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United States v. Gila Valley Irrigation District

United States Court of Appeals, Ninth Circuit

June 13, 2017

United States of America, Plaintiff-Appellant/ Cross-Appellee,
v.
Gila Valley Irrigation District; Franklin Irrigation District; Freeport Minerals Corporation; Larry W. Barney; Viri Viva Lunt Revocable Trust; TRP Family Trust; Ronald Howard; Janice Howard; Myrna Curtis; Joe B. Tatum; Judy L. Tatum; Harrington Ranch And Farm; S&R Daley, LP; Steve Daley; Ross and Fawn Bryce Family Trust; Householder Family Limited Partnership; Kenneth Claridge, Defendants-Appellees/ Cross-Appellants. and Gila River Indian Community; San Carlos Apache Tribe of Arizona, Intervenor-Plaintiffs-Appellants/Cross-Appellees,

          Submitted December 15, 2016 San Francisco, California

         Appeal from the United States District Court for the District of Arizona, D.C. Nos. 4:31-cv-00059-SRB 4:31-cv-00061-SRB Susan R. Bolton, District Judge, Presiding Argued and

          John L. Smeltzer (argued), Katherine J. Barton, F. Patrick Barry, and Yosef Negose, Attorneys, and John C. Cruden, Assistant Attorney General, Environment & Natural Resources Division, United States Department of Justice, Washington, D.C.; Scott Bergstrom and Andrew Engel, Office of the Solicitor, United States Department of the Interior, Washington, D.C.; for Plaintiff-Appellant/Cross-Appellee United States.

          Pratik A. Shah (argued), Merrill C. Godfrey, Hyland Hunt, and Z.W. Julius Chen, Akin Gump Strauss Hauer & Feld LLP, Washington, D.C.; Linus Everling and Thomas L. Murphy, Gila River Indian Community, Pima Maricopa Tribe Law Office, Sacaton, Arizona; for Intervenor-Plaintiff-Appellant/Cross-Appellee Gila River Indian Community.

          Joe P. Sparks (argued) and Julia Rowen Kolsrud, The Sparks Law Firm P.C., Scottsdale, Arizona, for Intervenor-Plaintiff-Appellant/Cross-Appellee San Carlos Apache Tribe of Arizona.

          Sean T. Hood (argued) and Rhett Billingsley, Fennemore Craig P.C., Phoenix, Arizona, for Defendant-Appellee/Cross-Appellant Freeport Minerals Corporation.

          Paul F. Eckstein (argued) Shane R. Swindle, and Vidula U. Patki, Perkins Coie LLP, Phoenix, Arizona; David A. Brown, Brown & Brown, St. Johns, Arizona; for Defendant-Appellee/Cross-Appellant Gila Valley Irrigation District and Franklin Irrigation District.

          Robert B. Hoffman, Somach Simmons & Dunn, Sacramento, California; for Defendants-Appellees/Cross-Appellants Larry W. Barney, Viri Viva Lunt Revocable Trust, TRP Family Trust, Ronald Howard, Janice Howard, Myrna Curtis, Joe B. Tatum, Judy L. Tatum, Harrington Ranch And Farm, S&R Daley, LP, Steve Daley, Ross and Fawn Bryce Family Trust, Householder Family Limited Partnership, and Kenneth Claridge.

          John B. Weldon, Jr., Mark A. McGinnis, Lisa M. McKnight, and Scott M. Deeny, Salmon Lewis & Weldon P.L.C., Phoenix, Arizona, for Amici Curiae Salt River Valley Water Users' Association and Salt River Project Agricultural Improvement and Power District.

          Before: Diarmuid F. O'Scannlain, Ronald M. Gould, and Milan D. Smith, Jr., Circuit Judges.

         SUMMARY[*]

         Water Rights

         The panel affirmed in part, and reversed in part, the district court's September 4, 2014 judgment in these consolidated appeals involving the Globe Equity Decree of 1935, and concerning whether landowners can transfer their rights to divert water from the Gila River, which flows through southern Arizona; and dismissed the cross appeals.

         In 1935, the district court entered a consent decree, the Globe Equity Decree, to govern the distribution of water among the Gila River Indian Community, the San Carlos Apache Tribe, and various other landowners. The district court has continuing jurisdiction to enforce and interpret the Decree.

         In 2007, the Community, the San Carlos Irrigation and Drainage District, the United States, and thousands of individual landowners entered into the Upper Valley Forbearance Agreement providing that the individual landowners could sever and transfer certain water rights. Pursuant to the Agreement, in 2008, fifty-nine sever and transfer applications were filed by Freeport Minerals Corporation, and the remaining parties filed objections. In a Freeport sub-docket, the district court denied Freeport's initial ten applications. The district court then adjudicated other sever and transfer applications filed in 2008, and eventually resolved Freeport's remaining applications. The district court entered its final judgment with respect to all of the 419 sever and transfer applications filed in 2008, and it was applicable to both the main docket and the Freeport sub-docket.

         Turning to jurisdiction questions, the panel held that it lacked jurisdiction over the applications and associated objections of non-Freeport applicants because the applications and accompanying objections filed by the non-Freeport defendants were voluntarily withdrawn or dismissed without prejudice. Additionally, concerning the non-Freeport defendants, the panel held that because there were ongoing sever and transfer applications being litigated on the main docket, the district court should have complied with Fed.R.Civ.P. 54(b). Because the district court did not follow Rule 54(b), the panel held that its September 4, 2014 order was not properly appealable as it related to the main docket. The panel held that no Rule 54(b) finding was required for the Freeport sub-docket because no additional applications remained pending, and concluded that appellate jurisdiction over Freeport's applications and accompanying objections was proper.

         Concerning further jurisdictional issues for the Freeport sub-docket appeals, the panel held that jurisdiction was proper over Applications 138, 150, and 162, together with associated counterclaims, along with the counterclaim for Application 147, and the additional fourteen applications appealed by Freeport. The panel left it to the district court to decide in the first instance whether the other six applications and associated counterclaims were moot due to the covenants Freeport entered under the Agreement.

         Turning to the merits, the panel held that the district court did not err in holding that Freeport failed to present a prima facie case of no injury to other Decree parties. The panel also held that the district court did not err in denying Freeport's Fed.R.Civ.P. 15(b)(1) motion to amend its applications to conform to the revised maps it filed during discovery. The panel held that allowing Freeport to amend its applications during closing argument would have resulted in prejudice to the objecting parties, and may have resulted in prejudice to additional parties under the Decree; and such material changes should be made by filing new sever and transfer applications.

         The panel held that the district court erred by considering whether Arizona's law of statutory forfeiture, Arizona Revised Statutes § 45-141(C), applied to Freeport's water rights when it concluded that water rights which vested prior to 1919 could not be lost through statutory forfeiture. The panel held that this interpretation was foreclosed by the Arizona Supreme Court's holding in San Carlos Apache Tribe v. Superior Court ex rel. Cty of Maricopa, 972 P.2d 179, 187, 204 (Ariz. 1999) (en banc) (holding that statutory forfeiture applied to pre-1919 water rights); and, thus, there was no need for the district court to evaluate further the 1919 water code. The panel left it to the district court on remand to determine in the first instance how statutory forfeiture applied to the remaining objections.

         The panel held that the district court did not clearly err in determining that Freeport had abandoned its water rights in 1.4 acres of land that were part of the sever parcel in Application 147 because the creation of (and failure to remove) a road and canal demonstrated an intent to abandon, and because Freeport failed to use its water rights in the land covered by the canal for at least eleven years. The panel held that the district court appropriately tailored its holding by limiting its finding of abandonment to 1.4 acres out of the 15.5 acre parcel.

         The panel declined to address in the first instance the question of abandonment of water rights in land that had become riverbed in certain applications.

          OPINION

          O'SCANNLAIN, Circuit Judge:

         In these consolidated appeals involving the Globe Equity Decree of 1935, we must decide whether landowners can transfer their rights to divert water from the Gila River which flows through southern Arizona.

         I

         A

         These cases arise out of litigation that began over ninety years ago. In 1925, the United States first brought suit on behalf of the Gila River Indian Community ("Community") and the San Carlos Apache Tribe ("Tribe"), seeking to adjudicate the water rights involving the Gila River. In 1935, the district court entered a consent decree, known as the Globe Equity Decree ("Decree"), to govern the distribution of water among the Community, the Tribe, and various other landowners. See United States v. Gila Valley Irrigation Dist., 31 F.3d 1428, 1430 (9th Cir. 1994) ("GVID IV"). The district court has continuing jurisdiction to enforce and to interpret the Decree, which provides for the appointment of a Water Commissioner for such enforcement purposes.

         Parties to the Decree are entitled to divert water from the River for the "beneficial use" and "irrigation" of land in accordance with the specified priorities. The Community and the Tribe have the senior-most water rights (the Community's date from time "immemorial" and the Tribe's date from 1846). Covered parcels of land are described in the Decree by reference to the number of acres located in a quarter-quarter section[1] of the Public Land Survey System. Parties to the Decree are permitted "to change the point of diversion and the places, means, manner or purpose of the use of the waters to which they are so entitled or any part thereof, so far as they may do so without injury to the rights of other parties."

         B

         In 1993, the district court entered an order (the "Change in Use Rule") outlining the procedures for severing water rights from one piece of property and transferring them to another. Parties must file a sever and transfer application with the Water Commissioner, who will publish notice of such application. If there are objections filed by other parties to the Decree, either the applicant or the objectors may request an evidentiary hearing before the district court. "The applicant shall have the burden of establishing a prima facie case of no injury to the rights of other parties under the Gila Decree and a right to transfer."

         In 1996, the district court entered a Water Quality Injunction, which provides that if the water quality reaching the Tribe deteriorates below certain thresholds, the Water Commissioner is directed to take measures limiting the diversions of water rights holders in the Safford Valley.

         In 2001, the Community, the Tribe, the United States, and the San Carlos Irrigation and Drainage District ("SCIDD") jointly filed a post-judgment complaint ("Pumping Complaint") asking the district court to enforce the Decree against thousands of individual landowners ("Upper Valley Defendants" or "UVDs") who, they claimed, were using wells to pump subflow of the river in excess of their decreed rights. In 2007, the Community, the SCIDD, the United States (as plaintiff, but not the Tribe or the United States in its capacity as trustee for the Tribe), and the UVDs entered into the Upper Valley Forbearance Agreement ("UVFA") by which they agreed to dismiss the Pumping Complaint if the UVDs permanently reduced the number of acres they were entitled to irrigate by 1000 acres.

         In addition, the UVFA provided that UVDs could sever and transfer water rights from decreed lands to certain "Hot Lands, " which had been irrigated but were not covered by the Decree. If property owners filed such good faith applications within six months of the enforceability date of the UVFA, they could continue to irrigate these Hot Lands while their applications were pending. The plaintiffs agreed not to object to properly filed applications.

         C

         Pursuant to the UVFA, a total of 419 sever and transfer applications were filed in 2008. Fifty-nine of these were from Freeport Minerals Corporation ("Freeport"), who had begun acquiring decreed lands in 1997. Freeport purchased farms for the express purpose of obtaining water rights, required its tenants to maintain the water rights, and paid all water-related assessments and fees.

         The United States, the Tribe, and the Community ("Plaintiffs") filed objections to the sever and transfer applications.[2] After receiving proposals from the interested parties on the best way to manage so many applications, the district court began by adjudicating Freeport's applications first. Accordingly, it created a sub-docket, No. 4:31-cv-00061-SRB, to which it transferred Freeport's fifty-nine applications, while staying the proceedings on other parties' applications. At the district court's invitation, the parties selected ten of Freeport's applications for initial adjudication.[3]

         In its applications, Freeport described its parcels by reference to the quarter-quarter section in which they fell but did not indicate a more specific location for the lands to and from which it was seeking to sever and to transfer water rights. After a ruling by the district court that sever and transfer applications should identify the "precise locations of the parcels within the quarter-quarter section, " Freeport hired a consultant to create more detailed maps and legal descriptions of the lands at issue. Freeport disclosed these revised maps and descriptions during discovery in November 2009. The revisions affected the locations and legal descriptions of multiple parcels, though each map revision fell within the same overall quarter-quarter section as its original application.

         D

         The district court held an evidentiary hearing (which the parties refer to as a "trial") on Freeport's initial ten applications from February 9-25, 2010 and denied them all on August 3, 2010, granting the Tribe's motion for judgment as a matter of law. The court concluded that (1) Freeport had failed to present a prima facie case of no injury to other Decree parties, (2) Arizona's statutory forfeiture law did not apply, and (3) Freeport had partially abandoned the water rights in one of its proposed sever parcels, and (4) it further declined to amend Freeport's applications to conform to its revised maps.

         Freeport attempted to appeal the order, but we declined jurisdiction because it was "neither a partial nor a final judgment." United States v. Sunset Ditch Co., 472 F.App'x 472, 474 (9th Cir. 2012). We instructed the district court that it needed to "resolve issues related to Freeport's other applications, as well as issues related to other applicants." Id. at 473.

         Thereafter, the district court proceeded to adjudicate other sever and transfer applications filed in 2008. Freeport's remaining applications were either denied or withdrawn. Pursuant to the UVFA, Freeport entered into covenants agreeing "to retire certain decreed water rights and to refrain from irrigating" the lands that were the subject of six of the original ten applications first adjudicated by the district court.[4] All of the remaining 2008 applications from non-Freeport parties were eventually withdrawn.

         E

         On September 4, 2014, the district court entered "final judgment with respect to, and in accordance with, all the Court's orders and proceedings on the 419 applications to sever and transfer Decree water rights filed with the Water Commissioner in 2008, " applicable both to the main docket, No. 4:31-cv-00059-SRB, as well as the separate Freeport sub-docket, No. 4:31-cv-00061-SRB. Nonetheless, there have been new sever and transfer applications filed on the main docket since 2008, and the district court continues to adjudicate issues on such docket (but not the Freeport docket).[5]

         The United States, the Community, and the Tribe timely appealed, and Freeport, Gila Valley Irrigation District, Franklin Irrigation District, Larry W. Barney, Viri Viva Lunt Revocable Trust, TRP Family Trust., Ronald Howard, Janice Howard, Myrna Curtis, Joe B. Tatum, Judy L. Tatum, Harrington Ranch And Farm, S&R Daley, LP, and Steve Daley, Ross and Fawn Bryce Family Trust, Householder Family Limited Partnership, and Kenneth Claridge timely cross-appealed.

         II

         Before reaching the merits, various jurisdictional questions have been brought to our attention by the parties, which must first be resolved. "We, of course, have jurisdiction to determine our own jurisdiction." Special Invs., Inc. v. Aero Air, Inc., 360 F.3d 989, 992 (9th Cir. 2004).

         A

         As the parties explain, the sever and transfer applications of all of the non-Freeport applicants that were filed in 2008 have been voluntarily withdrawn or dismissed without prejudice, together with their accompanying objections.

         "Article III's 'case-or-controversy' requirement precludes federal courts from deciding 'questions that cannot affect the rights of litigants in the case before them.'" Protectmarriage.com-Yes on 8 v. Bowen, 752 F.3d 827, 834 (9th Cir. 2014) (quoting DeFunis v. Odegaard, 416 U.S. 312, 316 (1974) (per curiam)). Indeed, "the general rule in this circuit" is that "voluntary dismissals without prejudice do not create appealable, final judgments." Romoland Sch. Dist. v. Inland Empire Energy Ctr., LLC, 548 F.3d 738, 748 (9th Cir. 2008); see also Concha v. London, 62 F.3d 1493, 1507 (9th Cir. 1995). But see James v. Price Stern Sloan, Inc., 283 F.3d 1064, 1070 (9th Cir. 2002) (carving out a limited exception to this rule).

         Because the applications and accompanying objections filed by non-Freeport defendants have been voluntarily withdrawn or dismissed without prejudice, any decision of this court will affect the rights of these parties only tangentially by outlining legal principles which could apply to future applications. Thus, as counsel for the non-Freeport defendants admitted at oral argument, this court lacks jurisdiction over the applications and associated objections of non-Freeport applicants.

         B

         1

         There is a further reason to decline jurisdiction over the appeals of non-Freeport defendants, as they also recognize. "A district court order is . . . not appealable unless it disposes of all claims as to all parties or unless judgment is entered in compliance with Federal Rule of Civil Procedure 54(b)." Romoland Sch. Dist., 548 F.3d at 747. Federal Rule of Civil Procedure 54(b) provides:

When an action presents more than one claim for relief-whether as a claim, counterclaim, crossclaim, or third-party claim-or when multiple parties are involved, the court may direct entry of a final judgment as to one or more, but fewer than all, claims or parties only if the court expressly determines that there is no just reason for delay. Otherwise, any order or other decision, however designated, that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties does not end the action as to any of the claims or parties and may be revised at any time before the entry of a judgment adjudicating all the claims and all the parties' rights and liabilities.

(emphasis added).

         Thus, as Rule 54(b) makes plain, "[f]inality is achieved only if the court takes each of two steps-it must make an 'express determination that there is no just reason for delay' and it also must make 'an express direction for the entry of judgment.'" 15A Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure: Jurisdiction and Related Matters § 3914.7 (2d ed. 1991).

         Here the district stated that it was entering "final judgment with respect to . . . the 419 applications . . . filed . . . in 2008." But it never made an "express determination" that there was no need for further delay. One might argue that the district court's order of "final judgment" necessarily means that the district court thought there was no reason to delay appeal. Yet, "[i]nterpreting a judgment as a Rule 54(b) determination without the required findings would effectively read out those requirements from Rule 54(b)." Am. States Ins. Co. v. Dastar Corp., 318 F.3d 881, 889 (9th Cir. 2003).

         The United States and Community contend that we have jurisdiction "over any order that finally resolves all matters in a post-judgment proceeding." Indeed, "[t]he Supreme Court has emphasized that the finality requirement is to be given 'a "practical rather than a technical construction."'" United States v. Ray, 375 F.3d 980, 985 (9th Cir. 2004) (quoting Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368, 375 (1981)). Further, "when post-judgment orders are involved[, ] [t]he policy against and the probability of piecemeal review [one of the major justifications for the final order doctrine] is not as decisive a consideration after judgment as before judgment since the underlying dispute is already settled." Id. at 986 (first and second alteration in original) (quoting United States v. Washington, 761 F.2d 1404, 1406 (9th Cir. 1985)); see also Armstrong v. Schwarzenegger, 622 F.3d 1058, 1064-65 (9th Cir. 2010).

         Yet, such cases addressed whether post-judgment orders could be final for purposes of 28 U.S.C. § 1291, rather than discussing the procedural requirements needed to make an order final under Rule 54(b). There is no question that a post-judgment order can be treated as a final order, even if there remain other, ongoing post-judgment proceedings. See Ray, 375 F.3d at 986. But this does not free the district court from the strictures of Rule 54(b).

         It is true that in the context of post-judgment proceedings in Washington, 761 F.2d at 1406-07, we held that a district court's decision to adopt a five-year "interim" plan, governing the number of fish permitted to escape certain fisheries, was appealable as a final order, although the district court did not certify it under Rule 54(b) or as an interlocutory appeal under 28 U.S.C. § 1292(b). But we never evaluated the application of Rule 54(b) in that case. Thus, Washington explains why, in the context of district court's ongoing jurisdiction over a consent decree, it may be sensible to treat certain orders resolving discrete issues as "final, " but it does not explain why such orders should be exempt from Rule 54(b).

         Indeed, a Rule 54(b) explanation is especially helpful where (as here) there are multiple parties litigating multiple claims at differing stages, leading to the possibility of confusion and overlap. It is undisputed that there are ongoing sever and transfer applications being litigated on the main docket (No. 4:31-cv-00059-SRB), which were filed in 2014. While resolution of these applications need not affect the disposition of the 419 applications from 2008, if the district court wanted to evaluate sever and transfer applications in discrete chronological chunks, it ...


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