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ELH LLC v. Westland Irrigation District

United States District Court, D. Oregon

March 20, 2017

ELH LLC, an Oregon limited liability company; OREGON HEREFORD RANCH LLC, an Oregon limited liability company; PAUL GELISSEN; MAURICE and LUCY ZIEMER; FRANK MUELLER; CRAIG and CYNTHIA PARKS and RICHARD and KRISTINE CARPENTER, Plaintiffs,
v.
WESTLAND IRRIGATION DISTRICT, an irrigation district organized under the laws of the State of Oregon, Defendant.

          Michael E. Haglund, Julie A. Weis, and Eric J. Brickenstein, Haglund Kelley LLP, Of Attorneys for Plaintiffs.

          Nicole C. Hancock, Stoel Rives LLP, David E. Filippi, Stoel Rives LLP, 760 SW Ninth Avenue, Of Attorneys for Defendant.

          OPINION AND ORDER

          Michael H. Simon United States District Judge

         Plaintiffs ELH LLC, Oregon Hereford Ranch LLC, Paul Gelissen, Maurice and Lucy Ziemer, Frank Mueller, Craig and Cynthia Parks, and Richard and Kristine Carpenter (collectively, “Plaintiffs”) bring this lawsuit against Westland Irrigation District (“Westland”). Plaintiffs, who hold water rights from the Umatilla River and McKay Reservoir, allege that Westland has illegally redistributed water to Plaintiffs' detriment and to the benefit of junior rights holders. Plaintiffs seek relief pursuant to the Takings Clause of the Fifth Amendment, as well as its analog in the Oregon State Constitution, the federal Declaratory Judgment Act, and several common law tort theories. Before the Court are three motions: Westland's Motion to Dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), Westland's Motion to Stay Discovery, and Plaintiffs' Motion for Leave to File a First Amended Complaint. For the reasons below, Westland's Motion to Dismiss (ECF 9) is granted, Plaintiffs' Motion for Leave to File First Amended Complaint (ECF 13) is denied as futile, and Westland's Motion to Stay Discovery (ECF 10) is denied as moot.

         STANDARDS

         A. Motion to Dismiss

         Federal courts are courts of limited jurisdiction. Gunn v. Minton, __U.S. __, 133 S.Ct. 1059, 1064 (2013) (citation omitted). As such, a court is to presume “that a cause lies outside this limited jurisdiction, and the burden of establishing the contrary rests upon the party asserting jurisdiction.” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994) (citations omitted); see also Robinson v. United States, 586 F.3d 683, 685 (9th Cir. 2009); Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). A motion to dismiss under Federal Rule of Civil Procedure 12(b)(1) for lack of “subject-matter jurisdiction, because it involves a court's power to hear a case, can never be forfeited or waived.” United States v. Cotton, 535 U.S. 625, 630 (2002). An objection that a particular court lacks subject matter jurisdiction may be raised by any party, or by the court on its own initiative, at any time. Arbaugh v. Y&H Corp., 546 U.S. 500, 506 (2006); Fed.R.Civ.P. 12(b)(1). The Court must dismiss any case over which it lacks subject matter jurisdiction. Fed.R.Civ.P. 12(h)(3).

         A motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) may be granted only when there is no cognizable legal theory to support the claim or when the complaint lacks sufficient factual allegations to state a facially plausible claim for relief. Shroyer v. New Cingular Wireless Servs., Inc., 622 F.3d 1035, 1041 (9th Cir. 2010). In evaluating the sufficiency of a complaint's factual allegations, the court must accept as true all well-pleaded material facts alleged in the complaint and construe them in the light most favorable to the non-moving party. Wilson v. Hewlett-Packard Co., 668 F.3d 1136, 1140 (9th Cir. 2012); Daniels-Hall v. Nat'l Educ. Ass'n, 629 F.3d 992, 998 (9th Cir. 2010). To be entitled to a presumption of truth, allegations in a complaint “may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). All reasonable inferences from the factual allegations must be drawn in favor of the plaintiff. Newcal Indus. v. Ikon Office Sol., 513 F.3d 1038, 1043 n.2 (9th Cir. 2008). The court need not, however, credit the plaintiff's legal conclusions that are couched as factual allegations. Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009).

         A complaint must contain sufficient factual allegations to “plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation.” Starr, 652 F.3d at 1216. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)).

         B. Motion to Amend

         Federal Rule of Civil Procedure 15(a)(2) provides that the “court should freely give leave [to amend a pleading] when justice so requires.” A district court should apply the Rule's “policy of favoring amendments . . . with extreme liberality.” DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 186 (9th Cir. 1987) (quotation marks omitted). The purpose of the rule “is ‘to facilitate decision on the merits, rather than on the pleadings or technicalities.'” Novak v. United States, 795 F.3d 1012, 1020 (9th Cir. 2015) (quoting Chudacoff v. Univ. Med. Ctr., 649 F.3d 1143, 1152 (9th Cir. 2011)). A district court, however, may deny a motion to amend due to, among other reasons, the futility of the proposed amendment. Zucco Partners, LLC v. Digimarc Corp., 552 F.3d 981, 1007 (9th Cir. 2009) (citation omitted).

         BACKGROUND

         Westland is an irrigation district organized under the laws of the State of Oregon and governed by a board of directors. It is responsible for delivering water from McKay Reservoir and the Umatilla River to district water users. Plaintiffs raise cattle and grow a variety of crops on farmland located within the Westland district. Plaintiffs hold water rights for the Umatilla River and McKay Reservoir with priority dates extending as far back as 1903.

         Plaintiffs allege that Westland's water delivery practices favors junior rights holders, in violation of Oregon's prior appropriation system that requires delivery of water on a “first in time, first in right” basis. Specifically, Plaintiffs contend Westland has allowed illegal over-pumping by junior rights holders, failed to monitor and properly measure water usage, failed to enforce priority dates and allowed junior users to use appropriated water on acreage not certified to receive the water, and entered into improper “limited water” delivery contracts. Plaintiffs also allege that Westland operates in a non-transparent fashion and improperly withholds public information. Plaintiffs seek monetary, declaratory, and injunctive relief, alleging that Westland's actions constitute a taking without just compensation in violation of the Fifth Amendment to the United States ...


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