Court Opinion

ID: 9535715
Source: CourtListenerOpinion
Date Created: 2023-08-07 04:52:11.659961+00
Date Added: 2024-06-11T13:33:18.735788
License: Public Domain

Justice SCOTT
specially concurring:
I agree with the majority that “a geophysical trespass did not occur in this case.” Maj. op. at 111. I also agree “that neither [Bradford C. (Boyce) ] nor [Bowen/Edwards Associates (BEA) ] had a duty to disclose geophysical information to Mallon ....” Id. at 110. Nonetheless, though I reach the same result as the majority, I would affirm the court of appeals judgment due to slightly different analyses, and hence, I write separately.
Unfortunately for the fate of Mallon Oil Company’s arguments before us, well-reasoned precedent confirms that, at least in the arena of commercial and business transactions, the law and its sanctions are not coterminous with society’s highest moral or ethical standards. Experience in the marketplace teaches that for every moral wrong, in fact, there may not be a remedy.
I.
In Grynberg v. City of Northglenn, 739 P.2d 230, 236 (Colo.1987), we described *113“ ‘geophysical trespass’ as a rubric for [unauthorized] invasion of the right to explore for minerals.” Justice Lohr, writing for a unanimous court in Grynberg, described a geophysical trespasser as “one who conducts geophysical operations upon the lands of another without permission or consent.” Id. (citing Earl A. Brown, Jr., Geophysical Trespass, 3 Rocky Mtn. Min. L. Inst. 57, 59 (1957)).
Here, Mallon Oil Company (Mallon) conceded that Boyce’s employer, the Southern Ute Indian Tribe (Tribe), had the right to enter upon and to be on the property in question. The Tribe’s activities were conducted for purposes of “coal and hydrocarbon research and drilling” on land that it owned. The research and drilling activities were carried out by the United States Geological Survey (USGS) pursuant to a contract that Mallon agreed was authorized. Based on the testimony of experts for both sides, the courts below concluded that testing for coal bed methane gas was necessary to determine the potential value of, and feasibility of mining, coal deposits. In the face of this evidence and concession, Mallon was unable to prove either that Boyce invaded its right to explore for oil and gas or that Boyce did so without Mallon’s consent. Put another way, Mallon conceded that the principal, Boyce’s employer, had a right to explore the property for coal, and therefore cannot be liable for trespass.1 A concomitant conclusion is, then, that if the principal — Boyce’s employer — is not Hable, its agent — Boyce—-acting in accordance with the Tribe’s authority and within the scope of his employment, is similarly without HabiHty. See Restatement (Second) of Agency § 359B cmt. a (explaining that agent’s HabiHty for principal’s conduct is normally terminated by a judgment in favor of the principal); see also Restatement (Second) of Agency § 217A cmt. b (explaining that a prior judgment for agent normally terminates principal’s HabiHty).
This result is consistent with our opinion in Grynberg that where, as here, the surface and mineral estates are severed and separately owned, the owner of the mineral estate can assert “a cognizable legal claim based upon the [other] party’s exploration for minerals without the mineral estate owner’s consent.” Grynberg, 739 P.2d at 233-34 (emphasis added). In Grynberg, we pointed out that the “issue central to the resolution” of that ease was “whether the owner of a severed surface estate has the authority to grant permission to conduct drilling” when the mineral estate holder has withheld consent. Id. at 234. UnHke Grynberg, however, in this case the mineral estate holder, Mallon, agreed that the Tribe’s activities carried out through the USGS were authorized, that is, Mallon, in effect, consented under the Mineral Exploration and Development Agreement (MEDA), by which Mallon acquired its leasehold or mineral estate interest. Hence, such actions by the surface estate owner carried out with the permission of the mineral estate owner could hardly amount to unauthorized exploration of mineral rights or an invasion of the interests of the mineral estate owner. Thus, in my view, Mallon has not offered a set of circumstances amounting to, nor can it prove, a geophysical trespass here.
II.
In Grynberg, we noted that the city defendant had engaged in “exploration ... without [the] consent of ... the owner of the [mineral estate],” which we concluded invaded the rights of Grynberg, the lessee and owner of the mineral estate. Id. at 236. We then reasoned that we “recogniz[e][the] unauthorized exploration of mineral lights as an invasion of the interest of the mineral owner for the reasons ... well explained in Layne Louisiana Co. v. Superior Oil Co., [209 La. 1014] 26 So.2d 20, 22 (La.1946).” Id. at 237. Quoting Layne Louisiana Co., we then set forth those reasons:
It is a well-known and accepted fact in this, the third largest producing oil State, that the right to geophysically explore land for oil, gas or other minerals is a valuable right. Large sums of money are annually paid landowners for the mere right to go upon their land and make geophysical and seismograph tests. The information obtained as the result of such tests is highly valuable to the person or *114corporation by whom they are made. If the information thus obtained be favorable, it can be used and is used in dealing with the landowner for his valuable mineral rights. If the information be unfavorable, the fact quickly becomes publicly known and thus impairs the power of the landowner to deal advantageously with his valuable mineral rights. The average landowner is without means or funds to secure geophysical or seismograph information. Where that information, which is exclusively his by virtue of his ownership of the land, is unlawfully obtained by others, the landowner is clearly entitled to recover compensatory damages for the disregard of his property rights.
Id. (emphasis added).
.As I read Justice Lohr’s opinion, we recognized that: (1) “the right to geophysically explore land for ... minerals is a valuable right”; (2) the exercise of that right, involving large sums of money, leads to “information obtained” which may be “favorable” or “unfavorable”; and (3) “[w]here that information ... is unlawfully obtained by others, the landowner is clearly entitled to recover compensatory damages for the disregard of his property right.”2 Id.
In its opinion, the majority opines that “[i]n Grynberg, we stated that information acquired from geophysical exploration is highly valuable.” Maj. op. at 110. If by this statement the majority concludes that the right to explore land for oil, gas, or other minerals is a valuable property right, then I agree. ■ However, if the majority intends, as its language suggests, that the mere possession of information acquired from exploration activities would imbue the individual possessing that information with a duty to disclose, then I am not in accord with that portion of its opinion. While I agree that “information acquired from geophysical exploration is highly valuable” id., I do not agree that the information itself represents a property or other right in another compelling disclosure. In my view, such a requirement assumes the adoption of a parity of information rule, which is antithetical to the natural imbalance of information that accompanies, and indeed induces, commercial transactions for the purchase and sale of various rights in property. While such a parity of information rule may have utility outside the facts of this case involving, for example, the market for inventions (where the commodity being produced is information), as I read our precedent it does not compel, nor will reason support, compensation, either where one fails to disclose information not acquired improperly or where a relationship between the possessor and another party does not command disclosure.3
The United States Supreme Court twice rejected any such parity of information rule in the market for investment securities. See Dirks v. SEC, 463 U.S. 646, 103 S.Ct. 3255, 77 L.Ed.2d 911 (1983); Chiarella v. United States, 445 U.S. 222, 100 S.Ct. 1108, 63 L.Ed.2d 348 (1980). Pursuant to its authority under the Securities Exchange Act of 1934, the Securities and Exchange Commission (SEC) promulgated a catchall rule designed to limit fraud in the purchase and sale of securities, Rule 10(b) — 5. The SEC administered the rule as a general prohibition against nondisclosure, assuming it was the mere possession of information that forced individuals to disclose that information or abstain from trading in securities. In Dirks, the Court rejected this administrative interpretation and held:
administrative and judicial interpretations have established that silence in connection with the purchase or sale of securities may operate as a fraud actionable under § 10(b) .... But such liability is premised upon a duty to disclose arising from a relationship of trust and confidence between parties to a transaction.
*115Dirks, 463 U.S. at 660, 103 S.Ct. 3255. Previously, in a criminal proceeding brought by the Justice Department under the same SEC rule, the Court in Chiarella stated that a duty to disclose or abstain does not arise from the mere possession of non-public information. Rather, such a duty arises from the existence of a fiduciary relationship. See Chiarella, 445 U.S. at 231, 100 S.Ct. 1108.
Here, Mallon fails to assert the existence of any relationship between Boyce (or BEA) and itself which could give rise to a fiduciary or similar duty to disclose. Having failed to do so, Mallon cannot simply rely upon Boyce’s possession of information, alone, regardless of how highly valuable, to prevail. It is not the geophysical exploration information held by Boyce that would automatically give rise to disclosure, but rather, the existence or nonexistence, of a relationship between Boyce and Mallon that determines the duty owed. Mallon did not establish a fiduciary relationship with either Boyce or BEA, and, hence, without more than favorable or unfavorable information, Boyce and BEA had no duty to disclose. Therefore, I am in accord with the majority inasmuch as its holding is not interpreted as an adoption of any parity of information rule.
III.
Accordingly, for the reasons set forth herein, I concur in the result of the majority and would affirm the judgment of the court of appeals. However, I do so relying upon the reasoning set forth herein.
Justice SCOTT specially concurring.

. In fact, Mallon did not name Boyce’s employer, the Tribe, as a party defendant to its civil action.

. Here, in my view, the "property right” that may be compensated is the "right to geophysically explore,” not any right to, or interest in, information, regardless of how valuable.

. Moreover, such a concept raises substantial issues regarding the ability of employees, such as Boyce, to freely leave the employ of one firm and enter the marketplace for human services by obtaining employment elsewhere. Without addressing those concerns, I merely note it may have even greater implications in an at-will employment jurisdiction such as Colorado.