State of N. M. ex rel. Reynolds v. Molybdenum Corp. of America

• Decision Date: 03 February 1978
• Docket Number: No. 76-1674,76-1674
• Citation: 570 F.2d 1364
• Parties: STATE OF NEW MEXICO ex rel. S. E. REYNOLDS, State Engineer, Plaintiff-Appellee, v. MOLYBDENUM CORP. OF AMERICA, Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1364

570 F.2d 1364

STATE OF NEW MEXICO ex rel. S. E. REYNOLDS, State Engineer Plaintiff-Appellee, v. MOLYBDENUM CORP. OF AMERICA, Defendant-Appellant.

No. 76-1674.

United States Court of Appeals Tenth Circuit.

Argued and Submitted Sept. 28, 1977.

Decided Feb. 3, 1978.

Richard A. Simms, Sp. Asst. Atty. Gen., New Mexico, for plaintiff-appellee.

Neil C. Stillinger, Santa Fe, N. M. (Watson, Stillinger & Lunt, Santa Fe, N. M., with him on the brief), for defendant-appellant.

Before McWILLIAMS, BREITENSTEIN and BARRETT, Circuit Judges.

BREITENSTEIN, Circuit Judge.

We have here a general water adjudication case brought by New Mexico in federal court. The controversy is solely between the State Engineer and a private water user. The decision depends on New Mexico law. The United States District Court for the District of New Mexico held against the water user. The court of appeals allowed an interlocutory appeal under 28 U.S.C. § 1292(b). We affirm.

The purpose of the action is to obtain an adjudication of rights of all claimants to the use of water of the Red River and its tributaries, all of which are located in New Mexico. The procedure is similar to that established in several western states. See Colorado River Water Conservation District v. United States, 424 U.S. 800, 96 S.Ct. 1236, 47 L.Ed.2d 483. The named defendants include the United States and Molybdenum Corp. of America, Molycorp. The complaint was brought under the New Mexico water adjudication statutes, chap. 75, art. 4, N.M.Stats., alleged that defendants claimed rights under the Constitution and laws of the United States and enumerated certain federal statutes none of which have any pertinence to the present controversy between the State Engineer and Molycorp.

The first question is federal jurisdiction. We recognized the problems of water adjudication when rights may be asserted under federal statutes. New Mexico says that it has pending in federal court seven general water adjudication cases involving 8,281 individual parties. The record in the instant case shows over 500 claimants to Red River water. Many of the claimants have no right under any federal statute. New Mexico asserts on its own behalf no right or immunity under the Constitution or laws of the United States. See Phillips Petroleum Co. v. Texaco, Inc., 415 U.S. 125, 127-128, 94 S.Ct. 1002, 39 L.Ed.2d 209. At the most, the complaint alleges that someone claims an unidentified right under unspecified federal law. We express no opinion as to whether the allegations are sufficient to establish federal question jurisdiction under 28 U.S.C. § 1331.

After the complaint was filed the United States filed a motion for leave to intervene. The court recognized that the United States was a named defendant and realigned the United States as a plaintiff. The United States then filed its complaint "in intervention" invoking jurisdiction under 28 U.S.C. § 1345 which grants federal jurisdiction over actions "commenced by the United States." The United States owns lands within the Red River Basin which are part of the Carson National Forest and were reserved by executive orders. See 34 Stat. 3262 and 35 Stat. 2240. The United States asserts that the reservations include the water necessary to fulfill the purpose of the executive orders. It also alleges rights under the Wild and Scenic Rivers Act, 16 U.S.C. § 1271 et seq. The United States often has reserved water rights based on withdrawals from the public domain. See United States v. District Court for Eagle County, 401 U.S. 520, 522-523, 91 S.Ct. 998, 28 L.Ed.2d 278.

Intervention ordinarily cannot provide jurisdiction lacking for the main cause. See Begg v. City of New York, 262 U.S. 196, 198-199, 43 S.Ct. 513, 67 L.Ed. 946, and Bantel v. McGrath, 10 Cir., 215 F.2d 297, 299. The rule does not apply here. The United States was a named defendant and was realigned as a plaintiff. We must determine the "principal purpose" of the suit and align the parties accordingly. Indianapolis v. Chase National Bank,314 U.S. 63, 69, 62 S.Ct. 15, 86 L.Ed. 47. As a practical matter, a general water adjudication is comparable to interpleader. New Mexico asks that all water users assert their claims and have them determined. The intent is to obtain a complete ascertainment of all existing rights. Pacific Live Stock Co. v. Oregon Water Board, 241 U.S. 440, 448, 36 S.Ct. 637, 60 L.Ed. 1084. Each person is interested both in the determination of his own claim and in the extent and validity of other claims. Ibid. at 449, 36 S.Ct. 637. In the situation presented, no good purpose is served by quibbling whether a party is a plaintiff or defendant. The United States has entered the suit as a claimant asking that its rights be determined. This action confers federal jurisdiction under § 1345.

The next problem is federal jurisdiction of the dispute between Molycorp and the State Engineer. Its determination does not depend on any federal law. The United States has shown no concern with, and is not a party to, this appeal. The question is whether we have ancillary jurisdiction over the dispute here presented. The concept applies when the subordinate claim "is a continuation of or incidental and ancillary to" the main action. See United States v. Acord, 10 Cir., 209 F.2d 709, 712, cert. denied 347 U.S. 975, 74 S.Ct. 786, 98 L.Ed. 115, and cases cited in n. 4. See also Aetna Insurance Co. v. Chicago, Rock Island & Pac. R. Co., 10 Cir., 229 F.2d 584, 586, and Pipeliners Local Union No. 798 v. Ellerd, 10 Cir., 503 F.2d 1193, 1198.

We have here both pendent claims and pendent parties. We are aware of Zahn v. International Paper Co., 414 U.S. 291, 94 S.Ct. 505, 38 L.Ed.2d 511, which holds that multiple plaintiffs must each satisfy the jurisdictional amount requirement, but we believe that it has no application here. All claimants to Red River water are interested in the determination of their rights. Those rights are interrelated and require specific determinations of priority date, quantity of water that may be diverted and put to beneficial use, place of diversion, and perhaps other matters. The interrelationship can only be determined in an action to which all water users are parties. The function of a general adjudication proceeding is to determine individual rights and their relationship to the rights of other claimants to the use of the waters of the river. Although here we have no transaction or occurrence, we have a situation affecting hundreds of water users and the determination of the right of each is not only incidental to, but also inextricably intertwined with, the determination of the rights of all. Accordingly, the federal court had ancillary jurisdiction to determine this controversy between the State Engineer and Molycorp.

The next problem is abstention. Before the water adjudication proceeding was commenced, the State Engineer sued Molycorp in state court for determination of the issues presented on this appeal. The parties stipulated the issues should be determined in the adjudication proceedings. After the trial before the Master and his report, and after the district court had confirmed that report, Molycorp sought a rehearing and filed a motion for abstention and certification to the New Mexico Supreme Court under § 16-2-7, N.M.Stats.1953 Comp., 1975 Pock.Supp. The district court refused to abstain and entered a second order confirming the Master's report.

The Molycorp request for abstention and certification comes too late. The case has been tried and the district court has made its decision. We find nothing in Colorado River Water Conservation District v. United States, 424 U.S. 800, 96 S.Ct. 1236, 47 L.Ed.2d 483, which requires dismissal, abstention, or certification. There dismissal occurred before trial. Colorado River recognizes "the virtually unflagging obligation of the federal courts to exercise the jurisdiction given them," 424 U.S. at 817, 96 S.Ct. at 1246, and holds that dismissal cannot be supported by the abstention doctrine "in any of its forms." 424 U.S. at 813, 96 S.Ct. 1236. The Court goes on to require dismissal of the federal action because of the extraordinary circumstances presented. 424 U.S. at 818-820, 96 S.Ct. 1236. The court emphasizes that actions for the allocation of water "involve the disposition of property and are best conducted in unified proceedings." 424 U.S. at 819, 96 S.Ct. at 1247.

In Colorado River, the United States apparently brought the federal court action, not to seek a determination of the rights of all water users, but only to seek a declaration of its rights as against other claimants. The rights of some 1,000 water claimants had been determined in the state proceedings. Piecemeal litigation could be avoided by determination of the United States' claims in the state proceedings.

The situation before us is strikingly different. The parties to this appeal stipulated that the issues would be tried in the federal court action. The rights of many of the over 500 claimants have been determined in that action. Dismissal, abstention, or certification would promote, not prevent, fragmentation of water adjudication proceedings.

Because of the interrelationship of water rights, the problem arises of whether any binding state court determination of the dispute between the State Engineer and Molycorp can be made without affording all claimants to Red River water the right to appear in state court and express their views. We are convinced that the situation presented requires denial of the request to abstain and certify.

We turn to the merits. One prong of the controversy relates to the Molycorp use of water from its Mill Wells, the other to its rights with regard to the Columbine Wells. With regard to Mill, Molycorp says that it is unlawfully limited to a stream depletion measured by water losses from a tailings pond area of 50 wetted acres. With regard to Columbine, Molycorp says that those wells should...