The widow of geologist Michael J. Fitzgerald believes the collection proceedings currently wrapping up in the Supreme Court of British Columbia will hopefully be the end of a 16-year legal battle involving court cases brought by Vancouver-based mining exploration company Mountainstar Gold Inc. against her late husband and his estate.
Over the course of 16 years, courts have cleared Fitzgerald of accusations that he acted improperly in staking mining claims that eventually resulted in the discovery of the Barrick’s Goldstrike property in Nevada — one of the world’s richest gold deposits.
“There is no doubt whatsoever that Mike has been cleared of any improper actions,” said Marissa Fitzgerald in a news release issued today.
Judges have repeatedly rejected Mountainstar’s allegations and ruled in favour of Fitzgerald.
She adds Mountainstar made several announcements touting the financial gains they expected from the lawsuits.
“They failed in those and they have also failed to pay what the courts ordered against them for costs.”
The current action against Mountainstar in the B.C. Supreme Court has been brought by the Fitzgerald Trust. It is seeking to enforce U.S. court-ordered judgments for legal costs.
U.S. courts held that the continuing legal actions brought by Brent Johnson, as president of Mountainstar Gold Inc., were vexatious and brought in bad faith.
According to court documents, a claim by Mountain-West Resources in the B.C. Supreme Court in 1999 was based on events that occurred nearly 25 years ago in 1975 when Fitzgerald was president of Cobre Exploration Ltd. Cobre later changed its name to Mountain-West Resources Inc., and is now known as Mountainstar Gold Inc.
Cobre was a Vancouver Stock Exchange-listed exploration company that had run out of money and was essentially dormant. The company could not pay Fitzgerald and he was forced to look for other opportunities to earn a living.
In July 1975, Fitzgerald became part of a syndicate to prospect for precious metals in Nevada. He eventually staked a number of claims for the syndicate, subject to a net carried interest that was part of the compensation for his services. The syndicate was formed and financed separately from Mountainstar.
In the late 1980s, further work on the property resulted in it being developed into a mine. The net carried interest that Mike Fitzgerald had earned became valuable as a result.
In 1999, when Fitzgerald retired from Mountainstar, the company’s new management, headed by Johnson, sued Fitzgerald alleging he had breached fiduciary duties by working with the Nevada syndicate on his own behalf.
Mountainstar pursued and instigated claims in courts in British Columbia, Nevada, Arizona, Wyoming, and Washington State. In every case, including appeals to higher courts, the claims were rejected.
In 2005, the B.C. Court of Appeal found that Mountainstar’s claims suffered from a “fatal weakness” — there was “no evidence” to support them. Yet Mountainstar went on to sue after that directly and indirectly, in the U.S. where courts ruled the company had made “meritless” claims first against Fitzgerald and later against his estate. At one point, Mountainstar alleged the claims made in the U.S. courts were worth $1.65 billion. The U.S. courts held that actions brought by Johnson, on behalf of Mountainstar, were vexatious and brought in bad faith.
On Nov. 10, 2015, the Fitzgerald Trust filed a complaint with the British Columbia Securities Commission calling for an investigation into the litigation, Mountainstar and Johnson’s involvement in it.
