Opinion ID: 162215
Heading Depth: 3
Heading Rank: 1

Heading: Whether the declaratory action would settle the controversy and clarify legal relationships

Text: 52 The district court found that the requested federal declaratory relief would not settle the entire controversy over water rights or even clarify the relative rights of the parties to Rio Grande water, because any declaration of the United States' rights to divert, impound, and store Project water would not be binding on parties not joined to the action. The United States and Texas parties, however, define the controversy as involving only the cloud placed on the United States' title by the named defendants. Because the federal action will completely settle this controversy, dismissal pursuant to Brillhart/Mhoon was inappropriate, they argue. 53 The appellants fail to acknowledge that the inquiry into whether the declaratory judgment settles a controversy and clarifies the legal relationships at issue is designed to shed light on the overall question of whether the controversy would be better settled in state court. See Brillhart, 316 U.S. at 495, 62 S.Ct. 1173. The federal suit may settle the controversy of whether the United States has superior title to the named defendants. As the district court pointed out, however, the declaration of superior title will not be binding on parties not joined to the action. See State Farm Mut. Auto. Ins. Co. v. Mid-Continent Cas. Co., 518 F.2d 292, 295 (10th Cir.1975). There are thousands of water users in New Mexico who may assert a right to Project water just as New Mexico State University and Stahmann Farms have in this case. Their claims will be adjudicated in the comprehensive New Mexico stream adjudication. By declining jurisdiction, the district court avoided a piecemeal approach to adjudicating the rights of the United States vis-a-vis innumerable water users in New Mexico. The district court acted within its discretion in determining that the United States' claims against the named defendants and other water users would be better settled in a unified proceeding. See State Farm Mut. Auto. Ins. Co. v. Scholes, 601 F.2d 1151, 1155 (10th Cir.1979) (quoting with approval a lower court opinion that considered the desirability of avoiding piecemeal adjudication); 10B Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 2759; cf. Rienhardt v. Kelly, 164 F.3d 1296, 1303 (10th Cir.1999) (noting that avoidance of piecemeal adjudication may counsel against hearing the case in federal court in Colorado River context). 54 Appellants also argue the New Mexico adjudication will not settle the federal controversy because the stream adjudication will not resolve rights to store and divert Elephant Butte Reservoir water. The New Mexico proceeding as it currently exists may not encompass storage rights in the Elephant Butte Reservoir, but the New Mexico State Engineer has notified all parties that he intends to include the Reservoir in the stream adjudication. 13 The United States and Texas parties contend that the Notice of Intent does not guarantee the Reservoir will be included in the stream adjudication. They also argue that the Reservoir cannot be included in the adjudication without adding the portion of the Rio Grande north from the Reservoir to Otowi Gauge, near Santa Fe. There is no merit to either of these contentions. 14 55 Although the Notice of Intent is not a guarantee that the Reservoir will be included in the stream adjudication, the district court was well within its discretion in determining that the Notice of Intent signaled that the Reservoir likely would be included. 15 56 The United States and Texas parties have pointed to nothing in the record indicating that the state court will not grant the Engineer leave to amend his complaint to include the Reservoir. The state court has allowed the complaint to be amended four times to reflect changes in parties and claims; it will likely do so again. See First Nat'l Bank of Santa Fe v. Southwest Yacht & Marine Supply Corp., 101 N.M. 431, 684 P.2d 517, 520 (1984) (amendments to pleadings are generally favored and liberally permitted). 57 Finally, appellants argue that the New Mexico adjudication would not settle the federal controversy because the stream adjudication excludes the Texas Parties. The district court, however, found that the state court would likely allow the Texas parties to intervene in the stream adjudication. The City of El Paso has been a party to the stream adjudication since it began in 1986. While El Paso Water District's attempt to intervene was opposed by some of the New Mexico parties, when the state court granted the District amicus status it also ruled that the District could request a ruling on its motion to intervene at any time. 58 In New Mexico, as in the federal courts, there are two types of intervention, intervention as of right and permissive intervention. See N.M. Ct. R. 1-024 (2001). 16 There are obviously common questions of fact and law relating to both the Texas parties' claims to Project water and the claims to Rio Grande water adjudicated in the New Mexico proceeding. The Texas parties may be entitled to intervention as of right since an adjudication of water rights in New Mexico could impede their ability to collect Project water. The continued, unmolested presence of El Paso and the state court's unwillingness to rule out intervention indicate that the Texas parties' assertion of Project water rights water can and will likely be adjudicated in the stream adjudication. Without a showing that intervention is impossible or the state forum is clearly hostile to the parties to the federal suit, this court cannot say that the district court abused its discretion. 59 An additional reason exists to reject the United States' and Texas parties' argument that the federal suit should proceed because it alone adjudicates the Texas parties' rights to Project water: the Texas adjudication will be more than adequate to decide the rights of the United States vis-a-vis the Texas parties. The United States filed a claim with the TNRCC on April 22, 1996, asserting claims against the Texas parties to the federal lawsuit identical to the claims made in its federal complaint, namely, that it held title to the Project water delivered to the City of El Paso, the El Paso Water District, and the Hudspeth County Conservation and Reclamation Dist. No. 1. According to Texas water law, the adjudication will resolve all storage, diversion, and use rights. See Tex. Water Code § 11.307 (Vernon, WESTLAW through 2001 Reg. Sess.) (requiring [e]very person claiming a water right of any nature to file a claim with the TNRCC during an adjudication) (emphasis added). Thus, the Texas adjudication can be expected to decide the title to Project water delivered to the Texas parties named in the federal suit. 60