Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-3_09-cv-08023/USCOURTS-azd-3_09-cv-08023-2/pdf.json

Nature of Suit Code: 440
Nature of Suit: Other Civil Rights
Cause of Action: 42:1983 Civil Rights Act

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 While oral argument has been requested, the Court has dispensed with

it because a hearing would not aid the decisional process since the facts and

WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Wind River Resources, LLC, et al.,

 Plaintiffs,

vs.

Herb Guenther, et al.,

 Defendants.

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No. CV-09-8023-PCT-PGR

 

 ORDER

Pending before the Court are Defendant Jack Riley’s Motion to Dismiss

Plaintiffs’ First Amended Complaint or in the Alternative Motion for a More

Definite Statement (doc. #89), Defendant Bob Frisby’s Motion to Dismiss (doc.

#90), and Rule 12(b) Motion to Dismiss of Defendants Herb Guenther and Karen

Smith (doc. #91). Having considered the parties’ memoranda in light of the

relevant record, the Court finds that the plaintiffs’ two federal claims must be

dismissed with prejudice pursuant to Fed.R.Civ.P. 12(b)(6) and that all of their

state claims must be dismissed without prejudice pursuant to 28 U.S.C.

§ 1367(c)(3).1

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legal contentions have been adequately presented in the submitted materials.

2

 The plaintiffs concede in their response to the state defendants’ motion

to dismiss that Guenther and Smith are properly sued only in their individual

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Background

Briefly stated, this action arises from the unsuccessful attempt by plaintiff

Wind River Resources, LLC (“Wind River”) to obtain a permit from the Arizona

Department of Water Resources (“ADWR”) to export ground water from the

Beaver Dam/Littlefield area of the Arizona Strip for the purpose of selling it to the

public utility serving Mesquite, Nevada. At the time Wind River filed its water

exportation application in March, 2005, its principal was co-plaintiff Erika Van

Alstine. A three-day public evidentiary hearing on Wind River’s application was

conducted in March, 2007 before a state administrative law judge (“ALJ”); the

hearing record was held open until October 10, 2007 to allow the filing of briefs

and rebuttal evidence. The ALJ issued a written decision on October 30, 2007,

wherein he recommended that the director of the ADWR, defendant Herb

Guenther, deny Wind River’s application because it was inaccurate in certain

respects and because Wind River had failed to submit satisfactory studies on the

hydrolic impact of the proposal. Guenther entered his decision denying Wind

River’s application on November 28, 2007. Wind River did not appeal the denial

of its application to the Arizona superior court as permitted by Arizona law.

The plaintiffs instead filed an action pursuant to 42 U.S.C. § 1983 in the

District of Nevada on May 21, 2008. That action was transferred to this Court

pursuant to 28 U.S.C. § 1404(a) on February 12, 2009. In their First Amended

Complaint (doc. #87), filed on April 27, 2009, the plaintiffs sued Guenther and

Karen Smith, ADWR’s assistant director2

, as well Jack Riley and Bob Frisby, two

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26 capacities.

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private citizens who actively opposed Wind River’s application during the ADWR

proceedings. The First Amended Complaint raises two federal constitutional

claims pursuant to § 1983 against all four defendants: denial of due process (First

Cause of Action) and denial of equal protection (Ninth Cause of Action); it also

raises seven state law claims against some or all of the defendants: fraudulent

misrepresentation, fraudulent nondisclosure and concealment, intentional

infliction of emotional distress, defamation, abuse of process, civil conspiracy,

and denial of public records. The First Amended Complaint does not seek to

have the denial of Wind River’s water exportation application overturned; rather, it

seeks damages for the defendants’ allegedly improper actions undertaken during

the pendency of Wind River’s application before the ADWR, including conspiring

to onerously obstruct and delay the administrative application process for the

purpose of financially destroying Van Alstine through increased bureaucratic,

technical and legal costs.

Discussion

I. Rooker-Feldman Doctrine

All of the defendants argue in part that the First Amended Complaint must

be dismissed in its entirety for lack of subject matter jurisdiction pursuant to the

Rooker-Feldman doctrine. The Court concludes that the Rooker-Feldman

doctrine is not applicable to this action.

The Ninth Circuit’s general formulation of the Rooker-Feldman doctrine is

that

[i]f a federal plaintiff asserts as a legal wrong an allegedly erroneous

decision by a state court, and seeks relief from a state court

judgment based on that decision, Rooker-Feldman bars subject

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matter jurisdiction in a federal district court. If, on the other hand, a

federal plaintiff asserts as a legal wrong an allegedly illegal act or

omission by an adverse party, Rooker-Feldman does not bar

jurisdiction.

Noel v. Hall, 341 F.3d 1148, 1164 (9th Cir. 2003); see also, Exxon Mobil Corp. v.

Saudi Basic Industries Corp., 544 U.S. 280, 284,125 S.Ct. 1517, 1521-22 (2005)

(Supreme Court noted that the Rooker-Feldman doctrine is narrowly confined to

those “cases brought by state-court losers complaining of injuries caused by

state-court judgments rendered before the district court proceedings commenced

and inviting district court review and rejection of those judgments.”)

First, although the parties do not distinguish between the two plaintiffs

relative to the application of the Rooker-Feldman doctrine, there is in fact a

material distinction inasmuch as the doctrine can only be applied against a “statecourt loser.” While Van Alstine was clearly in privity with Wind River, the losing

applicant in the state administrative proceeding, nothing in the record establishes

that she was an actual named party to that proceeding. As a non-party to the

state proceeding, the Rooker-Feldman doctrine has no application to her claims

raised in this action. Lance v. Dennis, 546 U.S. 459, 466, 126 S.Ct. 1198, 1202

(2006) (“The Rooker-Feldman doctrine does not bar actions by nonparties to the

earlier state-court judgment simply because, for purposes of preclusion law, they

could be considered in privity with a party to the judgment.”); Johnson v. De

Grandy, 512 U.S. 997, 1005-1006, 114 S.Ct. 2647, 2654 (1994) (RookerFeldman does not bar actions by a nonparty to the earlier state suit.)

Second, although the defendants argue the Rooker-Feldman doctrine is

applicable because this action is a de facto appeal from the state administrative

proceeding and that the claims raised herein are inextricably intertwined with the

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claims raised in the state proceeding, the Court disagrees. In determining the

applicability of the Rooker-Feldman doctrine, the Court must pay close attention

to the relief sought by the federal court plaintiffs. Bianchi v. Rylaarsdam, 334 F.3d

895, 900 (9th Cir.2003), cert. denied, 540 U.S. 1213 (2004). The Rooker-Feldman

doctrine is not applicable to the claims of Wind River, or to those of Van Alstine

even if she was a party to the administrative proceeding, because the relief

sought in the First Amended Complaint does not include having this Court set

aside the state administrative ruling that denied Wind River a water export

license; rather, the relief sought in this action involves damages for the

defendants’ allegedly wrongful conduct during the ADWR proceeding. Maldonado

v. Harris, 370 F.3d 945, 950 (9th Cir.2004) (Court concluded that the “inextricably

intertwined” test did not come into play because the federal plaintiff was not

bringing a forbidden de facto appeal since he was not alleging as a legal wrong

an erroneous decision from the state court.), cert. denied, 544 U.S. 968 (2005);

Kougasian v. TMSL, Inc., 359 F.3d 1136, 1139 (9th Cir.2004) (Court concluded

that the Rooker-Feldman doctrine did not deprive it of subject matter jurisdiction

because the plaintiff was not seeking damages based on any alleged error by the

state courts, but rather was seeking damages based on the alleged wrongful

behavior of the defendants during the underlying state court actions.) See also,

Nesses v. Shepard, 68 F.3d 1003, 1005 (7th Cir.1995) (In concluding that the

Rooker-Feldman doctrine did not bar a § 1983 action wherein the plaintiff claimed

that a conspiracy among attorneys and state court judges caused his state court

defeat, the court stated: “Were Nesses merely claiming that the decision of the

state court was incorrect, even if it denied him some constitutional right, the

doctrine would indeed bar his claim. But if he claims, as he does, that people

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3

 The Court concludes from its examination of the state administrative law

judge’s decision, which is a public record included in the record in this action, that

the ADWR process sufficiently comported with the requirements of United States

v. Utah Construction & Mining Co., 384 U.S. 394, 86 S.Ct. 1545 (1966), in that

the ADWR acted in a judicial capacity, the agency resolved disputed issues of

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involved in the decision violated some independent right of his, such as the right

(if it is a right) to be judged by a tribunal that is uncontaminated by politics, then

he can, without being blocked by the Rooker-Feldman doctrine, sue to vindicate

that right and show as part of his claim for damages that the violation caused the

decision to be adverse to him and thus did him harm. Otherwise there would be

no federal remedy for a violation of federal rights whenever the violator so far

succeeded in corrupting the state judicial process as to obtain a favorable

judgment[.]”) (citations omitted).

II. Res Judicata

The defendants also all argue in part that the claims in the First Amended

Complaint must be dismissed pursuant to Fed.R.Civ.P. 12(b)(6) as barred by the

doctrine of res judicata. The Court agrees to the extent that it concludes that the

plaintiffs are precluded by the doctrine from litigating their two federal claims in

this action.

When, as here, an Arizona administrative agency acts in a judicial capacity

to resolve disputed issues of fact and law properly before it and the parties have

had an adequate opportunity to litigate those claims, this Court is required to give

the same preclusive effect to the state agency’s determination to which that

determination would be entitled in the courts of Arizona. University of Tennessee

v. Elliott, 478 U.S. 788, 798-99, 106 S.Ct. 3220, 3226 (1986); Olson v. Morris,

188 F.3d 1083, 1086 (9th Cir.1999).3

 The Ninth Circuit has summarized the

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26 fact properly before it, and the parties had an adequate opportunity to litigate.

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governing law applicable to this issue as follows:

Under Arizona law, a party’s failure to appeal a final administrative

decision makes that decision final and res judicata. Under the

doctrine of res judicata, a judgment on the merits in a prior suit

involving the same parties or their privies bars a second suit based

on the same cause of action. This doctrine binds the same party

standing in the same capacity in subsequent litigation on the same

cause of action, not only upon facts actually litigated but also upon

those points that might have been litigated. In Arizona, the failure to

seek judicial review of an administrative order precludes collateral

attack of the order in a separate complaint. If no timely appeal is

taken, the decision of the board is conclusively presumed to be just,

reasonable and lawful. This principle applies even to alleged

constitutional errors that might have been corrected on proper

application to the court which has jurisdiction of the appeal.

Olson v. Morris, 188 F.3d at 1086 (internal citations and quotation marks

omitted). 

In the First and Ninth Causes of Action of the First Amended Complaint,

the plaintiffs allege that the conspiratorial actions of all four defendants related to

the manner in which the ADWR proceeding was conducted violated their federal

constitutional rights to due process and to equal protection. The Court concludes

that if the plaintiffs had constitutional defenses to the state administrative

proceeding, they had the right to raise those issues with the ADWR or on appeal

in state court. Id. at 1086-87; Dommisse v. Napolitano, 474 F.Supp.2d 1121,

1131 (D.Ariz.2007) (“In this case, Dommisse failed to appeal the final amended

decree of the [Arizona Medical] Board. This final decision is a res judicata and

may not be challenged even in a separate action in federal court. The

constitutional issues Dommisse advances in the instant action could have been

brought before the Board or on appeal before the state court.”), aff’d, 340

Fed.Appx. 384 (9th Cir. 2009); Gilbert v. Bd. of Medical Examiners of the State of

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4

 While the plaintiffs are correct that they are not required to exhaust state

remedies prior to filing a § 1983 action, that legal principle is inapposite here

since the federal claims are being dismissed pursuant to the doctrine of res

judicata, not for non-exhaustion. See Miller v. County of Santa Cruz, 39 F.3d

1030, 1034 n.3 (9th Cir.1994), cert. denied, 515 U.S. 1160 (1995).

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Arizona, 155 Ariz. 169, 174, 745 P.2d 617, 622 (App.1987) (“Dr. Gilbert argues

on appeal that board members and others were conspiring against him and were

motivated to act for reasons other than protection of the public. This assertion of

irregularity in the proceedings before BOMEX could have been raised during

those proceedings and on appeal of the board decision to the superior court.”) 

That these constitutional claims could have been raised in the ADWR proceeding

is reinforced by the fact that Wind River actually raised during that proceeding a

federal due process claim stemming from an alleged irregularity in the proceeding

that was rejected by the state ALJ in his written decision, and by the fact that the

federal claims set forth in the First Amended Complaint were contained in the

notice of claim filed by the plaintiffs prior to the expiration of their time to appeal

the administrative decision to the state court. Having failed to avail themselves of

the opportunity to pursue their constitutional claims at the state level, the plaintiffs

are barred from doing so in this action.4

III. Supplemental Jurisdiction

Since the sole original jurisdictional basis for this action is federal question

jurisdiction pursuant to 28 U.S.C. § 1331 and since the Court is dismissing both

of the federal claims raised in the First Amended Complaint, the Court concludes

that it should decline to exercise its supplemental jurisdiction over the remaining

state law claims in the First Amended Complaint and will dismiss those claims

without prejudice. See 28 U.S.C. § 1367(c)(3) (providing that a district court may

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decline to exercise supplemental jurisdiction when it has dismissed all claims

over which it has original jurisdiction); Fichman v. Media Center, 512 F.3d 1157,

1162-63 (9th Cir. 2008) (“Having granted judgment on the federal claims, the

district court did not abuse its discretion in declining to exercise supplemental

jurisdiction over the state claims.”) Therefore,

IT IS ORDERED that the plaintiffs’ Request for Telephonic Status Hearing

(doc. #104) is denied.

IT IS FURTHER ORDERED that defendant Jack Riley’s Alternative Motion

for a More Definite Statement (doc. #89) is denied.

IT IS FURTHER ORDERED that Defendant Jack Riley’s Motion to Dismiss

Plaintiffs’ First Amended Complaint (doc. #89), Defendant Bob Frisby’s Motion to

Dismiss (doc. #90), and Rule 12(b) Motion to Dismiss of Defendants Herb

Guenther and Karen Smith (doc. #91) are all granted to the following extent: the

two federal claims, the First Cause of Action (Denial of Due Process) and the

Ninth Cause of Action (Equal Protection) of the First Amended Complaint, are

both dismissed with prejudice pursuant to Fed.R.Civ.P. 12(b)(6), and the seven

state law claims, the Second, Third, Fourth, Fifth, Sixth, Seventh, and Eighth

Causes of Action of the First Amended Complaint, are all dismissed without

prejudice pursuant to 28 U.S.C. § 1367(c)(3). The Clerk of the Court shall enter

judgment accordingly.

DATED this 3rd day of March, 2010.

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