Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-3_13-cv-08269/USCOURTS-azd-3_13-cv-08269-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1441 Petition for Removal- Injunctive/Declaratory Relief

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

MOHAVE VALLEY IRRIGATION AND )

DRAINAGE DISTRICT, )

) 

 Plaintiff, ) 

) 

vs. ) 

)

HCJM, INC., et al., )

) No. 3:13-cv-8269-HRH

 Defendants. ) (Prescott Division)

__________________________________________) 

O R D E R

Motion to Dismiss

Defendants move to dismiss plaintiff’s complaint for failure to join indispensable

parties, or, alternatively, to join indispensable parties. This motion is opposed. Oral 1 2

argument has been requested but is not deemed necessary. 

Docket No. 6. 1

Docket No. 15. 2

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Case 3:13-cv-08269-HRH Document 17 Filed 03/13/14 Page 1 of 13
Background

Plaintiff is the Mohave Valley Irrigation and Drainage District. Defendants are

HCJM, Inc.; El Rio Recreational, LLC; and El Rio Holdings, LLC. 

“As a result of the works accomplished under the federal reclamation laws,

including the Boulder Canyon Project Act..., a system was created to tame, capture, store

and control the waters of the Colorado River....” “The Project Act recognizes water rights 3

perfected under state law as of the date of the Project Act.” “Colorado River waters 4

include water from the mainstream of the Colorado River, its tributaries, surface flows,

subsurface flows, and waters pumped from wells that are recharged orreplenished by the

waters of the Colorado River.” “The Project Act mandates that Colorado River water be 5

available for consumptive use in Arizona only if a contract has been made by, through or

on behalf of the Secretary of the Interior ... for that use.” 

6

Plaintiff alleges that it has a contract (the MVIDD Contract) with the Secretary of

Interior “for the delivery of Colorado River waters....” “The MVIDD Contract presently 7

allocates 41,000 acre feet of Colorado River waters annually from the Arizona apportionComplaint at 2, ¶ 6, attached to Notice of Removal, Docket No. 1. 3

Id. at ¶ 7. 4

Id. at ¶ 9. 5

Id. at ¶ 11. 6

Id. at 3, ¶ 12. 7

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Case 3:13-cv-08269-HRH Document 17 Filed 03/13/14 Page 2 of 13
ment to [plaintiff] for use within [plaintiff’s] service area....” Plaintiff’s allocation includes 8

the water used by holders of present perfected rights (PPRs). Mohave Valley Irrigation &

Drainage Dist. v. Norton, 244 F.3d 1164, 1165-66 (9th Cir. 2001). If the holders of PPRs do

not use their water, the water “revert[s] to [plaintiff] for allocation as 4th priority water.”9

Plaintiff alleges that defendants own and/or operate the El Rio Golf Course, which

is located within Section 11 of Mohave County, which is within plaintiff’s service area.10

Plaintiff alleges that the El Rio Golf Course diverted 561 acre feet of Colorado River water

in 2009, 542 acre feet in 2010, 340 acre feet in 2011, 634 acre feet in 2012, and 334 acre feet

from January 1, 2013 through June 30, 2013. 

11

Plaintiff alleges that “[w]ithin Section 11, Colorado River waters may only be

diverted, withdrawn or otherwise used pursuant to a subcontract with [plaintiff], pursuant

to the MVIDD Contract with the Secretary, with the possible exception relating to present

perfected rights[.]” Plaintiff alleges that defendants do not have a “contract with 12

Id. at ¶ 14 (footnotes omitted). 8

Id. at 5, ¶ 32. 9

Id. at 4-6, ¶¶ 19-23 & 34-35. 10

Id. at 6-7, ¶ 39. 11

Id. at 4,, ¶ 24. 12

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Case 3:13-cv-08269-HRH Document 17 Filed 03/13/14 Page 3 of 13
[plaintiff] or the Secretary for use of Colorado River water on or within the El Rio Golf

Course.” 

13

Plaintiff alleges that “[t]he only present perfected rights applicable to Section 11 are

those referred to as the Hurschler PPRs[.]” Plaintiff further alleges that “[a] contract 14

providing for satisfaction of the Hurschler PPRs was entered into on March 20, 1984 by the

Hurschlers with, or on behalf of, the Secretary ... (‘the Hurschler Contract’).” “The 15

Hurschler Contract is currently held by First American Title Insurance Agency of Mohave,

Inc. as Trustee of Trusts 4895 and 9177.” Plaintiff alleges that “[n]o water has been 16

ordered or reported as used under the Hurschler Contract” and that “[w]atering a golf

course is not an accepted or permitted use of Colorado River water under the Hurschler

PPRs.” Thus, plaintiff alleges that the Colorado River water that defendants have 17

diverted to use at the El Rio Golf Course has not been “properly consumed or otherwise

used under a present perfected right, including the Hurschler PPRs.”18

Id. at 5, ¶ 33. 13

Id. at 4-5, ¶ 26. 14

Id. at 5, ¶ 27. 15

Id. at ¶ 28. 16

Id. at ¶¶ 30-31. 17

Id. at 7, ¶ 40. 18

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Case 3:13-cv-08269-HRH Document 17 Filed 03/13/14 Page 4 of 13
JohnHoover, “the controlling manager of [d]efendants El Rio Recreational, LLCand

El Rio Holdings, LLC”, avers that the Hurschler Contract was “assigned ... to the El Rio

[d]efendants’ immediate predecessors-in-interest when those predecessors purchased the

associated real estate in two transactions in 2000 and 2006.” Hoover further avers that 19

“[t]hose predecessors-in-interest are related and commonly owned with the El Rio

[d]efendants, and are managed under my common control.” Hoover avers that “[i]n or 20

about 2000 and 2006, I caused [d]efendants’ immediate predecessors-in-interest to assign

the land and associated PPRs to First American Title Company, as trustee of two trusts,

Nos. 4895 and 9177, which were established to hold the land and water rights now in

question....” Hoover avers that “[t]he assignment of the [Hurschler] Contract was 21

approved by the Department of the Interior.” And, Hoover avers that “[d]efendant 22

HCJM, Inc. subsequently purchased a partial tenancy-in-common interest in a portion of

the property at issue. No assignment of water rights was included in that purchase.” 

23

Affidavit of John Hoover at 2, ¶¶ 2 & 4, appended to Defendants’ Motion to 19

Dismiss [etc.], Docket No. 6. 

Id. at ¶ 4. 20

Id. at ¶ 5. 21

Id. at ¶ 6. 22

Id. at ¶ 7. 23

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Case 3:13-cv-08269-HRH Document 17 Filed 03/13/14 Page 5 of 13
On October 8, 2013, plaintiff commenced this action in state court. In its complaint,

plaintiff asserts claims for misappropriation/conversion and unjust enrichment/quantum

meruit. Plaintiff alleges that defendants owe it $46,356.00 for the water they have diverted

from 2009 through June 30, 2013. Plaintiff also seeks to enjoin defendants from diverting

24

Colorado River water for use on the El Rio Golf Course, “except that portion of the Golf

Course lying within the Southwest Quarter of Section 11[.]”25

On November 13, 2013,defendants removedthe matterto this court, alleging federal

question jurisdiction. 

On November 20, 2013, defendants filed the instant motion to dismiss, in which they

argue that the Secretary of the Interior and the First American Title Company, as trustee

for the two Trusts, are indispensable parties. 

On December 2, 2013, the parties filed a stipulation for an extension of time for

plaintiff to respond to the motion to dismiss and the notice of removal. In the stipulation, 26

the parties “request[ed] that the [c]ourt grant an extension of sixty (60) days from

December 4, 2013 within which the [p]laintiff will file an amended complaint adding

certain federal officials and possibly other parties as defendants or real parties in interest

Complaint at 10, ¶ 67, attached to Notice of Removal, Docket No. 1. 24

Id, at 12-13, ¶¶ 80 & 85. 25

Docket No. 9. 26

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Case 3:13-cv-08269-HRH Document 17 Filed 03/13/14 Page 6 of 13
and addressing issues raised by [d]efendants’ Motion to Dismiss and Notice of Removal.”27

The stipulation provided that 

[i]t is the intent of counsel for the [p]laintiff and [d]efendants

to consult with each other and relevant federal officials during

this period in order to clarify the federal issues that this

controversy presents and to clarify complex factual issues in

this controversy concerning land ownership. It is the intent of

counsel that the [c]ourt be presented with a clear and concise

articulation of the issues and facts relevant to the controversy

in an amended complaint that will likewise bring before the

[c]ourt the necessary parties for resolution of the matter.[ ] 28

On February 7, 2014, plaintiff, rather than filing an amended complaint, filed a

response to defendants’ motion to dismiss. Defendants have filed a reply, and 29 30

defendants’ motion to dismiss is now ready for disposition. 

Discussion

Defendants move to dismiss plaintiff’s complaint pursuant to Rule 12(b)(7), Federal

Rules of Civil Procedure. Rule 12(b)(7) provides that a party may move to dismiss for

“failure to join a party under Rule 19.” Rule 19 governs the joinder of required parties.

31

Id. at 1-2. 27

Id. at 2. 28

Docket No. 15. 29

Docket No. 16. 30

The current version of Rule 19 uses the term “required” rather than “indispens31

able.” 

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Case 3:13-cv-08269-HRH Document 17 Filed 03/13/14 Page 7 of 13
As an initial matter, in their reply brief, defendants argue that plaintiff stipulated

that the Secretary and the Trusts were required parties and thus plaintiff should either join

them or this action should be dismissed. The court “has the discretion to consider an

argument first raised n a reply brief.” Lane v. Dep’t of Interior, 523 F.3d 1128, 1140 (9th Cir.

2008). The court will consider this argument because the parties entered into the

stipulation in question after defendants filed their motion to dismiss. Defendants could not

have raised this argument in their opening brief. 

Stipulations freely and voluntarily entered into arebinding. UnitedStatesv.Molina,

596 F.3d 1166, 1169 (9th Cir. 2010). “‘[S]tipulations serve both judicial economy and the

convenience of the parties, [and] courts will enforce them absent indications of involuntary

or uninformed consent.’” Id. (quoting CDN Inc. v. Kapes, 197 F.3d 1256, 1258 (9th Cir.

1999)). 

Defendants argue that in the parties’ December 2, 2013 stipulation, plaintiff agreed

that the Secretary and the Trusts were required parties. Defendants emphasize that the

stipulation provided that “[p]laintiff will file an amended complaint adding certain federal

officials and possibly other parties as defendants or real parties in interest” and that it was

“anticipat[ed] that the amended complaint w[ould] render ... responses” to the instant

motion to dismiss “unnecessary.” Thus, defendants argue that plaintiff’s complaint 32

Stipulation at 1-2, Docket No. 9. 32

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Case 3:13-cv-08269-HRH Document 17 Filed 03/13/14 Page 8 of 13
should now be dismissed because plaintiff did not file an amended complaint as it had

agreed to do. Alternatively, defendants argue that the court should not consider plaintiff’s

response to the instant motion because plaintiff either waived its right to argue that the

Secretary and the Trusts are not required parties or plaintiff should be estopped from

making such an argument. 

In the stipulation, plaintiff did not agree to file an amended complaint adding the

Secretary and the Trusts as defendants. Rather, the stipulation expressed plaintiff’s and

defendants’ then present intent to consult with federal officials to clarify issues and to

present the court with “a clear and concise articulation of the issues and facts relevant to

this controversy in an amended complaint that will likewise bring before the [c]ourt the

necessary parties for resolution of the matter.” In short, the stipulation provided that 33

plaintiff intended to file anamendedcomplaint, not that plaintiff had unequivocally agreed

to file an amended complaint. Plaintiff was not bound by the stipulation to file an

amended complaint. Because the stipulation was not a binding agreement to file an

amended complaint, plaintiff has not waived its right to argue that the Secretary and the

Trusts are not required parties nor is plaintiff estopped from making such an argument.

Turning then to the merits of defendants’ motion to dismiss, the court must “[f]irst,

guided by the provisions of Rule 19(a), ... decide whether it is ‘desirable in the interests of

Id. at 2. 33

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Case 3:13-cv-08269-HRH Document 17 Filed 03/13/14 Page 9 of 13
just adjudication’ to join” the Secretary of Interior and the two subject Trusts. 

Paiute-Shoshone Indians of Bishop Community of Bishop Colony, Cal. v. City of Los

Angeles, 637 F.3d 993, 997 (9th Cir. 2011) (quoting EEOC v. Peabody W. Coal Co., 400 F.3d

774, 779 (9th Cir. 2005)). “If so, [the court] must determine next whether [it] feasibly could

order that” the Secretary and the two Trusts be joined. Id. “Finally, if [the] court cannot

so order, then, guided by the provisions of Rule 19(b), [it] must decide whether ‘in equity

and good conscience’ the case may proceed in the absence of the” Secretary and the Trusts. 

Id. (quoting Peabody, 400 F.3d at 779-80). 

Rule 19(a) “provide[s] for a two-part analysis.” Id. The court “first examine[s]

whether [it] could award complete relief to the parties present without joining the

non-party.” Id. “Alternatively, [the court] ask[s] whether the non-party has a ‘legally

protected interest’ in this action that would be ‘impaired or impeded’ by adjudicating the

case without it.” Id. (quoting Yellowstone County v. Pease, 96 F.3d 1169, 1172-73 (9th Cir.

1996)). “If [the court] answer[s] either of those questions in the affirmative, then the [nonparty in question] is a ‘required party’ under Rule 19(a).” Id. (quoting Pease, 96 F.3d at

1172-73). 

Defendants argue that complete relief could not be awarded if the Secretary and the

Trusts are not joined. The court’s inquiry here is “concerned only with ‘relief as between

the persons already parties, not as between a party and the absent person whose joinder

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Case 3:13-cv-08269-HRH Document 17 Filed 03/13/14 Page 10 of 13
is sought.’” Eldredge v. Carpenters 46 N. Calif. Counties Joint Apprenticeship and

Training Comm., 662 F.2d 534, 537 (9th Cir. 1981) (quoting 3A Moore’s Federal Practice P

19.07-1[1], at 19-128 (2d ed. 1980)).

Defendants contend that all parties to the two contracts need to be part of this case

because the present action will not only determine their right to continued use of the

Hurschler PPRsunder the Hurschler Contract, but will also determine the amount of water

available under plaintiff’s contract with the Secretary. Thus, defendants argue that joinder

of the Secretary and the Trusts is required so that all the parties to the contracts at issue are

present in the case. 

There is no blanket requirement that all parties to a contract must be present in order

for a court to award complete relief, which is basically what defendants are arguing here. 

The court could award plaintiff all the relief it is seeking without the Trusts orthe Secretary

being parties. Awarding plaintiff the relief it seeks would require making a determination

that defendants cannot divert water for the El Rio Golf Course under the Hurschler

Contract. If the court makes that determination, it could require defendants to pay for the

Colorado River water they have used since 2009 and it could enjoin defendants from

diverting Colorado River water under the Hurschler Contract, without the Trusts or the

Secretary being parties. 

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Case 3:13-cv-08269-HRH Document 17 Filed 03/13/14 Page 11 of 13
Defendants also argue that the Secretary and the Trusts have legally protected

interests in this action which would be impaired or impeded if this case were adjudicated

without them. A legally protected interest may include rights created through being “a

party to a relevant commercial agreement, lease, trust, or treaty with one of the parties to

the lawsuit.” Pease, 96 F.3d at 1173. Defendants argue that the Secretary and the Trusts

have legally protected interests in the action because they are parties to the Colorado River

water contracts that are at issue in this litigation. Defendants contend that plaintiff’s claims

for relief will require interpretation of the Hurschler Contract as well as the MVIDD

Contract and that the Secretary’s and the Trusts’ interests could be impaired or impeded

by the interpretation of these contracts. Defendants also point out that the Secretary must

approve any modifications to either contract. 

The Secretary does not have a legally protected interest that could be impeded or

impaired by adjudication of this case. If this case were about diverting more water from

the Colorado River than is currently allowed, then the Secretary’s interests might be

impacted. But, that is not what this case is about. It is about whether defendants can divert

water under the Hurschler PPRs or whether it must enter into a contract with plaintiff in

order to continue diverting Colorado River water for the El Rio Golf Course. Adjudication

of plaintiff’s claims will not affect the Secretary’s duties and obligations under either the

MVIDD Contract or the Hurschler Contract. The Secretary is not a required party.

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Case 3:13-cv-08269-HRH Document 17 Filed 03/13/14 Page 12 of 13
The Trusts, however, do have legally protected interests that might be impeded or

impaired. The Trusts, as parties to the Hurschler Contract, have a legally protected interest

in the use of Colorado River water pursuant to that contract. Plaintiff’s claims are based

on the contention that defendants are not entitled to use water under the Hurschler

Contract to water a golf course. If plaintiff’s contention is correct, the Trusts’ right to use

water under the Hurschler Contract would be impaired orimpeded. Because adjudication

of plaintiff’s claims could affect the Trusts’ right to use water under the Hurschler Contract,

the Trusts are required parties. 

Neither party has argued that it would not be feasible to join the Trusts. Thus,

plaintiff must join the Trusts as defendants in this action. 

Conclusion

Defendants’ motion to dismiss is denied on the condition that plaintiff file an 34

amended complaint naming the Trusts as defendants. If plaintiff does not file an amended

complaint naming the Trusts as defendants by March 27, 2014, plaintiff’s complaint will be

dismissed. 

DATED at Anchorage, Alaska, this 13th day of March, 2014. 

/s/ H. Russel Holland 

United States District Judge

Docket No. 6. 34

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