Ray Westall Operating, Inc. v. Richard
| Decision Date | 04 January 2021 |
| Docket Number | No. CV 20-302 KG/GJF,CV 20-302 KG/GJF |
| Parties | RAY WESTALL OPERATING, INC., DONNIE MATHEWS, JAMES R. MALONEY, RAY WESTALL, and KAREN WESTALL, Plaintiffs, v. STEPHANIE GARCIA RICHARD, individually and in her official capacity as New Mexico Commissioner of Public Lands, and AUBREY DUNN, JR., individually, Defendants. |
| Court | U.S. District Court — District of New Mexico |
Plaintiff Ray Westall Operating, Inc. (RWO), is "in the salt-water and produced water disposal business in the oil and gas industry." (Doc. 8) at 4. Plaintiffs Ray and Karen Westall are the sole shareholders of RWO. Id. In pertinent part, RWO operates disposal wells on New Mexico state trust land under the control of New Mexico State Land Office Commissioner, Defendant Stephanie Garcia Richard, and former Commissioner, Defendant Aubrey Dunn, Jr. Id. at 5. The Westalls, along with Plaintiffs James Maloney and Donnie Mathews, "own[] varying percentage operating interests" in the salt-water wells that RWO operates. Id. at 4.
Plaintiffs filed this lawsuit claiming that Commissioner Richard and former Commissioner Dunn failed to issue or renew specific easements and rights-of-way on New Mexico state trust land. Id. at 2-34. Plaintiffs allege that the Commissioners' denial of their land-use applications hindered their ability to operate their salt-water disposal wells and resulted in millions of dollars in lost revenue. Id. In their Complaint, Plaintiffs assert claims for "impairment of contracts," violations of the equal protection clause under the 14th Amendment, "condition of association and/or surrender of rights," and "retaliation." Id. at 35-45. Plaintiffs seek actual and punitive damages, and injunctive relief. Id. at 49-55.
Presently before the Court are Commissioner Richard and former Commissioner Dunn's Motions for Judgment on the Pleadings (Motions) (Docs. 21, 32). The Motions are now fully and timely briefed. See (Docs. 30, 37, Responses, and Docs. 35, 38, Replies). The Court notes jurisdiction under 28 U.S.C. § 1331, as an action arising under 42 U.S.C. § 1983. Having considered the parties' briefing, the record, and the relevant law, the Court grants in part and denies in part Commissioner Richard's Motion (Doc. 21), and grants in part and denies in part former Commissioner Dunn's Motion (Doc. 32).
Plaintiffs allege that in July 2017, Ray Westall, serving as the operator of a fresh-water well company, Loco Hills Water Solutions, LLC (Loco Hills), "developed a disagreement" with then-Commissioner Dunn. (Doc. 8) at 9. Plaintiffs assert that despite Loco Hills and Commissioner Dunn's amicable business relationship, a dispute developed regarding the "percentage of its water sales (i.e., royalties) under three [of Loco Hills'] water easements." Id. Commissioner Dunn alleged that Ray Westall, as owner of Loco Hills, owed over $1 million in unpaid royalties to the New Mexico State Land Office. Id. at 10.
As a result of the parties' disagreement and the alleged Loco Hills' royalty debt, Commissioner Dunn "stopped issuing any renewal or new easements or rights-of-way" to Ray Westall. Id. at 11. Plaintiffs allege that Commissioner Dunn effectively "blacklisted all entities affiliated with Ray Westall," including, for purposes of this lawsuit, his salt-water disposal well company, RWO. Id. Specifically, Plaintiffs assert that Commissioner Dunn, and subsequently Commissioner Richard, refused to renew four easements, and denied without explanation severalnew applications for easements and rights-of-way because of Ray Westall and Loco Hills outstanding debt. Id. at 16-23. Plaintiffs allege their inability to renew the existing easements and lease new land rights irreparably harmed RWO's business interests. Id. at 23-31. In essence, Plaintiffs rely on the lease of New Mexico state trust land to effectively operate their business, and over the last several years, they built expensive and costly infrastructure to support their business enterprise on state land. Id.
Importantly, Plaintiffs assert that they paid all legally obligated royalties to the New Mexico State Land Office and, thus, the Commissioners' claims of non-payment are erroneous. Id. at 10. In support of this assertion, RWO and Loco Hills filed suit against former Commissioner Dunn in New Mexico State District Court. Id. (). The State Court case remains pending in Lea County, but all claims asserted by RWO and Loco Hills have been dismissed. Id. The only claims remaining in the State Court lawsuit are the counterclaims asserted by the New Mexico State Land Office, claiming entitlement to the past-due royalties. Id. ().
Given this procedural posture, both Commissioner Richard and former Commissioner Dunn filed Motions in the instant case, asserting, among other defenses, qualified immunity. (Docs. 21, 32). Specifically, Commissioner Richard asserts that she is entitled to qualified immunity on Plaintiffs' claims for damages, asserted against her in her individual capacity. (Doc. 21) at 7-20; (Doc. 35) at 12. Similarly, former Commissioner Dunn claims that he is entitled to qualified immunity on all of Plaintiffs' claims. (Doc. 32) at 11-13. On August 20,2020, the Commissioners jointly filed an unopposed Motion to Stay Proceedings. (Doc. 28). The case was subsequently stayed pending this Court's resolution of the Commissioners' Motions. (Doc. 29).
Motions for judgment on the pleadings are governed by Federal Rule of Civil Procedure 12(c). Procedurally, a motion under Rule 12(c) is "treated as a motion to dismiss under Rule 12(b)(6)." Atl. Richfield Co. v. Farm Credit Bank of Wichita, 226 F.3d 1138, 1160 (10th Cir. 2000). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Emps.' Ret. Sys. of R.I. v. Williams Cos., Inc., 889 F.3d 1153, 1161 (10th Cir. 2018) (citation omitted); accord Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Free Speech v. Fed. Election Comm'n, 720 F.3d 788, 792 (10th Cir. 2013) (citation omitted).
In making this plausibility assessment, courts "accept as true 'all well-pleaded factual allegations in a complaint and view these allegations in the light most favorable to the plaintiff.'" Schrock v. Wyeth, Inc., 727 F.3d 1273, 1280 (10th Cir. 2013) (citation omitted). As a result, a court "may not dismiss on the ground that it appears unlikely the allegations can be proven." Robbins v. Oklahoma, 519 F.3d 1242, 1247 (10th Cir. 2008). "[T]he degree of specificity necessary to establish plausibility and fair notice, and therefore the need to include sufficient factual allegations, depends on context." Id. at 1248. Accordingly, a court should conduct its plausibility and sufficiency analyses on a case-by-case basis. See id. at 1248-49 ().
In evaluating a qualified immunity defense in the context of a motion to dismiss, courts "must determine whether the plaintiff pled facts indicating: (1) the defendant violated a statutory or constitutional right and (2) that right was 'clearly established' at the time of the challenged conduct." Crall v. Wilson, 769 Fed. Appx. 573, 575 (10th Cir. 2019) (quoting Ashcroft v. al-Kidd, 563 U.S. 731, 735 (2011)). Courts "may address the two prongs of the qualified immunity analysis in either order: '[I]f the plaintiff fails to establish either prong of the two-pronged qualified-immunity standard, the defendant prevails on the defense.'" Cummings v. Dean, 913 F.3d 1227, 1239 (10th Cir. 2019), cert. denied sub nom. Cummings v. Bussey, 140 S. Ct. 81 (2019) (quoting A.M. v. Holmes, 830 F.3d 1123, 1134-35 (10th Cir. 2016), cert. denied, 137 S.Ct. 2151 (2017)).
Plaintiffs assert that they "pleaded at least five (5) different claims." (Doc. 30) at 3. In liberally construing Plaintiffs' Complaint and subsequent briefing, Plaintiffs allege: (1) "impairment of contracts;" (2) "class-based" and "class-of-one" discrimination under the equal protection clause; (3) infringement on their right to association; (4) retaliation; and (5) "unconstitutional conditions." See (Doc. 8) at 34-53; (Doc. 30); (Doc. 37). Both Commissioner Richard and former Commissioner Dunn assert that they are entitled to judgment on each of Plaintiffs' claims. (Doc. 21); (Doc. 32); (Doc. 35); (Doc. 38). Accordingly, the Court will address Plaintiffs' claims in turn.
As a preliminary matter, Plaintiffs' Complaint alleges a claim for the "illegal impairments of contracts." (Doc. 8) at 44. Specifically, the Complaint asserts that Defendants "disrupted [their] reasonable expectations pertaining to [the easements] and their business and [their actions resulted in the] ... illegal impairments of contracts." Id. at 45. The Commissioners both moved for judgment in their favor on this claim, arguing that such a claim may only be premised on the State's impairment of a contract through the subsequent passage of a law or the retroactive codification of a statute. See (Doc. 32) at 10 (citing inter alia Smith v. City of Enid by and through Enid City Comm'n, 149 F.3d 1151, 1154 (10th Cir. 1998)). In response to the Commissioners' present...
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