In re CSRBA Case No. 49576, 082719 IDSCCI, 45418

Docket Nº:45418
Opinion Judge:STEGNER, JUSTICE
Party Name:In Re: CSRBA CASE NO. 49576, SUBCASE NO. 91-7094. v. JEFFREY C. SHIPPY, Objector-Appellant. DOUGLAS MCINTURFF and DARCY MCINTURFF, Claimants-Respondents
Attorney:Barker, Rosholt & Simpson, LLP, Boise, for appellant Jeffrey C. Shippy. Albert P. Barker argued. Douglas McInturff and Darcy McInturff, Cataldo, respondents pro se. Douglas McInturff argued.
Judge Panel:Chief Justice BURDICK and Justice BEVAN CONCUR. BRODY, Justice, concurring in part and dissenting in part. Justice HORTON CONCURS.
Case Date:August 27, 2019
Court:Supreme Court of Idaho
 
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In Re: CSRBA CASE NO. 49576, SUBCASE NO. 91-7094.

DOUGLAS MCINTURFF and DARCY MCINTURFF, Claimants-Respondents

v.

JEFFREY C. SHIPPY, Objector-Appellant.

No. 45418

Supreme Court of Idaho

August 27, 2019

Appeal from the Fifth Judicial District of the State of Idaho, Twin Falls County. Eric J. Wildman, District Judge.

The district court's partial decree is affirmed.

Barker, Rosholt & Simpson, LLP, Boise, for appellant Jeffrey C. Shippy.

Albert P. Barker argued.

Douglas McInturff and Darcy McInturff, Cataldo, respondents pro se.

Douglas McInturff argued.

STEGNER, JUSTICE

This appeal arises from a disputed water right relating to the St. Joe River in Benewah County, Idaho, between a landowner and the tenants who put the water to beneficial use. The license at issue described the water right as "appurtenant to the described place of use." The landowner argues that the water right is appurtenant to his land, while the tenants contend that the right was developed and owned by their predecessors in interest and now belongs to them by virtue of their having purchased the interest. The district court ultimately adopted the Special Master's report and issued a partial decree, which listed the tenants as the owner of the license. For the reasons set out in this opinion, we affirm the district court's decree.

I. FACTUAL AND PROCEDURAL BACKGROUND

The disputed water right in this case first arose as a result of Jeffrey Baker (Baker) and Alexander Bruner (Bruner) creating an association, St. Maries Wild Rice Growers (St. Maries), to engage in commercial wild rice production. After St. Maries' formation, the association entered into an agreement with Aaron and Jeanne Robinson (the Robinsons) by which the association would cultivate wild rice on land owned by the Robinsons. In order to cultivate rice, the association needed water. In October 1983, St. Maries applied for a water right to irrigate the Robinsons' land. The Director of the Idaho Department of Water Resources (IDWR) approved St. Maries' permit application in November 1983 and issued it a license in 1991. The license contained a notation in its conditions section that stated: "This water right is appurtenant to the described place of use."

Following the time the water right was initially being put to beneficial use, St. Maries Wild Rice, Inc. was incorporated with Bruner as its president; however, the company was administratively dissolved by 1998. Nevertheless, the water right always remained under the name St. Maries Wild Rice Growers, and, in one form or another, St. Maries utilized the water right from the early 1980s until 2001.

On July 15, 2001, Bruner executed an agreement with Douglas and Darcy McInturff (the McInturffs) to sell the wild rice harvesting business and equipment. This agreement included the disputed water right as part of the sale, noting that it was "valuable and absolutely essential to the operation." The McInturffs, as the owners of St. Joe River Wild Rice Company, then took over cultivation of the land described in the water license. Four years later, the McInturffs submitted a notice of change in water right ownership to IDWR as required by Idaho Code section 42-248. The Director of the IDWR recorded the change in ownership of the water right to the McInturffs in December 2006.

During this time, the land on which the rice was harvested also changed owners. While the Robinsons initially owned the land on which St. Maries used the water, they later conveyed the land to their son Jeffery Shippy (Shippy). The property was transferred in four separate conveyances in 1993, 1994, 1998, and 1999. In 2010, Shippy conveyed the land to Cedar Creek Ranch, LLC (Cedar Creek), with Shippy as its sole managing member. Cedar Creek is the current owner of the land on which the rice was cultivated. Shippy and Cedar Creek never received notice of the change in ownership of the water license to the McInturffs in 2006 as communications occurred only between IDWR and the McInturffs. Meanwhile, Shippy contends that Robinson had owned the "appurtenant" water right by being the landowner, and, consequently, that the right passed with the land.

In February of 2015, the McInturffs filed a notice of claim within the Coeur d'Alene-Spokane River Basin Adjudication (CSRBA). The Director recommended the McInturffs be recognized as owners of the water right. Shippy timely filed an objection and a separate claim, arguing that he should be the sole owner of the water right. Following an investigation, the Director's Report explained that he was unable to determine who owned the water right, and therefore recommended it go to both Shippy and the McInturffs. The McInturffs filed an objection, and the parties went to trial before a Special Master on August 3, 2016. Following the trial, the Special Master determined that the McInturffs owned the water right. On November 28, 2016, Shippy filed a motion to alter or amend the Special Master's report and recommendation, which the Special Master denied. Shippy then challenged the Special Master's ownership determination in the district court. The district court adopted the Special Master's recommendation that the McInturffs owned the water right and entered a partial decree reflecting that decision. Shippy timely appealed. Following oral arguments, this Court ordered supplemental briefing to address a question regarding the identity of the real party in interest in the case.

II. STANDARD OF REVIEW

The Special Master's legal conclusions that the district court adopts are considered to be the district court's conclusions. United States v. Black Canyon Irrigation Dist., 163 Idaho 54, 59, 408 P.3d 52, 57 (2017). This Court freely reviews the district court's legal conclusions. Id. In addition, this Court exercises free review in determining whether an ambiguity exists in a legal instrument. Rangen, Inc. v. Idaho Dep't of Water Res., 159 Idaho 798, 807, 367 P.3d 193, 202 (2016).

"Findings of fact . . . must not be set aside unless clearly erroneous[.]" I.R.C.P 52(a)(7). A trial court's findings of fact are not clearly erroneous "if the findings are supported by substantial and competent evidence." PacifiCorp v. Idaho State Tax Comm'n, 153 Idaho 759, 767, 291 P.3d 442, 450 (2012) (quoting Senator, Inc. v. Ada Cty. Bd. of Equalization, 138 Idaho 566, 569, 67 P.3d 45, 48 (2003)).

III. ANALYSIS

A.

Shippy and Cedar Creek are both real parties in interest.

Before we can address the issues raised on appeal, we must determine who is the real party in interest. Shippy contends that he and Cedar Creek are both real parties in interest in this case because Cedar Creek owns the land to which the contested water right is appurtenant. Because this appeal was only brought by Shippy, the Court requested additional briefing concerning who the real parties in interest are. Cedar Creek subsequently filed a request to ratify, join, or be substituted into this action. We agree with Shippy that both parties are real parties in interest and grant Cedar Creek's motion to join pursuant to Idaho Rule of Civil Procedure 17(3) to afford complete relief to the parties.

Standing is essential to justiciability. Therefore, it is an issue that may be raised at any time, including for the first time on appeal or sua sponte by this Court. Houpt v. Wells Fargo Bank, Nat'l Ass'n, 160 Idaho 181, 186, 370 P.3d 384, 389 (2016). Idaho Rule of Civil Procedure 17(a) requires an action to be "prosecuted in the name of the real party in interest." We have interpreted Rule 17 liberally to "further the policy favoring the just resolution of actions- providing litigants their day in court." Houpt, 160 Idaho at 187, 370 P.3d at 390 (citation omitted). Thus, Rule 17 "prevent[s] forfeiture when determination of the proper party is difficult or when an understandable mistake has been made in selecting the party plaintiff." Id. (citation omitted).

Both Cedar Creek and Shippy are real parties in interest. First, Cedar Creek is a real party in interest because it owns the land to which the water right at issue is appurtenant. Though Cedar Creek was not originally a party on this appeal, we grant its motion to join this action to best afford relief.

Second, Shippy is still a real party in interest because he was a proper claimant in the CSRBA. See I.C. §§ 42-1401A(1), 1412. As we held in Bray v. Pioneer Irrigation District, any claimant has standing to file an objection or response to a water right reported in the director's report. 144 Idaho 116, 118, 157 P.3d 610, 612 (2007). Injury is not required to object to a water right. Id. Accordingly, Shippy has standing to object to the McInturffs' claim and argue that Cedar Creek is the rightful...

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