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Bar J Sand & Gravel, Inc. v. Fisher Sand & Gravel Co.

United States District Court, D. New Mexico

September 30, 2017

BAR J SAND & GRAVEL, INC., a New Mexico corporation, Plaintiff,
FISHER SAND & GRAVEL CO., a North Dakota corporation, doing business in New Mexico through its division SOUTHWEST ASPHALT & PAVING, Defendant.


         THIS MATTER is before the Court on Plaintiff Bar J Sand & Gravel, Inc.'s (“Bar J”) Motion for Partial Summary Judgment on Count I of Fisher's Amended Counterclaims. Doc. 104. In this motion, Bar J seeks summary judgment on Fisher's intentional or negligent misrepresentation counterclaim. Because the Court concludes that genuine disputes of material fact exist as to the elements of Fisher's counterclaim, summary judgment is improper and Bar J's motion is therefore denied.

         I. BACKGROUND[1]

         A. Fisher's Intentional or Negligent Misrepresentation Counterclaim (Count I)

         Fisher alleges that at an in-person meeting held on April 22, 2013, Bar J personnel represented to Fisher employees that the lease between the Pueblo and Bar J Trucking had been extended for an additional ten years. Id. ¶ 116. Fisher claims this was an intentional or negligent misrepresentation by Bar J because Bar J already knew at the time that the lease had not been extended because the BIA had cancelled it. Id. ¶ 117. Fisher alternatively asserts that Bar J knew at the time of the April 2013 meeting that the lease had not, or would not be, extended due to Bar J Trucking's failure to pay approximately $363, 074.40 in royalties to the Pueblo. Id. ¶ 118. Fisher also asserts that Bar J's failure to notify Fisher of the lease cancellation or the Pueblo's concerns regarding the lease constitutes a misrepresentation by omission. Id. ¶ 127. Fisher claims it relied on Bar J's misrepresentation that the lease had been renewed and therefore continued to produce and stockpile inventory because it expected that it would be able to continue its mining operations beyond January 2015, when the lease was initially set to expire. Id. ¶ 121. Fisher claims that Bar J did not notify Fisher until over a year later, on August 29, 2014, that the lease had not been renewed. Id. ¶ 120. Fisher alleges that it was forced to abandon 300, 000 tons of stockpiled material when the lease ended on January 17, 2015. Id. ¶ 130.

         B. Relevant Facts[2]

The individuals present at the April 22, 2013 in-person meeting on behalf of Bar J were Ted Martinez and Frank Duran. Doc. 104-1. Tommy Fisher, Mike Moehn and Dave Olson attended on behalf of Fisher. Id. According to Fisher, the purpose of the meeting was to discuss “whether the royalty rate could be reduced and how best to reduce the parties' agreement into writing.” Id. During the meeting, Fisher inquired as to the term of the proposed amendment it was going to draft because “if the Lease was to expire in January 2015, it may not be necessary to reduce anything to writing but that if the Lease was going to be extended, then the agreement that Fisher was to draft should reflect that additional term.” Id. Fisher states that at that point, “Frank Duran emphatically stated that the Lease had been extended another ten years.” Id. Fisher claims that Ted Martinez did not disagree with or correct Duran's statement, and that he did not make any statements contrary to Duran's representation that the lease had been renewed. Id.

         Mike Moehn, who was present at the meeting, testified in his deposition that Frank Duran told Fisher personnel at the meeting that the Pueblo had extended the lease for an additional ten years. See Moehn Depo., Oct. 12, 2015, 110:19-112:3 (Doc. 104-3) (“I just remember him saying we have it for ten more years”; “he was emphatic that they had the lease for ten more years”; “I took it as they had the lease secured for ten more years, and that's how he portrayed it”). Moehn did not, however, recall the exact words used by Duran. Id.

         Frank Duran's recollection of the April 2013 meeting differs from that of Moehn. In his affidavit, Duran states that although he does not recall what was specifically said at the meeting, he “would not have said definitely, or otherwise, that Bar J Trucking had ‘secured' an additional ten-year lease with the Pueblo.” Doc. 104-5 at ¶ 5. Duran denies that he would have made this representation because (1) he had no relationship with Bar J Trucking and (2) Bar J Trucking did not share its dealings with the Pueblo with him. Id. Duran further states that he would not have made a representation regarding lease renewal at the meeting because the lease “renewal or non-renewal decision did not have to be made by the Pueblo for more than a year and one-half.” Id. Additionally, Duran states that he is not an employee or agent of Bar J or Bar J Trucking and has never had the authority to bind either of these entities. Id. ¶¶ 1-3. Duran indicates in his affidavit that he has always represented to Fisher that he works for MCT Industries. Id.

         Following the April 2013 meeting, Fisher did not independently investigate Duran's alleged representation that the lease had been extended. Doc. 104-1. In May 2013, Moehn sent an email to Duran regarding a “Proposed Ammendment [sic] to Supply Agreement”. Doc. 104-2. Attached to the email was a copy of the proposed amendment, which included in relevant part a proposed term of five years with an option to renew for an additional five years. Id. It is undisputed that Bar J did not sign this proposed amendment. See Doc. 104 at 3, Doc. 105 at 9. Fisher nonetheless continued its mining operations through 2013 and into calendar year 2014.

         On August 29, 2014, a Fisher employee learned from a newspaper article that the lease had not been renewed. Doc. 137-3 at 5; See also Moehn Depo. 295:5-7 (Doc. 104-3). Fisher then contacted Bar J, and Bar J confirmed that the Pueblo would not be renewing the lease. Doc. 137-3. At that point, Fisher stopped production of additional materials, but it had approximately 340, 000 tons of stockpiled material.[3] Doc. 137-3 at 8; Doc. 104-4. Fisher did not remove its stockpiled material when the lease ended on January 17, 2015. Moehn testified that the reason Fisher did not remove the material is because the time frame was too prohibitive to secure and prepare a new site to store the stockpiled material and to transport the materials. Moehn Depo. 295:1-5 (Doc. 137-1). Fisher asserts that had Bar J informed Fisher of the issues surrounding the lease, including its cancellation, Fisher would have “converted its operations to an on-demand production model and would have sold most or all of the inventory that was in place as of April 22, 2013.” Doc. 137 at 6.

         During the course of discovery in this case, Fisher obtained documents from Bar J indicating that a month prior to the April 2013 meeting, Bar J, Bar J Trucking, Louis Jacques, and Ted Martinez “were notified by letter from Acting Superintendent of the Bureau of Indian Affairs and by letter from Insurance Company of the West that Bar J Trucking owed the Pueblo approximately $263, 074.40 for unpaid royalties for royalty adjustments made under Bar J [Trucking's] lease with the Pueblo.” Doc. 137-3 at 7. On or about April 25, 2013, Fisher asserts Bar J Trucking was informed that the BIA had decided to cancel the lease.[4] Id. Bar J Trucking appealed the decision and, on September 23, 2014, the BIA's Southwest Regional Director affirmed the decision. Id. The affirmance was appealed but later dismissed as moot on January 30, 2015. Id. at 7-8.

         II. ANALYSIS

         Bar J raises two main arguments in its motion for summary judgment as to Fisher's intentional or negligent misrepresentation counterclaim. First, Bar J argues that the release provision of the Exclusive Supply Agreement (ESA) bars this counterclaim. Doc. 104 at 5-9. Second, Bar J argues that Fisher is unable to prove the elements of the intentional or negligent misrepresentation claim. Doc. 104 at 9-15.

         With regard to Bar J's first argument concerning the ESA's release provision, [5] the Court has determined that the ESA was not renewed and therefore expired on June 28, 2012. Consequently, the ESA's release provision was no longer binding on the parties in 2013 when the alleged misrepresentation(s) occurred. The Court therefore rejects Bar J's argument that the release bars Fisher's intentional or negligent misrepresentation counterclaim. Thus, the only issue before the Court is ...

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