Merced Irrigation Dist. v. Cnty. of Mariposa

• Decision Date: 23 April 2013
• Docket Number: Case No. 1:12–cv–01645–LJO–SKO.
• Citation: 941 F.Supp.2d 1237
• Parties: MERCED IRRIGATION DISTRICT, a California Irrigation District, Plaintiff, v. COUNTY OF MARIPOSA, a political subdivision of the State of California, Defendant.
• Court: U.S. District Court — Eastern District of California

941 F.Supp.2d 1237

MERCED IRRIGATION DISTRICT, a California Irrigation District, Plaintiff,

v.COUNTY OF MARIPOSA, a political subdivision of the State of California, Defendant.

Case No. 1:12–cv–01645–LJO–SKO.

United States District Court, E.D. California.

April 23, 2013.

Abigail C. Briggerman, John P. Coyle, Duncan and Allen, Washington, DC, Jolie–Anne S. Ansley, Thomas M. Berliner, Duane Morris LLP, San Francisco, CA, for Plaintiff.

John P. Kinsey, Oliver W. Wanger, Wanger Jones Helsley PC, Fresno, CA, Steven W. Dahlem, Law Office of Steven W. Dahlem, Mariposa, CA, for Defendant.

ORDER ADOPTING THE MARCH 4, 2013, FINDINGS AND RECOMMENDATIONS (Doc. 27)

ORDER GRANTING MERCED IRRIGATION DISTRICT'S MOTION TO REMAND (Doc. 13)

LAWRENCE J. O'NEILL, District Judge.

I. INTRODUCTION

Plaintiff Merced Irrigation District (“MID”) filed a declaratory relief action against the County of Mariposa (“Mariposa”) in Merced County Superior Court on September 5, 2012. On October 5, 2012, Mariposa removed Plaintiff's declaratory relief action to this Court. (Doc. 1.) On November 2, 2012, MID filed a motion to remand the action to Merced County Superior Court. (Doc. 13.) Mariposa filed a brief in opposition to MID's motion on December 5, 2012, and MID filed a reply brief on December 12, 2012. On December 18, 2012, U.S. Magistrate Judge Sheila K. Oberto ordered the parties to submit additional briefing. On January 4, 2013, Mariposa filed a supplemental brief and on January 15, 2013, MID filed a supplemental brief. (Docs. 24, 25.)

On March 4, 2013, the Magistrate Judge issued Findings and Recommendations (“F & Rs”) recommending that MID's motion to remand be granted. (Doc. 27.) The parties each filed objections to the F & Rs on March 28, 2013 (Docs. 33, 34), and each filed responses to the other's objections on April 11, 2013 (Docs. 36, 37).

In accordance with the provisions of 28 U.S.C. § 636(b)(1)(C), this Court has conducted a de novo review of the case. Havingcarefully reviewed the entire file, the Court concludes that the Magistrate Judge's F & Rs are supported by the record and proper analysis; for the reasons set forth below, the March 4, 2013, F & Rs are ADOPTED, MID's motion to remand is GRANTED, and the case shall be remanded to the Merced County Superior Court.

II. DISCUSSION¹

A. MID's Objections

MID objects to the portions of the F & Rs that determined MID's complaint fairly anticipated state law claims for anticipatory breach and breach of the implied covenant of good faith and fair dealing. MID argues that the only claim anticipated by its complaint is one for breach of contract relevant to the payment provisions under Paragraph 3 of the 1960 Agreement.² The hypothetical state law causes of action posed by Mariposa “could only arise as a counterclaim or rejoinder by [Mariposa], premised on the affirmative defenses set up by the District's complaint for declaratory relief.” (Doc. 33, 2:17–20.) As it pertains to a claim for anticipatory breach of Paragraph 4 of the parties' 1960 Agreement, MID has not opposed any application by Mariposa to the State Water Resources Control Board. Moreover, MID contends that there is no actual repudiation of the parties' contract such that Mariposa has any anticipatory breach claim or implied covenant claim, and none of the allegations in its declaratory relief complaint can themselves give rise to such claims.

Mariposa filed a response to MID's objections, asserting that MID is incorrect in its argument that Mariposa's coercive claims for anticipatory breach and breach of the implied covenant would not arise but for MID's declaratory relief action and would only arise as counterclaims or rejoinders to MID's defenses in the declaratory relief action. Mariposa asserts that MID has made statements publicly before the Federal Energy Regulatory Commission (“FERC”) prior to filing its declaratory relief action that due to the National Wild and Scenic Rivers Act (“WSRA”) Mariposa “can exercise no more than the 5,000 [acre feet (“AF”)] it was separately allocated under the 1990 Agreement for the Saxon Creek Project, and that MID's payment obligations are capped by the cost of that product due solely to the enactment of the WSRA.” (Doc. 37, 3:21–23.) ³ Thus, the repudiation of Mariposa's water allocation rights did not arise as a result of MID's complaint, and Mariposa's claims in this regard are not simply rejoinders to MID's defenses as stated in its declaratory relief complaint.

MID's objections are not persuasive. Mariposa is correct that its hypothesized claims for anticipatory breach and breach of the implied covenant do not arise but for the filing of MID's complaint. MID's statements to FERC and to Mariposa itselfprior to the litigation can be construed as a repudiation of Mariposa's allocation rights under Paragraph 1 of the 1960 Agreement. Mariposa also argues that by entering into Paragraph 4 of the 1960 Agreement, MID impliedly agreed that it would not take a position effectively foreclosing Mariposa's right to apply for a permit from the State Water Resources Control Board (“SWRCB”) or any other regulatory agency. As demonstrated in Mariposa's opposition, the documents filed in support of Mariposa's opposition, and Mariposa's brief and materials filed in response to MID's objections, Mariposa's hypothetical state law claims were not precipitated by MID's declaratory relief complaint. Further, the Court does not construe the Magistrate Judge's discussion of the allegations in MID's complaint as a finding that Mariposa's hypothetical claims arose out of or because of the complaint, but reflect consideration of how MID's declaratory relief complaint fairly anticipated such state law claims.

B. Mariposa's Objections1. Mariposa's Hypothetical Federal Claims

Mariposa argues that it has potential federal claims against federal agencies under Section 7 of the WSRA and the National Environmental Protection Act (“NEPA”) pursuant to the Administrative Procedure Act (“APA”). The Magistrate Judge found that Mariposa's hypothetical federal claims could not confer federal-question jurisdiction:

[H]ypothetical coercive claims (1) adverse to a federal agency that is not the declaratory judgment plaintiff (MID), (2) challenging a hypothetical federal agency decision where agency proceedings have either not been initiated ( e.g., under Section 7 of the WSRA) or have not been completed ( e.g. FERC relicensing proceedings) such that they could be considered final and ripe for purposes of judicial review, and (3) that involve issues that are beyond the scope of what is fairly anticipated by the declaratory judgment complaint, do not confer federal-question jurisdiction on the Court.

(Doc. 27, 25:11-17.)

Mariposa objects to each of these findings asserting that (1) its federal claims are fairly anticipated by MID's declaratory relief complaint; (2) MID would most likely assert that it was a necessary party to any action Mariposa brought against a federal agency under the WSRA or NEPA, and, under Federal Rule of Civil Procedure 19, MID would be included as a necessary party; (3) its hypothetical APA claim under the WSRA or NEPA would be ripe under the test applied by the Ninth Circuit in San Luis & Delta–Mendota Water Authority v. Salazar, 638 F.3d 1163, 1173 (9th Cir.2011) (“San Luis ”); and (4) its hypothetical challenge to FERC's decision on MID's pending application is required to be heard in a federal court of appeals which underscores the need for federal jurisdiction over MID's state law declaratory judgment complaint.

Whether MID may be a necessary party to any future hypothetical challenge to a federal agency decision under Section 7 of the WSRA or pursuant to NEPA is irrelevant in light of the ripeness and finality issues noted by the Magistrate Judge. Mariposa asserts that its hypothetical APA claim under the WSRA or NEPA is ripe under the test applied by the Ninth Circuit in San Luis, 638 F.3d at 1173. In San Luis, the Ninth Circuit applied the ripeness test articulated by the Supreme Court in Abbott Laboratories v. Gardner, 387 U.S. 136, 149, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967), which determined ripeness based on the fitness of the issues for judicial decision and the hardship of the parties of withholding court consideration. Mariposa argues that the situation here is identical to that in San Luis because MID's declaratory judgment complaint has interfered with Mariposa's ability to utilize WSRA Section 7. Specifically, Mariposa argues that MID has articulated a concrete plan to use Mariposa's water to expand its power generation capacity and has sought intervention to terminate Mariposa's rights as a matter of federal law.

Even if the Abbott Laboratories ripeness analysis applied in San Luis applies here, the outcome of such an analysis would not favor Mariposa. In San Luis, agricultural interests receiving water from a federal/state water project challenged an Endangered Species Act (“ESA”) biological opinion issued to the water project operators. 638 F.3d at 1168. The district court found plaintiffs' challenge under ESA § 7 (the statutory provision requiring issuance of biological opinions) ripe, but dismissed a parallel claim brought under ESA § 9 (which makes it unlawful to “take” listed species without a permit) on the ground that there was no threat that § 9 would be enforced against the plaintiffs. 638 F.3d at 1168–69. The Ninth Circuit reversed as to the § 9 claim, reasoning that the “pre-enforcement” ripeness analysis should not apply. Rather, applying the Abbott Laboratories test, the Ninth Circuit concluded:

First, the challenge is fit for judicial review because further factual development would not significantly advance the Court's ability to deal with the legal issues presented.... Second, the Growers will suffer hardship if the court withholds consideration because the Service's continued power to enforce ESA § 9 imposes a significant practical harm upon the...