*1 943 inadmissibility statutory provision were III. into of
incorporated the cancellation re- reasons, For foregoing we DENY interpreta- provision, moval and such an Guerrero’s for petition review. plain language tion is inconsistent with a reading. Holder, 749, (7th
Barma v. 640 F.3d 752 2011). agree Cir. We Seventh analysis. Circuit’s Indeed, substantially this court came to INCORPORATED, PURE WAFER Gonzales, in v. the same conclusion Becker corporation, Delaware successor in in (9th 1000, 2007), 1003-04 in F.3d Cir. Exsil, Inc., corporation, terest to a Delaware grounds of which we held waivers for tiff-counter-defendant-A Plain deportability did as serve basis ppellee, excusing convictions for of cancellation re- v. grounds moval. of waiver both inadmissibility deportability are limit- PRESCOTT, OF, CITY an Arizona mu ined their application may be used nicipal Kuyken corporation; Marlin relief waive conviction bars under dall; Carlow, Craig McConnell; Alan 240A(b). § INA As this has ex- capacity in his as a Member context, plained in another related Council; “[a] City Lamerson, Prescott Jim giving Attorney statute discre- General in capacity a Member of his Council; grant inadmissibility Blair, tion to relief from in Prescott Steve capacity his as a Member of the Pres give Attorney does not discre- General City Council; Arnold, cott Charlie tion to grant relief removal.” Sanchez capacity his Member (9th as a of Pres Holder, v. 560 F.3d Cir. City Council; Kuknyo, cott Chris 2009) (en banc). capacity his Member as a of Pres language Because the of the cancellation City Council; Scamardo, Len cott of is “that unambiguous, removal is statute capacity his Member as a of Pres matter,” Chevron, U.S.A., the end Council; Nietupski, cott Mark Council, Inc., Inc. v. Nat. Res. Def. capacity his as Public Works Director 837, 842, 104 S.Ct. U.S. L.Ed.2d Prescott; Berman, Joel (1984). 212(h) § provi- INA waiver Manager capacity his as Utilities sion not be used excuse convictions Prescott, Defendants-coun 240A(b). § that bar under INA relief INA ter-claimants-Appellants. 212(h) permits Attorney General to No. 14-15940 inadmissibility, ground waive cannot conviction that bars cancel- waive a Appeals, United Court of States lation of removal. Because Guerrero’s Ninth Circuit. him from shoplifting preclude convictions Argued April and Submitted removal, seeking decline cancellation Francisco, California San treating a con- argument to reach his January Filed marijuana as a possession
viction for the arbitrary bar to cancellation removal
and capricious. *3 (argued),
Robert A Shull L. Andrew Hodson, Pringle, Kenneth A. and Nicole F. PLLC, Bergstrom, Wright Dickinson Phoenix, Arizona, for Defendants-Counter- Claimants-Appellants. Scottsdale,
Jeffrey (argued), D. Gross Arizona; Layne K. Morrill Stephanie Samuelson, PLC, L. Morrill & Aronson Phoenix, Arizona; for Plaintiff-Counter-De- fendant-Appellee. F.
Before: DIARMUID O’SCANNLAIN, RICHARD R. CLIFTON, SMITH, N. RANDY Judges. Circuit Partial Partial Concurrence and Dissent by Judge N.R. SMITH OPINION
O’SCANNLAIN, Judge: Circuit must decide whether
We Prescott, Arizona Contract violated the process Prescott when de- of the Constitution and treat Clause effluent City’s from the sewage plant treatment sewers. AWRF clared then discharges dis- treated wastewater effluent either longer accept to golf customers, into large recharge courses or of its basins by one charged replen- aquifer. ish the refinishing plant. metal controversy This centers the fluoride I concentration effluent, City of Prescott at dispute This sees City’s recent enactment of an Ordi- Inc., Wafer, corporate odds imposing nance limits on such concentra- Prescott, contract inter- over resident tion. grievances run Pure Wafer’s pretation. *4 vio- City has from the constitutional —the B our nation’s fundamental charter —to lated spe- betrayed the mundane —the In enteredinto a contract, the two made each other promises cific Development Agreement (“the called days. during happier Agreement”), with Pure Wafer’spredeces- interest, company a sor in calledExsil. In
A purchased 2007 Pure Wafer Exsil and ac- rights its quired in all of facility obligations runs a Prescott Pure Wafer un- Like Agreement. der cleaning parties, silicon wafers used clients as entities IBM, Intel, refer to both “Pure and Motorola. Called “test Wafer” like wafers,” simplicity’s sake. they play a crucial monitor production processes those in role time of the Agreement, At the Pure microproces- employ to build companies Sulphur, in plants Wafer owned Oklahoma chips. per- computer sors Jose, California. The Agreement and San called a service: forms “reclaim” what City to way for the was a enticePure nitrites from the role is to remove oxide its third facility build Wafer in the they pass given through after wafers Airpark, Prescott expected production process, clean phase jobs, create stimulate would economicac- them, them, back to polish and send them tivity, spur improvements, infrastructure they can later on. its clients so be reused revenue. In generate tax exchange, in four range The wafers diameter City agreed provide Pure Wafer to one foot. inches sewage it infrastructure with neededto large volume of busi- Pure Wafer does business, conduct its reclamation plus ness, running 36,000-square-foot Pres- things) tax (among other and zoning twenty-four day, hours a seven facility cott it for Pure to make easier breaks Waferto week, percent days ninety-five at around if facility it so expand the desired. Pure gen- activity All that reclamation capacity. in facility constructed the Wafer 195,000 up lot of erates a 2002, at a expanded wastewater — total costof it has day, although practice gallons per roughly million. $35 Pure then dis- been less—which City’s into sewer lines. The charges C carry effluent sewer lines Pure Wafer’s provisions of the Reclamation Three City’s Airport into the Water parties’ arguments (“AWRF”), figured centrally City- of three Facility one litigation. during course of this plants in owned wastewater treatment 4.2, fluoride, First, to- Agreement’s section and Pure Wafer maintains that F, gether provide with Exhibit City represented discharging City may raise Pure “sewer Wafer’s up fluoride to that level “would be accept- schedule, usage fees” above certain rate fact, negotiations In earlier in able.” long as the content in so fluoride Pure Wafer had informed the that its Wafer’s effluent remains at below fluoride levels ran high sometimes as mg/L. Exhibit F recites that Pure Wafer’s mg/L, but at request, “typical” fluoride content has a value of 50 agreed to design the Prescott facili- mg/L mg/L. and a “maximum” of 100 ty so fluoride contents addition, obligates City to Section 4.2 mg/L, exceed 100 a commitment reflected 195,000 up provide gallons “sewer in the maximum fluoride value listed per day, capacity” and to bear the cost Agreement’s years Exhibit F. In all the “augment[ing] necessary such facilities” as facility, has run Prescott Pure Wafer’s “accept or accommodate” Pure Wafer’s discharges mg/L have never exceeded effluent. concentration, in fluoride and have aver- Second, provides section 9.1 that Pure aged mg/L. about operate Facility Wafer “will representatives testified local, state, accordance all and federal *5 that the company’s pros- concern over the regulations.” environmental pect regulation of fluoride in part stemmed Third, 14.7, integration section Jose, from its in experience San where it clause, Agreement that states “[t]his facility ran a prior opening reclamation the exhibits hereto constitute the entire in In the one Prescott. the 1980s Jose San agreement parties,” between the “su- apparently passed an “similar” ordinance persed[ing]” prior contemporane- “all to the in Prescott Ordinance at issue agreements, representations, negotia- ous case, required “put which Pure Wafer to understandings.” tions and lot of infrastructure in to deal fluor- with ides,” prevented of Pure the cost D expanding facility. from Wafer negotiat- Pure insists that it Wafer when problem, explains, real was Wafer Agreement City, ed the with the its most it no Development that had important objective to make sure was Jose; wiser, much the with San so ability operate facility not continues, steps it took to “commu- Wafer changes City in be thwarted future City to the of Prescott needs nicate[ ] [its] it, regulations. As it Pure Wafer tells actually got inputted into a and ... plant “didn’t want to ... could build Development Agreement, the contractual any be useless at time rendered obligation.” City,” precautions so it took “to make up that it had a locked contract and sure City that it part, For its also claims water, re- position sewer and effluent composi- concerns about effluent harbored end, quirements.” To general partic- fluoride tion levels that it that the was claims “made sure above, had balked As noted ular. facility’s] require- fully aware of [the what report that its initial fluor- at Pure Wafer’s were.” ments high as 150 levels were sometimes ide addition, hearings prior mg/L. public In that it In avers particular, Pure Wafer Agreement’s adoption, City officials ability safeguard anxious to to dis- was required mg/L that- would be charge containing up to 100 stated effluent higher fluoride concentration than has a regarding pre- codes comply Dog’s, streams of At that Sun two effluent discharge. of effluent treatment commingled basins, in the recharge meeting, representa- a Pure same diluting importance the relative of company that the public tive reassured the Second, air, levels. ef- pollute not and AWRF’s fluoride some “did want water leaving the is system fluent AWRF to water ground, that a would be de- used [and] golf actually discharge from courses and does enter signed allow that would recharge Illustrating the pure enough go into basins. com- plant their circumstances, importance of city’s bined these plant.” wastewater treatment appears that Pure effluent E basically had no effect the fluoride con- as from aquifer, centration Subsequent changes in state and federal through monitoring well readings regulations set off the chain environmental reported consistently fluoride concentra- leading litigation. to this Above events mg/L, tions less than 0.4 or one tenth of all, in Arizona Department 1999 the the amount allowed under the Groundwa- Quality (“ADEQ”) Environmental —the ter Protection Permit. regulatory agency— State’s environmental Aquifer ADEQ’s required monitoring to obtain an decision shift the (“APP”), which, turn, point discharge location to the Protection Permit AWRF’s consequences. particular, on the serious imposed requirements host had AWRF, requirement City represents “like City, including the works, exiting publically could most treatment discharge owned AWRF fluoride, mg/L designed 4.0 other longer remove fluoride and exceed point types pollutants” from discharge at the industrial measured it, that, that flows into wastewater AWRF. *6 turn, along aquifer. it to sends the The change. to big That was a Prior the upshot that, City in order the to ADEQ-imposed regime, City op- APP the comply mg/L the APP’s 4.0 with fluoride pursuant erated the to a AWRF Ground- point discharge, limit at the AWRF’s Permit, only Protection re- water which changes one two had to occur: either the quired City groundwater to the sample the equipped must be to remove fluor- AWRF in in monitoring recharge wells the basins it; enters ide from the wastewater City’s aquifer, steps the one or more content of must be fluoride wastewater point downstream from the AWRF’s it enters the reduced before ever AWRF. discharge. Protec- Under the Groundwater option “pretreat- The latter is known as Permit, the in tion fluoride concentration ment.” not 4.0 recharge the basins could exceed mg/L. point the im- important The is that F pact samples of Pure effluent on recharge ADEQ City taken In 2004 sent the from the basins is less Notice during pronounced respect alleging than it to sam- seven dates is with Violation AWRF, ples previous year for at taken at the least two which fluor- AWRF’s First, recharge basins take in ide the maximum allowed reasons. levels exceeded discharged City’s from at dif- APP. effluent least two under The Notice directed AWRF, City response from ferent sources: to “submit written larger Sundog describing also the corrective actions that have but from the Wastewa- to resolve the violations.” In ter Treatment Plant. The effluent been taken AWRF’s City AWRF, response, began ing “any devel- wastewater contain- op pretreatment program to explore ing of’ mg/L excess 16.3 of fluoride.2 local help what fluoride limits requires would en- Ordinance also industrial City complied sure that with its users get APP. like Pure a permit from and, the City necessary, extent Nevertheless, ADEQ when conducted a “pretreat” their prior wastewater to dis- compliance “pretreatment audit” is, charge ensure, at their own —that City in it City concluded that “[t]he expense, that complies their wastewater does control valid mechanisms with mg/L the 16.3 limit on con- fluoride place regulate discharges” centration. The Ordinance threatens those City’s categorical two users, industrial in- who injunctive action, violate with civil cluding ADEQ Wafer. declared it penalties, prosecution. and criminal ADEQ “imperative” that City “establish an approved City’s pretreatment program pretreatment approved program.” Under established the Ordinance. law, state APP violations could in ADEQ fining City result up that if it estimates were re- $25,000 49-262(C). per day. A.R.S. quired pretreat entering wastewater it complies AWRF so that with the APP’s In 2012 ADEQ issued another Notice limitations, fluoride would cost the City, Violation had not still in capital outlay million $2.7 mil- $8.5 pretreatment established a program. The lion annually. Pure yet Wafer has not con- basis of the violation again was excessive study, ducted a preliminary esti- concentration in fluoride effluent dis- mate suggested pretreatment of its charged from the AWRF. This time the own effluent require company ADEQ entered into Consent spend million to million capital $1 $4 Order, which thirty mandated that within $360,000 $720,000 outlay and annually. days adopt “shall submit for ADEQ’s approval review the Pre- H Program.”
Treatment Not surprisingly, Pure Wafer was not G pleased developments. Claiming with such course, City passed due Ordi- that it likely facility will close the if forced No. Ordinance, nance 4856-1313 2013.1As relevant comply *7 here, the imposes (and Ordinance brought limits the against City this lawsuit the pollutants users, that industrial like certain capac- Pure of its officers in their official ities) Wafer, permitted discharge § into 42 seeking the under U.S.C. de- City’s system. claratory injunctive relief, sewer Most for important and the case, alternative, this the Sig- alleged that damages. Ordinance declares Pure Wafer (of by nificant Industrial Users Pure that enacting City which the Ordinance the one) obligation” not discharge “impaired] Wafer “shall or cause had con- the discharged Wafer, any entry to be tract Pure in violation of Arti- point” a with I, works, Constitution, publically owned cle 10 of treatment includ- section the federal questioned City’s appears 1. Pure Wafer has not were or are six the 2. It that there at least Prescott, authority City Significant enact the The in- Ordinance. Industrial Users Wafer, statute, cluding a see Rev. relies state Ariz. Pure Each received an identi- Stat. 49-391, I, City directing as well as 3 of its cal Article Section letter them to comply own Charter. with Ordinance. 950 for breach five claims Clause analogous Contract contract and
as well-as implied Constitution; of the and covenant of good Arizona Ordinance, dealing, com- fair had faith and enacting deemed it City, by un- of necessary proceed breaches two different at least mitted damages implied addition, of the trial. In phase contract, a breach of as well as the district dealing. fair held that Pure faith and court good was covenant entitled to fees, declaratory attorneys’ did not set an City counterclaimed The amount obli- in fact months that the until several later. The judgment court de- City’s the Ordi- comply counterclaim. Wafer to with nied gated Pure nance. 3 City timely appealed The the district hearing on court held a The district judgment. The court’s district court had in- preliminary motion for Pure Wafer’s jurisdiction §§ under U.S.C. 1331, 1343, parties by consent of the
junction, 1367,4 jurisdiction under into a trial on the court converted § 1291. 28 U.S.C. merits, liability to be into a bifurcated phase. a damages phase not en- agreed
also
II
against
force the Ordinance
argues
first
that the dis
in-
during
pendency
litigation,
in holding
trict court erred
City,
cluding any appeal.
enacting
Ordinance,
by
had violated
Contract Clause. The
Contract Clause
of the Constitution declaresthat “No State
merits,
trial
After
on the
the district
...
pass any
shall
Lawimpairing the
Wafer,
judgment
court entered
Const,
of Contracts.”
Obligation
U.S.
art.
refusing
to accept the
contention
I, §
cl. 1. The ContractClause applies
pretreatment
an envi-
ordinance is
State,
to contracts
into by
entered
regulation of the
ronmental
sort Pure Waf-
Peck,
(6 Cranch) 87,
Fletcher v.
U.S.
Instead,
agreed
obey.
believing
er
135-39,
(1810),
L.Ed.
as well as
thinly
Ordinance
abe
“cost-shift-
veiled
municipalities,
and suchcontracts
ing regulation,” the
district court held
“impaired”
meaning
within
Ordinance,
City, through
im-
had
municipal
Clause
ordinancesas well
paired
obligation
of its
legislation,
Gaslight
Paul
by state
St.
Co.
Wafer, in
violation
the Contract
U.S,
Paul,
142, 148, 21
v.
St.
Clauses
constitu-
federal
state
(1901).
575,
951 Clause, it necessary ing level, the Contract is it? At under the most basic it cannot be to set forth said to “impaired” first the differences between a have obligation of contract, or a its contract city “obligation” State’s breach of on the if such remains hand, full city impairment and a or force one State’s and effect. And our cases estab- contract’s on the lish that obligation, “obligation” of such other. of a is contract
the judicially duty enforceable it imposes A upon party each to perform either or else to submit the courts’ remedial powers, is a contract between a which will often the form of take an order municipality private party. and a In dis- to pay may damages, encompass but other contracts, involving government putes (and remedies as thus may well Holmes can sometimes be hard to tell whether the hasty have been too in proclaiming that entity “impaired governmental has ob- duty “[t]he a contract keep at common ligation” of its simply contract has law prediction you means a pay must private its contract par- breached with the damages it, if you keep not do noth- crucial, ty. But the distinction not is least —and ing Holmes, Jr., else.” Oliver Wendell conflating concepts because the two Law, Path L. 10 Harv. Rev. making risk a federal constitutional case of (1897)). of garden variety public out even the most dispute, transforming contract the Con- principle, Given that state action of tract Clause into a font contract state “impair” obligation cannot of be said to Horwitz-Matthews, law. See Inc. v. a long contract so it leaves both as 1248,1250 (7th 1996) Chicago, 78 F.3d Cir. free to remedy obtain a court-ordered (“It would be turn every absurd to (typically in the damages) event that either by a municipality contract state or into a promised. them perform fails to as And Constitution.”). violation the federal principle true whether state ac holds fact, Supreme long ago rejected Court tion private par affects a contract between proposition that it is “the wherever assert- or, here, ties as a a municipality ed on one hand that is See, e.g., State party. itself is a Univ. of bound a perform particu- contract to a Assembly Cayetano, Haw. v. Prof'l municipality lar act denies that it (9th 1999) (“[T]he Cir. F.3d so, is liable under the contract do there- substantial test turns impairment impairment obligations law-making used whether the State contract arises violation the Constitu- powers breach its merely contractu St. Paul tion United States.” Gas- a obligations, al to create defense Co., light S.Ct. 575. U.S. recovery prevents breach that proposition, explained, Court Such damages.”); at 642 n.7 Crosby, F.3d every “amounts the contention (“If right retains the offended involving controversy concerning case breach, damages recover the Con municipal cogni- contract is one Federal if, implicated; tracts on the Clause zance, ultimately determinable in this hand, repudiation goes other so far Thus, proposition court. to reduce the extinguish duty to pay the state’s dam conception is to ultimate demonstrate ages, impaired said Id. its error.” contract.”); obligation of Horwitz-Mat (“The thews, essence ... how tell the difference 78 F.3d at So do we of a is that it government’s impairing triggers breach of contract between the ob *9 reasonably for simply duty pay damages of its contract ligation and breach- 952 may erty If and as such consequences breach. be
foreseeable takenfor a public obligation just purpose provided duty unimpaired, compensationis to have been be said paid,” “[t]he contract cannot and thus States remain free impaired.”). abrogate such to ... contractual rights, just upon payment compensation.”431 Court’s Contract Supreme n.27, n.16, 1, U.S. 97S.Ct. 1505 52 deep con reflect the cases likewise Clause (1977). L.Ed.2d 92 obligation remedy, nection between a upshot being that State does not B of a contract so “impair obligation” contracting parties it leaves free to long as 0\ nnn In light principles ordinary state-law remedies in pursue nn above, City has it is clear to us As Court ex the event breach. contract impaired its with obligation Corp. v. Ro plained General Motors has Wafer, the Ordinance because mein, obligation of a contract con “[t]he reme ordinary not state-law altered the binding party force on the who sists otherwise would dies which Pure Wafer 181, 189, 112 S.Ct. makes it.” 503 U.S. a successfully proves if entitled (1992) (quoting L.Ed.2d 328 very might contract. (2 How.) Hayward, 43 v. U.S. McCracken question contract —a well breached its (1844)). Thus, 608, 612, 11 a L.Ed. opinion we later in this discuss —but “trigger Clause scruti Contract State violated not it has necessarily does mean “changes if it the laws that ny” enacts Consti the Contract of the federal Clause enforceable,” legally make a tution. eroding example, “the remedies avail Indeed, included a claim Wafer in way contract” that “con able under a simple against in its suit breach of contract at agreement enforceable law verts] City, “Pure cannot alleging contrast, promise.” into Id. But a mere without incur- comply the Ordinance not violate the Contract a State does Develop- ring costs which substantial “not challenged does if action Clause City,” Agreement allocated ment enforceability of the ... legal change the “such amount of requested specifically contracts,” at S.Ct. id. may establish damages as long as a State satisfies so condition from the flowing of this action as trial to relieve purport does —in City’s breach.” duty itself—of its cluding, especially, most to a court- submit perform either here, Crucially purposes for our remedy.5 ordered as a the Ordinance has never asserted legal effect have the defense that vein, Trust would United States In a similar perform and City’s duty to discharging the Jersey explained New New York v. Co. of legal of its thereby relieve the “[cjontract prop- form of would rights are a sure, Co. Clause. W.B. Worthen under the Contract Clause the Contract does not 5. To be 56, 60, 62, 55 S.Ct. Kavanaugh, mere- U.S. automatically approve state action that v. (1935). ly linger available on a contract alters the remedies We need not 79 L.Ed. entirely; stops wiping difficulties, however, them out short of because as over such (with some under- Justice Cardozo observed statement), attempted explain, here “dividing obli- line” between the remedies Pure tinker all with obscure,” remedy gation “is at times event it obtain be entitled to changes may be too purely some remedial proves breach of contract. unnecessary” pass muster "oppressive *10 obligation by the contract— spond in money damages if it loses this —established pay damages remedy other some as a case at the day.”7 end consequence of non-performance.6 its Although City argued has that the Ordinance survives Contract Clause scruti- But we not speculate need about what ny because impairment was not sub- legal effect might the Ordinance have on stantial, the thrust of that argument was Pure judicial entitlement reme- based, contract i.e. that Pure Wafer dies, City because the has several now “agreed to comply with reg- environmental expressly represented times Ordi- ulations,” the “cost of regulatory (that operate nance does not is, dissolve compliance [was] not a term that was bar- impair) binding its obligation to perform gained for.” To the extent City’s argu- whatever it promised to do under the De- otherwise, ment could read go should velopment Agreement. instance, For as the saying without City is barred City put it in briefing following the district from altering position legal on the ef- hearing court’s on Pure Wafer’s motion for fect subsequent Ordinance at stages a preliminary injunction: litigation, this thanks the doctrine of is suing City in this judicial estoppel principles. and related See case breach of contract and is seek- Whaley v. Belleque, 520 F.3d ing money damages_The City is de- (9th 2008); Cir. State v. Towery, 186 Ariz. fending claim upon plain based (1996) (in banc). P.2d terms of Development Agreement. If prevails Pure Wafer its breach of upon C presum- will Court analysis persuades us that ably damages, assess to the extent dam- Wafer does have a claim under ages proven appropriate. In any the Contract Clause. This case has all the event, the Pretreatment Ordinance hallmarks of quintessential contract dis- would not recovery. frustrate pute, as attempt- and insofar has Likewise, ed to rights Pure Wafer’s hearing at the claimed Waf- refute Agreement er’s motion under the preliminary injunction, has not at- —but tempted to City represented rights legally render such is a con- un- “[t]his dispute tract enforceable—it should be as a Development treated con- what Agreement plaintiff dispute. judgment tract The district city between and the court’s provides— defendant favor of Pure garden-vari- It’s a Wafer’s Contract Clause ety contract claim cannot dispute.... They’re stand. seeking damages for City’s] alleged [the breach of Ill They’re asking the contract— for dam- ages if they Nevertheless, comply have because pro- Pure Wafer seeks to breach of contract— The judgment can re- tect the in its favor on the alter- fact, above, it,” legal 6. equitable as noted the district court remedies available to proceedings had ordered the trial bifurcated provides and further that the shall phase damages liability phase, into a and a "subject equitable be enforceable to a court’s something City voluntarily to which the powers.” attempted to cast agreed. Hence, provisions. doubt on those in addition damages, be able to re- Agreement goes 7. We also note that the out of quest injunctive specific performance relief or way to state that “[i]n event if it so desires. herein, [Pure default Wafer] shall all *11 954 A City simply claim that has
native
obligations it un-
the contractual
breached
Development Agreement
Agreement.
Development
in the
dertook
specifies
by
it
governed
that
“shall be
court did not
Although
district
rule on
of
the laws of the State
construed under
Agree-
it
outright,
claim
discussed the
Arizona
has
Supreme
Arizona.” The
Court
length,
trial
ment at
considered extensive
Arizona,
“in
will
made
a court
clear
findings of
testimony, and made sufficient
according
attempt
contract
enforce
of
to re-
and conclusions
law
us
fact
Taylor
Farm
v. State
parties’
intent.”
scope
contractual
solve
Ins.,
148,
Mut.
P.2d
Auto.
for a
175 Ariz.
without
remand.8
rights
need
(1993) (in
Moreover,
banc).
un
proceed
the meri
We therefore
law,
may
“a
der Arizona
court
consider
ts,9
any
factu
respect
mindful that with
circumstances,
including ne
surrounding
findings,
court’s account
“[i]f
al
district
gotiation,
understandings,
prior
and subse
in light of
plausible
of the evidence is
Further,
Id.
quent
conduct.”
1139.
entirety,
of
viewed in its
court
record
are
applying
courts
Arizona contract
law
may
though
not reverse it even
appeals
ambiguity
not
in the con
required
find
sitting
it
convinced
had
been
language
they
tractual
before
enter
fact,
weighed
trier of
it would have
bearing
par
tain
on the
extrinsic evidence
differently.” Anderson
v.
evidence
of
Rather,
ties’ intents. Id.
573-74,
Bessemer, 1140.
we are
105 S.Ct.
U.S.
(1985).
offered
[to]
]
instructed
intended.” Id. Pure effectively Wafer describes the
Agreement as a “regulatory so-called con- B tract,” “regulated in entity con- tractually promises government the that theory City Pure Wafer’s that the will provide something [it] do that is not promised to accept long its effluent so as clearly by otherwise required extant law. its non-pretreated fluoride content remains return, government In the contractually at or mg/L, below 100 to bear the promises regulated the entity to maintain financial risk of future occurrence that regulatory regime the set out in the con- so, prevent would City doing the from government tract. If the breaches including in changes future law.10To Pure promise regulatory stability, it pay must mind, Agreement gave Wafer’s the it a damages.” contract David Dana & Susan right “contractual ... discharge at [con- to Koniak, P. in Bargaining the Shadow of 195,000 tractually specified] rates to up 473, Democracy, U. Pa. L. Rev. gallons per day containing up effluent to (1999). fluoride,” more, 100 mg/L of and what is parties agreed that if it “[t]he became hardly Such contracts are novel. To take to necessary modify system prominent the sewer so one example, United States v. permit as to discharge Pure to Corp. Winstar involved contracts between effluent, City the pay [such] for that government federal certain thrift view, institutions, modification cost.” Pure Wafer’s Supreme and the Court held ADEQ’s inauguration regime the APP government that in such contracts had it “necessary modify made promised regulate to the sew- to in specif- the thrifts system” er in manner, order to pay ensure Pure Waf- ic damages them if it ability discharge er’s in changed regulatory its effluent landscape later Agreement manner pro- way believes that caused them financial harm. 518 and, continues, 839, 871, Pure recent U.S. S.Ct. 135 L.Ed.2d tects— regulatory changes (1996) (“The among (plurality opinion) future thrifts contingencies agreed City government] whose risk the do not claim the [federal words, to shoulder. In purported Congress ossify other Pure Wafer bind Agreement, 10. The dissent contends that this breach of and 14.4 of sections 9.2 theory ¶¶ was never articulated City breached contract. 154. The Complaint. Wafer in its Amended Dissent at logical conclusion from the Amended Com- inventing It 962-63. accuses us of a new new, by trying plaint impose is that lower Yet, theory for Pure Wafer. Ordinance, discharge via limit rather than Complaint theory Amended articulates this Wafer, exempting breached the 3, 127, ¶¶ several times. Its two breach course, Agreement. Of exempted had the incorporate preceding of contract claims alle- point Pure Wafer it would not be in breach —a gations allege by failing exempt no one contests. Ordinance, required Pure Wafer from the is, claims that ates here. That conformity to the contracts.... law give Agreement requires They simply claim Government changes subsequent (among things) other the risk that what- benefit assumed perform- might prevent it from regulations were force at the law ever fluoride damages agreed pay into, ing, and Agreement was entered time caused perform that such failure newly event enacted laws insofar as injury.”); id. at 116 S.Ct. Ordinance) financial (including frustrate the (“[T]he agreed to ... Government so, ability is in breach do against contracting partners indemnify its and must submit arising regulatory financial losses remedy appro- the court deems whatever 916,116 (Brey- change.”); id. at S.Ct. priate. J.,
er, concurring) (explaining *13 to “a at of contract issue amounts class C obliges government promise that findings amply The in district court’s change from a harmless hold As the support position. free dis government remains Pure Wafer’s law that (“The recounted, make”); 918, pre 116 2432 trict court “Pure Wafer id. at S.Ct. specific promises opera that that its undisputed thrifts demonstrate sented evidence regu- particular them require discharge made to accord effluent with were tions years, period for a latory mg/L, treatment 16.3 concentration above a fluoride which, abrogated by subsequent leg- when Agree it at the time of the expected islation, liable rendered the Government discharge to be at concentra ment able contract.”); 923-24, id. 116 for breach at right up mg/L, tions of to 100 was J., (Scalia, in concurring 2432 S.Ct. past negotiations based its critical (“[I]t from the contract judgment) is clear facility, experiences Jose San ... question that the Government had viability of the that the financial Prescott change of a in its assumed the risk if facility is it threatened must bear laws.”).11 explained, As Justice Souter Likewise, the pretreatment district costs.” appro- especially like this are “[c]ontracts “Pure court Wafer was will concluded industries, regulated priate the world capital ing to incur initial the substantial legal change pre- will where the risk facility a reclaim investment construct al- bargained-for performance vent agreed com only City if Prescott lurking in Id. at ways the shadows.” maintaining mit to and sewer ser water (plurality opinion).12 S.Ct. facility specifications vices to the at productively oper oper- needed contacts issue Winstar facility,” ate its “Pure Wafer need in the manner as Pure and that ated same right to Agreement that it dis- alleges Development establish has oper- also, 1993) ("[Government] routinely e.g., United Cir. contracts 11. See Amino Bros. Co. v. States, (Ct. 1967) ("The shifting responsi- Cl. provisions 372 F.2d financial include binding make a Government cannot bility government for events which power, sovereign that it will exercise a might future. That some of these occur so, agree it can in contract that if it does sovereign govern- triggered by events pay contracting party will the other does not render the relevant con- ment action are increased amount which its costs binding provisions less than tractual act.”). sovereign the Government’s acts, parly contemplate third in- those which majeure," clement weather and other force also, Galaxy, e.g., Hughes 12. See Commc’ns omitted)). (footnote (Fed. States, 998 F.2d v. Inc. United AWRF,” that, mg/L, consequently, charge at least was “[c]learly done.” aware the time it entered into the that there ex- Although the district court did not use some level of isted fluoride concentration phrase “regulatory contract” as we did require prior that would treatment to its above, findings the district court’s make discharge,” ultimate but had “inaccurately unmistakably parties clear created particular estimated fluoride concen- it, put such contract. As the (or pre- tration above which treatment pay cannot “force Pure toWafer treatment) required.” [would be] pretreatment has con- when ability City’s anticipate stricter dis- agreed pass along to not tractually such charge limitations those ulti- ADEQ like accept costs. The must Pure Wafer’s mately passed any impossibility defeats pretreat as-is and it at the effluent asserted, expense.” City might own defense the be- it means the “non-occurrence” of cause agree with the district court that the We regulatory change such a “basic was City agreed accept such as the effluent assumption on which the contract was need knew Wafer would (Second) of made.” Restatement Con- discharge in order maintain a viable (1981); § tracts see also id. business, City agreed and that the to bear (“With greater cmt. a the trend toward regu- financial risk that State-initiated *14 governmental regulation, parties ... are latory changes complying make would with increasingly of [the] [that aware risks new promise costly more than it such was when government regulations per- will frustrate Agreement.13 the entered into the formance], may undertake a Hence, City may not the force Pure Wafer duty discharged by is not such su- bring to absorb the costs needed to the actions_ pervening governmental Such City into line with the of its APP. terms is agreement usually interpreted an as Enforcing against the Ordinance if pay damages one to is performance of Pure Wafer would eviscerate benefit Perillo, bargain; City prevented_”); Joseph cannot so 12 M. Wafer’s do (rev. putting itself in without breach of the Corbin 64.10 on Contracts ed. 1993) Agreement. (explaining that in some cases ren- post-formation changes where law by repre- is Our conclusion bolstered illegal, performance “damages der City itself in a sentations the made letter remedy, as a either still available because 2004, ADEQ in the summer in which risk for promisor assumed the oth- explained “signed that it City had reasons”). er agreement with [Pure Wafer] 2/11/97 allowing discharge them be- Fluoride mg/1 mg/1” into the
tween
D
City’s
And our conclusion derives
AWRF.
counterargument
most
City’s
basic
support from the district court’s
further
1994,
is
ADEQ is that the Ordinance
an “environmental
finding
early
“[a]s
ex-
regulation” of the sort Pure
City
Wafer
informed the
its Groundwater
obey, in section 9.1
pressly agreed
Quality
long-
Protection Permit would
analysis
for
“No
is
operation
Agreement.
er be sufficient
further
concentration,”
disagree
this error is
with the district court's deter-
irrelevant
13. We
ide
City
obligated
accept
that the
is
mination
of the case.
to the outcome
"regardless
effluent
fluor-
City.
per-
police power
cannot be limited
required,” says the
We are
public policy;
nor can it
suaded.
for reasons
destroyed by compromise,” for “it is be-
City’s argument is
with the
The trouble
yond
authority
of the state or the
completely ignores
context
abrogate
so
municipality
power
nec-
As the district court
parties’ negotiations.
essary
public safety.”
Ry.
to the
N. Pac.
it,
not construct
put
“Pure Wafer would
Minnesota,
v.
Co.
U.S.
facility
a commitment
the Prescott
without
(1908).
dissenting part: supplemental jurisdiction over state law Arizona Constitu- I. United States and forming “part claims of the same case Claims tional Contract Clause claims, controversy’ as federal there are a majority’s I conclusion concur with in which “[t]he number circumstances not have a claim that “Pure Wafer does [this] district court decline exercise of the United under the Contract Clause” all jurisdiction,” including when federal Maj. Op. or Arizona Constitutions. States claims been See 28 dismissed. U.S.C. Thus, judgment must agree I that the 953. 1367(a), (c). § The decision discretion remanded.1 be reversed and 1367(c) and, § ary, if circum one “the exercise of present, stances is discre of Contract Claims II. Arizona Breach Exec. N. triggered.” tion [is] Software However, I from the ma- must dissent Am., Dish Court Cent. Inc. v. U.S. decision to reach Pure jority’s sponte sua (9th Cal., 24 Cir. Dist. F.3d claims that alternative 1994), grounds on other Cal. overruled In- Development Agreement. breached the Corp., Powerex Dep’t Res. v. Water stead, for the district we should remand (9th 2008). F.3d Cir. Section (1) to consider whether exercise with the dis- plainly vests this discretion jurisdiction over the breach supplemental 1367(c); see U.S.C. trict court. See 28 (if (2) of contract decides Wilson, 504 *16 1051 Foster v. F.3d also findings jurisdiction) to make exercise such 2007) (“The (9th decision Cir. whether of to those claims. fact as jurisdic- supplemental continue exercise claims after all federal tion over state law court to must allow the district
A. We lies within claims have been dismissed tvhether assess in the instance first (emphasis add- discretion.” district court’s juris- supplemental to exercise its ed)); 24 at 1557 Software, Exec. F.3d diction. (“[S]ubsection (c) requires § 1367] [of discretion, court, exercising its in inappli district holding In the Contract Clause (em- case-specific analysis.” case, dismissed the undertake to this we have cable added) 734, 101st Thus, No. only phasis (quoting H.R. claim us. only federal before (1990))); Inc. v. Cong. Imagineering, § 29 Ari for breach of contract under claims stages during subsequent against agree should continue to 1. I also that the litigation. enforcing Ordinance of this enjoined from 960 (9th claims], Co., 1303, court shall 1309 law the district 976 F.2d
Kiewit Pac. 1992) (providing supple that once all federal decide anew whether to exercise Cir. dismissed, jurisdiction.”); juris- exercise of mental Mendoza v. Zirkle claims Co., 1163, (9th Cir. state claims “is Fruit 301 F.3d 1174-75 over law within diction 2002) (“The [supple court” to exercise discretion district decision federal added)), jurisdiction discretionary other remains mental] overruled on (emphasis 897, Gates, by Diaz v. 420 F.3d district court.... We therefore grounds with the 2005) (en banc). (9th determine, Cir. court to 900 remand the district instance, applica in the first whether the dismisses all claims be Once it federal permits tion of the Gibbs standard it, fore a federal court “must reassess supplemental jurisdiction, exercise of by engaging pragmatic jurisdiction over exercise whether such discretion myriad case-specific evaluation of the jurisdiction appropriate would be bear considerations litigation.”); context of this v. Om Webster sup whether exercise determination Int’l, (9th Inc., F.3d nitrition 79 790 jurisdiction.” 16 plemental James WM. 1996) (“The Attorney Cir. Defendants ask al., et Moore’s Federal Practice Moore against us to the state law claims dismiss 2016). (3d § ed. 106.66[1] Such consider pendent jurisdiction. them for lack of convenience, fair “economy, ations include discretion, may, in district court refuse ness, comity.” Software, 24 F.3d Exec. supplemental jurisdiction to exercise after at (quoting Imagineering, 976 F.2d § considering 28 U.S.C. mil [1367].[2]We 1309). “weighted] These factors must be necessary in the examine case, every stage litiga each and at factors added)). (emphasis instance.” tion,” City v. Int’l Sur Chi Coll. first 523,139 156,173,118 geons, 522 U.S. S.Ct. States, Fang plaintiff In v. United (1997) (quoting Carnegie L.Ed.2d against federal and state claims filed law -Mellon, 614), S.Ct. U.S. daughter’s based on her United States position and the court is in the best district park. national death F.3d them, see Hoeck v. Port- weigh 1998). (9th court Cir. (9th 1995); land, Cir. 57 F.3d 785-86 summary granted judgment the federal Moore, my § supra 106.66[3][a]. subject jurisdic- claims for lack of matter view, an court would be better Arizona tion under the Federal Tort Claims Act. adjudicate Pure claims suited to It claims Id. also dismissed the state law However, on Arizona law. the dis- based subject jurisdiction lack of un- matter make that trict should decision. 1367(c)(3). Id. On appeal, der 28 U.S.C. deciding lies with dis after to reverse the' district Because the discretion best position trict court and it is court’s dismissal the federal decision, supplemen- court’s make the several considered dismissal opinions indicate that allow the tal claims. Id. at 1241-43. reasoned we should We that, first to con claims opportunity district court because federal “were er- dismissed, Carter, *17 roneously the reason for sider the issue. See v. 668 dis- Watison (9th 2012) (“On 1108, missing remaining supplemental re the F.3d 1117 Cir. claims Declining appellate ruling negated longer no Id. 1244. [after exist[ed].” mand dismissing arguments district court’s basis for state to rule on the defendants’ 1366, clearly § concerning typo- § 2. 1366 is a Webster cites 28 U.S.C. case. The citation applicable exclusively graphical intended to cite 28 "laws of error that was District Columbia,” which issue in that 1367. were U.S.C.
961 questions predomi- ciding complex supplemental state law whether to exercise of state issues called for us to jurisdiction discretionary nance law question uphold court, (2) of state the dismissal law ruling the district on claims, we held: arguments defendants’ alternative would deprived oppor- have district court supplemental
The decision
exercise
tunity
in the first
jurisdiction is
decide
instance wheth-
within
discretion
jurisdiction
court
that court must be
er to
the district
exercise
re-—we
given
opportunity
position
to make that
manded so the
in the
deci-
court
best
case to
rule on
jurisdiction
sion. We therefore remand the
so.
issue could do
court
it can determine
Fang,
present
district
where
See
at 1244.
F.3d
jurisdiction
whether
compels
should retain
case
result. As in Hun-
same
in light
saker,
the state
claims
over
law
the district court did not
on
rule
arguments.
alternate
[these]
judg-
alternative state law
for the
basis
Therefore,
ment.
cised over the law, ultimately question in a contract is see guage state law breach dis- claims moot, Holdings, Figueroa, 222 ruling on Grosvenor L.C. v. missed them as based (Ct. 588, 1045, Fang, App. claims. As in Ariz. the constitutional P.3d 2009), purpose of contract disposition primary our federal claims on law appeal negated in Arizona is to determine the the basis which meaning state the contract at the district court dismissed the law intended formation, Fang, Taylor we could ruled on time of see v. State claims. In have Co., Farm Auto. 175 Ariz. plaintiffs presented whether claims Ins. Mut. (1993) (in banc), substantially P.2d 1138-40 novel state law issues fact to the fact question over “is left predominated the federal which finder,” disposed Chopin Chopin, could v. Ariz. state (Ct. 2010). (1) App. cases recognizing claims. that de- 232 P.3d However— *18 fact-finder, majority steps into the role deter- evidence is used where extrinsic rea- Prudential Ins. multiple intent from see Cal. Bank v. United mine the 238, 390, lan- Am., of contractual interpretations 140 Ariz. 681 P.2d sonable Co. of 1983) of the contract interpretation (Ct. guage, (resolving evidentiary App. question court), also become generally will role of the questions is the Pouser, 193 Ariz. In re Estate fact. See benefit of district court find- without the (1999); Taylor, 854 P.2d claims, concerning relying ings these Likewise, “[w]hether at 1144-45. P.2d only findings on the district court made contract is a [the] has breached of constitutional claims that we the context Great Bank v. LJC of fact.” W. question today to be invalid. hold Dev., LLC, Ariz. P.3d 2015). (Ct. allow the App. We must majority decides this case C. first opportunity, district court based on breach contract instance, to make these factual determina- claims believes Pure Wafer tions for Pure breach of Wafer’s ad- alleged, should have instead of claims. dressing the claims Pure ac- Wafer order, district court found the In tually alleged. light moot in of how it dis- breach claims assuming the district addition This of the constitutional claims. posed factfinder, majority’s court’s role claims resulted in breach treatment analysis breach of contract fails even only one-quarter devoting the court about provisions Pure only mention the two Waf- (out page thirty-two page opinion) of a of a actually alleged complaint that er directly to these claims. And alternative complaint alleged City breached. The space minimal find- even includes no (1) breached the under claims, ings specific of fact the breach by failing exempt 14.14 section providing the district instead ordinance, (2) from the 2013 not reach Pure alternative “need by failing exempt section 9.2 under claims.” the district Because [contract] According 2013 ordinance. moot court found the breach claims based alleged majority, “that premise the constitutional Ordinance, City, by enacting had valid, ruling today our claims were committed at least two breaches different only the dis- removed the basis which Maj. Op. Although of contract.” 950. this trict court those claims. There- dismissed claims initial statement about the breach fore, the breach claims must be revived. accurate, actually majority when the dis- (reinstating Fang, 140 F.3d 1243-44 See of those claims it cusses the substance where, of ap- claims after court state law to, analyze cite the con- does once peals’ ruling, district court’s “reason of, section 14.14 or section tent 9.2 dismissing remaining supplemental Agreement. majority also asserts exist[ed]”). longer Although claims for simple “Pure a claim (1) Wafer included breach claims are revived—because against of contract in its suit negated the the dis- conclusion City, alleging ‘Pure Wafer cannot respect trict court reached with to these claims, (2) comply with the without incur- Ordinance the district court made no Develop- ring substantial costs findings specific to factual the breach City.’” Agreement allocated to the nothing claims—there is for this court to ment While, concerning stage. again, majority at 952. cor- review the claims Id. Instead, recognizes by deciding rectly the breach that Pure Wafer included *19 claims, light in of their implies, incor- must be determined entire of contract breach Smith, con- rectly, alleged agreement. facts 659 P.2d at that Pure Wafer See 1267. in specifically cost cerning allocation parties’ dispute At the of the heart claims. context of its breach difficult, (1) issues: two interrelated considering breach not. Instead of did right to discharge limits of Pure Wafer’s them, the alleged claims as Pure Wafer sewer, (2) City’s into the who bears majority analyzes the claims it be- bringing discharge the cost of into alleged, should have lieves Pure Wafer compliance Department with Arizona in on those rules Pure Wafer’s favor Quality (ADEQ) require- Environmental the breach addresses and never majority appears rely exclu- ments. in actually alleged claims Pure sively Agreement 4.2 of the section complaint. questions. Although its inter- answer these valid, pretation analyze could it fails to analysis majority’s D. The specific language provision plain breach claims contradicts Further, majority which it relies. fails reading Agreement, fails provisions impli- to consider several other provisions, address several relevant whole, as a cated read here. When and demonstrates that fac- further susceptible to multi- clearly is may be needed. development tual interpretations respect ple reasonable noted, primary goal As of Arizona to these issues. parties’ contract law is to determine the meaning agreement of their intended majority’s interpretation 1. The give effect to that contractual intent. discharge rights contradicts Thus, Taylor, at
See 854 P.2d 1138-40. Wafer’s meaning plain section and has intent, Jf.2’s attempting parties’ discover the supporting extrinsic evi- liberally extrinsic courts are consider insufficient to overcome that contradiction. dence parties’ in- evidence show the intended language. terpretation of their contractual parties dispute what limits the However, “[i]n- See id. at 1138-41. because Agreement places right on Pure terpretation process is which we City’s obligation discharge, to ac- words,” see meaning determine the id. sys- cept, wastewater into sewer at extrinsic is useful evidence City to requires pro- 4.2 tem. Section parties’ how intent the extent reveals 195,000 gallons daily vide Pure Wafer they in the chose to reflected words provides that It further capacity.” “sewer agreement, their see id. memorialize reclassify “City [Pure shall Waf- Melson, 1140-44; Inc., see also Smith v. usage of sewer purposes effluent” er’s] (1983) 135 Ariz. 659 P.2d change is a material rates “unless there (in banc) (“A be read should quality specifica- from the the waste water light parties’ intentions as reflected Ex- F.” tions attached hereto Exhibit of all language their view F, turn, mg/L “typi- as the hibit lists circumstances.”). inter- And the further an mg/L as the cal value” for fluoride and pretation gets contract’s actual “maximum.” language, convincing the extrin- the more findings of the Contrary to the to show the sic evidence must be court, majority concludes Pure Wafer Taylor, 854 meaning. intended that See addition, right discharge wastewater only has a P.2d 1139^40. Maj. Op. fluoride. See language up mg/L to 100 specific contractual intent *20 right to any Exhibit F not relate 956-57, majority on Ex- The relies did 957-58. discharge certain contami- Pure Wafer to limit. at F for this See id. 947-48. It hibit but, instead, only related to (1) nant levels on certain extrinsic evidence: also relies pricing. that, Agree- at the time of the testimony
ment, expected discharge to majority points to extrinsic Although the mg/L fluoride up to 100 and under- position, fails to support evidence to it negotiations, critical to its standing was id. problem pointed interpretation address the 956-57; (2) indicating 2004 letter that at a is court —that there out the district Pure to City employee a understood Wafer provision Agreement, in the the words of 957; (3) right, id. at letters reasonably have such a interpret which we could ADEQ City prior from to the There no bet- impose mg/L a limit. is that it Agreement reflecting knew than ter contractual intent a indication protection aquifer permit, plain reading language obtain an must rights their obli- express at chose to see id. 957. And, here, gations Agreement. in the persuasively court below an- The district language support majority’s not does alyzed, and found antithetical position. persuasive evidence is Extrinsic plain meaning, the Agreement’s conclusion only parties’ extent shows majority now reaches as Pure Waf- meaning of the contrac- through intent discharge rights. Though er’s section 4.2 language, Taylor, see at tual 854 P.2d supply capaci- obligates the sewer Smith, 1140-44; and the P.2d provide not ty, that Pure does Wafer interpretation an further varies discharge right (through wastewater convincing language, written the more any specified capacity) with level of parties in- to show the evidence must be pollutants, any or that there are limits interpretation, proffered see tended content) on (regardless fluoride what Taylor, at 1139-40. The evidence P.2d 195,000 through Pure send Wafer majority on relies clear does daily gallons capacity. of sewer majority this bar. Neither does ad- plain language F’s cannot be Exhibit of Pure testimony only dress the Wafer’s limits, impose discharge as the read witness, majority’s which contradicts majority persua- asserts. The district court reading of F. the con- Exhibit Based rejected sively argument that Exhibit parties’ flicting interpretations in- any F established measure of Pure Waf- rights obligations concerning tended right discharge effluent of partic- er’s least, very discharge, at the the district content, instead, ular fluoride held permitted to determine should be provision reasonably that no contract could facts in the of Pure context Wafer’s interpreted to set such a be limit. And, remand, if on of contract claims. Agreement only refers to F once. Exhibit there is not as to persuasive evidence plain reading A shows reference intent, remaining parties’ actual ambi- any F any right Exhibit does not create obligations in the guity rights and fluoride, discharge a certain amount of interpreted against should rather, only to usage relates “sewer fees” agreement. as the who drafted the Koerner, pay capacity” must “sewer See 111 Ariz. Polk v. reading (1975). con- Interpretation against section 4.2. This was under P.2d witness, only particularly applicable firmed trial is where drafter attempting original planning “party impose in the obli- who was involved facility. gation He where otherwise such an the Prescott testified that another obligation exist.” United Cal. “regulatory amounts contract” under Bank, 681 City guaranteed P.2d 412. which the Pure Wafer the regulatory
benefit of the scheme existing at the time of the by agreeing majority’s interpretation 2. to bear the cost changes. Maj. Op. Agreement’s cost allocations contra- 946-47, However, 954-57. plain reading section n .2 plain meaning dicts the of section requires 4.2 ignores *21 provisions several rele- make a specified available amount phys- of to the obligations. vant financial space ical in system the sewer to accom- rights The parties’ discharge obli- And, modate discharge. Pure Wafer’s if gations also to a question relate second at existing the sewer lines at the of time the issue here: When environmental laws allow Agreement turned out to be insufficient to to release into wastewater required handle the of discharge, volume only if aquifer its fluoride content is below placed section 4.2 the financial burden on level, a certain and it undisputed only to augment physical ca- discharge Pure Wafer’s causes excess pacity of to those lines accommodate the levels, fluoride who bears the cost additional discharge could not other- The interprets abatement? majority sec- through wise fit physically system. See impose tion 4.2 to City. on cost See Bank, (ex- United at Cal. P.2d 946-47, that, Maj. Op. posits It 954-57. plaining that a contract where includes agreeing to discharge, take Pure Wafer’s general accompany terms specific agreed to bear the cost if the law covering subject matter, terms same required purification to the fluor- reduce meaning general “the pre- terms is However, reading ide. sec- contradicts [by] sumed to be limited the enumerated plain tion 4.2’s meaning and fails consid- to specific to only include terms and those er provisions several other to appear things of specifi- the same nature as those affect the parties’ obligations. financial enumerated”). cally (lo- expresses Section 4.2 when how majority again explain to fails how gistically) City provides capaci- “sewer the language supports of section 4.2 its 195,000 ty” to Pure Wafer: It must hold position. impose The section does gallons physical carrying capacity in obligation purifica- to extensive build some disposal system its at all “reserve sewer facility, phys- tion to the unrelated sewer’s times after commencement of construction accept ical a certain capacity volume Facility.” Section 4.2 refers to exist- through pipes. wastewater Some extrin- “[tjrunk ing currently line facilities may majority’s sic support evidence place appealed] pro- [that] adequate” position, again, per- that evidence is However, carrying capacity. vide this if the only to the extent can be suasive tied line “prove[d] inadequate,” trunk facilities language Agree- back into the actual “City obligated augment such [was] ment, 1140-44; Taylor, see 854 P.2d at ... by constructing facilities at no cost Smith, majori- 659 P.2d at mains, lines, [Pure Wafer] all other Instead, ty plain reading has failed do. necessary accept facilities accommo- supports section 4.2 a more reasonable date the additional sewer flow or effluent conflicting interpre- alternative. Given facility.” from the tations, given the district court should be majority suggests opportunity findings obli- make fact— gation “augment [inadequate] facilities” the context breach of Wafer’s assessments, costs, surcharges.” parties’ [or] under- Sec- claims—as against language protection 4.2. tion 4.2 sur- section contains
standings Further, if, ambiguity charges. remains as Pure Wafer’s wit- point, And at that meaning, ambiguity 4.2 intended ness that section and Exhibit their testified against charge higher be resolved F allow sewer should Polk, drafting party. See 533 P.2d discharge rates as contaminants increase 662; Bank, 681 at 412. City] Cal. P.2d United cost [the “because it will more testimony process.” par- His indicates the plain to section 4.2’s mean- addition understood, upon executing ties ing, provisions may other bear several Agreement, quality that if the of Pure obligations financial under the discharge City’s pro- increased the majority Yet the has limited contract. costs, cessing the increased costs could be 4.2 See analysis to section isolation. passed to Pure Wafer. whole, Smith, 659 P.2d 1267. Read as a *22 Agreement may speak also article provides cost protec- While section 4.2 to allocations. parties’ cost For exam- the Wafer, protections may tions to these they risk ple, with which the detail allocate prohibit processing not costs. increased negate interpre- to section 4.3 tends an increasing 4.2 prohibits Section Pure Waf- tation 4.2 makes allocations that section “a usage er’s “sewer fees” absent material stated. explicitly Under circumstances quality.” change water It also the waste here, expressly section present 4.3 provides, Capacity shall be at no “Sewer places on Pure Wafer: to than cost” other “normal any engineering noted, for and
responsibility] As 4.2 usage sewer fees.” section construction associated with connec- capacity” to indicates “sewer refers infrastructure[, that carry shall] tion to physical away to space sewer dis- to, include, metering not be Therefore, limited charge. preclude it would not structures, sampling devices and discharge-related charges and for something stations, pipeline, pump etc. [Pure space, other than such physical as responsible sampling shall be for surcharge City’s Wafer] extra costs testing costs.... In the event that fluoride. processing the excess Such discharges [Pure of an Wafer] effluent to “surcharge” not amount a “nor- would required by quality per- than is inferior mal usage protected sewer fee” under sec- mit, City’s nega- 4.2, and the facilities are tion nor it be assessed “sew- would tively impacted, [Pure shall er capacity.” Wafer] financially responsible. addition, parties’ In evidence deal- respon- some sections Because allocate ings may as to the excess-fluoride costs sibilities, detail, risks, costs in such understandings show them cost alloca- is to reasonable assume Bank, tions. See Cal. United P.2d explicit have made similar alloca- parties’ (explaining that the treatment 4.2, if they tions in section section intended of terms is after the contract executed but 4.2 to have effect. meaning “is dispute before as arises Agreement may weight” also “sur- great allow entitled evidence terms). meaning if its lev- for those charges” to Pure Wafer fluoride intended City’s During Agreement, processing period els costs. of their increase 4.1, City “Operations Supply,” accepted discharge Pure Wafer’s re- Section Water However, provides Supply gardless quality. that “Water shall be whenever City’s ADEQ City in violation expense, any special sole without found the of flúor- limits, Pure Waf- new possibly ide demanded burdens either could remedy problem. help governmental er’s And the amount to beyond action help. Al- record reflects Wafer did control parties. and without the fault of the though suggests some evidence Pure Waf- But given the district court should be provided despite having the assistance er first opportunity to make factual determi- so, obligation sug- to do other evidence nations as to parties’ understandings gests obligated Pure Wafer believed was scope provision. of this A 2004 help bear these costs: letter sum, majority errs in failing to City (following from Pure Wafer (in manner) many consider pro- (NOV) Notice Violation visions that bear the issues before outlined, ADEQ) “It is in- [Pure Wafer’s] us in failing recognize tent work with the assure provisions on which it relies subject discharge ... will enable the competing interpretations by Pure Wafer consistently all permit require- meet of its City. should We allow the district ments, including fluoride.” The letter also court to make factual determinations explained plan reduce respect these issues the first Finally, fluoride concentrations. the letter instance. provided that “the issued to the NOV directly operations to our related E. allowing Without the district court potential may require remedial solutions opportunity to consider expenditures part.” on our Other 2004 let- *23 question, majority bases its de- that ters indicate Pure Wafer hired an cision on record may that be in- engineer environmental to determine how to parties’ show the con- to reduce fluoride levels. Pure Wafer’s re- sufficient tractual intent. discharge duction of fluoride when its caused to levels permitted exceed In addition to lack of written find- to position tends contradict Pure Wafer’s ings as to the of breach a review right discharge that had a to wastewater present suggests record that the ab- any with fluoride content. in- Given these proceedings in breviated the district court terpretation problems, the district court may not have allowed for admission of should have the first chance to determine extrinsic evidence sufficient show the may as to all of the facts the matters that parties’ contractual intent. The parties’ understandings have affected the permitted on should be remand to of their cost allocations. whether, determine under Arizona con- A provision final contract bear law, adequately tract the record devel- obligations on the financial is sec- oped parties with facts that show what Majeure.” parties tion “Force Both truly agreement intended their to mean. claim it would cost several million dollars compliant achieve fluoride levels. Given 1. Lack attention to the breach claims of burden, parties might both claim de- parties indicates have not protects fenses under section which developed the record as adequately defaulting “inability where those claims. ... perform due acts or the failure [is] [to] act, history The of this case any utility, public governmen- or evidences of sufficiently agent entity beyond proceedings may or control have tal party.” developed on claims or without the fault such the record the breach on Changes imposing proper ruling to environmental laws to allow a the merits. The 8 merits, expectations consolidate it evidence heard conveyed their initial
parties preliminary injunction, on motion for timing of the claims this case all for the on presenting and finish evidence planning re- joint December their (January next available court date discovery they estimated port, where 2014). parties agreed the district The April take until the end would suggestion. subsequent court’s The court’s ready a three- the case would trial provided order that the remainder of May. the end Instead four-day trial at City calling would be one limited expected to this progressing pursuant call- more defense witness and Wafer timeline, evidentiary proceedings in (the ing same one rebuttal witness witness completed within court were the district presentation). direct called its parties filing their initial five weeks provided also in a footnote that “the order almost report and concentrated planning necessarily trial includes the issue liabil- exclusively claims. on constitutional ity pleaded claims the alterna- not include did breach tive, namely Pure Wafer’s alternative complaint. initial Al- contract claims of contract and claims breach though later amended add Pure Wafer good covenant faith.” implied issue, it then immedi- the breach claims words, claims other trial alternative injunction, for a ately preliminary moved com- only after Pure was ordered making argument that its breach claims fo- presentation-in-chief, pleted which justified injunction or that the claims an injunc- primarily preliminary on the cused on the eventually would succeed merits. Indeed, tion the constitutional issues. Instead, sought injunction its motion plan- when both would have been “pending judgment determining final subpoena, ning which witnesses claims” constitutional call, ask, questions what and what only motion the breach claims referred to present, they other evidence once, representing understanding that made those decisions claims for purely alternative “add[ed] presentations pertain their needed to *24 breach of contract ... breach of the and prelimi- to Pure entitlement to a Wafer’s good faith implied covenant of and fair injunction exclusively on nary based its ... dealing gjiven that the [and certainly they claims. constitutional And positions, those claims would not stated not have would made these decisions with only succeed and asserted the [were] understanding they try that needed to the alternative ... out of an of abundance cases, they their entire which had estimat- It perspective caution.” was with this to- (in report) planning ed their initial parties breach claims ward the the not for five more ready be months. This prepared court and district would have evidentiary to approach proceedings the preliminary injunction hearing, the which highlights why parties below the and dis- scheduled December court 2013. trict court not to attempt develop the did record for the breach of contract claims. party The district court limited each to only present to three and one-half hours evidentiary portion Like the of trial and Thus, argument. case, and every prior filing post-trial evidence in the during presen- only called one witness briefing proposed findings and conclu- day At tation-in-chief. the close first only superficially sions addressed noted, (during only also called one As breach claims. the district witness), suggested they opinion one-quar- district court’s than court devoted less (out proceed immediately page thirty-two pages) of of trial ter claims, holding they by reaching the breach need issue. constitutional Pure dismissing answered, not be them as reached reluctantly “Maybe.” (the moot. response This ambivalent last word argument) of Pure typifies of of parties’ treatment the breach parties’ perspective court’s of supports on appeal contract claims farther throughout the breach claims this case. parties the conclusion that the and district attempt develop court rec- did purpose addressing for the of ord those Having dearly focused, 2. on the parties’ claims. The reference the breach contract the proceed- of
briefing made to the claims in the was ings up to point may this left City’s opening brief: “Pure Wafer’s breach adequate record without evi- factual contract claims dismissed as were parties’ dence contractual in- appeal.” moot and are not at issue this tent. disputed position. Pure never this light of goal giving Arizona’s effect Indeed, argument, when asked at oral nei- intent, parties’ Supreme the Arizona prepared to ther was address the Taylor explained great Court in extent appeal as a breach of contract case. We to which state allows offer City, asked the “is there reason can’t extrinsic evidence to show their under- treat as a [this case] issue?” The standings language, of contractual answered, “I think don’t the record is thus, their contractual intent. See P.2d developed findings that —that fact analyzing at 1138-41. In meaning developed and conclusions of law how it permit you language parties’ shows the level that.”3 do intent, expressly Arizona rejected equally Wafer was reluctant “to requirement preliminary make a find- agree that appropriately the case could ing ambiguity” before the court can as a decided breach contract claim on consider extrinsic id. at evidence. See 1138. present response record. Even Instead, must consider all extrin- question, prevail “can still you this may support sic evidence that a party’s particular appeal by persuading us that interpretation of reasonable contractual enough findings the district court made showing language party’s theory establish that of con- was contractual intent. See id. at 1139. Under tract,” adopted po- Wafer never approach, this more liberal Arizona allows argument close, As sition. came to a surrounding the court to “consider circum- Wafer conceded *25 stances, including negotiation, prior under- for reducing cost allocations fluoride was conduct,” standings, subsequent ... and fully Agreement. a term covered the in interpreting the like the contract. concession, however, See Following this 1139-40; Smith, at also id. see thought clarified Pure P.2d whether (‘When (because interpreting agreement, an the term was covered the Agreement) may always the case be decided on the the sur- could court consider theory, a breach contract rather than rounding (citing circumstances.” Restate- during questioning City’s panel spent majority argu- 3. This occurred the of Pure Wafer’s the initially panel exploring approach raised the rebuttal. issue in ment whether we could question during argu- dispute, its first Wafer’s the case as a breach of contract it is ment, only already complet- troubling panel the after had that the did not raise the issue argument-in-chief being equal ed without asked at a time that would ensure the argue position opportunity on the Because the issue. address it. (1981))). (Second) not address how this evidence of Contracts did ment may of con- pertained the breach parties evidence shows the If extrinsic allegations, tract because it found those they in their contract mutu- language used moot. claims law allows a to be Arizona intended to have ally and understood the court to requires to offer—and give must effect meaning, the court certain sup- extrinsic consider—all evidence intent, if the words have to that even ports party’s interpretation reasonable ordinary usage. meaning under different aof contract. contin- Given pur- 1139. Taylor, 854 P.2d at “[T]he See extensively parties ued that the insistence the contract result the pose produce is negotiated the terms issue this case intended, judge not that which parties executing the prior Agreement, is beyond clear dis- intends. Some words likely most that more and com- extensive thing mean one to the pute. Some pelling evidence exists than the current something meant judge but could have else record shows. meaning latter parties. It is the n.2. at 1141 For is important.” example, Id. there no evidence City’s record to establish the intended proceedings Because meaning of the and under- on the court did concentrate negotiations standings from the at the time had parties no reason contract Surely formation. someone all the record with the facts develop (or knowledge- involved in to those claims. relevant of) many able on months of the details consistently parties maintained “telephone written and communications” extensively executing before negotiated parties between would be available to Agreement. alleged they It met provide Concerning nego- this information. many “on occasions and communicated tiations, may be there several witnesses by telephone written communications.” testify, early Agree- who can drafts of the alleged they “spent It also months several ment, drafts, parties’ notes on those Agreement] negotiating terms [their regarding communications their under- provide the both to protection desired terms, standings compromises of certain City, key Pure Wafer and to the etc., they reached, they changed, terms all development economic elements of their necessary highly which is relevant and Wafer, According deal.” to Pure “effluent intent, determining capacity quality material terms were none which can be found in record. ..., parties negotiated considered exists; evidence record indicates such Agreement] reflects [the those bar- part simply has been made alleged negotiated It gains.” parties example, For record. 1997 internal Pure accept specific effluent refers discussions of Wafer memo sewer profile,” accept risk “chemical usage rates the had at “the Devel- requirements permit that the could However, opment Agreement meeting.” expense. change, resulting extra minutes, notes, record contains parties’ negotiations, In describing the correspondence to specifically show what one the district court cited exhibit and *26 Similarly, was at this meeting. discussed pages transcript, coming seven trial from letter to the testimony only from the one that, letter, witness. in preparing outlined attorney “pulled And even these items were considered two [Pure Wafer’s] only the district court for file time Agreement their rele- from the was to the vance constitutional claims. The drafted and reviewed the notes [his] meetings alleged; by failing conversations with telephone recognize and that its City, correspondence analysis as well as with of the breach claims contradicts Agreement.” Agreement’s plain and drafts of the Yet meaning, fails to notes, correspondence, whole, these written Agreement consider the as a and is Agreements rec- draft are absent lacking adequate support from the record. record, testimony ord. Given this of a The warrant circumstances remand to single (testifying witness Pure Wafer’s (or permit the district court an Arizona behalf) does not seem sufficient estab- court) first opportunity to address the parties lish the contractual intent of both Doing merits. so allow trial they Agreement, the time executed the language court focus on the especially so much where additional extrin- and, in accordance with Ari- likely sic is evidence available. law, zona consider extrinsic evidence true intent cannot be re- supports reasonably susceptible in- vealed without consideration of all avail- terpretation of the contract. While I am application able evi- evidence and cognizant speedy for a desire language dence to the of the contract as a dispute, efficient resolution of this the ma- Though certainly whole. within the jority’s opinion proper sacrifices a discretion, I anticipate fact-finder’s the dis- thorough of this resolution case to con- trict remand would want speedy one. proceedings respect duct additional the breach the lack of at- because
tention claims those leaves the record containing far short of all available evi- dence of contractual intent. The permitted should to develop concrete positions evidence of their and understand- GARDNER; Fredric A. Elizabeth ings they of the relevant terms at the time Gardner, A. Petitioners- executed the Agreement. Appellants, v. III. Conclusion COMMISSIONER INTERNAL OF The district court should have the first REVENUE, Respondent- opportunity to consider whether to exer- Appellee. supplemental jurisdiction, cise because we have dismissed federal claim. This No. 13-72699 dismissal also necessitates a remand Appeals, States Court United findings court to the district make fact Ninth Circuit. specific conclusions of law claims, having of contract previous- January Filed ly found those claims be moot. The *, October Submitted majority stepping into errs the role Francisco, California San fact-finder in the first instance with re- claims; spect by failing to the breach actually
address the claims Pure Wafer * 34(a)(2). panel unanimously App. concludes case is See R. P. Fed. argument. suitable for decision without oral