Ness Investment Corporation, and Canyon Lake Resort, Inc. v. United States Department of Agriculture, Forest Service, and Fred Wirth, Forestsupervisor

512 F.2d 706, 1975 U.S. App. LEXIS 15992
Court of Appeals for the Ninth Circuit·Decided February 21, 1975·No. 73-2415·Published·Cited by 81 cases

Opinion

OPINION

LINDBERG, Senior District Judge.

This appeal presents the question whether a federal court may review a refusal by the Department of Agriculture, Forest Service (forest service), to issue a special use permit to a so-called successor group of investors for operation of a resort in a national forest. The successor group of investors has appealed from an order of the district court 1 granting the forest service’s motion to dismiss for want of jurisdiction. We affirm for the reasons expressed below.

I.

On May 18, 1965, the forest service issued 2 a twenty year special use permit 3 to the Ness Investment Corpora *708 tion (NIC), an Arizona corporation. The permit authorized NIC, subject to numerous terms and conditions, to construct, operate and maintain a resort at Canyon Lake in the Tonto National Forest, approximately forty-six miles east of Phoenix, Arizona. Among the duties imposed upon NIC through the permit were: keeping a responsible management official on the site or immediately available; providing a sanitation system and related facilities; constructing roads, parking lots, buildings, water systems, a sewage disposal system and a gas storage system; meeting a schedule for development of the site and for installation of the enumerated facilities. It was the opinion of the forest service that NIC was not fully discharging its permit responsibilities, and on May 3, 1968, the regional forester attempted to revoke the permit. The board of forest appeals, in an order filed on July 24, 1969, held this attempt to have been ineffective.

Subsequently, in a letter dated September 24, 1969, the regional forester requested NIC to show cause why the permit should not be revoked. Through a memorandum of October 16, 1969, Berth C. Ness, chief executive officer of NIC, authorized William H. O’Brien to handle all negotiations with the forest service pertaining to the permit. On October 22, 1969, O’Brien wrote to the forest supervisor and noted only the following points: NIC had merged with a group of investors with experience in the resort business; arrangements had been made to satisfy most of the claims outstanding against improvements on the resort site; development and operation of the site had been prohibited by the forest service for two years; the bond securing the permit then remained in effect; with new management the terms and conditions of the permit could be met. The record does not reveal that any NIC response to the request to show cause was forthcoming. On May 4, 1970, the chief of the forest service revoked the permit by letter; the letter was sent to Berth C. Ness at his business address in Minnesota. The revocation was based upon the failure of NIC to comply with the terms of the permit. An appeal was filed. 4

*709 As a point of information, the involvement of O’Brien with the resort originally planned by NIC arose from O’Brien’s apparent status as an NIC creditor and from the following series of events. Berth C. Ness and O’Brien entered into an agreement on January 9, 1969. Under the agreement, the First Southwest Small Business Investment Corporation (FSSBIC), of which O’Brien was then president, would receive title to all of the physical assets at Canyon Lake belonging to NIC. The agreement was subject to the condition both that the forest service approve transfer of the NIC permit and that financing be available. Preferred stock in the amount of $80,000.00 in a corporation to be organized by O’Brien was to have been issued to NIC in consideration for the transfer; in addition, FSSBIC was to have assumed all of the liabilities of NIC. A bill of sale dated November 1, 1969, evidenced the fact that NIC had conveyed all of its assets located at Canyon Lake to Canyon Lake Resort, Inc. (CLR). The bill of sale was executed pursuant to the January 9, 1969, agreement. It appears that this agreement and transfer were executed in settlement of a legal action; for a state court in Arizona has adjudged that, at the time of the decree, FSSBIC held title to all of the improvements at Canyon Lake in which NIC had had an interest. First Southwest Small Business Investment Corp. v. Dick B. Roach and Jane Doe Roach, Berth C. Ness and Jane Doe Ness, and Ness Investment Corp., No. 21015, (Superior Court, Pinal County, Arizona, January 27, 1970).

By telegram dated January 15, 1970, O’Brien notified the regional forester that, as a result of court action in lieu of foreclosure, the November 1, 1969, bill of sale had been issued, and that FSSBIC had later assigned the assets to CLR. In a February 4, 1970, letter FSSBIC notified the forest supervisor of the January 27, 1970, judgment and made application for a transfer of the permit to CLR. The forest supervisor in a letter of March 16, 1970, denied the application for transfer of the permit; the forest supervisor felt that clause twelve of the *710 NIC permit 5 prohibited its transfer. In a letter written on April 10, 1970, O’Brien writing for FSSBIC, applied under clause twelve for a permit in favor of CLR. In that letter O’Brien again stated that FSSBIC had had title to the NIC assets and had transferred them to CLR. On January 29, 1971, O’Brien executed an assignment transferring all the physical assets at Canyon Lake from FSSBIC and CLR to NIC.

Beginning on January 27, 1971, a hearing was held before the board of forest appeals concerning the May 4, 1970, revocation of the NIC permit. After the hearing a decision, of which no review has been sought, was rendered and an opinion was issued. In re: Ness Investment Corporation, Forest Service Docket No. 134 (November 4, 1971). The decision of the board of forest appeals was summarized at the conclusion of the opinion as follows. In re: Ness Investment Corporation, supra, pp. 11 — 12:

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Ness Investment Corporation, and Canyon Lake Resort, Inc. v. United States Department of Agriculture, Forest Service, and Fred Wirth, Forestsupervisor, 512 F.2d 706, 1975 U.S. App. LEXIS 15992 (9th Cir. 1975).

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