Soscia Holdings, LLC v. Rhode Island

677 F.Supp.3d 55

2023 DNH 074

SOSCIA HOLDINGS, LLC v. State of RHODE ISLAND, et al.

Civil No. 22-cv-266-LM

United States District Court, D. Rhode Island

Signed June 15, 2023

Richard E. Fleury, Law Office of Richard E. Fleury, Warwick, RI, Patrick J. Dougherty, Narragansett, RI, for Soscia Holdings, LLC.

Nicholas M. Vaz, Office of the Attorney General, Providence, RI, for State of Rhode Island, et al.

ORDER

Landya B. McCafferty, United States District Judge

Soscia Holdings, LLC, brings federal and state claims against the State of Rhode Island, the Rhode Island Department of Environmental Management ("DEM"), DEM Director Terrence Gray, and Administrator of DEM Office of Compliance and Inspection David E. Chopy. Soscia's claims arise from its operation of the Flat River Reservoir Dam ("Dam") in Coventry, Rhode Island. DEM sent letters to Soscia under a law requiring permits for certain dams, Rhode Island General Laws § 46-19.1-1 ("Permitting Act"), directing Soscia to reduce the water flow from the Dam in order to raise the water level in the reservoir created by the Dam.

Soscia alleges that the Permitting Act is unconstitutional and challenges the defendants' actions to enforce it. Soscia brings a claim under the Rhode Island Constitution and federal claims under 42 U.S.C. § 1983 against Rhode Island, DEM, Chopy, and Gray and brings state law tort claims against Chopy and Gray. Defendants move to dismiss based on Eleventh Amendment sovereign immunity, qualified immunity, abstention principles, and failure to state a cognizable claim. For the following reasons, the court dismisses all claims brought against the State of Rhode Island and DEM, the claim brought under the Rhode Island Constitution, and the § 1983 claims against Chopy and Gray in their individual capacities. The court does not dismiss the § 1983 claims against Chopy and Gray in their official capacities, seeking only prospective injunctive relief.

With jurisdictional and quasi-jurisdictional issues resolved, the court has substantially narrowed Soscia's federal claims. The court find that this is an appropriate point to reassess the merits of the remaining claims. The court, therefore, denies without prejudice that part of the motion seeking dismissal of the claims on the merits. Defendants may address the merits of the remaining claims either in a subsequent and newly-briefed motion to dismiss or in a motion for summary judgment.

STANDARD OF REVIEW

Eleventh Amendment sovereign immunity implicates the court's jurisdiction, which the court addresses under Federal Rule of Civil Procedure 12(b)(1).¹ Motions to dismiss under Rule 12(b)(1) may be facial or factual, depending on whether the motion is based on the complaint alone or is supported by evidence. Laufer v. Acheson Hotels, LLC, 50 F.4th 259, 265 (1st Cir. 2022). When, as here, defendants present a facial challenge, the court takes the properly pleaded facts in the complaint as true and follows the standard used under Federal Rule of Civil Procedure 12(b)(6). Id. The party invoking the court's jurisdiction, here the plaintiff, bears the burden of showing that jurisdiction exists. Aversa v. United States, 99 F.3d 1200, 1211 (1st Cir. 1996).

Under Rule 12(b)(6), the court asks whether the plaintiff has made allegations in its pleadings that are sufficient to render its entitlement to relief plausible. See Manning v. Boston Med. Ctr. Corp., 725 F.3d 34, 43 (1st Cir. 2013). The court accepts all well-pleaded facts as true and draws all reasonable inferences in the non-moving party's favor. Hamann v. Carpenter, 937 F.3d 86, 88 (1st Cir. 2019). The court, however, disregards "statements in the complaint that simply offer legal labels and conclusions or merely rehash cause-of-action elements." Sonoiki v. Harvard Univ., 37 F.4th 691, 703 (1st Cir. 2022) (internal quotation marks omitted). In addition to the allegations in the complaint, the court may consider exhibits submitted with the complaint, official public records, and documents whose authenticity is not disputed. Douglas v. Hirshon, 63 F.4th 49, 57 (1st Cir. 2023).

BACKGROUND

On January 24, 2023, the court held a hearing on defendants' motion to dismiss (doc. no. 34) and Soscia's motion for a preliminary injunction (doc. no. 5). The court denied Soscia's motion for a preliminary injunction due to a lack of irreparable harm and took defendants' motion to dismiss under advisement.

I. The 1846 Act

The story behind this case began in 1846 when certain owners of mills and real estate in Coventry, Rhode Island, petitioned the Rhode Island General Assembly to pass an act of incorporation for the "Quidnick Reservoir Company."² Doc. no. 32-3 at 4. The purpose of the corporation was to build dams and reservoirs on the Pawtuxet River to supply water for their mills. The General Assembly passed "An Act to Incorporate the Quidnick Reservoir Company" ("1846 Act"):

for the purpose of erecting, establishing, maintaining and keeping in order dams and reservoirs on the waters of said Pawtuxet River and its branches; and by that name are and forever hereafter shall be able and capable in law to hold, purchase, receive, possess, enjoy and retain to themselves and their successors, lands, rents, tenements, goods, chattels and effects of what kind or nature soever.

Id. at 8. Once incorporated, the Quidnick Reservoir Company built the Dam on the Pawtuxet River that created the Flat River Reservoir, known as Johnson's Pond.³

The Rhode Island General Assembly amended the 1846 Act in 1867, 1975, and 1982. As part of the 1982 amendment, the stated purposes of the Quidnick Reservoir Company were: "to erect and establish dams and reservoirs for the rentention [sic] and preservation of the waters of the Pawtuxet River and its branches for the benefit of its members; for establishment and operation of hydro power sites for its members' uses and resale of power generated therefrom; and any other legal purposes." Id. at 20. Section 2 of the 1846 Act, as amended in 1982, provides that "Quidnick Reservoir Company shall enjoy the other powers generally incident to corporations and shall be subject to the provisions of Title 7 of the General Laws of Rhode Island of 1956, as amended, and all acts in amendment thereof and in addition thereto."⁴ Id. at 23.

II. The Coventry Lease

In January 2009, the Town of Coventry, where the Dam is located, leased Johnson's Pond and a vacant parcel of land, referred to as Open Space, from Quidnick Reservoir Company ("Coventry Lease").⁵ Under the terms of the Coventry Lease, Quidnick agreed to maintain the water level in Johnson's Pond according to the "Water Level Table," which is Section 7 of the Lease. The Coventry Lease will expire on March 31, 2024.

III. Sale to Soscia

In March 2020, Quidnick sold "two parcels of land and water rights" to Soscia through a purchase and sale agreement (doc. no. 32-1) and a quitclaim deed (doc. no. 32-2 at 14-16). Quidnick took a mortgage on the property for $1,500,000.00 and assigned its rents and leases of the property to Soscia. Doc. no. 32-2 at 2-3. Parcel I of the two parcels of property Quidnick sold is described by its boundaries in the deed and included approximately 100 acres of land on Flat River Road in Coventry. Id. at 2 & 15-16. Parcel II is described as "land and water rights commonly known as Johnson's Pond, Coventry, Rhode Island." Parcel II is also described as follows.

Also specifically including in this conveyance any and all right held by Quidnick Reservoir Company to cover and flow with water all or so much of any such lands as shall be consequent upon and caused by the erection and maintenance of any dam on the Flat River within the Town of Coventry, and including and hereby conveying any and all rights that Quidnick Reservoir Company has or has any claim to in any waters within the Town of Coventry, including but not limited to Flat River Reservoir or Johnson's Pond so-called[.]

It is the purpose and intent of this Deed to convey, and Quidnick Reservoir Company hereby does convey, to Soscia Holdings LLC all the right, title, claim and interest that Quidnick Reservoir Company has in and to any and all land in the Town of Conventry, and any and all rights, title, claims and interest that Quidnick Reservoir Company has in the waters or submerged lands within the Town of Coventry, including but not limited to the Flat River Reservoir and Johnson's Pond, and all flowage rights, dams, flumes, raceways and other apparatus or equipment used in connection therewith.

Id. at 16. Quidnick assigned its interest in the Coventry Lease to Soscia. Doc. no. 32-5. After the sale and assignment of the Coventry Lease, Soscia sued Coventry in state court seeking a declaration related to the terms of the Lease.⁶

IV. Water levels in Johnson's Pond

At some point after purchasing the property from Quidnick, Soscia increased the water flow through the Dam, lowering the water level in Johnson's Pond below its customary level. The lowered water level exposed muddy banks along the Pond and decreased the depth of the Pond. In April 2021, David Chopy, Administrator of the DEM Office of Compliance and Inspection, sent letters to Soscia and Coventry about water levels in Johnson's Pond, notifying them that Soscia would need a permit to operate the Dam with water levels other than those stated in the lease with Coventry. Chopy also communicated with the United States Geologic Survey-Water Mission Area in November 2021 about the need for certain flow in the Pawtuxet River related to grass or weed growth. Doc. no. 32-7.

V. Permitting Act

The Rhode Island General Assembly passed the Permitting Act, which became effective in June 2022. The Permitting Act requires permits for dams with certain water retention capacity, which includes the Dam at issue in this case. R.I. Gen. Laws § 46-19.1-1. Under the Act, the owner or operator of a dam above a certain water capacity must apply to the director of DEM for a permit to raise or lower the water...