Neal et al v. Greenfields Irrigation District et al

Filing 42

ORDER ON THIRD-PARTY DEFENDANT'S MOTION TO DISMISS: IT IS HEREBY ORDERED THAT 1) Third-Party Defendant BOR's 17 Motion to Dismiss is hereby GRANTED. 2) The Districts' 5 Third-Party Complaint against BOR is DISMISSED. 3) Plaintiffs' unopposed request that this Court retain supplemental jurisdiction over Plaintiffs' claims against the Districts is GRANTED. SEE ORDER FOR FULL DETAILS. Signed by Judge Brian Morris on 9/19/2022. (SLR)

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
GREAT FALLS DIVISION
LLOYD and DANIELLE NEAL, JAMES
P. TROY, and DAVID M. SABATO and
MITZI B. SABATO as trustees of
SABATO DAVID M AND SABATO
MITZI B 2017 REVOCABLE TRUST,
Plaintiffs,
v.
GREENFIELDS IRRIGATION DISTRICT,
FORT SHAW IRRIGATION DISTRICT,
and DOES A-E,
Defendants,
___________________________________
GREENFIELDS IRRIGATION DISTRICT
and FORT SHAW IRRIGATION
DISTRICT,
Third-Party Plaintiffs,
v.
UNITED STATES DEPARTMENT OF
INTERIOR, BUREAU OF
RECLAMATION,
Third-Party Defendant.

CV-21-106-GF-BMM

ORDER ON THIRD-PARTY
DEFENDANT’S MOTION
TO DISMISS

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INTRODUCTION
Third-Party Defendant U.S. Bureau of Reclamation (“BOR”) has moved to
dismiss the Third-Party Complaint (Doc. 5) filed by Defendants Fort Shaw
Irrigation District (“Fort Shaw”) and Greenfields Irrigation District (“Greenfields”)
(collectively “the Districts”). The Court conducted a hearing on August 24, 2022.
FACTUAL AND LEGAL BACKGROUND
Plaintiffs Lloyd and Danielle Neal, James P. Troy, and David M. Sabato and
Mitzi B. Sabato, as trustees of the Sabato David M and Sabato Mitzi B 2017
Revocable Trust (collectively “Plaintiffs”), brought suit against the Districts in
Montana’s Eighth Judicial District Court, Cascade County. (Doc. 18 at 3); see Case
No. BDV-20-283 (“the state case”). Plaintiffs allege that the Districts operate the
Willow Creek Feeder Canal (“the Canal”) that runs through Plaintiffs’ property.
(Doc. 5-1 at 1.) Plaintiffs allege that the Canal has eroded, silted, and significantly
damaged their property. (Id.)
The Districts moved to dismiss the state case under Mont. R. Civ. P. 19,
arguing that BOR was an indispensable party that could not be joined in state
court. (Doc. 18 at 3.) The state court granted the motion. The state court
determined that it would be unable to award complete relief to Plaintiffs without
BOR’s participation or consent. (Doc. 5-1 at 10.)

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Plaintiffs filed their Complaint against the Districts in this Court on October
18, 2021 (Doc. 1.) Plaintiffs filed an Amended Complaint on November 16, 2021.
(Doc. 5.) The Districts answered the Amended Complaint and simultaneously filed
a Third-Party Complaint against BOR for breach of contract, negligence, and
declaratory judgment. (Doc. 8.)
BOR now moves to dismiss. BOR alleges that the Districts’ crossclaim
represents a direct claim against BOR for which the Government has not waived
sovereign immunity. (Doc. 17.) Fort Shaw’s response brief (Doc. 27) merely
joined in Greenfields’ brief (Doc. 26), and, therefore, the Court will group and
consider together the Districts’ arguments. Plaintiffs take no position on BOR’s
motion. They ask the Court to retain supplemental jurisdiction over their claims
against the Districts should the Court grant BOR’s motion. (Doc. 20 at 3.) The
Districts do not object to Plaintiffs’ request that the matter remain in federal court
if the Court grants BOR’s motion. (Doc. 26 at 9.)
LEGAL STANDARDS
Rule 12(b)(1) permits a defendant to move for dismissal on the basis that the
court lacks subject matter jurisdiction. See Fed. R. Civ. P. 12(b)(1). Courts
presume a lack of jurisdiction until the plaintiff proves otherwise. See Stock West,
Inc. v. Confederated Tribes, 873 F.2d 1221, 1225 (9th Cir. 1989). “Federal courts
lack subject matter jurisdiction over a claim against the United States absent a
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waiver of sovereign immunity by the United States.” Mitrano v. United States, No.
CV-16-13-GF-BMM, 2017 WL 499905, at *1 (D. Mont. Feb. 7, 2017) (citing
United States v. Mitchell, 463 U.S. 206, 212 (1983)).
To survive a Rule 12(b)(6) motion, a complaint must contain sufficient
factual matter to state a claim for relief that appears plausible on its face. Ashcroft
v. Iqbal, 556 U.S. 662, 678–79 (2009). A claim appears plausible on its face when
“the plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” Id. at 678.
DISCUSSION
BOR moves to dismiss the District’s Third-Party Complaint (Doc. 5) for
lack of subject matter jurisdiction. (Doc. 17.) BOR alleges that the Districts’
crossclaim amounts to a direct suit against the United States for which the United
States has not waived sovereign immunity. (Id. at 5–10.) BOR additionally argues
that the Districts have failed to state claims upon which relief can be granted by
this Court. (Id. at 10–16.)
I.

Whether sovereign immunity bars the Districts’ claims against BOR.
A direct suit against the United States is not permitted unless Congress has

waived sovereign immunity. This waiver must be expressed unequivocally.
McNabb v. U.S. Dep’t of the Army, 623 F. App’x 870, 872 (9th Cir. 2015). BOR
argues that sovereign immunity bars the Districts’ claims against it. (Doc. 18.)
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The Court’s subject matter jurisdiction in this matter depends on the
Reclamation Reform Act of 1982, which provides a limited waiver of sovereign
immunity in the context of federal reclamation contracts. The statute provides
consent “to join the United States as a necessary party defendant.” 43 U.S.C. §
390uu (“Section 390uu”). This consent applies to “any suit to adjudicate, confirm,
validate, or decree the contractual rights of a contracting entity and the United
States regarding any contract executed pursuant to Federal reclamation law.” Id.
BOR argues that Section 390uu waives sovereign immunity in the instance
of joining the United States as a necessary party, but not in instances where a
plaintiff brings suit directly against the United States. (Doc. 18 at 7–8 (citing
United States v. Orff, 545 U.S. 596 (2005)). The U.S. Supreme Court held in Orff
that Section 390uu “does not permit a plaintiff to sue the United States alone” and
“does not waive immunity from suits directly against the United States.” 542 U.S.
at 602, 604.
The Districts argue that BOR misconstrues the holding in Orff. (Doc. 26 at
7.) The Districts assert that Section 390uu waives sovereign immunity so long as
the United States is joined to an existing action by a claimant who either is a
contracting party or intended third-party beneficiary of a Reclamation contract.
(Doc. 26 at 11–12.) The Districts argue that Orff’s holding, when properly
interpreted, prohibits only a standalone lawsuit against the Government. (Id. at 12.)
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The Districts urge that resolution of Plaintiffs’ claims “necessarily requires
adjudication and validation of Reclamation contracts between each of the Districts
and BOR.” (Id. at 14.) The Districts contend that Plaintiffs’ requested relief
includes repairs and alterations to the Canal and any changes to the Canal require
the approval of BOR. (Id.)
The Districts’ arguments prove unavailing. Despite the Districts’ attempts at
categorizing their crossclaim against BOR as “joining” the United States to the
Plaintiffs’ suit, they level claims directly against BOR and actually seek
contribution from BOR for compensatory damages. (Doc. 8 at 7.) The Districts’
crossclaim constitutes a direct suit against the United States. Orff, 542 U.S. at 604.
The Districts’ attempt to limit Orff’s holdings to claims “solely” against the
Government lacks merit. Contrary to the Districts’ claims, Orff determined that
Section 390uu’s waiver of sovereign immunity does not encompass direct suits
against the United States. Id. Orff clearly states that Section 390uu “does not waive
immunity from suits directly against the United States, as opposed to joinder of the
United States as a necessary party defendant” to allow complete adjudication of
reclamation contract rights. Id.
Recent cases have applied Orff to bar any direct claims against the United
States, even in the case of multiparty suits or crossclaims. The District of Arizona
in Ak-Chin Indian Community v. Maricopa-Stanfield Irrigation & Drainage
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District dismissed a crossclaim against the United States brought pursuant to
Section 390uu, even though the United States properly had been joined as a party.
No. CV-20-00489-PHX-JJT, 2021 WL 2805609, at *5 (D. Ariz. July 6, 2021). The
district court recognized that “Section 390uu does not allow [a party] to bring an
independent crossclaim against the federal government.” Id. Ak-Chin also limits
the holding of Roosevelt Irrigation Dist. v. United States, No. CV-15-00448-PHXJJT, 2015 WL 13747125, at *4 (D. Ariz. Nov. 16, 2015), on which the Districts
rely. Ak-Chin concluded that “[n]othing in Roosevelt indicates that Section 390uu
waives sovereign immunity for a direct crossclaim against the United States where
the United States has already been joined to the lawsuit.” Ak-Chin, 2021 WL
2805609, at *6.
Roosevelt’s holding relies on its unique procedural posture, as BOR notes
(Doc. 29 at 7). The federal defendants in Roosevelt had not been joined. 2015 WL
13747125, at *4. The federal defendants acknowledged, however, that joinder
would be appropriate. Id. The district court allowed the case to proceed without
dismissal and formal joinder to avoid “procedural gymnastics.” Id. BOR has made
no such concession regarding the appropriateness of joinder. The Districts’
crossclaim against BOR falls within the general prohibition on direct suits against
the Government. Section 390uu does not present a valid waiver of sovereign

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immunity for the crossclaim against BOR and thereby eliminates this Court’s
jurisdiction and bars the Districts’ crossclaim.
Joinder of BOR pursuant to FRCP 19 remains available. The Court
encourages the Districts to properly join BOR, keeping in mind the appropriate
scope and purpose of such actions––adjudicating or declaring contractual rights
rather than direct suit against the United States––as specified in Section 390uu.
II.

Whether the Districts have failed to state a claim upon which relief can be
granted.
BOR argues that the Districts’ crossclaim against BOR fails to state a claim

upon which relief can be granted even if this Court were to possess subject matter
jurisdiction. (Id. at 10.) BOR raises three distinct arguments: (1) if Plaintiffs
prevail, the Districts would be required to hold BOR harmless, so no relief could
be granted for the Districts on the BOR’s crossclaim; (2) the statute of limitations
for the Districts’ crossclaim against BOR has expired; and (3) the Districts fail to
plead facts to support liability for breach of contract. The Court declines to address
these arguments in light of the Court’s decision to grant BOR’s motion on the basis
that Districts’ crossclaim lacks subject matter jurisdiction.

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ACCORDINGLY, IT IS HEREBY ORDERED THAT:
1. Third-Party Defendant BOR’s Motion to Dismiss (Doc. 17) is hereby
GRANTED.
2. The Districts’ Third-Party Complaint (Doc. 5 at 9–21) against BOR is
DISMISSED.
3. Plaintiffs’ unopposed request that this Court retain supplemental
jurisdiction over Plaintiffs’ claims against the Districts is GRANTED.
Dated this 19th day of September, 2022.

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