Clay Regional Water v. City of Spirit Lake, Iowa
| Decision Date | 04 April 2002 |
| Docket Number | No. C01-4100-MWB.,C01-4100-MWB. |
| Citation | 193 F.Supp.2d 1129 |
| Parties | CLAY REGIONAL WATER, Plaintiff, v. CITY OF SPIRIT LAKE, IOWA, Defendant. |
| Court | U.S. District Court — Northern District of Iowa |
Gregg L. Ownes, Ladegaard, Maahs & Owens, Spirit Lake, IA, for the City.
TABLE OF CONTENTS
I. INTRODUCTION .......................................................... 1131
A. The Parties And The Underlying Dispute ............................. 1131
B. The State And Federal Court Lawsuits ............................... 1132
1. The state court action .......................................... 1132
2. The federal court action ........................................ 1133
II. DISCUSSION ............................................................ 1134
A. The District Court's Virtually Unflagging Obligation ............... 1134
B. Exceptions To The General Rule ..................................... 1134
C. Standard Of Discretion: Colorado River or Brillhart? ............... 1137
1. Parallel proceedings ............................................ 1137
2. Essence of the District's complaint ............................. 1138
D. Brillhart Abstention ............................................... 1145
III. CONCLUSION ............................................................ 1155
This matter is before the court on the defendant's Motion (1) To Dismiss Or Stay Based On Abstention From Jurisdiction, Or, In The Alternative, (2) To Strike Unnecessary And Inappropriate Matters From Plaintiff's Complaints. (Doc. No. 8). The defendant requests that this court abstain from exercising jurisdiction over the plaintiff's federal causes of action on the ground parallel litigation is presently advancing in state court, arguing that the plaintiff's federal lawsuit is a duplicitous attempt to oust the state court of the opportunity to decide the matter. The plaintiff resists the defendant's motion and argues that the state and federal lawsuits are not parallel; according to the plaintiff, the state court action will merely decide a simple question of state contract law, which will not resolve future disputes between the parties and will not adequately address the plaintiff's federally guaranteed rights.
The plaintiff, Clay Regional Water (the "District"), is a rural water district, organized and incorporated pursuant to Iowa Code chapter 357A. The defendant, City of Sprit Lake, Iowa (the "City"), is a municipal corporation created under the laws of the State of Iowa.1
In 1990, the parties entered into a contact, the validity of which the District put in issue in the pending state court action. The contract2 is titled "New Water Service Plan for Property Within Two Miles of the City of Spirit Lake, Iowa (East Lake Okoboji Project)" and establishes the property the District can service in the event the City annexes land. According to the City's state court petition, the City indeed annexed the land contemplated in the contract and claims that the District does not have the exclusive right to provide water services to the annexed property. Instead, the City argues that it, not the District, may provide water services to the annexed property pursuant to the express provisions of the contract.
The City filed the state court action on May 23, 2001. In this lawsuit, the City requests a declaratory judgment that it may provide water services to the land annexed by the City in the area contemplated by the contract. In its state court petition, the City seeks the following relief:
Wherefore, Plaintiff, City of Spirit Lake, Iowa, prays the Court to declare and construe the rights and duties of the parties under the contract; that the Court reserve jurisdiction to award supplementary relief, either because defendant violates the contract after its construction by the Court, or does any act pending the trial which turns out to be such a violation. Also to adjudge that Plaintiff has the right hereafter to sue at law for past or future damages from any violation of the contract as herein construed; and for such other relief as may be appropriate to adjudge and declare the rights of the parties herein.
Def.'s Exh. A, at 2 (State Court Petition).
The District answered the City's petition on June 19, 2001. It filed an amended answer on July 3, 2001. In both the initial and the amended answers, the District denied both the validity and the enforceability of the contract on several grounds. Namely, the initial and amended answers share five common defenses. First, the District contends the City failed to satisfy conditions precedent to the District's obligation to perform. Specifically, the District claims that the agreement was not approved by the Farmers' Home Administration ("FmHA"),3 thus making the contract void. In arguing failure of a condition precedent, the District relies on the contractual provision that provides: "This agreement is subject to Farmers' Home Administration's approval and Clay County Rural Water District will not provide service to any area under this agreement until this agreement is approved by the Farmers' Home Administration." Def.'s Exh. A (State Court Petition, at ¶ 5). The District denies that the FmHA approved the 1990 contract.
Second, the District asserted the affirmative defense that the contract is void as against public policy embodied in 7 U.S.C. § 1926(b). Third, the District asserted the defense of estoppel. Fourth, the District asserted that the City's claims were precluded by federal statutory compliance. Fifth, the District asserted justification.
The amended answer ends with these five defenses. The initial answer, but not the amended answer, however, further makes three counterclaims. First, the District set forth a claim under 7 U.S.C. § 1926(b), asserting continuing violations and invasion and curtailment of the service area provided and made available to the District. Second, the District alleged a claim under 42 U.S.C. § 1983 for a pattern and practice of continuing and threatened violations of federally guaranteed rights, namely, the rights guaranteed by 7 U.S.C. § 1926(b). In addition, the District sought attorney's fees pursuant to 42 U.S.C. § 1988. And third, the District sought statutory compensation as provided by Iowa Code section 357A.21, which provides that "[a] water district organized under chapter 357, 357A, 499, or 504A shall be fairly compensated for losses resulting from annexation."
On July 31, 2001, the District filed a Motion For Summary Judgment in the Iowa District Court for Dickinson County. The Iowa court heard oral arguments on the motion on September 5, 2001, and, as of the date of this opinion, the motion is under consideration by the state court. Trial is scheduled in the state court matter for May of 2002.
On October 2, 2001, the District filed a complaint in this court against the City, alleging violations of 7 U.S.C. § 1926(b), for continuing violations and for invasion and curtailment of the service provided and made available to the District and seeking declaratory and injunctive relief pursuant to 42 U.S.C. § 1983 and the Federal Declaratory Judgment Act, 28 U.S.C. § 2201 et seq. In its complaint, the District seeks the following relief:
[T]he District, Clay Regional Water, requests that this Court (i) declare the rights and liabilities of the parties and render judgment in favor of the District for the City's violation of 7 U.S.C. § 1926(b), thereby declaring the respective boundaries of the parties pursuant thereto; (ii) enjoin the City from providing service to existing and potential current and future customers within the District's defined federal franchise; (iii) create, pursuant to 42 U.S.C. § 1983, a constructive trust over customers, revenues and facilities of the City within the District's state-law defined federal franchise boundaries, and for the transfer of wrongfully acquired customers, revenues and facilities from the City to the District; (iv) exercise its equity jurisdiction pursuant to the doctrine of en custodia legis for the facilities, customers, and revenue the subject of this action during the pendency of this litigation; (v) award the District attorney's fees, expert fees, and costs pursuant to 42 U.S.C. § 1988 and 28 U.S.C. § 2202, and tax costs pursuant to 28 U.S.C. § 1920; (vi) award pre- and post judgment interest; and (vii) grant such other and further relief, in law or in equity, which this honorable Court may find the District justly entitled.
Pltf.'s Complaint (Doc. No. 1).
In November of 2001, the City filed this Motion To Abstain From Jurisdiction. On December 26, 2001, the District filed a Motion For Summary Judgment on each of its claims against the City. The court has taken no action on this motion, having granted the City a lengthy extension of time in which to respond to the District's motion. The parties submitted their scheduling report on January 17, 2002 and indicated a trial readiness date of November 12, 2002. However, a trial date has yet to be set by this court. In January of 2002, the District moved to supplement its resistance to the City's motion to dismiss or stay, which this court granted on January 29, 2002.4
In this action, both parties urge the court to employ the Colorado River abstention doctrine as interpreted by the Eighth Circuit Court of Appeals. Compare Colorado River Water Conservation Dist. v. United States, 424 U.S....
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