State Engineer v. Smith Cattle, Inc., 2

• Decision Date: 02 October 1989
• Docket Number: S,No. 2,2
• Citation: 780 P.2d 546
• Parties: The STATE ENGINEER, Jeris A. Danielson, and the Division Engineer for Water, Divisionteven J. Witte, Defendants/Appellants, SRJ I Venture, Plaintiff/Appellee, and The Travelers Insurance Company and Rodney J. Preisser, Plaintiffs/Intervenors/Appellees, v. SMITH CATTLE, INC., a Kansas corporation, and Reid Cattle Co., a Colorado corporation, Defendants. NO. 88SA349.
• Court: Colorado Supreme Court

Page 546

780 P.2d 546

The STATE ENGINEER, Jeris A. Danielson, and the Division Engineer for Water, Division No. 2, Steven J Witte, Defendants/Appellants SRJ I Venture, Plaintiff/Appellee and The Travelers Insurance Company and Rodney J. Preisser Plaintiffs/Intervenors/Appellees, v. SMITH CATTLE, INC., a Kansas corporation, and Reid Cattle Co., a Colorado corporation, Defendants.

NO. 88SA349.

Supreme Court of Colorado,

En Banc.

Oct. 2, 1989.

Duane Woodard, Atty. Gen., Charles B. Howe, Chief Deputy Atty. Gen., Richard H. Forman, Sol. Gen., and Peggy M. Ventura, First Asst. Atty. Gen., Denver, for defendant/appellant and plaintiff/appellee.

Brownstein Hyatt Farber & Madden, Charles B. White and Wayne F. Forman, Denver, for plaintiff/intervenor/appellee Travelers Ins. Co.

Anderson, Johnson & Gianunzio, Gregory L. Johnson and Mark T. Pifher, Colorado Springs, for plaintiff/intervenor/appellee Rodney J. Preisser.

Carlson, Hammond & Paddock, John U. Carlson and M. Wray Witten, Denver, amicus curiae for Colorado Water Congress.

Ben L. Wright, Jr., Denver, and Robert D. Gower, Elizabeth, amicus curiae for defendants.

Justice VOLLACK delivered the Opinion of the Court.

I.

Appellants Jeris A. Danielson, the State Engineer, and Steven Witte, the Division Engineer for Water Division No. 2 (engineers), appeal the judgment of the Water Court Division No. 2 (water court), which held that the engineers may not apply the Arkansas River Rules ¹ to wells owned by SRJ I Venture (Venture) and the Travelers Insurance Company (Travelers). The water court ruled that the engineers' attempt to apply the Arkansas River Rules to Venture's and Travelers' wells was barred by the doctrine of res judicata because in 1973 the water court had determined that Venture's and Travelers' wells, which at that time were owned by Rodney Preisser and Diane Preisser (Preissers), took their water from a source independent of the Arkansas River. Pursuant to section 13-4-102(1)(d), 6A C.R.S. (1987), the engineers appeal the judgment of the water court. They contend, first, that the doctrine of res judicata does not bar the application of the Arkansas River Rules to Venture's and Travelers' wells, and, second, that the application of the Arkansas River Rules to those wells would not deprive the owners of the wells of their vested constitutional right to divert unappropriated water. Finally, the engineers argue that the application of the Arkansas River Rules to Venture's and Travelers' wells would not exceed the statutory authority for those rules and would not violate the well owners' constitutional guarantees to due process of law.

We affirm the judgment of the water court and hold that the 1973 water court decree bars application of the Arkansas River Rules to Venture's and Travelers' wells. Therefore we address only the first of the engineers' arguments.

II.

In June of 1972, Travelers filed with the water court an Application for Water Rights (application) in case No. W-2545. Travelers' application concerned wells identified by the water court as wells 1, 2, 3, 4, 5 and 6. The Preissers were substituted as applicants on November 6, 1972. The Preissers filed an application in case No. W-3890 in December of 1972. Case No. W-3890 concerned wells identified by the water court as wells 7, 8, 9, 10, 11, 12, 13, 14 and 15. The fifteen wells in both cases (the wells) were located in Lincoln County, Colorado, in Water Division No. 2. The water clerk delivered resumes of the applications to the engineers, pursuant to what is now section 37-92-302(3), 15 C.R.S. (1988 Supp.). The resumes stated that the applications requested a decree that the wells took their water from a source independent of the Arkansas River System. On September 25, 1973, the water court entered a decree in case Nos. W-2545 and W-3890 which adjudicated water rights belonging to the Preissers. The water court's September 25, 1973, decree found that

Little Horse Creek, Steel Fork and other tributaries of Little Horse Creek above Horse Creek constitute a separate basin; that Horse Creek receives water from these tributaries only in time of flood; that there is no significant hydraulic connection between this basin and the Arkansas River; that ground water in storage in the basin would not reach the Arkansas River for a period between 300 and 800 years, if it would reach the Arkansas at all ... and that the wells in this basin should not be administered as part of the Arkansas River supply....

Horse Creek is a tributary of the Arkansas River. Thus the water court decreed that the water supplying the Preissers' wells came from a source independent of the Arkansas River.

On June 26, 1985, Robert Jesse, who was at that time Division Engineer for Water Division No. 2, wrote to the Preissers notifying them that the Office of the State Engineer had placed a "call" on the Preissers' wells. The letter also stated that, because the Preissers' water rights were junior to the water rights of Reid Cattle Company and Smith Cattle Company, the Preissers' wells were subject to the Arkansas River Rules.

On September 16, 1986, Venture, a general partnership which now owns six of the wells formerly owned by the Preissers (wells 5, 11, 12, 13, 14 and 15), brought this declaratory judgment action. Venture's complaint sought declaratory judgments that the Arkansas River Rules did not apply to its wells and that Robert Jesse's call on its wells was void. Venture's complaint also sought an injunction against the engineers' enforcement of the Arkansas River Rules, an injunction invalidating the call on its wells, and other relief.

The engineers moved for summary judgment on November 4, 1986. On November 20, 1986, Venture entered a cross-motion for summary judgment in which it argued that the water court's decree of September 25, 1973, was res judicata on the issue of the applicability of the Arkansas River Rules to Venture's wells.

Travelers moved to intervene on December 12, 1986, on the basis of its ownership of eight of the wells (wells 1-4 and 7-10). The water court granted Travelers' motion to intervene on January 6, 1987.

On May 29, 1987, the water court granted Venture's cross-motion for summary judgment. The water court reasoned that because it had previously ruled that the wells took their water from a basin separate from the Arkansas River, the engineers could not apply the Arkansas River Rules to Venture's and Travelers' wells.

Rodney Preisser moved to intervene on January 21, 1988, on the ground that he held a first deed of trust upon the water rights owned by Venture, and had begun an action to foreclose on Venture for nonpayment. The water court granted Rodney Preisser's motion to intervene on February 16, 1988.

On August 30, 1988 the water court made final its order granting Venture's cross-motion for summary judgment. On October 13, 1988, the engineers appealed the final order of the water court granting Venture's cross-motion for summary judgment.

III.

The engineers contend that the doctrine of res judicata does not bar the application of the Arkansas River Rules to the wells. We disagree.

In City of Westminster v. Church, 167 Colo. 1, 9, 445 P.2d 52, 55 (1968), we noted that "[r]es judicata constitutes an absolute bar only when there is in both the prior and subsequent suits identity of subject matter, identity of the cause of action, identity of parties to the action, and identity of capacity in the persons for which or against whom the claim is made." The "same claim or cause of action" requirement is bounded by the injury for which relief is demanded, and not by the legal theory on which the person asserting the claim relies. 1B J. Moore, J. Lucas & T. Currier, Moore's Federal Practice p 0.410(1) (2d ed. 1988). See Hildebrand v. Dart Indus., Inc., 640 F.2d 289 (10th Cir.1981) (action barred by res judicata where plaintiffs attempted to cure statute-of-limitations defect in fraudulent-inducement claim by adding count for fraudulent termination of distributorship agreement).

In Pomeroy v. Waitkus, 183 Colo. 344, 350, 517 P.2d 396, 399 (1974), we noted that the doctrine of res judicata, which, strictly speaking, refers to claim preclusion, "holds that an existing judgment is conclusive of the rights of the parties in any subsequent suit on the same claim. It bars relitigation not only of all issues actually decided, but of all issues that might have been decided." Res judicata bars the claims of those who were parties to the previous action or in privity with a party to the previous action. This is because, in Justice Traynor's words, "[t]he requirements of due process of law forbid the assertion of a plea of res judicata against a party unless he was bound by the earlier litigation in which the matter was decided." Bernhard v. Bank of America Nat'l Trust and Savings Ass'n, 19 Cal.2d 807, 809, 122 P.2d 892, 894 (1942) (approved in Pomeroy, 183 Colo. at 350, 517 P.2d at 399). In Closed Basin Landowners Association v. Rio Grande Water Conservation District, 734 P.2d 627 (Colo.1987), we stated that "[a] trial court has jurisdiction to render an erroneous decision, which may be reviewed on appeal. Consequently, a judgment entered within the jurisdiction of the court, even though wrong, is not subject to collateral attack." (Citations omitted.)

Therefore we must determine whether the water court had original jurisdiction when it entered its 1973 decree, whether the prior action and the instant action concern the same subject matter and cause of action, and whether the engineers are bound by the water court's decree.

A.

We first consider whether the water court had subject-matter jurisdiction to enter its 1973 decree. Travelers filed the original application with the water court in June of 1972. The Preissers were substituted as applicants on November 6, 1972. None of the parties disputes that Travelers and the Preissers properly invoked the jurisdiction of the water court...