Court Opinion

ID: 9614124
Source: CourtListenerOpinion
Date Created: 2023-08-22 04:22:45.588378+00
Date Added: 2024-06-11T08:55:52.691817
License: Public Domain

JOHNSON, Justice,
concurring and dissenting.
I concur in the majority opinion, except the portion which holds that the trial court misallocated the burden of proof and the portion that remands for further proceedings to determine the level of mining re-, quired to satisfy the implied covenant. In my view, there is ample evidence in the trial court’s decision that the trial court understood and correctly allocated the burden of proof. The trial court’s findings of fact support the imposition of the one million tons requirement.
The trial court’s conclusions of law stated, in part:
D. Under the circumstances of this case, considering the length of the primary term of the lease, the expectation of the parties, the economic, environmental and competitive factors, a prudent operator in good faith would not have mined as the secondary term began and continued only for the purpose of keeping the lease alive.
E. A prudent operator in good faith, under the conditions and factors referred to above, would mine at least 1 million tons of ore annually.
These conclusions make it plain to me that the trial court did not rule against Alumet because Alumet did not fulfill a burden of proof. These conclusions clearly indicate that the trial court considered all the evidence and was persuaded that Alumet had not acted with reasonable diligence under the facts and circumstances as they existed at the times involved.
The trial court’s findings in support of the one million tons requirement stated:
FINDINGS OF FACT
1. Drilling and trenching operations were performed by lessee on the property between 1965 and 1974 to determine the location, grade of ore and thickness of deposit.
2. Substantial ore, good for commercial development, was located on the leased property.
3. Alumet shortly after it obtained the property by assignment from John Archer, devised a plan and schedule for mining and processing ore. That plan called for construction of a beneficiating and calcining plant and annual production of approximately 2.5 million tons of ore. (Plaintiff’s Exhibit 12 and Defendant’s Exhibit “E”)
4. Calcining and beneficiating phosphate ore are necessary to a market and a viable phosphate mining operation in the upper intermountain area. Such a plant was contemplated by the parties and known at the time of the extension of the primary term and of the assignment of the lease by Archer to Alumet. (Tr. Vol. IV, P. 659-60, 1. 8-1)
5. At a September 1976 meeting, Alumet declared its intention to build a processing plant and to process 1 to 1.5 million tons of ore annually. (Tr. Vol. I, P. 124, 125, 1. 23-4, Defendant’s Exhibit “C”)
6. Alumet represented in January 1980 that 1) construction of the processing plant would begin immediately; 2) the needed capital to finance plant construction had been obtained; 3) increased mining would begin so a stock pile would be available on completion of plant construction. (Tr. Vol. Ill, P. 430, 1. 3-12; P. 431-435)
7. Davy Power Gas Company was contracted by Alumet for the purpose of *961independent verification of the existence of commercial ore bodies on the leased property so $130 million could be borrowed to build the contemplated plant and roads. (Tr. Vol. I, P. 113-114, 1. 24-11)
8. There are at least 21.1 million tons of proven minable ore on the Diamond & Lanes Creek sites covered by the lease. (Tr. Vol. I, P. 141, 142, 1. 14-2; Plaintiffs Exhibits 30 & 36)
9. Alumet never did capitalize its operation sufficiently to build the processing plant or transportation facilities, to commercially mine the leased property. (Tr. Vol. I, P. 116-125; Defendant’s Exhibit “C”)
10. Alumet began mining in 1979 at the end of the primary term and until this action was instituted for the purpose of preventing termination of the lease only. (Tr. Vol. II, P. 288, 1. 11-17)
11. In mining only to keep the lease alive, Alumet is not making a profit. (Tr. Vol. II, P. 287-288, 1. 22-10)
12. Alumet is essentially an unfunded partnership whose operation since 1979 is limited by a budget equal to pre-sold raw ore. (Tr. Vol. I, P. 116-125; Vol. II, P. 182-183)
13. Other companies in southeastern Idaho and the western United States have invested substantial capital as they mined phosphate ore on a commercial basis from 1974 to 1984. (Exhibit 66, Tr. Vol. II, P. 215-221)
I would affirm the decision of the trial court.
McDEVITT, J., concurs.