City of Eudora v. Rural Water District No. 4
875 F.3d 1030
| 10th Cir. | 2017Background
- Douglas Water Dist. No. 4 (Douglas-4) obtained a 2004 private bank loan for a water project that was USDA-guaranteed; repayment ran 2004–2024. Douglas-4 had also secured a KDHE loan.
- In 2002 Eudora annexed the disputed Service Area and sought to assume water customers under Kansas statute K.S.A. § 12-527 (later § 12-540).
- Douglas-4 relied on federal protection in 7 U.S.C. § 1926(b) (which can bar municipal takings of rural water customers while a USDA-guaranteed loan is outstanding) and invoked K.S.A. § 82a-619(g) to accept USDA guarantees.
- Prior litigation: Douglas-4 sued in 2007; in Eudora I (10th Cir.) the court found the jury was not asked whether USDA cooperation/guarantee itself was “necessary.” On remand the Kansas legislature amended § 82a-619(g) (2012) to expressly reference 7 U.S.C. § 1921 et seq.; Eudora II (10th Cir.) held that amendment was nonretroactive and that Douglas-4 could not meet the statutory “necessary” requirement—judgment for Eudora.
- After Eudora II’s mandate, Douglas-4’s board (July 2013) passed a resolution “reaffirming/ratifying” the 2004 USDA guarantee; USDA and the bank later sent letters reaffirming the guarantee.
- Eudora sued for declaratory relief (2014) seeking a ruling that Douglas-4 lacks § 1926(b) protection despite the post-2012 reaffirmation; the district court granted summary judgment for Eudora. Douglas-4 appeals.
Issues
| Issue | Eudora's Argument | Douglas-4's Argument | Held |
|---|---|---|---|
| Whether Eudora’s declaratory claim is barred by claim preclusion (res judicata) | Prior final judgment resolved the same transaction; the reaffirmation was part of that transaction and could/should have been raised earlier | Reaffirmation occurred after the prior judgment and follows a 2012 statutory amendment, so it creates a new claim/transaction | Judgment affirmed: claim precluded as the reaffirmation was part of the same transaction and was a nullity for preclusion avoidance; Douglas-4 had opportunity to raise it earlier |
| Whether the doctrine against claim-splitting bars Eudora’s suit | Not applicable; Eudora’s suit follows final judgment and addresses new post-judgment conduct by Douglas-4 | Argues earlier litigation resolved the dispute | Doctrine irrelevant; it targets plaintiffs who split claims across concurrent suits, not this situation |
| Whether Douglas-4’s July 2013 reaffirmation constituted an “accept[ance] [of] financial or other aid” under K.S.A. § 82a-619(g) thereby triggering § 1926(b) protection | The reaffirmation (and USDA/bank letters) created a new acceptance under the amended § 82a-619(g) and thus federal protection | Reaffirmation had no legal effect to alter the original guarantee’s status after Eudora II; it did not create new terms or a new transaction | Reaffirmation did not amount to a new “acceptance” entitling Douglas-4 to § 1926(b) protection; the earlier holding that the guarantee was not “necessary” controls |
| Whether the 2012 amendment to K.S.A. § 82a-619(g) applies retroactively to validate the reaffirmed guarantee | Eudora argued amendment not retroactive in prior appeal | Douglas-4 argued amendment applies to the reaffirmation thereby avoiding the prior “necessary” requirement | Court previously held amendment is substantive and nonretroactive; reaffirmation cannot bootstrap retroactivity and does not revive § 1926(b) protection |
Key Cases Cited
- Rural Water Dist. No. 4, Douglas Cty. v. City of Eudora, 720 F.3d 1269 (10th Cir. 2013) (Eudora II) (held amendment to K.S.A. § 82a-619(g) nonretroactive and guarantee did not meet “necessary” requirement)
- Rural Water Dist. No. 4, Douglas Cty. v. City of Eudora, 659 F.3d 969 (10th Cir. 2011) (Eudora I) (addressed trial error and scope of jury question regarding whether USDA guarantee itself was necessary)
- Taylor v. Sturgell, 553 U.S. 880 (2008) (defining res judicata and preclusion concepts)
- MACTEC, Inc. v. Gorelick, 427 F.3d 821 (10th Cir. 2005) (adopting transactional approach for claim preclusion)
- King v. Union Oil of Cal., 117 F.3d 443 (10th Cir. 1997) (pragmatic test for determining transactions for preclusion purposes)