Hager v. City of Devils Lake

• Decision Date: 13 October 2009
• Docket Number: No. 20090050.,20090050.
• Citation: 773 N.W.2d 420,2009 ND 180
• Parties: Kenneth HAGER, Agathy C. Baker, Irene Streifel, Raymond Hager, Cecelia Parkos and Bernice Bays, Plaintiffs and Appellants, v. CITY OF DEVILS LAKE, a municipal corporation, Defendant and Appellee.
• Court: North Dakota Supreme Court

773 N.W.2d 420

2009 ND 180

Kenneth HAGER, Agathy C. Baker, Irene Streifel, Raymond Hager, Cecelia Parkos and Bernice Bays, Plaintiffs and Appellants, v. CITY OF DEVILS LAKE, a municipal corporation, Defendant and Appellee.

No. 20090050.

Supreme Court of North Dakota.

October 13, 2009.

Christopher M. McShane and Robert G. Hoy (on brief), Ohnstad Twichell, P.C., West Fargo, N.D., for plaintiffs and appellants.

Daniel L. Gaustad and Ronald F. Fischer (on brief), Pearson Christensen & Clapp, PLLP, Grafton, N.D., for defendant and appellee.

MARING, Justice.

[¶ 1] Kenneth Hager, Agathy Baker, Irene Streifel, Raymond Hager, Cecelia Parkos, and Bernice Bays (collectively "Hagers") appeal from a judgment and an amended judgment: (1) dismissing their claims against the City of Devils Lake ("City") for inverse condemnation, nuisance, and negligence; (2) determining the City had an irrevocable permissive license to maintain a storm sewer system upon their land; and (3) ordering them to pay a portion of the City's costs. We modify the judgment and, as modified, affirm, concluding: (1) res judicata and collateral estoppel did not preclude the City from raising a statute of limitations defense; (2) the district court did not err in concluding the Hagers' claims were barred by the statute of limitations; (3) the City acquired an easement by estoppel to maintain a storm sewer system upon the Hagers' property; and (4) the district court did not abuse its discretion in awarding costs to the City.

I

[¶ 2] The disputes in this case center upon two parcels of land owned by the Hagers, which the parties have denoted the larger parcel and the smaller parcel. The larger parcel contains approximately 170 acres and lies contiguous to the eastern edge of Hagers' Northdale Subdivision of Devils Lake. The smaller parcel is a 72 foot by 50 foot strip of land within the city limits in Hagers' Northdale Subdivision.

[¶ 3] The Hagers originally owned the land which now comprises Hagers' Northdale Subdivision, as well as the contiguous larger parcel to the east. The Hagers requested the City to construct a storm sewer system to facilitate development of a residential subdivision. In response to the Hagers' request, the City constructed a storm sewer system including two storm water pipelines which diverted storm water onto the larger parcel. The project was completed in 1980 at a cost of approximately $144,000. The City paid $18,000 of these costs, with the remainder assessed against property benefitted by the project, including property owned by the Hagers. The Hagers ultimately developed their land west of the larger parcel into a residential subdivision, called Hagers' Northdale Subdivision, and sold the lots. The Hagers allege that, in 1991, the City installed a culvert and dug drainage ditches on the larger parcel, resulting in additional storm water being discharged onto the larger parcel. The Hagers contend the City's construction and maintenance of the storm sewer system hindered their use of, and restricted their access to, the larger parcel, resulting in a taking of the property by inverse condemnation.

[¶ 4] The Hagers also contend that, during the summer of 1998, the City entered upon the smaller parcel without their permission and placed municipal utilities on and under the property. They also allege that the City graded the property and made it into a road. They contend that the City's actions constituted a taking of the property by inverse condemnation.

[¶ 5] In 2001, the Hagers brought an action against the City seeking damages for the City's placement of municipal utilities on the smaller parcel, damages for trespass for the City's discharge of storm water onto the larger parcel, and compensation for the City's removal and disposal of the Hagers' personal property from the smaller parcel in 1999. The parties stipulated that only two issues, compensation for removal of the Hagers' personal property on the smaller parcel and whether the City had acquired a prescriptive easement on the larger parcel, would be tried, and all other issues and claims would be dismissed without prejudice. After a bench trial, the district court found that the City had trespassed upon the smaller parcel and removed items belonging to the Hagers, and the court awarded damages of $100, which were offset by a bill the Hagers owed to the City for removing other debris from the property. The court further held that, because the Hagers had requested the City to construct the storm sewer system to aid in the development of their adjoining property, the City's use of the property on the larger parcel was permissive and did not give rise to a prescriptive easement.

[¶ 6] In July 2005, the Hagers brought the present action alleging four claims: (1) inverse condemnation for drainage of storm water onto the larger parcel; (2) nuisance created by drainage of storm water onto the larger parcel; (3) negligent design and construction of the storm sewer system; and (4) inverse condemnation for installation of municipal utilities on and under the smaller parcel. The City counterclaimed, seeking easements for its storm sewer system on the larger parcel and fee simple title to the smaller parcel if the Hagers were successful on their inverse condemnation claim.

[¶ 7] The City moved for summary judgment, seeking dismissal of the Hagers' claims and granting of an irrevocable permissive license upon the larger parcel. The district court concluded the statute of limitations had run on all of the Hagers' claims and ordered the claims dismissed. The court also concluded that the City had an irrevocable permissive license upon the larger parcel to maintain the existing storm sewer system. The City moved for reconsideration for the district court to correct a perceived clerical error and to establish a precise legal description of the portion of the larger parcel subject to the irrevocable license. After a hearing, the court reaffirmed its prior holdings and adopted a metes and bounds description of the property subject to the City's irrevocable license. The court also ordered the Hagers to pay the City's costs in the amount of $13,872.57, and judgment was entered on December 4, 2008. On December 8, 2008, the Hagers filed objections to the taxation of costs and disbursements. On January 30, 2009, the Hagers filed an appeal from the December 4 judgment. The district court subsequently ordered that the taxation of costs be amended, and on March 12, 2009, an amended judgment was entered reducing the costs awarded to the City to $6,936.28. The Hagers filed an amended notice of appeal from both judgments on March 16, 2009.

II

[¶ 8] The Hagers contend that, because the only defense raised by the City in the first action to the trespass claims on the larger parcel was a prescriptive easement, resolution of that issue in the first case prevents relitigation of the City's liability for inverse condemnation under the doctrines of res judicata and collateral estoppel. Thus, the Hagers contend, the City was barred from raising new defenses based upon the statute of limitations in this case. The Hagers' argument is premised upon a misinterpretation of the effect of a dismissal without prejudice.

[¶ 9] The parties in this case agreed to try only two issues in the first case: compensation for personal property removed from the smaller parcel and whether the City had acquired a prescriptive easement on the larger parcel. The parties expressly stipulated that all other issues and claims, including the trespass claim for damages on the larger parcel, were dismissed without prejudice.

[¶ 10] We outlined the application of res judicata and collateral estoppel in Riverwood Commercial Park, L.L.C. v. Standard Oil Co., Inc., 2007 ND 36, ¶ 13, 729 N.W.2d 101 (quoting Ungar v. North Dakota State Univ., 2006 ND 185, ¶ 11, 721 N.W.2d 16):

Res judicata, or claim preclusion, prevents relitigation of claims that were raised, or could have been raised, in prior actions between the same parties or their privies. Thus, res judicata means a valid, existing final judgment from a court of competent jurisdiction is conclusive with regard to claims raised, or those that could have been raised and determined, as to [the] parties and their privies in all other actions. Res judicata applies even if subsequent claims are based upon a different legal theory. Collateral estoppel, or issue preclusion, forecloses relitigation of issues of either fact or law in a second action based on a different claim, which were necessarily litigated, or by logical and necessary implication must have been litigated, and decided in the prior action.

[¶ 11] Dismissal of a claim or action without prejudice has no res judicata effect because there has been no decision on the merits and no right or remedy of the parties is affected:

A dismissal without prejudice is, by definition, not res judicata:

"A dismissal `without prejudice' allows a new suit to be brought on the same cause of action. The words `without prejudice', as used in judgment, ordinarily import the contemplation of further proceedings, and, when they appear in an order or decree, it shows that the judicial act is not intended to be res judicata of the merits of the controversy."

Black's Law Dictionary 1603 (6th ed.1990). We have previously held that a dismissal without prejudice has no res judicata effect:

"A dismissal `"without prejudice," means that no right or remedy of the parties is affected, the use of the phrase simply shows that there has been no decision of the case upon the merits, and prevents the defendant from setting up the defense of res adjudicata.'"

Sellie v. North Dakota Insurance Guaranty Ass'n, 494 N.W.2d 151, 159 (N.D. 1992) (quoting Olson v. Coalfield School District No. 16, 54 N.D. 657, 210 N.W. 180, 181-182 (1926)).

Furthermore, the court's order of dismissal clearly indicated the court envisioned further proceedings:

"The Court is...