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United States v. Walker River Irrigation District

United States Court of Appeals, Ninth Circuit

May 22, 2018

United States of America, Plaintiff-Appellant,
v.
Walker River Irrigation District; Estate of Herbert Garms, et al.; Circle Bar N Ranch, L.L.C., et al.; E.L.W. Ranches, Inc.; Tri-State Motor Transit Company; Desert Pearl Farms, GP, et al.; Douglas County, Nevada; John A. Mathias, et Al.; Break-A-Heart, LLC, et al.; Bently Family Ltd. Partnership, et al.; Hawthorne Utilities, et al.; Nevada Bighorns Unlimited; David J. & Pamela A. Peri Family TRUST AGREEMENT, et al.; NATIONAL FISH AND WILDLIFE FOUNDATION; DWIGHT CRAIG DONOVAN; YERINGTON VENTURES, LLC; DARLA CLARKE PERRY, et al.; ANNETTE R. SWAINSTON, et al.; RESIDUAL TRUST OF THE HEIMAN FAMILY TRUST, et al.; VGR LIMITED PARTNERSHIP; MOTLEY LIVING TRUST DATED 12- 23-70; BORDA FAMILY LP; THEODORE DAVID HAIGHT; LELAND D. HAYDEN, et al.; MARJORIE L. URREA, et al.; FRED FULSTONE, JR.; NEVADA STATE OF, et al.; GREGORY B. ADAMS, et al.; ARLENE M. HOFERER, et al.; CALIFORNIA DEPARTMENT OF FISH & GAME, et al.; NORMAN W. AND KELLI J. ANNETT FAMILY TRUST, et al.; ANTLER PEAK GOLD INC.; MICHAEL J. CHILTON; COUNTY OF MONO, CALIFORNIA, et al.; SMITH VALLEY FIRE PROTECTION DISTRICT, et al.; KYLE A. RUF; SHANE BRANDON; BOREALIS MINING CO.; J & S ROBERTS TRUST DATED 2-26-96; SUELLEN FULSTONE, et al.; MINERAL COUNTY; CENTENNIAL LIVESTOCK; U.S. BOARD OF WATER COMMISSIONERS; FENILI FAMILY TRUST, c/o Peter Fenili and Veronica Fenili, Trustees; SIX-NRANCH, INC., c/o Richard and Cynthia Nuti; MICHAEL NUTI; NANCY NUTI; RALPH E. NUTI; MARY E. NUTI; LAWRENCE M. NUTI; LESLIE NUTI; MICA FARMS, LLC, c/o Mike Faretto; JOHN AND LURA WEAVER FAMILY TRUST, c/o Lura Weaver, Trustee; SMITH VALLEY GARAGE, INC., c/o Dan Smith and Shawna Smith; DONALD GIORGI; LORIE MCMAHON; MERLE MCMAHON; LYON COUNTY, Defendants-Appellees. and Walker River PaiuteTribe, Intervenor-Plaintiff, UNITED STATES OF AMERICA, Plaintiff, and WALKER RIVER PAIUTE TRIBE, Intervenor-Plaintiff- Appellant,
v.
WALKER RIVER IRRIGATION DISTRICT; ESTATE OF HERBERT GARMS, et al.; CIRCLE BAR N RANCH, L.L.C., et al.; E.L.W. RANCHES, INC.; TRI-STATE MOTOR TRANSIT COMPANY; DESERT PEARL FARMS, GP, et al.; DOUGLAS COUNTY, NEVADA; JOHN A. MATHIAS, et al.; BREAK-A-HEART, LLC, et al.; BENTLY FAMILY LTD. PARTNERSHIP, et al.; HAWTHORNE UTILITIES, et al.; NEVADA BIGHORNS UNLIMITED; DAVID J. & PAMELA A. PERI FAMILY TRUST AGREEMENT, et al.; NATIONAL FISH AND WILDLIFE FOUNDATION; DWIGHT CRAIG DONOVAN; YERINGTON VENTURES, LLC; DARLA CLARKE PERRY, et al.; ANNETTE R. SWAINSTON, et al.; RESIDUAL TRUST OF THE HEIMAN FAMILY TRUST, et al.; VGR LIMITED PARTNERSHIP; MOTLEY LIVING TRUST DATED 12- 23-70; BORDA FAMILY LP; THEODORE DAVID HAIGHT; LELAND D. HAYDEN, et al.; MARJORIE L. URREA, et al.; FRED FULSTONE, JR.; NEVADA STATE OF, et al.; GREGORY B. ADAMS, et al.; ARLENE M. HOFERER, et al.; CALIFORNIA DEPARTMENT OF FISH & GAME, et al.; NORMAN W. AND KELLI J. ANNETT FAMILY TRUST, et al.; ANTLER PEAK GOLD INC.; MICHAEL J. CHILTON; COUNTY OF MONO, CALIFORNIA, et al.; SMITH VALLEY FIRE PROTECTION DISTRICT, et al.; KYLE A. RUF; SHANE BRANDON; BOREALIS MINING CO.; J & S ROBERTS TRUST DATED 2-26-96; SUELLEN FULSTONE, et al.; MINERAL COUNTY; CENTENNIAL LIVESTOCK; U.S. BOARD OF WATER COMMISSIONERS; FENILI FAMILY TRUST, c/o Peter Fenili and Veronica Fenili, Trustees; SIX-NRANCH, INC., c/o Richard and Cynthia Nuti; MICHAEL NUTI; NANCY NUTI; RALPH E. NUTI; MARY E. NUTI; LAWRENCE M. NUTI; LESLIE NUTI; MICA FARMS, LLC, c/o Mike Faretto; JOHN AND LURA WEAVER FAMILY TRUST, c/o Lura Weaver, Trustee; SMITH VALLEY GARAGE, INC., c/o Dan Smith and Shawna Smith; DONALD GIORGI; LORIE MCMAHON; MERLE MCMAHON; LYON COUNTY, Defendants-Appellees.

          Argued and Submitted August 30, 2017 Pasadena, California

          Appeal from the United States District Court for the District of Nevada D.C. No. CV 73-0127 RCJ Subproceeding: C-125-B Robert Clive Jones, District Judge, Presiding

          Elizabeth Ann Peterson (argued), David L. Negri, Andrew "Guss" Guyarino, Katerine J. Barton, David C. Shilton, and William B. Lazarus, Attorneys; Jeffrey H. Wood, Acting Assistant Attorney General; United States Department of Justice, Washington, D.C.; for Plaintiff-Counterclaimant-Appellant.

          Wes Williams Jr. (argued) Schurz, Nevada, for Intervenor-Plaintiff-Appellant.

          Gordon H. DePaoli (argued) and Dale E. Ferguson, Woodburn & Wedge, Reno, Nevada, for Defendant-Appellee Walker River Irrigation District.

          Bryan L. Stockton (argued), Senior Deputy Attorney General; Adam Paul Laxalt, Attorney General; Office of the Attorney General, Carson City, Nevada; for Defendant-Appellee Nevada Department of Wildlife.

          Roderick E. Walston (argued) and Steven G. Martin, Best Best & Krieger, Walnut Creek, California; Stephen B. Rye, District Attorney, Lyon County District Attorney's Office, Yerington, Nevada; Jerry M. Snyder, Reno, Nevada; Stacy Simon, County Counsel, Office of the County Counsel, Mammoth Lakes, California; Therese A. Ure, Schroeder Law Offices P.C., Reno, Nevada; for Defendants-Appellees Lyon County, et al.

          Before: A. Wallace Tashima, Raymond C. Fisher, and Jay S. Bybee, Circuit Judges.

         SUMMARY[*]

         Water Rights

         The panel reversed the district court's order dismissing, on res judicata grounds, an action brought by the United States and the Walker River Paiute Tribe against the Walker River Irrigation District and others concerning water rights in the Walker River basin.

         This case began in 1924 when the United States filed suit in Nevada federal court to establish water rights in the Walker River Basin on behalf of the Walker River Paiute Tribe. In 1936, the court entered the Water River Decree awarding water rights to the Tribe and various other claimants. In 1940, after remand from the Ninth Circuit, the district court amended the original decree and retained jurisdiction to modify it. In 1991, the Walker River Irrigation District filed a petition invoking the court's continuing jurisdiction over the waters of the Walker River. The petition was in response to a California State Water Resources Control Board decision to issue restrictions on the District's California water licenses. The current appeals arise from the counterclaims in the 1991 action filed by the Tribe in 1992 (and later by the United States) asserting new water rights. In May 2015, without briefing or argument on the issue, the district court sua sponte dismissed all of the Tribe's and the United States' counterclaims on res judicata or jurisdictional grounds.

         The panel first held that the district court was correct that it retained jurisdiction to litigate additional rights in the Walker River Basin and to modify the 1936 Decree. On the merits, the panel held that the district court erred in characterizing the counterclaims as part of a new action. The panel concluded that based on the procedural history and the fact that the Tribe and the United States brought their counterclaims under the same caption as the 1924 action, the counterclaims did not constitute a new action. The panel further held that the district court erred by dismissing the claims sua sponte on the basis of res judicata without first giving the parties an opportunity to be heard on the issue. Moreover, the panel held that because the counterclaims were not a new action, traditional claim preclusion and issue preclusion did not apply.

         The panel directed that on remand, the case should be randomly reassigned to a different district judge. The panel reluctantly concluded that reassignment was appropriate because it believed (1) that Judge Jones would have substantial difficulty putting out of his mind previously expressed views about the federal government and its attorneys, and (2) that reassignment will preserve the appearance of justice.

          OPINION

          TASHIMA, Circuit Judge:

         This case is but one among a group of related actions in a long-running and complex dispute over water rights in the Walker River Basin. This case began in 1924 when the United States filed suit in Nevada federal court to establish water rights in the Walker River Basin on behalf of the Walker River Paiute Tribe ("Tribe"). In 1936, the court entered a decree awarding water rights to the Tribe and various other claimants. In 1940, after remand from the Ninth Circuit, the district court amended the original decree and retained jurisdiction to modify it.[1]

         The issues we confront in these appeals stem from the counterclaims filed by the Tribe in 1992 (and later by the United States) asserting new water rights. The district court ordered the Tribe and the United States to name as counterdefendants all water rights claimants in the Walker River Basin and to serve them with summons and the counterclaims. In 2013, after service was substantially complete, Judge Robert Clive Jones[2] ordered briefing on Rule 12(b) issues related to jurisdiction and expressly ordered the litigants not to address other issues, such as res judicata, which were to be addressed at a later date. Nonetheless, in May 2015, without briefing or argument on the issue, the district court sua sponte dismissed all of the Tribe's and the United States' counterclaims on res judicata or jurisdictional grounds. The Tribe and the United States appeal.

         We hold that the district court had continuing jurisdiction over the counterclaims and that it erred in dismissing the claims on res judicata or jurisdictional grounds without giving the parties an opportunity to brief the issue. Accordingly, we reverse and remand. On remand, we also order the reassignment of this case to another district judge.

         I. Facts and Procedural Background[3]

         A. The Walker River and the Reservation

         The Walker River originates in the Sierra Nevada Mountains in Mono County, California, and terminates at Walker Lake in Mineral County, Nevada. The river is comprised of two forks: the East Walker River and West Walker River. The two forks merge near Yerington, Nevada, where the river then flows through the Walker River Paiute Reservation ("Reservation"). The river continues another twenty-one miles south before draining into Walker Lake. The Walker River Basin covers approximately 4000 square miles. The Reservation dates to November 29, 1859, and was established for the benefit of the Tribe. The initial Reservation encompassed 320, 000 acres of land located southeast of Reno, Nevada, in the Walker River Basin.

         B. First Federal Proceeding

         At the turn of the twentieth century, conflicting claims to water rights arose among residents of the Walker River Basin. In 1902, Miller & Lux Corporation, a cattle and land company, filed suit in federal court seeking adjudication of its water rights in the Walker River Basin vis-à-vis 150 upstream entities and individuals. See Miller & Lux v. Rickey, 146 F. 574 (C.C.D. Nev. 1906);[4] Rickey Land & Cattle Co. v. Miller & Lux, 218 U.S. 258, 259 (1910). Two years later, Rickey Land & Cattle Company filed two actions in California state court against Miller & Lux, also seeking to quiet its title to water rights in the Walker River Basin. See Rickey Land & Cattle, 218 U.S. at 259. Miller & Lux moved to enjoin the proceedings in California on the ground that the federal court in Nevada had acquired prior exclusive jurisdiction. Id. at 260. The lower court agreed and enjoined the California proceedings. Id. The Supreme Court affirmed. Id. at 262.

         In 1919, the lower federal court issued the "Rickey Decree" apportioning the relative surface-water rights among the 151 parties. Although neither the United States nor the Tribe participated in that litigation, the Rickey Decree recognized a state-law based irrigation water right for the Reservation. See United States v. Walker River Irrigation Dist., 11 F.Supp. 158, 160 (D. Nev. 1935).

         C. The 1924 Federal Proceeding

         In 1924, the United States filed suit in the District of Nevada to establish federal water rights for the Reservation. At the time, the Reservation encompassed 86, 400 acres of land. The named defendants were 253 individuals and entities located upstream from the Reservation. See id. at 159. The complaint, as amended in 1926, sought a right to an unimpeded flow of 150 cubic feet per second ("cfs") of water from the Walker River. The basis for the water claim was the original 1859 reservation of land, which the complaint alleged constituted an implicit "set aside . . . of the waters of the said Walker River and its tributaries [in the amount of] 150 cubic feet of water per second of time." In addition, the United States requested a determination of "the relative rights of the parties hereto in and to the waters of the said river and its tributaries in Nevada and California."

         Although other reservations existed in the Walker River Basin as of 1926, the amended complaint did not assert claims to water rights on behalf of any other tribes. Nor did the amended complaint assert claims on behalf of the United States for any other federally owned properties in the Basin or seek groundwater rights for any tribe or federal property.

         D. The 1936 Decree

         The district court issued a decision on June 6, 1935, and entered a decree on April 14, 1936. Walker River Irrigation Dist., 11 F.Supp. 158. The court denied the United States' claim to a federal water right for the Reservation, concluding that the Tribe's only water rights were based on state-law principles of prior appropriation. Id. at 167. The bulk of the decree set forth the amounts of water awarded to the United States and each of the other parties. These awards included rights that the district court had adjudicated in the course of its proceeding, as well as rights incorporated from the Rickey Decree.

         Paragraph XI of the Decree provides:

Each and every party to this suit and their [sic] and each of their servants, agents and attorneys and all persons claiming by, through or under them, and their successors and assigns in and to the water rights and lands herein described, be and each of them hereby is forever enjoined and restrained from claiming any rights in or to the waters of Walker River and/or its ...

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