The suit accuses the state's child welfare agency of improperly handling the investigation of abuse allegations against Tierra Blanca Youth Ranch near Hillsboro.
The ranch is located between Deming and Truth or Consequences, and youth enrolled in the ranch have attended Deming High School.
In separate but related developments over the weekend, New Mexico State Police tracked down nine teenage boys who had been at the ranch and found them safe.
The lawsuit filed on behalf of ranch owner Scott Chandler wants Chandler or the teens' parents to have parental authority over certain children, not the state agency.
The District Court judge hearing the case has scheduled the next hearing for Jan. 15, and lawyers said they hope the case will go to trial in March or April.