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Heat oil in a 4-quart Dutch oven over medium heat. Add onion; cook for 8 to 10 minutes or until very tender, stirring occasionally. Stir in garlic.
Stir in tomatoes, black-eyed peas, lima beans, water, chili powder to taste, paprika and salt. Bring to a boil; reduce heat. Simmer, covered, for 10 to 15 minutes to blend flavors. If desired, top each serving with Cheddar.