## Facts

- In 1966, Whitten H. Anderson (with a partner) located an unpatented federal mining claim for a deposit of green slate on federal land.
- During construction of the Trans–Alaska Pipeline System in the mid-1970s, an Alyeska subcontractor built an access road across the claim.
- After discovering the road, Anderson negotiated a right-of-way lease with Alyeska for $1,000 per year; the lease included a covenant against waste.
- Despite the lease, Alyeska personnel removed slate/rock from the claim for pipeline construction purposes without authorization or payment for the material.
- Anderson sued Alyeska for conversion.
- A jury found the mining claim valid, found Alyeska unlawfully removed slate, and awarded damages using a harsh measure (value after severance without credit for extraction costs).
- Alyeska appealed the claim’s validity and the damages measure; Anderson cross-appealed rulings on prejudgment interest, attorney’s fees, and punitive damages.

## Issues

1. Whether the green slate deposit satisfied federal mining-law requirements for a “valuable mineral deposit” under the prudent-person and marketability tests, supporting a valid unpatented mining claim.
2. Whether conversion damages were properly measured by the harsh rule (enhanced value without deduction for extraction costs) rather than a good-faith trespasser rule (net value after deducting costs).
3. Whether the trial court erred regarding prejudgment interest, attorney’s fees, or denial of punitive damages.

## Decision

- The Alaska Supreme Court affirmed the judgment for Anderson in all material respects.
- The court upheld the jury’s finding that the slate deposit constituted a valuable mineral deposit and that the mining claim was valid.
- The court upheld harsh conversion damages because Alyeska failed to establish it acted in good faith when removing slate, particularly given notice of the claim and the lease’s covenant against waste.
- The court found no reversible error in the trial court’s determinations on prejudgment interest, attorney’s fees, or punitive damages.

## Legal Principles

- An unpatented federal mining claim is valid only if the claimant proves a “valuable mineral deposit” under both:
  - the prudent-person test (reasonable prospect of developing a valuable mine), and
  - the marketability test (ability to extract, remove, and market at a profit).
- In mineral conversion/trespass cases, the defendant bears the burden to prove good faith to obtain a cost-deduction (net value) measure of damages.
- If the defendant proceeds with notice of the plaintiff’s rights and exceeds any granted authority (including violating an anti-waste covenant), the harsh measure may apply: the enhanced value of severed minerals without deduction for extraction costs.
- A court may deny separate punitive damages where the harsh conversion measure already serves a punitive and deterrent function.
- Appellate review generally defers to jury findings supported by substantial evidence and to trial court discretion on interest and attorney’s fees within governing rules.

## Conclusion

The court affirmed that a decorative stone deposit can support a valid unpatented mining claim when prudent-person and marketability standards are met, and it sustained harsh conversion damages because Alyeska did not prove good-faith removal of slate despite notice and contractual limits.


Alyeska Pipeline Serv. Co. v. Anderson, 629 P.2d 512 (Alaska 1981)