City of Raton v. Arkansas River Power Authority
| Citation | 600 F.Supp.2d 1130 |
| Decision Date | 17 September 2008 |
| Docket Number | No. Civ 08-0026 JB/WDS.,Civ 08-0026 JB/WDS. |
| Parties | CITY OF RATON, a municipal corporation and political subdivision of the State of New Mexico, Plaintiff, v. ARKANSAS RIVER POWER AUTHOITY, a public power corporation and political subdivision of the State of Colorado, Defendant. |
| Court | U.S. District Court — District of New Mexico |
Nannette M. Winter, Sheehan, Sheehan & Stelzner, P.A., Albuquerque, NM, for Plaintiff.
Craig N. Johnson, Kutak Rock LLP, Denver, CO, Lynn H. Slade, Erin Langenwalter, Modrall Sperling Roehl Harris & Sisk PA, Albuquerque, NM, for Defendant.
THIS MATTER comes before the Court on the Defendant's Motion to Stay, or in the Alternative, to Transfer Venue Pursuant to 28 U.S.C. § 1404(a), or Dismiss Pursuant to Fed.R.Civ.P. 12(b)(6), filed February 15, 2008 (Doc. 5)("Motion"). The Court held a hearing on May 2, 2008. The primary issues are: (i) whether the Court should transfer venue of this action to the United States District Court for the District of Colorado; (ii) whether Plaintiff City of Raton's claim for declaratory relief under the New Mexico Joint Powers Agreements Act states a claim for which relief can be granted; (iii) whether the Colorado Governmental Immunity Act bars the City of Raton's claim for negligent misrepresentation; and (iv) whether the City of Raton can state a claim, under the circumstances alleged, for violation of the New Mexico Constitution's Anti-Donation Clause. For the reasons stated at the hearing, for reasons stated herein that are consistent with those stated at the hearing and because the Court does not believe that the Colorado venue is a measurably, if any, better forum than the jurisdiction of New Mexico, the Court will deny the motion to transfer and to abstain. The Court will permit Defendant Arkansas River Power Authority ("ARPA") to withdraw its motion to dismiss City of Raton's First Claim. The Court will grant the motion to dismiss City of Raton's Third Claim for negligent misrepresentation because the Court believes that New Mexico courts would extend governmental immunity to the Arkansas River Power Authority under the principle of comity. The Court will grant the motion to dismiss City of Raton's Fifth Claim for Relief because Raton has failed to state a claim for violation of the Anti-Donation Clause, because the Court believes the purpose of the Anti-Donation Clause is to prevent gifts from governmental entities and the City of Raton is not gifting electricity to non-ARPA subscribers.
ARPA is a political subdivision of the State of Colorado, formed by six Colorado municipalities and the City of Raton, to provide wholesale electric power to its member municipalities. See Motion at 1. The City of Raton entered into the Organic Contract and the Power Sales Agreement forming ARPA in 1979. See Complaint for Declaratory. Judgment, Breach of Contract, Misrepresentation, Violation of the New Mexico Constitution and Permanent. Injunctive Relief ¶ 10, at 2, filed January 9, 2008 ("Complaint"). Pursuant to the Organic Contract and the Power Sales Agreement, the City of Raton agreed to "purchase and obtain all [of its] wholesale power and energy requirements from [ARPA]." Complaint ¶ 13, at 3 (internal quotation marks omitted). The New Mexico Department of Finance and Administration ("DFA") approved the Organic Contract on October 31, 1979. See Complaint ¶ 11, at 2.
The City of Raton subsequently approved amendments to the Organic Contract. See Complaint ¶ 26, at 5. The amendments authorized ARPA to proceed with the Repowering Project and with the issuance of bonds to finance that project. See Complaint ¶¶ 25-30, at 5. The City of Raton approved these amendments on or about October 26, 2004 and January 18, 2005. See Complaint ¶ 29, at 5. The City of Raton did not provide any notice of its suit against ARPA under the Colorado Governmental Immunity Act, Colo.Rev. Stat. § 24-10-109(1). See Motion, Exhibit 1, Affidavit of Brunelli ¶ 24, at 7-8 (executed February 15, 2008)("Brunelli Aff.").
The City of Raton's First Claim for Relief is for declaratory judgment and seeks a declaration that certain amendments to the Organic Contract and the Power Sales Agreement, made in contemplation of the Repowering Project, are "void and of no effect" because ARPA did not, pursuant to the New Mexico Joint Powers Agreements Act, N.M.S.A.1978 §§ 11-1-1 to 11-1-7, receive the DFA Secretary's prior approval. Complaint ¶¶ 61-68, at 10-11.
In its Third Claim for Relief, for negligent misrepresentation, the City of Raton alleges that ARPA "made a number of material misrepresentations to the City concerning the Project and costs associated with the Project," including alleged "misrepresentations concerning the cost of the Project, the progress of the Project, its economic feasibility, and its superiority to other alternatives available to the City and Member Municipalities for acquiring power." Complaint ¶¶ 77-78, at 12. The City of Raton alleges that, as a result of these alleged misrepresentations, it was damaged. See Complaint ¶ 84, at 13.
The City of Raton's Fifth Claim for Relief asserts that ARPA "must sell up to twenty-seven percent (27%) of the Project energy output to non-members" at rates less than the estimated cost of production, which "would amount to an impermissible donation and an indirect lending of credit to non-members [of ARPA] in violation of Article IX, Section 14 of the New Mexico Constitution." Complaint ¶¶ 93-94, at 14.
On February 5, 2008, ARPA submitted a motion requesting that the Court stay the case, or in the alternative transfer venue to the United States District of Colorado, or dismiss Counts I, III, and V of the City of Raton's Complaint. See Doc. 5. ARPA contends that the Court should abstain from deciding the case because the action should have been commenced in Colorado and thus venue is inconvenient in this Court. See id. at 12. While ARPA acknowledges that this case was filed two days before the pending case in Colorado, neither case has progressed more significantly than the other. See id. at 13-14. ARPA also asserts that Colorado law, not New Mexico law, should govern the dispute, because the Organic Contract and the Power Sales Agreement were "intended to be governed by Colorado law." Id. at 14. ARPA alternatively requests that the Court transfer venue of this case to the federal district court in Colorado. See id. at 16-17. ARPA asserts that the majority of non-party witnesses reside in Colorado. See id. at 17.
ARPA argues that the Court should dismiss the City of Raton's Count I because the Colorado Governmental Immunity Act bars the claim and because the City of Raton has not sufficiently pled this count with particularity as required under rule 9 of the Federal Rules of Civil Procedure. See id. at 20-24. ARPA contends that the Court should dismiss City of Raton's Count V for violation of the Anti-Donation Clause of the New Mexico Constitution because ARPA is a Colorado political subdivision that is not subject to New Mexico Constitution's limitations. See id. at 24. ARPA asserts that, even if the Anti-Donation Clause were applicable, its conduct does not violate the Anti-Donation Clause because the City of Raton has received substantial consideration for its expenditures. See id. at 25. ARPA also argues that the Court should give effect to the notice requirements of the Colorado Governmental Immunity Act under the comity principle. See Reply in Support of Motion to Stay, or in the Alternative, to Transfer Venue Pursuant to 28 U.S.C. § 1404(a), or Dismiss Pursuant to Fed.R.Civ.P. 12(b)(6), filed March 28, 2008 (Doc. 10)("Reply"). ARPA further contends that the City of Raton has not provided sufficient detail to satisfy rule 9, because "it[s] recitation of the general subject matter of the alleged misrepresentations fails to describe exactly what [ARPA] said that was not true, who made the statements, or how such statements were false." Id. at 8.
The City of Raton responded on March 4, 2008. See City of Raton's Response to Motion to Stay, or in the Alternative, to Transfer Venue Pursuant to 28 U.S.C. § 1404(a), or Dismiss Pursuant to Fed. R.Civ.P. 12(b)(6), filed March 4, 2008 (Doc. 7)("Response"). The City of Raton contends that the Court should not abstain, because there are no parallel proceedings pending in state and federal court. See id. at 5. The City of Raton contends that the majority of relevant events and communications underlying the dispute occurred in New Mexico. See id. at 8. The City of Raton argues that, because the Organic Contract and Power Sales Agreement does not contain a choice-of-law provision selecting Colorado law, it is unclear Colorado law is applicable to this case. See id. at 11. The City of Raton contends that it has properly stated a claim for negligent misrepresentation because the Colorado Governmental Immunity Act is inapplicable to breach-of-contract actions. See id. at 19. The City of Raton asserts that, even if the Colorado Governmental Immunity Act is applied, it properly gave actual notice to ARPA of its intention to sue. See id. at 20. The City of Raton argues that ARPA would not have immunity under New Mexico law, because it was provided actual notice. See id. at 21. The City of Raton also asserts that rule 9 does not apply to a negligent misrepresentation claim, and, even if it did, that the City of Raton has satisfied it by providing sufficient detail. See id. at 22. The City of Raton contends that it has asserted a claim for violation of the Anti-Donation Clause because the City of Raton is forced to pay a subsidy to a non-member, private citizen, who will pay less than the cost of production. See id. at 23.
On March 11, 2008, the City of Raton submitted a request for judicial notice of dismissal of related...
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