INSURANCE: Employers Mutual changes coverage analysis but does not result in coverage of beetle infestation claims against log home builder, reconsideration denied… homeowner’s counterclaims against insurer, 3rd-party claims against agent, rejected… Christensen.

Joseph Mulroy hired Duane Keim (Northwest Log Homes) to construct a home in Trego in 6/06. It purchased standing dead timber from a broker out of Striker, who purchased it from loggers in NW Montana. Northwest peeled, notched, pressure washed, and sorted the logs but did not treat them with insecticide. It completed the project in 2008. Mulroy began noticing insect holes and tracks in 2009. He made a claim to Northland Casualty, which had insured Northwest under a CGL policy. Northland advised Keim and Northwest 7/5/11 that there was no coverage because Mulroy’s claims were for “breach of contract and faulty workmanship” and thus did not constitute “property damage” caused by an “occurrence.” Mulroy sued Keim and Northwest in 12/11 in Lincoln Co. alleging negligence, negligent misrepresentation, and breach of warranty. Northland accepted defense under reservation of rights. After 19 months of litigation, which included a $490,000 demand from Mulroy, Northland filed this declaratory action. A settlement conference failed and trial was set for 1/28/14. Judge Wheelis granted Mulroy’s motion to vacate the trial date, and on 1/22 Northland sent a 2nd reservation of rights letter with the same coverage analysis as its previous letters and further reminded Northwest that it “may not voluntarily make a payment, assume any obligation, or incur any expense” without Northland’s consent. On 3/19/14 — without notifying Northland — Mulroy, Keim, and Northwest entered into a settlement agreement providing for Northwest’s “admission of liability and agreement to hold a hearing on damages in exchange for a covenant not to execute and assignment of all rights relating to insurance.” Wheelis concluded 8/29/14 that Northwest and Keim were liable on all 3 counts in Mulroy’s complaint, as stipulated, and awarded $208,824 remediation damages and $120,000 diminution damages. This Court 7/21/15 concluded that Northland did not breach the duty to defend Northwest and that there is no coverage under the CGL policy for the damage to Mulroy’s home. (43 MFR 1). It nevertheless viewed Mulroy’s counterclaims related to Northland’s representations as to coverage, as well as his 3rd-party claims against Glacier Ins. of Libby, as pending. Before the Court are Mulroy’s motion for reconsideration of the order granting summary judgment for Northland on coverage, Northland’s 2nd motion for summary judgment as to Mulroy’s counterclaims, and Glacier’s 2nd motion for summary judgment as to Mulroy’s contract and individual-capacity tort claims. (The Court in 3/16 granted Glacier’s 1st motion, finding that Keim and Northwest could not assign their PI claims to Mulroy.)

Mulroy contends that the order finding no coverage has been rendered erroneous by Employers Mutual (Mont. 2016) — that it is now legally irrelevant whether failure to treat the logs was a volitional act or intentional business choice, which formed the basis for the Court’s conclusion that there was no “occurrence.” Northland counters that while Employers Mutual clarified the law as to whether particular circumstances constitute an “occurrence,” there was no “occurrence” when Keim built a home with beetle-infested logs. (Northland also correctly points out that Mulroy’s motion fails to comply with LR 7.3, to which Mulroy responds that enforcing the LR “would be the proverbial elevation of form over substance.” While the Court rejects Northland’s procedural argument, it is not, as Mulroy seems to suggest, because the LR represent trivial requirements which a litigant can ignore on a whim. LR 7.3 provides ample ground to deny Mulroy’s motion, regardless of how firmly he is convinced that Employers Mutual resets the table. The Court instead reaches the substance of his motion simply for the sake of expediency.)

Employers Mutual held, citing Phalen (Mont. 1979), that the proper inquiry for whether acts constitute an “occurrence” is “(1) whether the act itself was intentional, and (2) if so, whether the consequence or resulting harm stemming from the act was intended or expected from the actor’s standpoint.” Although Phalen provides that it is “the actor’s standpoint” which dictates where a consequence was expected or intended, Employers Mutual made clear that “the second prong of the analysis … is an objective inquiry.” The rationale is obvious: few if any insureds in cases such as these would acknowledge their subjective intent to harm the parties injured by their actions. Thus it is left to the courts “to determine objectively what injuries could reasonably be expected to result from an intentional act.” Id. The Court acknowledges that its previous coverage analysis now appears incomplete. However, like the Employers Mutual analysis of Blair (Mont. 2007) and Landa (Mont. 2013), application of the Phalen inquiry does not change the result. At the 1st step, it is undisputed that Keim’s and Northwest’s decision not to treat the logs was an intentional act. At the 2nd step, regardless of Keim’s or his insurance agent’s personal experience in the log home business or whether there has been a finding or legal conclusion that Keim and Northwest violated industry standards, presence of the beetles is a reasonably expected result of the intentional act of purchasing standing dead timber, especially since the logs came from a broker in a region with a widespread and highly publicized beetle epidemic. Moreover, if the presence of the beetles is an objectively, reasonably expected result, then surely the potential for those insects to cause damage to the logs in which they burrow is an objectively reasonably expected result. Because Employers Mutual changes the coverage analysis, but does not result in coverage for Mulroy’s injuries, his motion for reconsideration is denied. (Similar to the Court’s observation in the 7/15 order, although there is no need to reach policy exclusions even in light of Employers Mutual, coverage would likely be precluded by the “your work” exclusion and similar provisions designed to prevent the policy from serving as a warranty of Keim’s and Northwest’s workmanship.)

Northland is granted summary judgment on Mulroy’s breach of contract counterclaim. The Court has already determined that it satisfied its duty to defend and, because there was no coverage for Mulroy’s injuries, it had no duty to settle or indemnify Keim and Northwest. As to his contention that Northland failed to “disclose material information regarding coverage,” he fails to cite any provision outlining its contractual duty to disclose material information as to coverage. (The Court struggles to imagine what such a provision would look like, given that the policy consists entirely of “material information regarding coverage.”) Instead, as Northland points out, Mulroy attempts to argue that his breach of contract claim is in essence a placeholder for any number of contractual claims that may or may not ultimately stick. While he is correct that “there are a number of ways in which an insurer can breach its contract,” he has chosen 3, had summary judgment entered on 2, and fails to prove the 3rd. The Court rejects his contention that pursuant to Rule 15(b) he should be permitted to argue a heretofore unasserted claim for breach of the implied covenant based on his expert’s “injection of the issue into this litigation.” When a party asserts issues outside the pleadings in opposition to summary judgment, courts in the 9th Circuit should construe the assertion as a motion to amend the pleadings out of time pursuant to 15(b) and consider “bad faith, undue delay, prejudice to the opposing party, futility of amendment, and whether the plaintiff has previously amended the complaint.” Desertrain (9th Cir. 2014). These factors cut against granting Mulroy leave to amend — there is no reasonable excuse for waiting 2½ years to assert a breach of covenant claim, and no excuse for failing to assert it in 2 amended pleadings, the latter of which he filed just 2 months before Northland’s instant motion for summary judgment. Moreover, considering the Court’s ruling on Northland’s duties to defend, settle, and indemnify, adding the covenant claim is likely futile.

Northland is granted summary judgment on Mulroy’s negligence claim. Because he and Northland have no relationship whatsoever absent Keim’s and Northwest’s assignment, and the Court has ruled that their tort claims were not assignable, it follows that Northland owed no duty directly to Mulroy as to Keim’s and Northwest’s insurance purchasing and coverage. Nevertheless, the record also demonstrates that Northland did not have a legal duty to provide Keim and Northwest any particular coverage or inquire about their coverage needs, and did not even communicate with them in any manner regarding coverage. At the time they purchased insurance from Glacier, and Glacier gathered information as to the type of coverage best suited for them, it did not serve as Northland’s agent, and any of Glacier’s representations could not be attributed to Northland through agency principles. Northland likewise had no duty to train & supervise Glacier or its employees at the time Glacier procured coverage for Keim and Northwest because it was not Northland’s agent until after the procurement. If any party owed Keim and Northwest a duty as to provision of requested coverage, or to properly train & supervise employees to that end, it was Glacier.

Apart from disagreeing with the Court’s determination that Keim and Northwest could not assign their tort claims to him, Mulroy does not respond to Northland’s motion for summary judgment as to his individual-capacity negligent misrepresentation, constructive fraud, and fraudulent concealment claims. The Court therefore consider’s Northland’s motion well-taken, but they are also subject to summary judgment on the merits. Each tort requires proof of an untrue or incomplete representation. Nothing in the record suggests that Northland made any representations of any kind to Keim and Northwest prior to their purchase of the policy. Certainly then, it made no representations to Mulroy. It appears that its only representations came after the beetle infestation became apparent in 7/11, and took the form of true statements as to whether Mulroy’s losses were covered.

Northland is granted summary judgment on Mulroy’s UTPA claim. Mulroy, individually and as assignee of Keim and Northwest, alleges that Northland “misrepresented or omitted pertinent facts regarding the insurance policy and coverage thereunder,” “failed to conduct a reasonable investigation which would have belied [Northland’s] positions on defense and indemnity,” and “placed such unreasonable conditions on the provision of defense and indemnity that they were tantamount to a failure to affirm or deny coverage within a reasonable time.” Because the Court has ruled that there was no coverage for Mulroy’s injuries and that Northland breached neither its duty to defend nor its duty to indemnify, Mulroy’s UTPA claim fails as a matter of Montana law. §33-18-242(5); Waller (Mont. 1992); O’Mailia (Mont. 2015).

Glacier is granted summary judgment as to Mulroy’s individual-capacity tort claims. As to his negligence claim, it is clear that Glacier’s procurement duties flowed to Keim and Northwest as the clients, insureds, and parties requesting insurance products. Monroe (Mont. 2010). There is no basis in Montana law for extending those duties to an insured’s customers. That would create an impossible requirement for agents, who would be responsible for informing anyone who hired their clients of coverage details and for estimating whether potential circumstances might fall within or outside that coverage. Just as there is no evidence of any misrepresentation by Northland toward Keim, Northwest, or Mulroy, there is no evidence of any misrepresentation by Glacier toward Mulroy. They never communicated as to the policy until they discussed the beetle infestation in 7/11 when Glacier agent Kevin Peck purportedly stated that “he thought it was covered or that … it should be covered.” This cannot be considered a representation sufficient to trigger a fraud-based claim because it came after the injury and thus could not have caused any detrimental reliance. Mulroy attempts to gain a foothold for negligent misrepresentation by citing Peck’s alleged statement to Keim in 2005 that the policy would cover replacement of rotten logs in a structure. Glacier and Peck deny this statement, and Mulroy contends that it constitutes a material fact issue because he relied on Keim’s and Northwest’s assurance that they were adequately insured for the project. However, even if Peck made this statement, Keim and Northwest never relayed it to Mulroy, nor did they ever discuss the full scope of the policy or whether certain factual circumstances would fall within coverage. Instead, the record reflects that in 2005 Keim and Northwest requested and received a general liability policy from Northland through Peck, and in 2007, before hiring him to build the log home, Mulroy simply asked Keim if he had general liability insurance. The record does not support the conclusion that Glacier affirmatively misrepresented or concealed information.

Glacier is granted summary judgment on Mulroy’s breach of contract and breach of the covenant claims. The duties purportedly assumed by Glacier through selling Keim and Northwest a policy are nearly exactly the same duties he alleged were breached in his negligence claim against Glacier. He cannot point to any specific contractual provisions imposing these duties upon Glacier, nor does he cite any evidence that the duties were contemplated in the implied oral contract between Glacier, Keim, and Northwest. Thus his contract claims are merely tort claims pled in the language of the contract. Their phrasing supports this conclusion, as does their timing — he amended his 3rd-party claims during pendency of Glacier’s 1st motion for summary judgment, and one could certainly conclude that he opted to include the contract claims as a hedge against a finding that PI tort claims are not assignable in Montana. Indeed, absent the “contract” claims, this order would have ended 3 pages ago. Having concluded that Mulroy’s contract claims, as pled, are actually tort claims cloaked in the language of contract, the Court further finds that they were not assignable under Montana law.

The Clerk shall enter judgment for Northland and Glacier and close this case.

Northland Casualty v. Mulroy dba Yorlum Ranch, Northwest Log Homes, and Keim; Mulroy v. Glacier Ins. of Libby; 43 MFR 349, 8/9/16.

Marshal Mickelson & Annie Harris (Corette Black Carlson & Mickelson), Butte, for Northland; Joseph Casillas & Trent Baker (Datsopoulos, MacDonald & Lind), Missoula, for Mulroy; Perry Schneider & Tim Dailey (Milodragovich, Dale & Steinbrenner), Missoula, for Glacier.

JUDICIAL ELECTIONS: Judicial candidate unlikely to succeed on merits of claim that professional/judicial conduct rules prohibiting false statements violate Free Speech and Equal Protection Clauses, preliminary injunction denied… Molloy.

Robert Myers filed a Statement of Candidacy with the Commissioner of Political Practices in 3/16 so he could run for judge in the 21st Judicial Dist. against Jeffrey Langton. He caused to be broadcast a campaign ad narrated by child custody client Dan Cox:

This is Dan Cox and I have a warning for you. I caught Judge Jeff Langton committing fraud on the court. He was secretly communicating with attorneys for the other party. He denied me a chance to respond and prevented me from fully presenting my case. Robert Myers was the only attorney who helped me stand up to this corruption. All I was asking for was a new judge to determine how his conduct affected my ability to have a fair hearing. Not only did Jeff Langton not allow a neutral judge to look at his conduct, but he stopped all witnesses including himself from being questioned. He of course found himself innocent without a hearing. No judge should judge his own conduct. Shame on Jeff Langton for retaliating against my lawyer, and shame on Jeff Langton for not giving me and my children a fair hearing. Paid for by Myers for Judge.

The ad was broadcast several times in 4/16 and 5/16 on Missoula station KGVO, whose broadcasts can be received in Ravalli Co. It makes multiple factual assertions that are of questionable veracity, many of which have been rejected by the Montana Supreme Court. Dep. Disciplinary Counsel Jon Moog emailed Myers in 5/16 that he had initiated an investigation for potential violations of Montana Rules of Professional Conduct 8.2 and Montana Code of Judicial Conduct Canon 4 and for production of related materials. Myers’s lawyer faxed a request for the complaint and a list of regulations he was suspected of violating. Moog responded that ODC had not received a written complaint, just a transcript of the radio ad sent by Langton’s law clerk, and that he was not sure what rules might be implicated, but 4.1(A)(10 and 4.2(A)(3) “look applicable.”

MRPC 8.2(a) states: “A lawyer shall not make a statement that the lawyer knows to be false or with reckless disregard as to its truth or falsity concerning the qualifications or integrity of a judge, adjudicatory officer or public legal officer, or of a candidate for election or appointment to judicial or legal office.” 8.2(b) further provides that “a lawyer who is a candidate for judicial office shall comply with the applicable provisions of the code of judicial conduct,” implicating Canon 4. Rule 4.1(A)(10) states: “A judge or a judicial candidate shall not … knowingly or with reckless disregard for the truth, make any false or misleading statement.” Rule 4.2.(A)(3) states: “A judicial candidate shall … review and approve the content of all campaign statements and materials produced by the candidate or his or her campaign committee … before their dissemination.”

Myers challenges the constitutionality of Rules 8.2(a) and 4.1(A)(10). He does not challenge 4.2(A)(3), asserting that he reviewed and approved the ad and stands by it. Following filing of his suit, ODC emailed Myers:

Your federal lawsuit notwithstanding, Mr. Myers’ response is still due as directed, absent an injunction. Your client is free to run any advertising he wishes, but there will be consequences for untruthful (or reckless disregard for the truth) advertisements in violation of the Rules, which will withstand constitutional scrutiny.

Myers seeks declaratory and injunctive relief, arguing that the rules prohibiting false statements violate Free Speech and Equal Protection Clauses. He wants to continue broadcasting the ad, but claims he will not do so as long as he faces a threat of prosecution by ODC and subsequent discipline. Indeed, at oral argument he claimed the Canons kept him from saying anything critical of Langton.

The State argues that Myers lacks standing to bring his as-applied challenges because he has not suffered an injury and the challenges are not ripe absent an ODC complaint. However, he faces a credible threat of prosecution if he continues to broadcast an ad that is conceivably false in several respects, and there is a substantial controversy between him and ODC. The State’s motion to dismiss for lack of standing and ripeness is denied. Its motion to abstain underYounger (US 1971) is likewise denied, as, like ReadyLink (9th Cir. 2014), this case does not involve a parallel criminal proceeding and there is no state order or judgment to be enforced.

“A State may restrict the speech of a judicial candidate only if the restriction is narrowly tailored to serve a compelling interest.” Williams-Yulee (US 2015). Myers acknowledges that judicial integrity and the appearance of judicial integrity are compelling state interests, but argues that the State’s rules are not narrowly tailored to meet those interests. For a rule limiting speech to be narrowly tailored, it “must be the least restrictive means of achieving a compelling state interest.”McCullen (US 2014). Myers argues that counterspeech is less restrictive than regulations that suppress false or misleading speech, relying onAlvarez (US 2012). While counterspeech may be a strong alternative in the political election context, the rationale advanced by Myers does not enhance the State’s interest in judicial elections. Rules 8.2(a) and 4.1(A)(10) are not meant to protect individual judges or judicial candidates from scrutiny and criticism, but to prevent erosion of public confidence in the system when false and misleading statements are made in judicial races or by judicial candidates. Yagman (9th Cir. 1995).

Myers also claims that Canon 4.1(a)(10) is substantially overbroad because it applies without regard to subject and to any setting including private conversations. However, it is specifically related to “political and campaign activities of judges and judicial candidates.” It does not prevent candidates from announcing their views on disputed legal or political subjects or making truthful critical statements about judges or judicial candidates. Its “plainly legitimate sweep” is made clear in the preface which limits its application to the bounds of the law.

Because Myers is unlikely to succeed on the merits, his motion is denied. (As the Court noted at the hearing, the quality of the briefing and arguments was refreshing.)

Myers v. Chief Montana Disciplinary Counsel Thompson, 43 MFR 326 , 6/28/16.

Matthew Monforton (Monforton Law Offices), Bozeman, for Myers; Asst. AGs Andres Haladay & Stuart Segrest.

MINERALS: Fossils not in ordinary & natural definition of “mineral” in general mineral deed, highly valuable Dueling Dinosaurs, Murray T. Rex, Triceratops fossils found on ranch not part of mineral estate, surface owners are sole owners… Watters.

Jerry & Robert Severson sold surface rights in their Garfield Co. farm/ranch to Mary & Lige Murray in 2005. The mineral estate was severed. The mineral deed provided that Seversons and Murrays would own as tenants in common “all right title and interest in and to all of the oil, gas, hydrocarbons, and minerals in, on and under, and that may be produced from the [property].” Neither Seversons nor Murrays suspected that dinosaur fossils existed on the property. After the severance, Murrays discovered several dinosaur fossils. The first was a “spike cluster” from a Pachycephalosaur found in the fall of 2005. At the time, Murrays did not consider it significant. Sometime before 12/06 they discovered fossils of dinosaurs that appeared to have been locked in battle. Their experts described the Dueling Dinosaurs a “one-of-a kind find” with “huge scientific value.” They were appraised at $7-9 million. Murrays attempted to sell them at a NYC auction but nobody bid over the $6 million reserve. They also discovered fossils of a Tyrannosaurus rex. There are only a dozen Tyrannosaurus rex skeletons as well-preserved and complete as the “Murray T. Rex.” It has been sold to a Dutch museum for a price in the millions. The proceeds are being held in escrow pending the outcome of this action. A Triceratops skull and part of a foot have also been found. Murrays’ agent who helped prepare it for display described it as “the best specimen I have ever worked on and I have done 27 Triceratops skulls.” Murrays have offered the skull for $200,000-$250,000. They sold the foot for $20,000. They entered into contracts and arrangements with 3rd parties relating to excavation and sale of the fossils. They did not notify Seversons upon discovery of the fossils or before attempting to sell them. Murrays filed this action in State Court seeking a declaration that the fossils are part of the surface estate and therefore solely owned by them. Seversons removed to this Court based on diversity and counterclaimed for a declaration that the fossils are minerals under Montana law for purposes of a mineral deed.

Seversons’ expert Raymond Rogers opined that fossilization refers to “recrystallization of organic bone into more stable forms, and that minerals including calcite, pyrite, barite, apatite, chlorite, and silica sometimes fill open spaces and the space formerly occupied by decomposed collagen, but minerals do not fill voids in all fossils. He concluded that the fossils on Murrays’ ranch recrystallized into francolite, “a carbonate and fluorine enriched apatite group mineral.” Murrays’ experts largely agree with the fossilization process described by Rogers, but differ on the conclusion that francolite is a mineral compound. Peter Larson stated that it has not been recognized as a distinct mineral species since 2008. He stated that the fossils are composed of the mineral hydroxylapite, which is found in the bones of living vertebrates. He does not consider minerals that fill voids in the bone to be part of the fossil.

While the Dueling Dinosaurs, the Murray T. Rex, and Triceratops skull and foot are indisputably valuable, not all dinosaur fossils are rare and valuable. Fragments that have little or no value are sometimes referred to as “chunkosaur” or “junkasaur.” Clayton Phipps stated that he has “walked by literally truckloads of bone fragments which I regularly call `leaverite’ which means `leave ‘er rite there, it’s worthless.”’ Finding valuable fossils is mostly a matter of luck and effort, and locating fossils involves walking, riding, or driving around to see if there are any bones lying around or sticking out of the ground.

When used in a deed, “the term `mineral’ has been the source of considerable confusion in mineral law litigation nationwide,” which has led to “title uncertainty and the need to litigate each general reservation of minerals to determine which minerals it encompasses.”Farley (Mont. 1995); Miller (Wyo. 1988). Farley, which considered whether scoria is a “mineral” for purposes of land transfers, found that the statutory definitions of “mineral” differs depending on context. For example, scoria was included in the definition of “mineral” under §82-4-403(6) in the Opencut Mining Reclamation part of the code, but may not have been included in the definition formerly found at §82-4-303(9) in the Metal Mine Reclamation part of the code. After reviewing law from other jurisdictions which follow the “ordinary and natural meaning test” first articulated in Heinatz (Tex. 1949), Farley held that scoria is not a mineral because it is used in road construction, which did not elevate it to the status of a compound which is “rare and exceptional in character.” Holland(Okla. 1975) (limestone which was useful only for building purposes was not a mineral for mineral deed purposes). This approach was reaffirmed in Hart(Mont. 2009) which concluded that sandstone is not a mineral because it “is not exceptionally rare and valuable.”

The focus of the Heinatz test is not whether the substance is “rare and exceptional in character,” or every rare and exceptional substance found on somebody’s property would be a “mineral.” Instead, for purposes of property transfers, it turns on the “ordinary and natural meaning” of “mineral.”Dyegard (Tex. App. 2001). Whether a material is “rare and exceptional” assists the determination of whether it is included in the ordinary natural meaning of “mineral.” For example, as in Heinatz, limestone could be a mineral if it could be profitably used in making cement, but it is not a mineral if it can only be used for building purposes. Sand is also not generally a mineral, but it could be if it had special properties that made it valuable for making glass. Sandstone and scoria could fall into the ordinary definition of mineral, but for purposes of a mineral deed they do not because they do not possess any special properties that make them rare and exceptional. When a material may fit into the “ordinary and natural meaning” of “mineral,” such as limestone and sand, any rare and valuable characteristics inform the inquiry into whether a material fits the definition. However, not all rare and valuable materials fit the ordinary and natural meaning of mineral.

The 2nd takeaway from Heinatz is that inclusion in the scientific definition of “mineral” is not determinative. If courts were to follow the technical definition of “mineral,” “dirt composing a large part of the surface could also be considered a mineral.” Dyegard; see also Fleming(Tex. Civ. App. 1960) (although there is no “doubt about water being technically a mineral,” subsurface water is not a mineral under a reservation of mineral rights). Thus the Court need not involve itself in the dispute as to whether francolite is properly classified as a mineral, nor is the presence of the mineral hydroxylapatite determinative. Bones and teeth of living and dead vertebrates naturally contain hydroxylapatite. Yet a reasonable person would not believe that the remains of a mule deer on Murrays’ ranch that contain francolite or hydroxylapatite would fit the ordinary definition of “mineral” under a mineral deed.

Accordingly, the Court’s task is not simply to determine whether the dinosaur fossils are “rare and exceptional in character.” The Court uses their characteristics to help inform the analysis of whether they meet the ordinary and natural meaning of “mineral.” Montana courts use dictionary definitions to assist in determining the common and ordinary understanding of a contract term. Dollar Plus Stores (Mont. 2009); Erickson (Mont. 2004). Relevant dictionary definitions of “mineral” typically include an inorganic element or compound mined for economic purposes. Webster’s Third New International Dictionary(1981). Black’s (10th ed.) defines “mineral” as:

1. Any natural inorganic matter that has a definite chemical composition and specific physical properties that give it value < most minerals are crystalline solids<. 2. A subsurface material that is explored for, mined, and exploited for its useful properties and commercial value. 3. Any natural material that is defined as a mineral by statute or caselaw.

Montana courts also may look to statutory definitions from other contexts to help determine the common and ordinary understanding of a contract term.Dollar Plus Stores. §82-4-303(16) provides:

“Mineral” means any ore, rock, or substance, other than oil, gas, bentonite, clay, coal, sand, gravel, peat, soil materials, or uranium, that is taken from below the surface or from the surface of the earth for the purpose of milling, concentration, refinement, smelting, manufacturing, or other subsequent use or processing or for stockpiling for future use, refinement, or smelting.

§15-38-103 of Montana’s tax code defines “mineral” as

any precious stones or gems, gold, silver, copper, coal, lead, petroleum, natural gas, oil, uranium, talc, vermiculite, limestone, or other nonrenewable merchantable products extracted from the surface or subsurface of the state of Montana.

These definitions focus on the mining of hard substances or oil & gas that are primarily extracted for refinement and economic purposes. Dinosaur fossils do not seemingly fall into those definitions. In the context of leasing state land, ARM 36.25.145(11) differentiates fossil collection and mineral exploration:

“General recreational use” means non-concentrated, non-commercial recreational activity, except:

(a) collection, disturbance, alteration, or removal of archeological, historical, or paleontological sites or specimens (e.g., fossils, dinosaur bones, arrowheads, old buildings, including siding) (which requires an antiquities permit pursuant to 22-3-432, MCA);

(b) mineral exploration, development, or mining (which requires a lease or license pursuant to Title 27, chapter 3, MCA);

(c) collection of valuable rocks or minerals (which requires a lease or license pursuant to Title 77, chapter 3, MCA).

The Legislature differentiated between fossils and minerals by granting the Montana Historical Society authority “to collect and preserve such natural history objects as fossils, plants, minerals, and animals.” §22-3-107(13).

Seversons challenge use of unrelated statutory definitions to assist in determining the meaning of “mineral” as used in their mineral deed, pointing out that Farley considered but ultimately did not rely on the statutory definitions of “mineral.” They urge the Court to consider only whether the fossils are “rare and exceptional.” While the statutory definitions in different contexts cannot be used as the sole authority to determine whether a material is a “mineral” for land transfer purposes, the Court can use them to assist in determining whether dinosaur fossils are included in the ordinary and natural meaning of “mineral.”Dollar Plus; see also Newman (Mont. 1996) (“statutory definitions provide guidance in interpreting the ordinary and popular meaning of undefined terms in a restrictive covenant”). Further, Farley is distinguishable because one statutory definition of “mineral” explicitly included scoria, while it was unclear whether scoria was included in another statutory definition. As related to fossils, the statutory and dictionary definitions of “mineral” all exclude fossils.

The Court finds that dinosaur fossils are not included in the ordinary meaning of “mineral” as used in Seversons’ and Murrays’ mineral deed. The dictionary statutory definitions show that the common understanding of “mineral” includes mining of a hard compound or oil & gas for refinement and economic exploitation. In contrast, dinosaur fossils are the remains of once-living vertebrates. Their properties are not what make valuable. They are not subject to further refinement becoming economically exploitable. They are valuable because of their very existence. They are not economically valuable to be processed into fuel or materials or manufactured into jewelry. They are not mined in the traditional sense, but discovered by happenstance. Dinosaur fossils do not meet the ordinary & natural definition of “mineral for purposes of a mineral deed, even though the fossils found on Murrays’ ranch could be described as “rare and exceptional.” While “rare and exceptional” helps inform whether a material is ordinarily considered a mineral, not all materials that are rare and exceptional are considered minerals. Both valuable dinosaur fossils such as the Dueling Dinosaurs and worthless fossils like “junkasaur” are not ordinarily considered minerals. Both are likely composed of the same minerals, but the composition of minerals in them does not make them valuable or worthless; the value turns on characteristics other than mineral composition such as completeness of the specimen, species of dinosaur, and how well it is preserved. If the test is truly whether a material is rare and exceptional, many items that ordinarily would not be considered minerals would fall under a mineral deed. Although the Dueling Dinosaurs, the Murray T. Rex, and the Triceratops fossils are indisputably valuable, they do not fall under the ordinary and natural definition of “mineral” for mineral deed purposes. Murrays are sole owners of the fossils found on the property.

Murray v. Severson et al, 43 MFR 305, 5/20/16.

Harlan Krogh & Eric Nord (Crist, Krogh & Nord), Billings, for Murrays; Stephanie Regenold (Perkins Coie), Boise, and Shane Swindle & Brian Lake (Perkins Coie), Arizona, for Seversons et al.