IN THE OFFICE OF ADMINISTRATIVE HEARINGS STATE OF ARIZONA

John B. Weldon, Jr., 0001 Mark A. McGinnis, 01 Scott M. Deeny, 0 SALMON, LEWIS & WELDON, P.L.C. 0 East Camelback Road, Suite 00 Phoenix, Arizona 01 (0) 01-00 jbw@slwplc.com mam@slwplc.com smd@slwplc.com Attorneys for Salt River Valley Water Users Association IN THE OFFICE OF ADMINISTRATIVE HEARINGS STATE OF ARIZONA 1 1 1 1 1 1 1 In the Matter of the Decision by the Director to Grant the Salt River Valley Water Users Association s Amended Applications Nos. E-, R-0, R-, R-, R-1, R-, A-1, and A-1 for Permits to Store and Beneficially Use Water on the Salt and Verde Rivers and Issue Permits Nos. -, -001, - 00, -00, -00 and - 00 No. 1A-SW0001-DWR SALT RIVER VALLEY WATER USERS ASSOCIATION S MOTION FOR SUMMARY JUDGMENT REGARDING PALOMA IRRIGATION AND DRAINAGE DISTRICT (Assigned to the Hon. Thomas Shedden) 1 0 1 The Salt River Valley Water Users Association ( SRVWUA ) hereby moves for summary judgment against the protest asserted by the Paloma Irrigation and Drainage District ( Paloma ) in this matter. Paloma contends that it and its landowners 1 have vested water rights that are senior in priority to those claimed by the SRVWUA in these pending applications to appropriate and that the granting of SRVWUA s applications would conflict 1 For purposes of this motion, Paloma refers to the irrigation district and its landowners upon whose behalf the district has filed its protest.

1 1 1 1 1 1 1 1 0 1 with those alleged vested rights. See A.R.S. -1(A). Paloma s predecessor in interest, Gillespie Land & Irrigation Company ( Gillespie ), made these same arguments against SRVWUA more than fifty years ago. Gillespie pursued those arguments all the way to the Arizona Supreme Court and lost. See Gillespie Land & Irr. Co. v. Buckeye Irr. Co., Ariz., P.d (1) ; see also Section I(B), infra. Paloma is thus precluded by res judicata (claim preclusion) and collateral estoppel (issue preclusion) from again pursuing those same arguments against SRVWUA. See Section II(A), (B), infra. As between Paloma and SRVWUA, it has been conclusively established that Paloma has no water rights. Id. Because Paloma, as a matter of law, has no vested water rights with which SRVWUA s applications can conflict, Paloma has no legal basis or authority upon which to protest these applications under A.R.S. -1(A). See Section II(C), infra. Therefore, Paloma s protest to the pending SRVWUA applications must be dismissed in its entirety. This motion supported by the attached Memorandum of Points and Authorities, the Separate Statement of Facts ( SOF ) filed concurrently herewith, and the entire record before the Administrative Law Judge ( ALJ ). I. Undisputed Facts MEMORANDUM OF POINTS AND AUTHORITIES A. General background Paloma diverts water from the Gila River at Gillespie Dam. Gila Bend is located about twenty-five miles south of the Gila River s confluence with the Hassayampa River and downstream of the confluences with the Agua Fria River and the Salt River. See SOF 1. Paloma claims water rights on the Gila River dating back to the late 0s. Id.. See Statement of Protest by Lower Gila Water Users, at -1 (December, 0); Notice of Appeal of Agency Action (August 1, 01) ( LGWUs Appeal ). Paloma is one of three LGWUs. Id. at 1. The case was captioned as Buckeye v. SRVWUA in the Superior Court, but the appeal in the Arizona Supreme Court that is at issue here was captioned as Gillespie v. Buckeye. For purposes of this motion, Buckeye v. SRVWUA refers to the case in its entirety, and Gillespie v. Buckeye refers to the Supreme Court appeal and opinion relating specifically to the claims by Gillespie, Paloma s predecessor.

1 1 1 1 1 1 1 1 0 1 The checkered past of attempts to divert water near Gillespie Dam consists of a series of false starts, missteps, protracted disputes, and decades of litigation among those involved. See generally SOF & exhibit cited therein. For purposes of this motion, however, the pertinent history begins in May 1, when Gillespie was created. See SOF. Gillespie purchased the land that is now Paloma and any associated water rights in October 1. Id.. B. Buckeye v. SRVWUA In September 1, Buckeye Irrigation District and Arlington Canal Company filed suit against,0 upstream defendants on the Gila River and its tributaries, including SRVWUA. See SOF. The purpose of the litigation was to determine the rights of the parties in and to the Gila River System and whether the defendants interfered with the plaintiffs rights. Id.. On January 1, 1, Gillespie intervened in the Buckeye v. SRVWUA lawsuit, seeking to determine its rights and to obtain an injunction against upstream diverters who allegedly interfered with its rights. See SOF. Intervener Gillespie asserted in its Second Amended Complaint that its predecessors in interest appropriated all the unappropriated waters of the Gila River and its tributaries between the years and 1 and continuously used such waters up to the full capacity of its canal system, 0 cubic-feet per second of continuous flow. Id.. Gillespie also asserted that the SRVWUA s dams and wells impounded and intercepted the waters of the Gila River and its tributaries, thereby depriving Gillespie of the waters to which it was entitled under the doctrine of prior appropriation. Id.. Many of the defendants filed pleadings countering that Gillespie had no valid surface water rights. Id.. Gillespie then sought to have its rights determined by the State Water Commissioner. See SOF 1. As a result, the defendants requested that the Court direct a special trial upon intervener s right of appropriation to the waters of the Gila River. Id.

1 1 1 1 1 1 1 1 0 1 On June 1, 1, the judge in Buckeye v. SRVWUA set a trial date to determine the extent, priority dates, and status of Gillespie s claims only. See SOF 1. The judge ordered that the issues raised by intervener s claims of right to the use of waters of the Gila River and its tributaries (as set forth in intervener s pleadings, and defendant s answers thereto) be set for trial, for the purpose only of determining the extent, priority dates, and status of intervener s claims to the appropriation and use of the waters of the Gila River, and that upon such determinations being made, the issues then remaining be tried and determined. Id. 1. A hearing was held in December 1, and Gillespie introduced evidence over several days. See SOF 1. At the close of Gillespie s case, the original plaintiffs and defendants in the action moved in open court to dismiss the complaint in intervention. Id. 1. The motion to dismiss was based on the following grounds: 1. Gillespie obtained no rights in the Gila River because neither it nor its predecessors in interest owned land upon which water could be used, nor did they act as an agent for other appropriators who owned land, one of the requirements for a valid appropriation of water;. Gillespie did not perfect its water rights within a reasonable time and failed to use reasonable diligence to maintain its dam;. Gillespie did not initiate an appropriation of water before March, 11, and therefore did not fall under an exception to the statutory requirement of applying for a permit to appropriate water from the State;. Water was not used on land owned by Gillespie or its predecessors in interest until 1, at the earliest, and very little water was actually used beneficially to grow crops;. Gillespie never filed an application for a permit to appropriate water with the State; and. No evidence was presented as to the particular lands upon which water was used in 1 and after, the amount of water used on particular lands, or the amount of water that was available for use.

1 1 1 1 1 1 1 1 0 1 Id. 1. The parties argued that the evidence presented was so indefinite and insufficient that the Court could not adjudicate Gillespie s rights. Id. 1. They contended that, as a matter of law, Gillespie failed to meet its burden of proving that it had perfected valid surface water rights. Id. On May, 1, the Maricopa County Superior Court entered judgment against Gillespie on the Motion to Dismiss Intervener s Second Amended Complaint and Action. See SOF 1. The Court stated that the second amended complaint of the Intervener Gillespie Land and Irrigation Company and the cause of action set forth therein be and the same are hereby dismissed, and that said Intervener take nothing by reason of its said second amended complaint. Id. 0. This decision was appealed to the Arizona Supreme Court. Id. 1. On May 1, 1, the Supreme Court affirmed the dismissal, finding that Gillespie failed to prove the extent of its water rights. Id. ; Gillespie v. Buckeye, Ariz. at, P.d at. The Supreme Court found: The purpose of the preliminary hearing was to determine the extent, priority dates and status of intervener s claims to the appropriation, and use, of the waters of the Gila River. It was incumbent on intervener at this hearing to first prove that it had made an appropriation of unappropriated waters, and then the extent thereof; that is, the amount or quantity of water beneficially used and the specific lands upon which the waters were used.... When no proof is offered on the extent of appropriation, i.e., quantity of water beneficially used and the particular lands upon which used, the motion to dismiss was presented and there was nothing for the trial court to do other than dismiss the complaint in intervention.... SOF ; Gillespie v. Buckeye, Ariz. at, P.d at -. The Supreme Court stated: We are not determining in this case that the intervener has no rights in the river but we are holding that as against the plaintiffs and defendants [including SRVWUA] it failed to prove two of the essentials of a valid appropriation, i.e., the quantity of water beneficially used and the particular grounds on which used. SOF ; Gillespie v. Buckeye, Ariz. at -, P.d at....

1 1 1 1 1 1 1 1 0 1 C. Subsequent owners Gila River Ranch, Inc. bought the Gillespie property in 1. See SOF. Gila River Ranch sold the property to Giffen, Inc., in April 1. Id.. Northwestern Mutual Life Insurance Company bought the property and rights through a warranty deed in 1. Id.. In 1, the owners leased the property to CRANCO. Id.. Paloma Ranch Joint Venture bought the property in October 1 and terminated the CRANCO lease. See SOF. The Prudential Agricultural Group, a division of Prudential Insurance Company of North America, purchased the property from Paloma Ranch Joint Venture. Id. 0. The property was purchased by W.K. Jenkins at auction in 1. Id. 1. In 1, Paloma Ranch Investments LLC acquired the property. Id.. The property was subsequently subdivided into smaller parcels and the Paloma Irrigation and Drainage District ( Paloma ) was created. Id.. II. Legal Argument It has long been recognized that a right, question, or fact distinctly put in issue, and directly determined by a court of competent jurisdiction, as a ground of recovery, cannot be disputed in a subsequent suit between the same parties or their privies.... Southern Pac. R. Co. v. United States, 1 U.S. 1, (1). The preclusive effect of prior judgments can be separated into two basic concepts: Res judicata (claim preclusion) and collateral estoppel (issue preclusion). Claim preclusion provides that, when a final judgment has been entered by a court of competent jurisdiction on the merits of the case, it concludes or extinguishes the entire claim or cause of action in controversy. See Nevada v. United States, U.S. 1, 1, reh g denied, 1 U.S. (1); see also Hall v. Lalli, 11 Ariz., P.d (App. 1), aff d, 1 Ariz., P.d (1). This bar precludes the parties or their privies from re-litigating claims that were or could have been raised in the action. Under the doctrine of issue preclusion, the prior judgment operates to preclude the re-litigation of specific issues that were actually litigated in the earlier action. Thus, in that situation, the prior judgment does not preclude litigation of issues that might have been but were not

1 1 1 1 1 1 1 1 0 1 actually litigated and determined in the earlier action. See generally Irby Constr. Co. v. Department of Revenue, 1 Ariz., 0 P.d (App. 1). In Buckeye v. SRVWUA, the Court dismissed Gillespie s claims to senior surface water rights and of interference with such rights against SRVWUA and other defendants. See SOF 1-. Based on this prior judgment in favor of SRVWUA, Paloma (as Gillespie s successor in interest) is precluded from claiming senior rights and interference with such rights against SRVWUA. Paloma is precluded from re-litigating the issues of the extent, priority dates, and status of its water rights in an action against SRVWUA. Paloma is a successor in interest to Gillespie s property, which was at issue in Buckeye v. SRVWUA, and Paloma is thus bound by the judgment. See Restatement (Second) of Judgments (1). A. Claim preclusion bars Paloma from enforcing any water rights it may have against SRVWUA. Under Arizona law, a second claim based on the same cause of action that was asserted in previous litigation will be precluded when a former judgment on the merits was rendered by a court of competent jurisdiction and the matter now in issue between the same parties or their privies was, or might have been, determined in the former action. Better Homes Constr., Inc. v. Goldwater, 0 Ariz.,, P.d, (App. 00); see also Hall v. Lalli, 1 Ariz.,, P.d, (1); Hoff v. Mesa, Ariz., 1, P.d 1, 1 (1); Federated Dep t Stores, Inc. v. Moitie, U.S. (11). The judgment rendered in Buckeye v. SRVWUA was decided by a court of competent jurisdiction after the plaintiffs presented their case. Therefore, even assuming that Paloma has valid claims to water rights, Paloma is precluded from asserting those claims against SRVWUA. A valid and final judgment rendered without fraud or collusion is generally conclusive as to every issue decided and every issue raised by the record that could have been decided. See A Ariz. Prac., Civil Trial Practice. (d ed. 001) ( Arizona Practice ). This is true regardless of whether Paloma can (or cannot) assert any such rights against entities other than SRVWUA.

1 1 1 1 1 1 1 1 0 1 Therefore, not only is Paloma precluded from re-litigating the extent, priority dates, and status of its water rights against SRP, it also is precluded from raising claims of interference or any other claims that might have been raised in Buckeye v. SRVWUA. Arizona subscribes to the same evidence test to determine if two claims constitute the same cause of action for res judicata purposes. Under that test, a second action is barred [i]f no additional evidence is needed to prevail in the second action than that needed in the first. See Arizona Practice, supra, at 0. Paloma s water rights claims are the same as in Buckeye v. SRVWUA. No additional evidence is needed to prevail on those claims other than that which would have been needed for Gillespie to prevail in the Buckeye v. SRVWUA litigation. In both cases, Paloma and Gillespie made the same claims to water rights with priority dates as early as and claims of interference based on the construction of the SRVWUA dams. The same evidence was available in both cases to support the claims. For a judgment to have preclusive effect on an entire claim, it must have resulted from an adjudication on the merits. The Arizona Rules of Civil Procedure provide that any dismissal (other than one for lack of jurisdiction, for improper venue, or for failure to join a party) operates as an adjudication on the merits and bars a subsequent action on the same claim. See Cochise Hotels, Inc. v. Douglas Hotel Operating Co., Ariz. 0, -, 1 P.d 0, (1); A.R.C.P. 1(b). Rule 1(b) encompasses motions to dismiss at the end of plaintiff s case in non-jury trials. See A.R.C.P. 1(b), State Bar Committee Notes. After the plaintiff has presented its case in an action, the defendant may move for a dismissal on the ground that upon the facts and the law the plaintiff has presented show no right to relief. If the court renders judgment on the merits against the plaintiff, the dismissal operates as an adjudication on the merits. See Restatement (Second) of Judgments 1, comment b (00). In Buckeye v. SRVWUA, the Court did exactly that. After the Court heard Gillespie s case in support of its claim to water rights, the Court determined that Gillespie failed to prove the basic elements of a water right. The Court granted the defendants motion to dismiss as a matter of law against Gillespie with respect to its entire claim because its claim could not be

1 1 1 1 1 1 1 1 0 1 maintained without a favorable finding on the extent of Gillespie s water rights. See A.R.C.P. (c). Therefore, the dismissal in Buckeye v. SRVWUA operates as an adjudication on the merits and bars Paloma s current claims against SRVWUA. B. Issue preclusion bars Paloma from enforcing any rights it may have against SRVWUA. Because Paloma is barred under the doctrine of claim preclusion from re-litigating claims its predecessors made or could have made in Buckeye v. SRVWUA, the doctrine of issue preclusion is perhaps moot. If claim preclusion is found not to apply, however, issue preclusion clearly applies. The issues that were litigated in Buckeye v. SRVWUA may not be raised again in subsequent litigation. Issue preclusion bars re-litigation of issues that were actually litigated and decided if that finding was essential to the judgment, regardless of whether the claim is the same. See Restatement (Second) Judgments (1); A Ariz. Prac., Civil Trial Practice. (d ed.) (001); Yavapai County v. Wilkinson, 1 Ariz. 0, P.d (1). The following conditions must be present for issue preclusion to apply: (1) The issue in question was actually litigated in a previous proceeding; () there was a full and fair opportunity to litigate the issue; () there was a final decision on the merits; () the resolution of the issue in question was essential to the prior decision; and () there is a common identity of the parties. Irby Constr. Co., 1 Ariz. at, 0 at. The issues of the extent, priority dates, and status of Gillespie/Paloma s claimed water rights were actually litigated in Buckeye v. SRVWUA. Gillespie had several days to present evidence before the judge. See SOF 1. All parties had a full and fair opportunity to litigate the issue. In fact, the Court considered the evidence and briefs on the issues, and the Supreme Court also considered the record as well as lengthy briefs on the issues. Id. 1-. Moreover, there was a final decision on the merits, demonstrated by the final judgment entered in the case after evidence was presented and briefs submitted and by the Supreme Court s final decision affirming the trial court. See Gillespie v. Buckeye, Ariz. at, P.d at. Furthermore, the resolution of the

1 1 1 1 1 1 1 1 0 1 issues was essential to the decision in Buckeye v. SRVWUA because the extent, priority dates, and status of intervener s rights could not be established without a determination of the basic elements of a water right. These issues were necessary to a determination of Gillespie s rights. There is a common identity of the parties. Paloma is the direct successor in interest to Gillespie, and SRVWUA is a party in both cases. Issue preclusion bares Paloma from relitigating the same issues against SRVWUA on which Gillespie lost more than six decades ago. C. Paloma has no legal basis or authority to protest SRVWUA s applications. Paloma s predecessor had an opportunity to litigate its water rights claims against SRVWUA, took advantage of that opportunity, and lost. Because Paloma is now barred by claim preclusion and issue preclusion from asserting that it has rights that might be injured by SRVWUA s upstream reservoirs, no basis exists for any protest by Paloma. Paloma s protest must be dismissed. III. Summary and Requested Action For the reasons set forth herein, the ALJ should dismiss Paloma s protest in its entirety. DATED this th day of September, 01. SALMON, LEWIS & WELDON, P.L.C. By John B. Weldon, Jr. Mark A. McGinnis Scott M. Deeny 0 East Camelback Road, Suite 00 Phoenix, Arizona 01 Attorneys for SRVWUA

1 CERTIFICATE OF SERVICE IN THE ARIZONA OFFICE OF ADMINISTRATIVE HEARINGS Re: In the Matter of the Decision by the Director to Grant the Salt River Valley Water Users Association s Amended Applications Nos. E-, R-0, R-, R-, R-1, R-, A- 1, and A-1 for Permits to Store and Beneficially Use Water on the Salt and Verde Rivers and Issue Permits Nos. -, -001, -00, -00, -00 and -00 Case No. 1A-SW0001-DWR ORIGINAL filed using the OAH electronic document filing system https://portal.azoah.com/oedf/ on this th day of September, 01, with copies provided to all parties on the approved mailing list this th day of September, 01, by posting through the designated OAH website at https://portal.azoah.com/oedf/documents/1a-sw001- DWR/index.html. /s/francine Ford-Bush 1 1 1 1 1 1 1 0 1