Cappel v. Neb. Dep't of Natural Res.

• Decision Date: 22 December 2017
• Docket Number: No. S-16-1037,S-16-1037
• Citation: 298 Neb. 445,905 N.W.2d 38
• Parties: Rodney CAPPEL et al, appellants and cross-appellees, v. STATE of Nebraska DEPARTMENT OF NATURAL RESOURCES, an executive department and agency of the State of Nebraska, and Jeff Fassett, in his official capacity as director of the Department of Natural Resources, appellees and cross-appellants.
• Court: Nebraska Supreme Court

298 Neb. 445

905 N.W.2d 38

Rodney CAPPEL et al, appellants and cross-appellees,

v.STATE of Nebraska DEPARTMENT OF NATURAL RESOURCES, an executive department and agency of the State of Nebraska, and Jeff Fassett, in his official capacity as director of the Department of Natural Resources, appellees and cross-appellants.

No. S-16-1037

Supreme Court of Nebraska.

Filed December 22, 2017.

Stephen D. Mossman, Lincoln, Ryan K. McIntosh, Nebraska City, and Patricia L. Vannoy, Lincoln, of Mattson Ricketts Law Firm, for appellants.

Douglas J. Peterson, Attorney General, Justin D. Lavene, and Kathleen A. Miller, Lincoln, for appellees.

Heavican, C.J., Miller-Lerman, Cassel, Stacy, Kelch, and Funke, JJ.

Kelch, J.

INTRODUCTION

This case involves the administration of the Republican River Compact. Appropriators Rodney Cappel; Steven Cappel; Cappel Family Farm LLC; C & D Cappel Farms, L.L.C.; and Midway Irrigation, Inc. (collectively the Cappels) appeal the order of the district court for Hitchcock County that dismissed their complaint without leave to amend, upon the motion of the State of Nebraska Department of Natural Resources and Jeff Fassett, its director (collectively the DNR). The DNR cross-appeals. We hold that the Cappels failed to state a claim for inverse condemnation, but we conclude that the district court erred in failing to find that it lacked subject matter jurisdiction over the Cappels' remaining claims for relief under 42 U.S.C. § 1983 (2012), due process, and restitution, which were barred by sovereign immunity. Therefore, we affirm in part, and in part reverse and remand with directions to dismiss for lack of subject matter jurisdiction those claims barred by sovereign immunity.

BACKGROUND

The Cappels own farmland throughout the Republican River Basin. They irrigate their farmland with ground water from wells located within the Middle Republican Natural Resources District and receive surface water appropriations from the Frenchman Valley Irrigation District. As such, they are subject to the integrated management plan and associated surface water controls adopted jointly by the Middle Republican Natural Resources District and the DNR.

The administration of water in the Republican River Basin is subject to the Republican River Compact (hereinafter the Compact), which is an interstate compact between Nebraska, Kansas, and Colorado that regulates the consumption of the basin's waters and allocates a certain amount of surface water to each state, depending on the amount of surface water available in the basin each year. The DNR is responsible for ensuring Nebraska's compliance with the Compact.

In January 2013 through 2015, the DNR's hydrologic forecast indicated that without essential action, Nebraska's consumption of water from the Republican River would exceed its allocation under the Compact. Accordingly, the DNR declared a "Compact Call Year" and issued closing notices to holders of surface water permits for each of those years. As a result of the closing notices, the Cappels were barred from using the surface waters of the Republican River and its tributaries to irrigate their crops. However, the Cappels were still obligated to pay the costs associated with owning irrigated acres, including taxes and assessments. And DNR did not curtail ground water use, which allegedly continued to deplete streamflow in the Republican River Basin to the future detriment of surface water users. The Cappels themselves had drilled new irrigational wells because they could not irrigate their land with surface water.

The Cappels did not challenge the DNR's 2013 through 2015 compact call year orders or corresponding closing notices as provided in Neb. Rev. Stat. § 61-206 (Reissue 2009). Instead, in December 2015, they filed a verified complaint against the DNR in the district court for Hitchcock County, followed by a verified amended complaint. They alleged a cause of action under 42 U.S.C. § 1983, due to deprivation of their property rights and violations of their due process rights. The Cappels also alleged that they had been subject to an inverse condemnation in that the closing notices and administration of the Republican River amounted to an uncompensated physical and regulatory taking under Neb. Const. art. I, §§ 3 and 21, and the U.S. Const. amends. V and XIV. Further, the Cappels alleged that they had suffered damages when they were deprived of the benefits of condemnation proceedings, in violation of their due process rights, and when DNR allowed excessive ground water pumping to the detriment of the their surface water appropriations. The Cappels sought reimbursement for occupation taxes paid to the Middle Republican Natural Resources District and water taxes paid to the Frenchman Valley Irrigation District, money damages, and restitution.

The DNR filed a motion to dismiss under Neb. Ct. R. Pldg. § 6-1112(b)(1) and (6), alleging lack of subject matter jurisdiction and failure to state a claim upon which relief can be granted. Following a hearing, the district court issued a written order dismissing the amended complaint pursuant to § 6-1112(b)(6), without leave to amend. It determined beyond a doubt that the Cappels could plead no set of facts that would entitle them to relief under their theories of recovery and that amendment would be futile. Specifically, the district court found that it had subject matter jurisdiction, because the Cappels' claims were not barred by the State's sovereign immunity and therefore overruled the DNR's motion based on § 6-1112(b)(1). However, it determined that neither the closing notices nor the adopted integrated management plans amounted to a physical or regulatory taking. Additionally, the district court held that the closing notices and adopted plans did not violate the Cappels' due process rights and that the Cappels had failed to state a claim under 42 U.S.C. § 1983. Finally, the district court ruled that the Cappels were not entitled to restitution for taxes paid in 2013 through 2015.

The Cappels filed this appeal in the Nebraska Court of Appeals, and the DNR cross-appealed. We moved the case to our docket and denied the DNR's motion for summary affirmance.

ASSIGNMENTS OF ERROR

The Cappels assign, combined and restated, that the district court erred in holding that (1) the issuance of closing notices was not an exercise of eminent domain and did not constitute a physical or regulatory taking, (2) the DNR's administration of the Republican River did not constitute a regulatory taking, (3) the DNR did not deprive the Cappels of their due process rights, (4) the Cappels failed to state a claim for relief under 42 U.S.C. § 1983, and (5) the Cappels were not entitled to restitution of occupation taxes levied against their property.

The DNR cross-appeals and assigns that the district court erred when it held that the Cappels' claims brought under 42 U.S.C. § 1983 were not barred by sovereign immunity.

STANDARD OF REVIEW

A district court's grant of a motion to dismiss is reviewed de novo.¹ When reviewing an order dismissing a complaint, the appellate court accepts as true all facts which are well pled and the proper and reasonable inferences of law and fact which may be drawn therefrom, but not the plaintiff's conclusion.²

ANALYSIS

The Cappels brought claims (1) under 42 U.S.C. § 1983 ; (2) under article I, § 21, of the Nebraska Constitution and the 5th and 14th Amendments to the U.S. Constitution for alleged inverse condemnation; (3) under article I, § 3, of the Nebraska Constitution and the 5th and 14th Amendments to the U.S. Constitution for alleged violations of substantive and procedural due process rights; and (4) for restitution. We address the parties' assignments of error as they relate to each of these claims.

42 U.S.C. § 1983 ACTION

The Cappels' first claim against the DNR was brought under 42 U.S.C. § 1983. The district court dismissed this claim pursuant to § 6-1112(b)(6) for failure to state a claim upon which relief can be granted. The Cappels dispute this finding on appeal. On cross-appeal, the DNR contends that the Cappels' § 1983 claim is barred by sovereign immunity and that the district court erred by not dismissing it for lack of subject matter jurisdiction pursuant to § 6-1112(b)(1). We agree with the DNR.

Sovereign immunity is jurisdictional in nature, and courts have a duty to determine whether they have subject matter jurisdiction over a matter.³ Thus, the district court's jurisdiction to address whether the Cappels stated a claim upon which relief can be granted depended on whether the Cappels' § 1983 claim is barred by sovereign immunity.

Section 1983 provides a civil remedy for deprivations of federally protected rights, statutory or constitutional, caused by persons acting under color of state law.⁴ But it does not necessarily provide a remedy for litigants seeking such remedy against a state.⁵ The enactment of § 1983 did not abrogate the State's 11th Amendment immunity,⁶ which bars such suits unless the State has waived its immunity or unless Congress has exercised its undoubted power under § 5 of the 14th Amendment to override that immunity.⁷ Here, Nebraska has not waived its sovereign immunity with regard to § 1983 suits brought against it.⁸ Nor has Congress exercised its power to override that immunity.⁹ Therefore, the Cappels' § 1983 claim against the DNR, a state agency, and thus, the State,¹⁰ is barred by sovereign immunity, and the district court erred in failing to dismiss it for lack of subject matter jurisdiction.

This finding applies equally to the Cappels' § 1983 claim against Fassett, the director. A suit against a state official in his or her official capacity is not a suit against the official, but, rather, a suit against the official's office.¹¹ Accordingly, the Cappels' suit against Fassett is a suit against a state agency. Because a suit against a state agency is a suit against the State,¹² the Cappels' claim against Fassett is a claim against the...