Garrett Development LLC v. Deer Creek Water Corporation

Filing 16

ORDER denying 10 Defendant's Motion to Dismiss for Lack of Subject Matter Jurisdiction. Signed by Honorable Timothy D. DeGiusti on 2/8/2019. (mb)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF OKLAHOMA
GARRETT DEVELOPMENT, L.L.C., an
Oklahoma limited liability company,
Plaintiff,
v.
DEER CREEK WATER CORPORATION,
an Oklahoma not for profit corporation,
Defendant.

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Case No. CIV-18-298-D

ORDER
Before the Court is Defendant’s Motion to Dismiss for Lack of Subject Matter
Jurisdiction [Doc. No. 10]. Plaintiff has filed a Response [Doc. No. 12] and Defendant has
replied [Doc. No. 13]. The matter is fully briefed and at issue.
BACKGROUND
Plaintiff Garrett Development, LLC, (“Garrett”) owns land comprising the NW/4 of
Section 19-T14N-R3W, Oklahoma County. Garrett is in the process of developing a
residential housing addition known as the Covell Creek Addition (“Addition”) on this land.
In order to obtain re-zoning and final approval of the plat for the Addition and sell
individual residential lots, Garrett contends it must first obtain a water source for the
Addition. Response at 2, 7, and 8. Both parties represent that Garrett has not yet obtained
the re-zoning necessary to obtain approval of the plat for the Addition.
Defendant Deer Creek Water Corporation (“Deer Creek”) claims that it has an
exclusive right to provide water to a service area including the Addition pursuant to the
Consolidated Farm and Rural Development Act, 7 U.S.C. § 1926(b). When Garrett

initially inquired whether Deer Creek would provide water to the Addition and under what
terms, Deer Creek informed Garrett that it had instituted a moratorium on providing water
service to new developments. Deer Creek later informed Garrett that it had lifted the
moratorium and was willing to consider an application for Deer Creek to provide water
service to the Addition.
Garrett submitted an application to Deer Creek and Deer Creek provided Garrett
with terms and conditions under which it was willing to provide water service to the
Addition. Garrett found the terms and conditions to be punitive and wished to obtain water
from a water service provider other than Deer Creek. Deer Creek asserts that re-zoning is
required before Garrett may obtain a water source, however, Deer Creek admits that “it has
nevertheless offered to service Garrett’s proposed development.” Motion at 4.
In Count I of its Complaint, Garrett seeks a declaration that Deer Creek “does not
have a service area protected by 7 U.S.C. § 1926(b) and that obtaining water service for
the Addition from another water service provider does not violate 7 U.S.C. § 1926(b).”
Complaint at ¶ 4. In the alternative, Count II requests a declaration “that Deer Creek has
failed and refused to make water service available to Garrett such that Garrett is free to
obtain water service from a water service provider other than Deer Creek” and that doing
so does not violate 7 U.S.C. § 1926(b). Complaint at ¶ 23.
Deer Creek moves for dismissal pursuant to Rule 12(b)(1) for lack of subject matter
jurisdiction. Deer Creek asserts: (1) Garrett lacks standing as to Count I because it is
attempting to determine the rights of a non-party to supply water to the Addition; (2) Count
II is not ripe because Garrett does not have the legal authority to develop its property as it

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proposes; and, (3) Garrett improperly seeks an advisory opinion from the Court in violation
of the Declaratory Judgment Act, 28 U.S.C. §§ 2201, et seq.
STANDARD OF REVIEW
A Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction takes one
of two forms: a facial attack or a factual attack. Pueblo of Jemez v. United States, 790 F.3d
1143, 1148 n.4 (10th Cir. 2015). A facial attack questions the sufficiency of the complaint’s
allegations. Id. In reviewing a facial attack, a district court must accept the allegations in
the complaint as true. Id. In a factual attack, the moving party may go beyond allegations
contained in the complaint and challenge the facts upon which subject matter jurisdiction
depends. Id. When reviewing a factual attack on subject matter jurisdiction, a district court
may not presume the truthfulness of the complaint’s factual allegations. Id. Instead, the
court has wide discretion to allow affidavits, other documents, and a limited evidentiary
hearing to resolve disputed jurisdictional facts. Id.
In this case, Deer Creek’s Motion raises a factual challenge because it attacks the
facts upon which Garrett asserts subject matter jurisdiction. Both parties have submitted
for consideration evidence outside the pleadings.
I.

Standing
The Federal Declaratory Judgment Act confers “on federal courts unique and

substantial discretion in deciding whether to declare the rights of litigants.” See Wilton v.
Seven Falls Co., 515 U.S. 277, 286 (1995); see also United States v. City of Las Cruces,
289 F.3d 1170, 1179 - 80 (10th Cir. 2002). The Act provides that:

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In a case of actual controversy within its jurisdiction, . . . any court of the
United States, upon the filing of an appropriate pleading, may declare the
rights and other legal relations of any interested party seeking such
declaration, whether or not further relief is or could be sought.
28 U.S.C. § 2201 (2010). For the purposes of the Act, “actual controversy” refers to the
case-or-controversy requirements of Article III of the U.S. Constitution. Surefoot LC v.
Sure Foot Corp., 531 F.3d 1236, 1241 (10th Cir. 2008) (citing MedImmune, Inc. v.
Genentech, Inc., 549 U.S. 118, 126, 127 S.Ct. 764, 771, 166 L. Ed. 2d 604 (2007)).
“Constitutional standing is a threshold jurisdictional question” that “must be
satisfied prior to adjudication by Article III courts” of claims brought pursuant to the
Federal Declaratory Judgment Act. Trant v. Oklahoma, 874 F. Supp. 2d 1294, 1299 (W.D.
Okla. 2012), aff'd, Trant v. Oklahoma, 754 F.3d 1158 (10th Cir. 2014). “Standing doctrine
is designed to determine who may institute the asserted claim for relief.” ACORN v. City
of Tulsa, Okl., 835 F.2d 735, 738 (10th Cir. 1987) (quoting Action Alliance of Senior
Citizens v. Heckler, 789 F.2d 931, 940 (D.C.Cir.1986) (emphasis in original)). In order to
establish standing “a party must show at least that he or she has suffered an actual or
threatened injury caused by the defendant and that a favorable judicial decision is likely to
redress the injury.” ACORN v. City of Tulsa, Okl., 835 F.2d 735, 738 (10th Cir. 1987)
(internal quotations and citations omitted). Deer Creek bases its entire standing argument
as to Count I on the assertion that Garrett “seeks to determine the rights of a non-party.”
Motion at 3, 7.
Deer Creek interprets Count I as requesting a declaration that third parties may
provide water to the Addition and argues that the controversy is not between Garrett and

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Deer Creek but between Deer Creek and other unnamed third-party water service
providers. Motion at 7, 8. Garrett, however, contends that the controversy at issue is
whether Deer Creek is actually entitled to an exclusive designated service area
encompassing the Addition, thereby prohibiting Garrett from obtaining water from a
source other than Deer Creek. Response at 7; Complaint at ¶¶ 19, 20.
Deer Creek counters that 7 U.S.C. § 1926(b) “does not speak to someone’s right to
obtain water, but rather concerns a ‘similar service within such area[.]’” Motion at 8. This
argument overlooks the nature of Garrett’s claim. Garrett challenges whether the land on
which it plans to build the Addition is subject to a protected service area as claimed by
Deer Creek. Count I of the Complaint clearly states the controversy is “whether 7 U.S.C.
§ 1926(b) grants Deer Creek a protected service area1 in which Deer Creek has the right to
require Garrett to obtain water service from Deer Creek and not from any alternative water
source provider.” Complaint at ¶19 (emphasis added). Garrett is seeking a declaration as
to its own rights rather than the rights of a third party. Therefore, Garrett has a “cognizable
stake in the outcome of this litigation.” Motion at 8.

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In order “to receive the protection against competition provided by § 1926(b) a
water association must (1) have a continuing indebtedness to the FmHA and (2) have
provided or made available service to the disputed area.” Sequoyah Cty. Rural Water Dist.
No. 7 v. Town of Muldrow, 191 F.3d 1192, 1197, 1203, 1205, and 1206 (10th Cir. 1999);
see also, TP Real Estate LLC v. Rural Water, Sewer & Solid Waste Mgmt. Dist. No. 1,
Logan Cty., Oklahoma, CIV-09-748-R, 2010 WL 11508774, at *1 (W.D. Okla. Apr. 19,
2010) (unpublished). Neither party addresses the full standard in their briefing.

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Although Deer Creek does not address either the “actual or threatened injury” or
redressability elements of the standing doctrine, the Court finds that Garrett has established
both. Acorn, 835 F.2d at 738.
Garrett states that it must obtain a water service provider before it can seek re-zoning
of its land and that: (1) Deer Creek initially declined due to a moratorium thereby leaving
Garrett without a water provider for the Addition; (2) the City of Oklahoma City indicated
it would provide water but for Deer Creek’s claim of exclusivity; (3) when Deer Creek
lifted the moratorium it offered to provide water under terms Garrett found punitive and
unfeasible; and, (4) based on Deer Creek’s continued claim of exclusivity, Garrett is
prohibited from engaging third party water service providers. Complaint ¶ 8, 11, 12, 13,
and 14. Deer Creek does not challenge these facts. Garrett thus sufficiently asserts it has
suffered the injury of being unable to obtain a feasible water service provider due to Deer
Creek’s claim to exclusivity as to the Addition.
Based on Deer Creek’s assertion of a protected service area, and the statement by
the City of Oklahoma City in denying water service for the Addition on the basis of Deer
Creek’s assertion, it is foreseeable that a declaration in Garrett’s favor stating that the
Addition does not fall within a service area protected by 7 U.S.C. §1926(b), would redress
Garrett’s injury in allowing it to obtain a feasible alternative water service provider, even
if only to obtain re-zoning.
The Court finds Count I presents an “actual controversy” in which “the facts alleged,
under all the circumstances, show that there is a substantial controversy, between parties
having adverse legal interests, of sufficient immediacy and reality to warrant the issuance

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of a declaratory judgment.” MedImmune, 549 U.S. at 127 (quoting Maryland Casualty Co.
v. Pacific Coal & Oil Co., 312 U.S. 270, 273, 61 S.Ct. 510, 85 L.Ed. 826 (1941)).
Deer Creek’s Motion to Dismiss Count I of Garrett’s Complaint for lack of standing
is denied.
II.

Count II, and Ripeness.
“[R]ipeness is peculiarly a question of timing.” New Mexicans for Bill Richardson

v. Gonzales, 64 F.3d 1495, 1499 (10th Cir. 1995) (quoting Regional Rail Reorganization
Act Cases, 419 U.S. 102, 140, 95 S.Ct. 335, 357, 42 L.Ed.2d 320 (1975)). The doctrine of
ripeness is “intended ‘to prevent the courts, through avoidance of premature adjudication,
from entangling themselves in abstract disagreements.’” Gonzales, 387 U.S. at 148
(quoting Abbott Labs. v. Gardner, 387 U.S. 136, 148, 87 S.Ct. 1507, 1515, 18 L.Ed.2d 681
(1967)). “In evaluating ripeness, the central focus is on whether the case involves uncertain
or contingent future events that may not occur as anticipated or indeed may not occur at
all.” Walker v. Utah Wildlife Fed'n, 450 F.3d 1082, 1098 (10th Cir.2006).
Deer Creek limits its ripeness argument to the contention that Garrett cannot yet
secure any water service provider because its land is not properly zoned for the Addition
plat, and if Garrett obtained the necessary re-zoning, it would then have to seek approval
for the Addition plat itself before securing a water service provider. Motion at 9, 10. Deer
Creek maintains that these are uncertain or contingent future events. Garrett counters that
it cannot secure re-zoning without demonstrating water service is available to the Addition,

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Deer Creek’s claim of an exclusive service area prevents him from doing so, and, therefore,
the controversy is ripe. Response at 2.2
Deer Creek’s argument that Garrett cannot secure a water service provider prior to
re-zoning and approval of the plat is belied by the fact that Deer Creek repeatedly admits
it has offered to provide water service to the unapproved Addition under the desired but
unattained zoning.3 Motion at 3-4, 10; Reply at 6. Likewise, Garrett presents evidence
that the City of Oklahoma City has stated its willingness to provide water service but for
Deer Creek’s claim of exclusivity. Response, Affidavit of William P. Garrett, Exhibit 1
[Doc. No. 12-1] at ¶ 14. Thus, it appears that obtaining a commitment by a water service
provider is not an uncertain, contingent future event so as to make the instant dispute an
abstract disagreement.

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Both parties discuss at length a related state court case in which Garrett challenged
the Board of County Commissioners of Oklahoma’s denial of re-zoning. According to the
parties, that case ultimately resulted in the entry of summary judgment against Garrett.
Response at 1-2; Reply 5-6. This discussion is unhelpful as the entry of summary judgment
contained no reasoning for the state court’s determination. However, the Court notes that
the renewed motion for summary judgment upon which the final judgment was based
argues exclusively that “the availability of water service (and sanitary sewer service) is a
requirement for the rezoning [sic]” and that water service was not available at the time
Garrett sought to challenge the Board of County Commissioners’ denial of re-zoning.
Intervenor Deer Creek Community Association, Inc.’s Renewed Motion for Summary
Judgment and Brief in Support at 1, 6, Garrett Development, LLC, v. The Board of County
Commissioners of Oklahoma, CJ-2014-1966, (August 18, 2016) (emphasis added). The
motion explains that water was not available because Deer Creek is the exclusive water
service provider and it had instituted a moratorium on applications at the time. Id.
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The Court makes no determination here as to whether Deer Creek’s offer to
provide water to the Addition is sufficiently adequate to satisfy the “provided or made
service available” prong of the inquiry into whether Deer Creek is entitled to a protected
service area as set forth in Sequoyah, 191 F.3d at 1197, 1203, 1205, and 1206.

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For these reasons, the Court finds that the dispute Garrett asserts in the Complaint
is ripe. Deer Creek’s motion to dismiss Count II is denied.
III.

Prohibited Advisory Opinion
“[W]hat makes a declaratory judgment action a proper judicial resolution of a case

or controversy rather than an advisory opinion is the settling of some dispute which affects
the behavior of the defendant toward the plaintiff.” Jordan v. Sosa, 654 F.3d 1012, 1025
(10th Cir. 2011) (emphasis in original) (internal quotation marks omitted). “[W]here a
plaintiff seeks a declaratory judgment against his opponent, he must assert a claim for relief
that, if granted, would affect the behavior of the particular parties listed in his complaint.”
Jordan, 654 F.3d at 1025 (citing Rhodes v. Stewart, 488 U.S. 1, 4, 109 S.Ct. 202, 102
L.Ed.2d 1 (1988) (per curiam)).
As discussed above, the Court finds the crux of Garrett’s request is a declaration as
to whether Deer Creek is entitled to an exclusive water service area pursuant to 7 U.S.C. §
1926(b) including the Addition. Deer Creek asserts that its claim to exclusivity only affects
third-party water providers in prohibiting them from supplying water and that this does not
affect Garrett’s right to obtain water. Motion at 8, 11. This argument is unpersuasive. A
restriction prohibiting any other water provider from supplying water in the claimed
protected service area inherently affects the ability of a property owner, such as Garrett, to
obtain water from a water service provider other than Deer Creek. Moreover, in order to
determine a water service provider’s entitlement to a protected service area, the Court must
consider the actions of the water service provider with regard to the property in question,
for instance, whether it made service available to the disputed area. Sequoyah, 191 F.3d at

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1197, 1206 and 1203 (stating that a water service provider is only entitled to protection
from competition pursuant to 7 U.S.C. §1926(b) where it can establish that it made service
available to the disputed customers); TP Real Estate LLC, 2010 WL 11508774 at *1, *4,
*5, and *6 (holding that a water service provider was not entitled to a protected service
area pursuant to 7 U.S.C. § 1926(b) with regard to a proposed development after
determining that its offer to provide service did not sufficiently “make service available”
to the plaintiff property owners).
Whether Deer Creek is entitled to an exclusive service area pursuant to 7 U.S.C. §
1926(b) as to the Addition will in part turn upon whether Deer Creek’s offer of service
sufficiently made water service available to the Plaintiff. A declaration in Garrett’s favor
will affect Deer Creek’s behavior by preventing Deer Creek from claiming a non-existent
exclusive service area as to the Addition, allowing Garret to obtain water service from a
provider other than Deer Creek. See TP Real Estate LLC, 2010 WL 11508774, at *1, *5,
*6 (stating that a judgment would issue declaring that the water service provider had “not
made service available to the [d]isputed [a]rea and is not entitled to protection under 7
U.S.C. § 1926(b) as to the [d]isputed [a]rea”).
For these reasons, Defendant’s Motion to Dismiss for Lack of Subject Matter
Jurisdiction is denied.
CONCLUSION
IT IS THEREFORE ORDERED that Defendant’s Motion to Dismiss [Doc. No.
10] is DENIED, as set forth herein.

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IT IS SO ORDERED this 8th day of February 2019.

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