Goosebay Homeowners Ass'n, LLC v. Bureau of Reclamation

Decision Date22 April 2013
Docket NumberCV 13-21-H-CCL
PartiesGOOSEBAY HOMEOWNERS ASSOCIATION, LLC, Plaintiff, v. BUREAU OF RECLAMATION, UNITED STATES DEPARTMENT OF INTERIOR, MONTANA DEPARTMENT OF FISH, WILDLIFE AND PARKS, RUTH LEFEVER and HOLLIS LEFEVER, Defendants.
CourtU.S. District Court — District of Montana
OPINION & ORDER

Before the Court is an Application for Temporary Restraining Order and Preliminary Injunction filed by Plaintiff Goosebay Homeowners Association ("HOA") on March 29, 2013. The matter came on for hearing on April 8, 2013.HOA was represented by Nathan Wagner. The Bureau of Reclamation (the "BOR") was represented by AUSA Leif Johnson. Defendants Hollis and Ruth Lefever ("Lefevers") were represented by Kevin D. Feeback. Defendant Montana Fish, Wildlife and Parks ("MTFWP") has made no appearance in this matter.

Background

Plaintiff Goose Bay Homeowners Association ("HOA") is a membership organization comprised of 31 mobile home owners who rent trailer spaces in a 5-acre trailer court situated within a federal public recreation area near the waterfront. Located on Canyon Ferry Lake, Goose Bay Marina is a 227-acre facility that is owned by the United States and managed by the BOR. The private managers of the marina store and trailer court since 1986, Gerald and Muriel Reller (the "Concessionaire"), allowed their concession agreement ("Lease and Permit")1 with the BOR to expire on December 31, 2012.2

Prior to expiration of the Lease and Permit agreement, HOA members rented their trailer spaces from the Concessionaire pursuant to oral agreements. Now that there is no concessionaire and no concession agreement, the BOR has decided to modernize the Goose Bay Marina facility and is in the early planning stage of redesigning marina facilities and services. The marina's outdated and failing septic system is in need of substantial reconstruction.

The BOR gave the HOA members over one year's notice that they would be required to remove their mobile homes from the marina. (See ECF No. 5-2, referencing letters dated November 28, 2011, and December 13, 2011.) The BOR also gave the HOA members six months' notice that it intended to terminateelectrical and water services by April 1, 2013, and a reminder that they must remove their mobile homes by April 30, 2013. (ECF No. 5-5 and 5-2.)

In response to the impending termination of septic service to the trailer court, HOA filed an action for declaratory judgment in Montana First Judicial District Court on March 21, 2013, claiming to be third-party beneficiaries of the Lease and Permit between the Concessionaire and the Bureau of Reclamation.3 The HOA alleges in Count I that the most recent (now expired) Lease and Permit Agreement (the "July 14, 2000 Lease and Permit Agreement") is void for failure of the BOR to provide consideration for several modifications it made to the 1986 Lease. According to the HOA, after judicial rescission of the 2000 Lease agreement, the BOR should be compelled to renew the Lease and PermitAgreement for a ten-year term beginning in 2013. In Count Two of the Complaint, the HOA asserts a prescriptive easement against its neighbors, the Lefevers, who are private landowners. The HOA asserts that it is entitled to maintain the trailer court's septic drain field on Lefevers property by prescriptive easement. In Count Three, the HOA claims that Lefevers should be estopped from demanding that the septic drain field be removed because Lefevers' predecessor allegedly promised a prior concessionaire that the septic drain field would be allowed in perpetuity.

The state district court granted the HOA's ex parte application for temporary restraining order on the same day the complaint was filed. However, it appears to this Court that the state district court's temporary restraining order was void or voidable because it was based upon a complaint verified upon information and belief and not positively verified. See Mont. Code Ann. § 27-19-303(2)(b) ("An injunction order may not be granted on affidavits unless . . . the material allegations of the affidavits setting forth the grounds for the order are made positively and not upon information and belief."); see also City of Great Falls v.Forbes, 247 P.3d 1086, 1088 (Mont. 2011) (injunction not to be granted unless material allegations of the complaint are made positively and not upon information and belief). The complaint in state district court was based upon the verification of Scott Joyner, a member of Goose Bay HOA, "based upon information and belief." (ECF No. 11 at 10.) This Court allowed Mr. Joyner to testify and thereby to cure that problem, but in any event the state restraining order has expired by operation of law.

Following the issuance of that temporary restraining order, the BOR removed the case to federal court, as it was clearly entitled to do based upon this federal statute:

(a) A civil action . . . that is commenced in a State court and that is against or directed to any of the following may be removed by them to the district court of the United States for the district and division embracing the place wherein it is pending:
(1) The United States or any agency thereof . . . , for or relating to any
act under color of such office . . . .

28 U.S.C. § 1442. This statute is to be broadly construed to favor removal. See Durham v. Lockheed Martin Corp., 445 F.3d 1247, 1252-53 (9th Cir. 2006). Thiscase will not be remanded to state court as was suggested by Plaintiff HOA during oral argument at the hearing on April 8. A demand for declaratory judgment and for specific performance as to a contract filed against an agency of the United States is properly adjudicated in a federal court. Note, however, the Declaratory Judgment Act is permissive only and does not require a federal court to declare the rights of the litigants. Thus, "[i]f a district court, in the sound exercise of its judgment, determines after a complaint is filed that a declaratory judgment will serve no useful purpose, it cannot be incumbent upon that court to proceed to the merits before staying or dismissing the action." Wilton v. Seven Falls Co., 515 U.S. 277, 286, 115 S.Ct. 2137 (1995) (discussing the DJA, 28 U.S.C. §§ 2201-2202).

The Application for Temporary
Restraining Order/Preliminary Injunction

Plaintiff HOA now seeks an injunction against the BOR to prevent it from terminating utility services and evicting HOA members from the trailer court at Goose Bay Marina. Plaintiffs claim that there are multiple factual issues thatshould be determined by a jury, including the ultimate issue of whether the United States' failure to renew the 2000 Lease and Permit was reasonable.4 In the meantime, Plaintiff HOA seeks an injunction to prevent the BOR from evicting them. In support of its application for injunction, the HOA relies upon the allegations of their Complaint: that HOA members are third-party beneficiaries of the 1986 Lease and Permit, that the 2000 Lease and Permit is void for lack of consideration for the modifications contained therein, and that the BOR may not unreasonably deny the Concessionaire's right in 2013 to renew the lease for an another 10 year term.

Obviously, the first notable problem with HOA's request is that theConcessionaire has not appeared in this matter, that the Concessionaire has failed to renew the Lease, and that the Concessionaire has failed to fix the marina's septic system to fulfill the BOR's condition for renewal. The second notable problem is that the Lease has now expired, and the HOA members no longer have any legal right to remain on this federal property. In fact, as of May 1, 2013, the HOA members will be trespassers upon the property. Nevertheless, HOA claims that it has shown a likelihood of success on the merits and the possibility of irreparable injury or serious questions and a balance of hardships tipping sharply in HOA's favor.

Legal Standard for Injunction

As the parties agree, the legal standard for issuance of an injunction is (1) whether the applicant is likely to succeed on the merits of its claims, (2) it is likely to suffer irreparable harm absent preliminary relief, (3) the balance of the equities tips in its favor, and (4) an injunction is in the public interest. Winter v. Nat'l Res. Def. Council, 555 U.S. 7, 129 S. Ct. 365, 374 (2008). The Ninth Circuit has allowed an alternative "sliding scale" test such that "serious questions going to themerits and a balance of hardships that tips sharply towards the plaintiff can support issuance of a preliminary injunction, so long as the plaintiff also shows that there is a likelihood of irreparable injury and that the injunction is in the public interest." Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1135 (9th Cir. 2011) (internal marks removed). However, 'serious questions on the merits' requires more than a simple preponderance of the evidence; plaintiff must demonstrate a "substantial case for relief on the merits." Leiva-Perez v. Holder, 640 F.3d 962, 968 (9th Cir. 2011).

Sovereign Immunity

The first legal hurdle the HOA members face in attempting to show a likelihood of success on the merits or even serious questions is the United States' sovereign immunity from suit. "Absent a waiver, sovereign immunity shields the Federal Government and its agencies from suit." FDIC v. Meyer, 510 U.S. 471, 475, 114 S.Ct. 996, 127 L.Ed.2d 308 (1994) (citing Loeffler v. Frank, 486 U.S. 549, 554, 108 S.Ct. 1965, 100 L.Ed.2d 549 (1988)); FHA v. Burr, 309 U.S. 242,244, 60 S.Ct. 488, 84 L.Ed. 724 (1940). Unless a waiver of sovereign immunity can be established, courts have no subject matter jurisdiction over cases against the government, with the result in this case that the federal government or its agencies cannot be sued. United States v. Mitchell, 463 U.S. 206, 212, 103 S.Ct. 2961, 77 L.Ed.2d 580 (1983). Indeed, a plaintiff such as HOA cannot sue the United States in any court of law, whether state or federal, unless the...

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