Navajo Agric. Prods. Indus. v. United States

• Decision Date: 13 June 2022
• Docket Number: Civ. 1:20-cv-01183 MIS/JFR
• Parties: NAVAJO AGRICULTURAL PRODUCTS INDUSTRY, Plaintiff, v. UNITED STATES OF AMERICA, Defendant.
• Court: U.S. District Court — District of New Mexico

NAVAJO AGRICULTURAL PRODUCTS INDUSTRY, Plaintiff,
v.
UNITED STATES OF AMERICA, Defendant.

Civ. No. 1:20-cv-01183 MIS/JFR

United States District Court, D. New Mexico

June 13, 2022

MEMORANDUM OPINION AND ORDER

MARGARET STRICKLAND UNITED STATES DISTRICT JUDGE

THIS MATTER is before the Court on Defendant's Motion to Dismiss. ECF No. 4. Plaintiff responded, and Defendant replied. ECF Nos. 8, 9. Having considered the parties' submissions, the record, and the relevant law, the Court will grant the Motion in part and deny it in part as explained below.

BACKGROUND

Plaintiff is an enterprise of the Navajo Nation that was created to operate a commercial farm for the benefits of the tribe. ECF No. 1 at 1, ¶ 1. Congress authorized the Navajo Indian Irrigation Project (“Project”), a large irrigation project south of Farmington, New Mexico. Id. at 3-4, ¶ 12. Defendant completely owns the irrigation system and siphons of the Project, including a section of the system called the Kutz Siphon. Id. at 4, ¶ 17. Plaintiff “was not permitted to do any maintenance on the Kutz Siphon” without the direct permission of Defendant. Id. On May 13, 2016, a pipe in a section of the Kutz Siphon ruptured, blowing concrete 100 to 200 feet away, damaging an overhead powerline, and spewing water rapidly into a nearby wash. Id. at 5, ¶¶ 21, 23, 24. Plaintiff was able to shut off the water to stop the waste, but it and its farmers had no

1

way to irrigate their newly planted crop. Id. at ¶¶ 25, 26. Repairs were eventually completed on the Kutz Siphon in mid-June, restoring service after about a month with no water available. Id. at ¶ 27.

Since Defendant owns and maintains the Kutz Siphon, Plaintiff alleges that it owed Plaintiff a duty to maintain the Kutz Siphon with reasonable care. Id. at ¶ 29. Plaintiff alleges that Defendant was aware of the old and failing nature of the Kutz Siphon for years and that Defendant admitted it was negligent in a report issued in August 2017. Id. at 4, ¶ 18; 6, ¶ 30. Due to Defendant's negligence, Plaintiff claims it sustained approximately $8 million in damages. Id. at 7, ¶ 42.

Plaintiff filed an administrative claim with the appropriate federal agency on February 22, 2019. Id. at 3, ¶ 8. The agency denied the claim on May 14, 2020. Id. at ¶ 9. Plaintiff filed the Complaint in this case under the Federal Tort Claims Act (“FTCA”) on November 13, 2020. See id. at 1. The Complaint alleges three Counts: (1) negligence; (2) negligent hiring, training, supervision, and retention; and (3) vicarious liability, respondeat superior, ostensible agency and/or agency. Id. at 7-10. Defendant moves to dismiss the Complaint for lack of subject matter jurisdiction and failure to state a claim. ECF No. 4.

LEGAL STANDARD

1. Federal Rule of Civil Procedure 12(b)(1)

“Federal courts are courts of limited jurisdiction; they are empowered to hear only those cases authorized and defined in the Constitution which have been entrusted to them under a jurisdictional grant by Congress.” Henry v. Off. of Thrift Supervision, 43 F.3d 507, 511 (10th Cir. 1994). “[T]he party invoking federal jurisdiction, ” generally the plaintiff,

2

“bears the burden of establishing its existence.” Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 104 (1998). Rule 12(b)(1) allows defendants to raise the defense of the court's “lack of subject-matter jurisdiction” by motion. Fed.R.Civ.P. 12(b)(1).

Rule 12(b)(1) motions to dismiss for lack of subject matter jurisdiction “generally take one of two forms: (1) a facial attack on the sufficiency of the complaint's allegations as to subject matter jurisdiction; or (2) a challenge to the actual facts upon which subject matter jurisdiction is based.” Ruiz v. McDonnell, 299 F .3d 1173, 1180 (10th Cir. 2002). A facial attack “questions the sufficiency of the complaint, ” and when “reviewing a facial attack . . . a district court must accept the allegations in the complaint as true.” Holt v. United States, 46 F.3d 1000, 1002 (10th Cir. 1995) abrogated on other grounds by Cent. Green Co. v. United States, 531 U.S. 425, 437 (2001).

2. Federal Rule of Civil Procedure 12(b)(6)

Pursuant to Federal Rule of Civil Procedure 12(b)(6), a party may move for dismissal if the complaint fails “to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). To survive a Rule 12(b)(6) motion, the complaint “must contain sufficient factual matter, accepted as true, ‘to state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). This pleading standard does not impose a probability requirement, but it demands “more than a sheer possibility that a defendant has acted unlawfully.” Id. Mere “labels and conclusions” or “a formulaic recitation of the elements of a cause of action” will not suffice. Twombly, 550 U.S. at 555. Although the court must accept the truth of all properly alleged facts and draw all reasonable inferences in the plaintiff's favor, the

3

plaintiff still “must nudge the claim across the line from conceivable or speculative to plausible.” Brooks v. Mentor Worldwide LLC, 985 F.3d 1272, 1281 (10th Cir. 2021).

DISCUSSION

The FTCA waives the sovereign immunity of the United States and allows it to be sued for certain torts. 28 U.S.C. § 2674. However, the statute contains limitations on the government's waiver of immunity. For example, there is a statute of limitations period, a notice requirement, a discretionary function exception, and the claim must arise under state tort law. See 28 U.S.C. § 2401(b) (statute of limitations); 28 U.S.C. § 2675(a) (notice requirement); 28 U.S.C. § 2680(a) (discretionary function exception); 28 U.S.C. § 1346(b) (limited to state tort law). If any of these requirements are not met, the government's waiver of immunity does not apply, and district courts have no jurisdiction. See, e.g., Franklin Sav. Corp. v. United States, 180 F.3d 1124, 1130 (10th Cir. 1999). Defendant moves to dismiss for lack of jurisdiction under Rule 12(b)(1) for each of these reasons^[1]and moves to dismiss Count III for failure to state a claim under Rule 12(b)(6).

1. The FTCA Statute of Limitations

Defendant argues that Plaintiff's claims must be dismissed for failure to comply with the FTCA statute of limitations, which is two years. ECF No. 4 at 8-10. The Kutz Siphon failed on May 13, 2016, and Plaintiff did not file its administrative claim until March 2019. Id. at 8. Defendant asserts that the injury-occurrence rule applies in this

4

case; and therefore, Plaintiff's claims are time barred. Id. at 8-10. Plaintiff responds by arguing that the discovery rule applies and asserting that its claims were timely because it did not learn of the negligence until August 2017. ECF No. 8 at 2-5.

“In the Tenth Circuit, the general rule for accrual of an FTCA claim outside the medical malpractice context is the ‘injury-occurrence rule.'” Cannon v. United States, 338 F.3d 1183, 1190 (10th Cir. 2003). However, “the discovery rule applies only in the exceptional case where a reasonably diligent plaintiff could not immediately know of the injury and its cause.” Id. (cleaned up). Here, Plaintiff alleges that “[t]he irrigation system and siphons are completely owned by the Defendant, and [Plaintiff] was not permitted to do any maintenance on the Kutz Siphon other than at the direct orders of [Defendant].” ECF No. 1 at 4, ¶ 17. At the motion to dismiss stage, the Court accepts this alleged fact as true.^[2] Plaintiff has alleged that it had no access to the Kutz Siphon. Thus, the Court finds that a “reasonably diligent plaintiff” could not immediately have known of the cause of the injury in this case, and therefore, the discovery rule applies. See Cannon, 338 F.3d at 1190. As such, the statute of limitations was tolled until Plaintiff discovered the cause of the injury in August 2017, and it follows that Plaintiff's administrative claim was timely filed in March 2019.

2. Duty to Maintain the Kutz Siphon

Defendant argues that Plaintiff's negligence claim cannot survive because Defendant owed Plaintiff no duty to provide water under state tort law; its only duty to

5

provide water stemmed from either a federal statute or a contract resulting from the statute. ECF No. 4 at 10-14. Plaintiff counters that its negligence claim is based on Defendant's duty to properly maintain the Kutz Siphon, not its duty to provide water in the first instance. ECF No. 8 at 6-11.^[3]

“The broad and just purpose which the [FTCA] was designed to effect was to compensate the victims of negligence in the conduct of governmental activities in circumstances like unto those in which a private person would be liable.” Indian Towing Co. v. United States, 350 U.S. 61, 68 (1955). “[T]he FTCA's waiver of sovereign immunity is limited to conduct for which a private person could be held liable under state tort law.”^[4]United States v. Agronics Inc., 164 F.3d 1343, 1346 (10th Cir. 1999) (citing 28 U.S.C. § 1346(b)); see also Hoefler v. United States, 121 Fed.Appx. 464, 466 (3d Cir. 2005) (holding that the “private analog” in state tort law should be applied in FTCA cases).

As a general matter, for actions in negligence, New Mexico courts follow the “duty framework” of the Restatement (Third) of Torts and focus on policy considerations when

6

determining whether a duty exists.^[5] Lopez v. Devon Energy Prod. Co., L.P., 468 P.3d 887, 892-93 (N.M. Ct. App. 2020). Moreover, analogous with the facts of this case, New Mexico recognizes a private right of action for negligence in the construction and maintenance of dams, which control the flow of water and can cause serious damage to property, including crops, if not built and maintained properly. Little v. Price, 397 P.2d 15 (N.M. 1964). In Little, the state supreme court upheld the trial court's finding that the...