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WO NOT FOR PUBLICATION 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

City of Kingman, 

Plaintiff, 

v. 

Kingman Airport Authority Incorporated, 

Defendant. 

No. CV-17-08272-PCT-JJT

ORDER 

 At issue is the Plaintiff City of Kingman’s (“Kingman”) Motion to Remand (Doc. 

6, Mot.), to which Defendant Kingman Airport Authority (“KAA”) filed a Response 

(Doc. 13, Resp.), and Kingman filed a Reply (Doc. 17, Reply). In this Order, the Court 

will also address Kingman’s “Notice of Application Requiring Immediate Attention by 

the Court.” (Doc. 20.) The Court finds these matters suitable for resolution without oral 

argument. See LRCiv 7.2(f). 

I. BACKGROUND 

In the Complaint (Doc. 1-6 at 2-4, Compl.) and its attachments, Kingman alleges 

that it has leased the Kingman Airport to KAA since 1992, and the 1992 Lease 

Agreement together with Amendments made in 2003 and 2007 (collectively, “Lease”) 

have a term that expires in 2028. The Lease sets forth the conditions under which 

Kingman can terminate it, including a failure by KAA “to perform, keep and observe any 

and all” of the Lease terms, providing Kingman gives notice of any default or breach and 

a 90-day opportunity to cure to KAA. (Doc. 1-1, Lease ¶ 20.) The Lease also provides for 
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the compensation to be paid in the event the Airport is “condemned, taken or acquired by 

a body having superior power of eminent domain.” (Lease ¶ 17.) 

 Kingman became dissatisfied with KAA’s operation of the Airport and, on 

November 7, 2017, the City Council passed Resolution 5113, declaring that KAA was 

failing to perform under the Lease, mismanaging the Airport, “committing waste,” and 

devaluing the City’s assets. (Doc. 1-8 at 169, Resolution 5113.) Resolution 5113 thus 

authorized Kingman to acquire the Airport pursuant to the provisions of A.R.S. § 12-

1111, et seq.—Arizona’s condemnation statutes. On November 14, 2017, the City sent a 

letter to KAA offering to acquire the Lease and KAA’s assets for zero dollars plus 

assumption of KAA’s obligations and giving KAA 20 days in which to respond, under 

threat of a condemnation action. (Doc. 1-2.) 

 On December 1, 2017, KAA filed a Complaint in this Court—designated Case No. 

CV-17-08260-PCT-JJT—alleging that, as a result of Resolution 5113 authorizing 

Kingman’s condemnation of KAA’s leasehold, KAA may not seek damages for what 

otherwise would be Kingman’s breach of the Lease through its failure to give KAA 

notice of any default or breach and a 90-day opportunity to cure, and through its 

termination of the Lease in the absence of any other required conditions. KAA also 

contended that Arizona law does not support Kingman’s position that it is “a body having 

superior power of eminent domain” allowing it to condemn the leasehold and triggering 

the compensation terms of paragraph 17 of the Lease. Furthermore, KAA alleged that 

Kingman violated Arizona’s condemnation statute, A.R.S. § 12-1112, because the land 

was already appropriated to some public use and the public use to which it is to be 

applied is not a more necessary public use. Based on these allegations, KAA raised two 

claims against Kingman: (1) a claim under 42 U.S.C. § 1983 for violation of Article 1, 

Section 10, Clause 1 of the United States Constitution (the “Contracts Clause”); and (2) a 

claim under Article II, Section 25 of the Arizona Constitution (the “State Contracts 

Clause”). KAA sought preliminary and permanent injunctive relief precluding Kingman 
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from enforcing Resolution 5113 or otherwise condemning KAA’s leasehold interest in 

the Kingman Airport and an award of attorney’s fees. 

 On December 5, 2017, Kingman filed the present case: a Complaint in Eminent 

Domain in Mohave County Superior Court seeking to condemn KAA’s leasehold interest 

under Arizona’s eminent domain laws. (Compl. at 1-2.) KAA removed the case to this 

Court, contending that its Contracts Clause claim against Kingman’s condemnation 

action gives the Court federal question jurisdiction. (Doc. 1, Notice of Removal at 1-2.) 

Kingman has moved to remand this case to state court. (Doc. 6.) Kingman has also filed a 

“Notice of Application Requiring Immediate Attention by the Court,” requesting that this 

Court immediately address Kingman’s underlying application for immediate possession 

of the KAA leasehold. (Doc. 20.) 

 The Court has now dismissed KAA’s earlier-filed action against Kingman for lack 

of subject matter jurisdiction (Case No. CV-17-08260-PCT-JJT) and will now resolve 

Kingman’s Motion to Remand (Doc. 6) and “Notice of Application Requiring Immediate 

Attention by the Court” (Doc. 20) filed in this action. 

II. LEGAL STANDARD 

Federal courts may exercise removal jurisdiction over a case only if subject matter 

jurisdiction exists. 28 U.S.C. § 1441(a); Valdez v. Allstate Ins. Co., 372 F.3d 1115, 1116 

(9th Cir. 2004). The removing party is required to provide a signed notice of removal that 

contains a short and plain statement of the grounds for removal. 28 U.S.C. § 1446(a). The 

removing party carries the burden of establishing subject matter jurisdiction, and “[a]ll 

doubts about federal jurisdiction should be resolved in favor of remand to state court.” In 

re Prempro Prod. Liab. Litig., 591 F.3d 613, 620 (8th Cir. 2010); see 28 U.S.C. 

§ 1447(c). A plaintiff may seek to have a case remanded to the state court from which it 

was removed if the district court lacks jurisdiction or if there is a defect in the removal 

procedure. 28 U.S.C. § 1447(c). The district court must remand the case if it appears 

before final judgment that the court lacks subject matter jurisdiction. Id. 
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III. ANALYSIS 

 A. Motion to Remand 

 KAA contends that this Court has subject matter jurisdiction over Kingman’s state 

court condemnation action because that action necessarily includes a determination 

whether Resolution 5113 and Kingman’s associated actions to condemn KAA’s leasehold 

interest contravene the Contracts Clause of the United States Constitution, a federal 

question providing the Court with jurisdiction.1 2

 (Notice of Removal at 1-2; Resp. at 4.) 

Presuming that, under Gunn v. Minton, 568 U.S. 251, 258 (2013), KAA’s Contracts 

Clause claim is necessarily implicated in Kingman’s state court condemnation action, the 

Court must conclude that KAA cannot state a Contracts Clause claim in this circumstance 

under the operative case law. 

 The Contracts Clause provides, “No State shall . . . pass any . . . Law impairing the 

Obligation of Contracts.” U.S. Const. art. I, § 10, cl. 1. On a number of occasions, the 

Supreme Court has taken to laying out the scope of protection the Contracts Clause 

provides. In West River Bridge Co. v. Dix, 47 U.S. 507 (1848), on which Kingman relies 

in opposing KAA’s assertion of federal question jurisdiction (Reply at 2-3), the State of 

Vermont granted a charter to a private corporation to operate a toll bridge across a river. 

47 U.S. at 530. Some years later, Vermont exercised its eminent domain authority to 

extinguish the corporation’s franchise, assess just compensation, and convert the bridge 

to a free public highway. Id. at 531. In evaluating the corporation’s Contracts Clause 

claim against Vermont, the Supreme Court concluded that the Constitution did not 

prevent Vermont from exercising its power of eminent domain, even if the property taken 

from the corporation was previously conveyed by Vermont to the corporation. Id. at 

 

1

 The Court addressed the same question in KAA’s earlier-filed lawsuit, Case No. 

CV-17-08260-PCT-JJT, but, in the interest of completeness, the Court will repeat its analysis in large part here. 

2

 In its Response, KAA also argues that only the Federal Aviation Administration determines who may operate an airport, which also gives this Court federal question jurisdiction. However, KAA did not allege this as a jurisdictional basis in its Notice of 

Removal. 
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532-33. The resulting doctrine, labelled the reserved powers doctrine, describes the 

proposition that a state “may not enter a contract that ‘surrenders an essential attribute of 

its sovereignty,’” including its power of eminent domain. Matsuda v. City & Cty. of 

Honolulu, 512 F.3d 1148, 1153 (9th Cir. 2008) (quoting U.S. Trust Co. v. New Jersey, 

431 U.S. 1, 23 (1977)). Such a contract is void ab initio and, as a consequence, “the 

Contracts Clause may not be used to compel a state to adhere” to the contract. Id. at 

1152-53. “As the Court explained, all contracts, whether they are between a state and a 

private actor or [between] private actors alone, are made subject to the understanding that 

the state may one day take the subject property for public use, provided that just 

compensation is paid.” Id. at 1153. Kingman argues that this holding is dispositive of 

KAA’s Contracts Clause claim. 

 KAA argues that an important distinction exists between West River Bridge and 

this case: here, the contract is between two state actors whose eminent domain powers are 

set forth in Arizona statutes. (See Resp. at 4.) As a result, the Lease was not a surrender 

of eminent domain power and the reserved powers doctrine does not apply. KAA thus 

contends that the heightened scrutiny test announced by the Supreme Court in U.S. Trust, 

431 U.S. at 20-21, applies to determine whether a state (or local) law violates the 

Contracts Clause, namely, “(1) whether the state [or local] law has, in fact, operated as a 

substantial impairment of the contractual relationship; (2) whether the state [or local] law 

is justified by a significant and legitimate public purpose; and (3) whether the impairment 

resulting from the law was both reasonable and necessary to fulfill such public purpose.” 

Matsuda, 512 F.3d at 1152 (internal quotations and citations omitted). 

 Essential to the application of the reserved powers doctrine is a showing that the 

contract in question—the Lease—prevents the state actor’s exercise of the power of 

eminent domain, such that the state actor did not have the capacity to enter into the 

contract to begin with. Matsuda, 512 F.3d at 1154. The question before the Court is 

whether one state actor surrenders its eminent domain power by entering into a Lease 

with another state actor, where the state’s statutes define the actors’ eminent domain 
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powers and the Lease itself provides the terms of compensation when a state actor 

“having superior power of eminent domain” condemns the leasehold interest (Lease 

¶ 17). Each party to the Lease, as a state actor, has the sovereign power the West River 

Bridge Court was concerned about, that is, the “right and the duty of guarding its own 

existence, and of protecting and promoting the interests and welfare of the community at 

large.” 47 U.S. at 531. The Supreme Court’s conclusion that “all private rights . . . are . . . 

held in subordination to . . . and must yield in every instance” to a state’s eminent domain 

power, id. at 532 (emphasis added), is not implicated in this case where private rights are 

not at issue. Put another way, the question is this: Does a state relinquish its “power of 

self-government and self-preservation,” id., when one of its subdivisions leases property 

to another? 

 The parties do not cite a case resolved by the reserved powers doctrine in which 

the underlying contract was entered into between two state actors, nor has the Court 

uncovered one. But see Municipality of Anchorage v. Alaska, 393 F. Supp. 2d 958 (D. 

Alaska 2005) (recognizing the application of the Contracts Clause to contracts entered 

into between two state actors but analyzing the state’s actions not under the reserved 

powers doctrine but instead under the three-part heightened scrutiny test of U.S. Trust). In 

the more straightforward circumstance presented in West River Bridge, the state entered 

into a contract to give a private corporation the exclusive right to erect a bridge and take 

tolls, and the Supreme Court found the contract to be void as a surrender of the state’s 

eminent domain power. The Ninth Circuit has subsequently applied the reserved powers 

doctrine in its review of the constitutionality of a state subdivision’s contract with a 

private party and subsequent act to modify the contract. E.g., Matsuda, 512 F.3d at 1152-

54. 

 Here, the Lease is a contract between two state actors that contemplates 

condemnation by referring the parties to state law for a determination of which party has 

the superior power of eminent domain and what compensation should be paid in the event 

of condemnation. It is possible to interpret the Lease as a bargained-for procedure by 
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which condemnation is to take place, more than a surrender of state eminent domain 

power. But KAA seeks to invoke the Contracts Clause to stop Kingman from 

condemning KAA’s leasehold interest in any manner, whether through Resolution 5113 

or otherwise. Thus, regardless of the fact that both parties to the Lease are state actors 

here, West River Bridge and its progeny operate to provide that the Contracts Clause 

cannot be used to enforce a contract that prevents a state actor from exercising its 

eminent domain power. While the Court understands KAA’s concerns, in the absence of 

further or contrary authority, the Court will apply the reserved powers doctrine and find 

that Kingman’s condemnation of KAA’s leasehold does not contravene the Contracts 

Clause. 

 Because KAA cannot state a claim against Kingman under the Contracts Clause or 

another provision of the United States Constitution, and that federal question was the 

basis for the Court’s subject matter jurisdiction asserted by KAA in its Notice of 

Removal, the Court must remand this action. See Herman Family Revocable Trust v. 

Teddy Bear, 254 F.3d 802, 805 (9th Cir. 2001) (concluding that, “[w]ithout the hook of 

[federal question] jurisdiction—the basis for original jurisdiction—the district court has 

no power under either 28 U.S.C. § 1367 or Article III of the Constitution to adjudicate 

any claims in the lawsuit” and should remand the case to state court). KAA may still raise 

its defenses to condemnation under Arizona law in state court, including that Kingman 

does not have superior eminent domain power over KAA and that the public use 

associated with Kingman’s operation of the airport is not more necessary than the public 

use associated with KAA’s operation of the airport. See A.R.S. § 12-1112. 

 Kingman requests that the Court “enter a show-cause order re Rule 11 sanctions in 

this case sua sponte” for sanctions against counsel for KAA. (Mot. at 5.) Federal Rule of 

Civil Procedure 11 provides that a person who signs a pleading “certifies that to the best 

of the person’s knowledge, information, and belief, formed after an inquiry reasonable 

under the circumstances . . . the claims, defenses, and other legal contentions are 

warranted by existing law or by a nonfrivolous argument for extending, modifying, or 
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reversing existing law or for establishing new law.” Rule 11 also provides that a court 

may impose an appropriate sanction against an attorney who violates the Rule. In 

examining a pleading under Rule 11, the court must determine “(1) whether the 

[pleading] is legally or factually baseless from an objective perspective, and (2) if the 

attorney has conducted a reasonable and competent inquiry before signing and filing it.” 

Holgate v. Baldwin, 425 F.3d 671, 676 (9th Cir. 2005) (internal quotation omitted). “As a 

shorthand for this test, [courts] use the word ‘frivolous’ to denote a filing that is both 

baseless and made without a reasonable and competent inquiry.” Id. (internal quotation 

omitted). 

 Kingman implies that KAA’s Notice of Removal is frivolous for the same reasons 

it sought remand of this action. The Court does not find that KAA’s removal of this 

lawsuit even begins to rise to the level of frivolousness warranting the entry of Rule 11 

sanctions—nor did Kingman cite a single case to try to convince the Court otherwise. 

Indeed, KAA’s positions in asserting federal jurisdiction, while they did not prevail here, 

were at least colorable, and its counsel’s briefing was candid, credible and considerably 

more helpful to this Court in resolving the issues before it than those of Kingman’s 

counsel. If the Court had concern about any party’s briefing to the Court, it was that of 

Kingman, which the Court found to have overlooked or avoided germane issues in 

several instances. 

 B. “Notice of Application Requiring Immediate Attention by the Court” 

 Although Kingman’s Motion to Remand required the Court to determine if it has 

subject matter jurisdiction over this matter, days after it was fully briefed and while it was 

still pending, Kingman filed a “Notice of Application Requiring Immediate Attention by 

the Court,” requesting that the Court immediately address Kingman’s underlying 

application for immediate possession of the KAA leasehold. (Doc. 20.) It might usually 

go without saying, but the Court would not proceed with a substantive hearing in an 

action if it has not yet determined its subject matter jurisdiction over the action—a 

subject Kingman itself put before the Court. 
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 Moreover, in the Notice, not only does Kingman’s counsel take a tone of 

aggressiveness bordering on arrogance in trying to tell the Court how to do its job; he 

does so by ignoring and distorting the controlling law. Counsel states that “an application 

for immediate possession must be given precedence over other civil cases under 

Arizona’s condemnation statute [and] the law governing this case.” (Doc. 20 at 1.) In 

support of this proposition, counsel cites A.R.S. § 12-1121(B), which provides that a 

court hearing a condemnation action “shall, at the request of any party, give the action 

precedence over other civil actions.” But the prioritization of condemnation cases over all 

others that Arizona state law provides for in § 12-1121(B) is undeniably a procedural 

law, not a substantive law, and counsel states no authority to rebut the general proposition 

that federal courts entertaining federal Constitutional questions will apply federal 

procedural law. See, e.g., Fed R. Civ. P. 81(c)(1). There is no federal procedural law 

giving priority of any sort to a state condemnation case. 

 Moreover, in support of his statement that “the law governing this case” requires 

immediate hearing of the instant action, counsel also cites Rule 71.1(k) of the Federal 

Rules of Civil Procedure, which provides that where a federal court hears a condemnation 

matter under state law, “if state law provides for trying an issue by jury—or for trying the 

issue of compensation by jury or commission or both—that law governs.” The provision 

counsel cites has nothing to do with prioritization or precedence of the action. It is 

expressly limited to whether a jury will hear the matter. The entire Notice and all of the 

legal citation upon which counsel rests his argument is most charitably characterized as 

sloppy at best, and potentially something much worse. The Court is entitled to rely on 

accurate and candid citations of law and rules by all counsel; it expects the same now and 

in the future, as should any court. 

 IT IS THEREFORE ORDERED granting in part Plaintiff City of Kingman’s 

Motion to Remand (Doc. 6). This case is to be remanded to state court, but Plaintiff’s 

request for a show cause hearing related to Rule 11 sanctions is denied. 
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 IT IS FURTHER ORDERED denying all other pending motions in this action as 

moot. 

 IT IS FURTHER ORDERED vacating the Rule 16 Scheduling Conference 

scheduling before District Judge Rayes at 4:30 p.m. on March 7, 2018. 

 IT IS FURTHER ORDERED directing the Clerk of Court to remand this action to 

Mohave County Superior Court as soon as is practicable. 

 Dated this 16th day of January, 2018. 

Honorable John J. Tuchi

United States District Judge