Garetson Bros. v. Am. Warrior, Inc., 117,404

• Citation: 435 P.3d 1153,56 Kan.App.2d 623
• Decision Date: 11 January 2019
• Docket Number: No. 117,404,117,404
• Parties: GARETSON BROTHERS and Foreland Real Estate, LLC, Appellees, v. AMERICAN WARRIOR, INC., Successor in Interest to Kelly and Diana Unruh, Appellant, and Rick Koehn, Defendant.
• Court: Court of Appeals of Kansas

56 Kan.App.2d 623

435 P.3d 1153

GARETSON BROTHERS and Foreland Real Estate, LLC, Appellees,

v. AMERICAN WARRIOR, INC., Successor in Interest to Kelly and Diana Unruh, Appellant,andRick Koehn, Defendant.

No. 117,404

Court of Appeals of Kansas.

Opinion filed January 11, 2019.

Gerald O. Schultz and Zachary D. Schultz, of Schultz Law Office, P.A., of Garden City, for appellant.

J. Michael Kennalley, Lynn D. Preheim, and Frank Basgall, of Stinson Leonard Street LLP, of Wichita, for appellees.

Before Powell, P.J., Atcheson and Gardner, JJ.

Powell, J.:

Garetson Brothers and Foreland Real Estate, LLC (Garetson) own a number of water rights in Haskell County, Kansas, including water right HS-003. Garetson sought injunctive relief in the Haskell County District Court to prevent the nearest junior water right holders, American Warrior, Inc. and Rick Koehn (American Warrior), from impairing its water right. In accordance with the agreement of the parties, the district court appointed the Kansas Department of Agriculture's Division of Water Resources (DWR) as referee, and subsequently, the DWR issued a report finding that American Warrior's junior water rights were substantially impairing Garetson's water right. As a result, the district court entered a temporary injunction ceasing operation of American Warrior's junior water rights 10,467 and 25,275. American Warrior brought an interlocutory appeal, and another panel of this court affirmed the temporary injunction. The district court then conducted a three-day trial and found that American Warrior's junior water rights 10,467 and 25,275 were impairing Garetson's senior water right, HS-003. The district court issued a permanent injunction prohibiting American Warrior from exercising its junior water rights. American Warrior now appeals. After a careful review of the record and for reasons more fully stated below, we affirm in part and dismiss in part.

FACTUAL AND PROCEDURAL BACKGROUND

The matter now before us has been at issue for nearly 14 years. At the heart of this dispute is Garetson's claim that American Warrior is infringing on its senior water right. Over the course of the past 14 years, this case has involved a complaint with the DWR, two temporary injunctions—one of which was vacated by the district court and the other of which was affirmed by another panel of this court in Garetson Brothers v. American Warrior, Inc. , 51 Kan. App. 2d 370, 347 P.3d 687 (2015), rev. denied 303 Kan. 1077 (2016)—and, ultimately, a permanent injunction. To provide context for the subsequent facts, in February 2017 the district court granted Garetson's request for a permanent injunction against American Warrior. This permanent injunction prohibits American Warrior from utilizing its junior water rights because such use impairs Garetson's senior water right.

History and Garetson's Complaint with the DWR

The first neighboring well at issue in this action was approved in 1964 and was assigned appropriation water right numbered 10,467.

The second neighboring well was approved in 1976 and was given appropriation water right numbered 25,275. Both of the neighboring wells at issue are used to irrigate crops. All of the wells are located in Groundwater Management District 3 in southwest Kansas, overlying the Ogallala Aquifer.

On March 14, 2005, Garetson, a Kansas general partnership, filed a complaint with the DWR, alleging two neighboring junior water rights were impairing its senior vested water right. At the time, Garetson owned a tract of land in Haskell County upon which a single well was used for crop irrigation. A prior owner of Garetson's land had filed for and received a vested water right in the well on September 12, 1950. This vested right is numbered HS-003. HS-003 is permitted to pump 240 acre-feet at a rate of 600 gallons per minute. The DWR began investigation of the complaint upon its filing.

Garetson subsequently withdrew its complaint in 2007; however, the DWR continued to investigate, monitor, and record data from the wells at issue and three other neighboring wells from 2005 into the present. In 2005, the DWR installed water level monitoring equipment that over time allowed it to determine the degree of well-to-well interference between HS-003 and the five nearest water rights: 10,035, 10,467, 11,750, 19,032, and 25,275.

The Lawsuit

On May 1, 2012—seven years after Garetson filed its initial complaint with the DWR—Garetson filed the lawsuit now at issue, alleging impairment of senior water right HS-003 by water rights 10,467 and 25,275, then owned by Kelly and Diana Unruh. The Unruhs filed an answer on June 11, 2012, admitting they owned the two junior water rights but denying the allegations of the impairment. For whatever reason, and unbeknownst to Garetson and the district court, the Unruhs misrepresented their ownership of the water rights because in reality, they had sold the property and water rights to American Warrior on May 30, 2012—12 days prior to the filing of their answer. American Warrior's ownership was disclosed in August 2013. American Warrior was aware of the pending water right dispute when it purchased the property from the Unruhs.

On November 29, 2012, in a phone conference with the district court, Garetson and the Unruhs advised that they agreed to the appointment of the DWR as a fact-finder in the case pursuant to K.S.A. 82a-725. The district court appointed the DWR as the agreed-upon fact-finder, directed the DWR to submit a report to the court, and set the case for review in March 2013.

The First Temporary Injunction

The DWR filed its preliminary fact-finder report on April 3, 2013, and it was placed into evidence without objection. The district court granted Garetson's motion for a temporary injunction and ordered "the defendants (Unruh), their successors, their tenets [sic ], and their agents ... to refrain from pumping Well 10,467 and Well 25,257." The district court also joined Cecil O'Brate, owner and CEO of American Warrior, as a defendant. The Unruhs filed a motion to establish bond on June 3, 2013.

On July 11, 2013, numerous procedural motions were set for hearing. At this hearing, the Unruhs requested a continuance on their motion for bond, which the district court granted.

On August 5, 2013, Garetson filed an amended petition naming American Warrior and Rick Koehn, the tenant farming on American Warrior's land, as defendants. O'Brate was dismissed as an individual defendant, and the Unruhs were no longer named defendants. On October 14, 2013, Garetson transferred its senior water right to Foreland Real Estate, LLC (Foreland), who joined the lawsuit as a named plaintiff.

On November 3, 2013, the district court heard numerous motions and ultimately vacated the 2013 temporary injunction because the injunction had shut off the water supply to Koehn's crop and he had not received notice of the proceeding. Because the temporary injunction was vacated, the district court did not find a need to set bond. Additionally, the district court denied American Warrior's motion to dismiss for Garetson's alleged failure to exhaust its administrative remedies, holding that K.S.A. 82a-717a provided that any person with a vested water right may restrain or enjoin any diversion or proposed diversion that impairs a water right in any court of competent jurisdiction and that the statute did not require that one must first exhaust his or her administrative remedies to do so. The district court also ordered the DWR to continue as the court-appointed fact-finder and directed the DWR to continue to investigate and report any or all of the physical facts concerning the water rights referenced in this case pursuant to K.S.A. 82a-725. Specifically, that order stated:

"The report shall set forth findings of fact in regard to the degree HS-003 is being impaired by water rights 10,467 and 25,257. The report shall set forth the opinions the [the DWR] regarding whether any such impairment ... [is] a substantial impairment to HS-003. If [the DWR] concludes substantial impairment to HS-003 exists, [the DWR] shall advise as to recommended remedies to curtail the substantial impairment to HS-003 and explain why these remedies are recommended."

The Second Temporary Injunction

The DWR filed a second and final report on March 31, 2014. Subsequently, the district court considered Garetson's second motion for a temporary injunction and, on May 5, 2014, issued a temporary injunction, set a bond, and ordered American Warrior and its tenant to curtail use of water rights 10,467 and 25,257.

Interlocutory Appeal to This Court

American Warrior filed an interlocutory appeal, raising four issues: (1) the admission of the DWR's report into evidence, (2) the consideration given to certain evidence presented by American Warrior, (3) the interpretation of "impair," and (4) the granting of the temporary injunction.

The panel hearing American Warrior's interlocutory appeal ultimately held that temporary injunctive relief was an appropriate remedy because under the circumstances the district court did not abuse its discretion by ordering American Warrior to stop pumping water from the junior wells during the pendency of the action. 51 Kan. App. 2d at 392, 347 P.3d 687. The panel also held that the DWR's report had been properly admitted into evidence and that the district court properly considered all of the evidence presented. 51 Kan. App. 2d at 386-87, 347 P.3d 687. Finally, the panel interpreted K.S.A. 82a-716and K.S.A. 82a-717a, holding the Legislature did not give the word a special definition in the statute and, therefore, the district court used the proper definition of "impair." 51 Kan. App. 2d at 388-89, 347 P.3d 687.

Trial and the Permanent Injunction

After the temporary injunction was affirmed by another panel of this court, the district court held a three-day bench trial. Two witnesses testified for Garetson, including the chief engineer who prepared the final DWR report. American Warrior called 11 witnesses,...