Opinion ID: 2514177
Heading Depth: 2
Heading Rank: 1

Heading: equitable reimbursement under federal common law

Text: ¶ 9 The trial court relied on section 78-12-25(1) to bar the equitable reimbursement claim. That section provides that An action may be brought within four years: (1) upon a contract, obligation, or liability not founded upon an instrument in writing;. . . provided, that action in all of the foregoing cases may be commenced at any time within four years after the last charge is made or the last payment is received. Utah Code Ann. § 78-12-25(1) (1996). ¶ 10 In its amended complaint, CIGE pleaded: Justice and fairness demand that CIGE have a cause of action under federal common law for reimbursement of the overcharges which were received by the State as royalty owner. Because CIGE's federal common law cause of action is based upon justice and fairness, it sounds in equity and is not based on a written contract. Thus, we must apply the four-year statute of limitations in section 78-12-25(1). Claims falling within this limitation period are time-barred within four years after the last charge is made or the last payment is received. Id. CIGE made its last payment to the State in April 1985 and filed this action in July 1991 after the four-year period had lapsed. ¶ 11 CIGE argues that the equitable principle of laches, not section 78-12-25(1), should apply to the federal equity claim. In support of this position, CIGE relies on Louisiana Land & Exploration Co. v. Unocal Corp., 863 F.Supp. 306 (E.D.La.1994), where the federal district court held that a state statute of limitations did not apply to a federal common law claim for equitable restitution of a percentage of a settlement paid to the Department of Energy for overcharges of crude oil under various federal acts. However, that decision is inconsistent with the general rule that federal courts apply state statutes of limitations by analogy to like causes of action. See Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, 501 U.S. 350, 355-56, 111 S.Ct. 2773, 2778, 115 L.Ed.2d 321, 331 (1991); Pipkin v. USPS, 951 F.2d 272, 274 (10th Cir.1991); Shell v. Strong, 151 F.2d 909, 911 (10th Cir.1945). Equitable claims will be barred after the time fixed by the analogous statute of limitations unless extraordinary circumstances make the application unjust. See id. ¶ 12 The federal district court addressed this same issue in Hill, determining that the equitable tolling doctrine did not shield CIGE from the reach of section 78-12-25(1). See 824 F.Supp. at 1548-49. The court reasoned that when several of CIG's resale customers sued for overpayment in 1982, CIGE was put on notice of questions regarding the legality of its use of tight sands prices. See id. at 1548. Nevertheless, CIGE continued to make royalty payments to royalty interest owners based on the tight sands prices until April 1985. On July 24, 1985, an administrative law judge ruled that CIG was not allowed to charge tight sands prices because CIG's resale customers had not consented to those prices. On July 7, 1988, FERC affirmed that CIG did not have authority to charge the tight sands prices. In 1989, the parties entered into a settlement, wherein CIG agreed to refund overcharges to its customers. FERC approved the 1989 settlement on August 1, 1989, and that order became final on August 8, 1990. ¶ 13 The federal district court held that CIGE was on notice as early as 1982 of the challenge to the charging of the tight sands prices, yet declined to file this action until 1991. Given the ongoing litigation between CIG and its resale customers, there is no basis upon which to support the conclusion that CIGE should be allowed to file this action beyond the limitations period. CIGE's argument that it could not have sued Defendants prior to FERC's approval of the 1989 Settlement is wrong. The 1989 Settlement was an agreement between private parties and certainly did not create Defendants' liability to CIGE. Had CIGE brought suit at that time, and had Defendants filed a motion to dismiss for failure to state a claim upon which relief can be granted, Defendants' liability to CIGE would have been determined at that time. Hill, 824 F.Supp. at 1548-49. ¶ 14 We agree with the reasoning of the federal district court that section 78-12-25(1) applies to an equitable federal common law claim. Even if laches did apply, it would not aid CIGE, which had notice as early as 1982 of potential reimbursement claims. The doctrine of laches is based upon [the] maxim that equity aids the vigilant and not those who slumber on their rights. Black's Law Dictionary 787 (6th ed.1990). Failure to file a claim until 1991, nine years after CIGE had notice of a potential claim and three years after FERC issued opinion 306, evidences a lack of vigilance in pursuing a claim. We hold that the limitation period in section 78-12-25(1) began to run in April 1985 upon CIGE's final payment to the State, and that the four years expired before July 1991 when this action was filed.