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Mohave Valley Irrigation and Drainage District v. Hcjm, Inc.

United States District Court, D. Arizona

March 13, 2014

HCJM, INC., et al., Defendants.


H. RUSSEL HOLLAND, District Judge.

Motion to Dismiss

Defendants move to dismiss plaintiff's complaint for failure to join indispensable parties, or, alternatively, to join indispensable parties.[1] This motion is opposed.[2] Oral argument has been requested but is not deemed necessary.


Plaintiff is the Mohave Valley Irrigation and Drainage District. Defendants are HCJM, Inc.; El Rio Recreational, LLC; and El Rio Holdings, LLC.

"As a result of the works accomplished under the federal reclamation laws, including the Boulder Canyon Project Act..., a system was created to tame, capture, store and control the waters of the Colorado River...."[3] "The Project Act recognizes water rights perfected under state law as of the date of the Project Act."[4] "Colorado River waters include water from the mainstream of the Colorado River, its tributaries, surface flows, subsurface flows, and waters pumped from wells that are recharged or replenished by the waters of the Colorado River."[5] "The Project Act mandates that Colorado River water be available for consumptive use in Arizona only if a contract has been made by, through or on behalf of the Secretary of the Interior... for that use."[6]

Plaintiff alleges that it has a contract (the MVIDD Contract) with the Secretary of Interior "for the delivery of Colorado River waters...."[7] "The MVIDD Contract presently allocates 41, 000 acre feet of Colorado River waters annually from the Arizona apportionment to [plaintiff] for use within [plaintiff's] service area...."[8] Plaintiff's allocation includes the water used by holders of present perfected rights (PPRs). Mohave Valley Irrigation & Drainage Dist. v. Norton , 244 F.3d 1164, 1165-66 (9th Cir. 2001). If the holders of PPRs do not use their water, the water "revert[s] to [plaintiff] for allocation as 4th priority water."[9]

Plaintiff alleges that defendants own and/or operate the El Rio Golf Course, which is located within Section 11 of Mohave County, which is within plaintiff's service area.[10] Plaintiff alleges that the El Rio Golf Course diverted 561 acre feet of Colorado River water in 2009, 542 acre feet in 2010, 340 acre feet in 2011, 634 acre feet in 2012, and 334 acre feet from January 1, 2013 through June 30, 2013.[11]

Plaintiff alleges that "[w]ithin Section 11, Colorado River waters may only be diverted, withdrawn or otherwise used pursuant to a subcontract with [plaintiff], pursuant to the MVIDD Contract with the Secretary, with the possible exception relating to present perfected rights[.]"[12] Plaintiff alleges that defendants do not have a "contract with [plaintiff] or the Secretary for use of Colorado River water on or within the El Rio Golf Course."[13]

Plaintiff alleges that "[t]he only present perfected rights applicable to Section 11 are those referred to as the Hurschler PPRs[.]"[14] Plaintiff further alleges that "[a] contract providing for satisfaction of the Hurschler PPRs was entered into on March 20, 1984 by the Hurschlers with, or on behalf of, the Secretary... (the Hurschler Contract')."[15] "The Hurschler Contract is currently held by First American Title Insurance Agency of Mohave, Inc. as Trustee of Trusts 4895 and 9177."[16] Plaintiff alleges that "[n]o water has been ordered or reported as used under the Hurschler Contract" and that "[w]atering a golf course is not an accepted or permitted use of Colorado River water under the Hurschler PPRs."[17] Thus, plaintiff alleges that the Colorado River water that defendants have diverted to use at the El Rio Golf Course has not been "properly consumed or otherwise used under a present perfected right, including the Hurschler PPRs."[18]

John Hoover, "the controlling manager of [d]efendants El Rio Recreational, LLC and El Rio Holdings, LLC", avers that the Hurschler Contract was "assigned... to the El Rio [d]efendants' immediate predecessors-in-interest when those predecessors purchased the associated real estate in two transactions in 2000 and 2006."[19] Hoover further avers that "[t]hose predecessors-in-interest are related and commonly owned with the El Rio [d]efendants, and are managed under my common control."[20] Hoover avers that "[i]n or about 2000 and 2006, I caused [d]efendants' immediate predecessors-in-interest to assign the land and associated PPRs to First American Title Company, as trustee of two trusts, Nos. 4895 and 9177, which were established to hold the land and water rights now in question...."[21] Hoover avers that "[t]he assignment of the [Hurschler] Contract was approved by the Department of the Interior."[22] And, Hoover avers that "[d]efendant HCJM, Inc. subsequently purchased a partial tenancy-in-common interest in a portion of the property at issue. No assignment of water rights was included in that purchase."[23]

On October 8, 2013, plaintiff commenced this action in state court. In its complaint, plaintiff asserts claims for misappropriation/conversion and unjust enrichment/quantum meruit. Plaintiff alleges that defendants owe it $46, 356.00 for the water they have diverted from 2009 through June 30, 2013.[24] Plaintiff also seeks to enjoin defendants from diverting Colorado River water for use on the El Rio Golf Course, "except that portion of the Golf Course lying within the Southwest Quarter of Section 11[.]"[25]

On November 13, 2013, defendants removed the matter to this court, alleging federal question jurisdiction.

On November 20, 2013, defendants filed the instant motion to dismiss, in which they argue that the Secretary of the Interior and the First American Title Company, as trustee ...

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