McKay v. Boise Project Bd. of Control

• Decision Date: 13 April 2005
• Docket Number: No. 28660.,28660.
• Citation: 111 P.3d 148,141 Idaho 463
• Parties: L. Darwin McKAY and Patricia McKay, husband and wife, and The Turf Company, LLC, Plaintiffs-Respondents, v. BOISE PROJECT BOARD OF CONTROL, a/k/a Board of Control, Defendant Appellant.
• Court: Idaho Supreme Court

111 P.3d 148

141 Idaho 463

L. Darwin McKAY and Patricia McKay, husband and wife, and The Turf Company, LLC, Plaintiffs-Respondents, v. BOISE PROJECT BOARD OF CONTROL, a/k/a Board of Control, Defendant Appellant.

No. 28660.

Supreme Court of Idaho, Boise, November 2003 Term.

April 13, 2005.

Rehearing Denied April 13, 2005.

Moore, Baskin & Parker, Boise, for appellant. Paige A. Parker argued.

Westberg, McCabe & Collins; Bevis, Cameron & Johnson, Boise, for respondents. William D. Collins and James A. Bevis argued.

Norman M. Semanko, Boise, for Amicus Curiae Idaho Water Users Association.

SUBSTITUTE OPINION. THE COURT'S PRIOR OPINION DATED JULY 22, 2004, IS HEREBY WITHDRAWN.

BURDICK, Justice.

L. Darwin and Patricia McKay (McKay) and their company, the Turf Company, LLC, brought this action after incurring a crop loss resulting from the flooding of land in the Hubbard Reservoir basin. After a court trial on McKay's claims the district court awarded damages to McKay and issued a permanent injunction. This Court reverses the trial court's permanent injunction, vacates the award of damages to McKay, and remands for further proceedings consistent with this opinion.

FACTUAL AND PROCEDURAL BACKGROUND

Joan Sterling and her husband, Lance Fleming, purchased the subject land from the State of Idaho in 1967. Fleming no longer has any interest in the land. Located in the Hubbard Reservoir basin, the land is encumbered by a flowage easement held by the Boise Project Board of Control (Project). The land sale certificates indicate that the land "is subject to inundation by waters of Hubbard Reservoir."

In a 1976 action filed by the State of Idaho against the Project, the district court, Hon. W.E. Smith, presiding, entered a stipulation and judgment dated November 1, 1979, which provided that the Project could fill the Hubbard Reservoir to 2,771 feet for routine irrigation operations based on the elevation gauge on Hubbard Dam.

While she owned the land, Sterling did not farm below the 2,771-foot elevation and did not complain of irregular flooding. In 1992, Sterling leased the land to McKay. The lease agreement contained a provision specifically authorizing a reduction in the rent in the event the land was flooded for more than thirty days. McKay planted turf grass as a cash crop on all of the property leased from Sterling.

In January of 1996, McKay approached the Project's Board of Directors about the flooding of his leasehold during the previous year. There was a discussion about a means of reconciling the Project's continued use of the Hubbard Reservoir while preserving McKay's crop production. In reliance on the 1979 judgment interpreting the Project's flowage easement as a right to flood for "routine irrigation operations," the Board of Directors sent a letter to Sterling as the landowner informing her of the Project's intent to fill the Hubbard Reservoir to the level of 2,766 feet in 1997 and to hold the water there, if conditions allowed.

1997 was an above average water year. In spring 1997, the Project decided to take excess river flow from the Boise River and to fill the reservoir. On about March 18, 1997, the backwater from Hubbard Reservoir began to reach McKay's turf fields. On May 22, 1997, the Project stopped the inflow into the reservoir and measured the maximum level of the water at 2,767.8 feet. The water left McKay's turf fields on approximately May 29, 1997.

As a result of the flooding, McKay brought an action alleging intentional tort, negligence, inverse condemnation and trespass. McKay primarily claimed damages from the Project's negligent use of the flowage easement and intentional trespass of his leasehold. Prior to trial, McKay notified the district court that it would not present any evidence of damage for the inverse condemnation count.

On September 19, 2002, the district court entered its second amended findings of facts, conclusions of law and judgment. The district court sitting without a jury ruled that the Project's conduct in 1997 of raising the level of the reservoir so as to flood McKay's fields was a negligent breach of its duty to exercise the flowage easement in a reasonable manner and in accordance with the 1979 stipulated judgment. The district court rejected the Project's argument that it was entitled to immunity for its conduct, under I.C. § 6-904(1), issued a permanent injunction, and awarded damages to McKay for his losses suffered as a result of the flooding. The injunction effectively changed the scope of the flowage easement from permitting flooding for "routine irrigation operations it may desire" to provide that the Project "may not flood the servient estate, presently leased by [McKay] in filling Hubbard Reservoir except in the good faith pursuit of legitimate irrigation goals." The Project timely appealed the decision of the district court, asserting its right to full use of the flowage easement as decreed in the 1979 judgment, notwithstanding the high seepage rate of the reservoir.

ISSUES ON APPEAL

I. Did the District Court err in finding McKay in privity with the State of Idaho and thus bound by the 1979 judgment?

II. Did the district court err in finding the Project negligent in the use of the Hubbard Reservoir flowage easement?

III. Is the Project entitled to immunity as provided by Idaho Code § 6-904(1)?

IV. Did the district court err in basing its damage award upon a market share analysis?

STANDARD OF REVIEW

A district court's findings of fact in a court-tried case will be liberally construed on appeal in favor of the judgment entered, in view of the district court's role as trier of fact. Western Heritage Ins. Co. v. Green, 137 Idaho 832, 835, 54 P.3d 948, 951 (2002) (citing Conley v. Whittlesey, 133 Idaho 265, 269, 985 P.2d 1127 (1999); Lindgren v. Martin, 130 Idaho 854, 857, 949 P.2d 1061, 1064 (1997)). Review of the decision is limited to ascertaining whether the evidence supports the findings of fact and whether the findings of fact support the conclusions of law. Id. If the findings of fact are based on substantial evidence, even if the evidence is conflicting, they will not be overturned on appeal. Id. However, this Court exercises free review over questions of law. Id.

ANALYSIS

Hubbard Reservoir was constructed in 1902 by Daniel R. Hubbard in connection with and for the Idaho-Iowa Lateral and Reservoir Company (Idaho-Iowa). The reservoir is supplied by the New York Canal, which was opened for the first time in February of 1909. The Reclamation Service (Bureau of Reclamation) filled the Hubbard Reservoir and it went practically dry in fifteen days. During its early years, the reservoir was used as a waste-way and under certain circumstances as an irrigation storage facility. Prior to turning the reservoir over to the Bureau of Reclamation, Idaho-Iowa started a condemnation proceeding for reservoir purposes in order to store water for irrigation. In 1911, the district court entered an order condemning that property for the construction and maintenance of a reservoir and for such purpose "to completely use, enjoy, and control the same." In 1912, the Idaho-Iowa granted to the United States all its interest in the Hubbard Reservoir.

A second judicial determination of the Hubbard Reservoir easement was begun in 1976 as a result of the State of Idaho's complaint against the Project for alleged damages and trespass because of grazing on the easement. Finally, in 1979, the parties to that litigation settled the dispute and entered into a stipulation, which was reduced to a judgment on November 1, 1979. That judgment reads in part as follows:

11. The Boise Project Board of Control, be, and it is hereby, restrained from filling that portion of Hubbard Reservoir lying above the level of 2771.00, as measured on the staff gauge on the dam of the Hubbard Reservoir except in the event of an irrigation emergency. For the purpose of this order, an irrigation emergency shall exist when, in the sole discretion of the Manager of the Boise Project Board of Control, the integrity of any of the irrigation works operated by the Boise Project Board of Control is threatened with damage in [t]he absence of removal of water from said works by diversion into the Hubbard Reservoir, provided, that the Boise Project Board of Control shall reduce the level of water in said Hubbard Reservoir following any such emergency which reduces the level of the water in the reservoir to the level of 2771.00 on the staff gauge at the maximum rate possible, consistent with good water management practices.

* * *

13. That the Boise Project Board of Control may, at any time and without violation of this Order and without any requirement as to notice, except as hereinabove set forth utilize the reservoir below the level of 2,771.00, as measured on the staff gauge, for any routine irrigation operations it may desire;

14. That all prior injunctive orders issued in the above-entitled matter be, and the same hereby are vacated.

(Emphasis added.) As part of the judgment, the district court also decreed the State of Idaho the fee simple owner of the land under the Hubbard Reservoir and the Bureau of Reclamation the owner of a permanent flowage easement (subject to this decree) to use Hubbard Reservoir being operated by the Project.

I. DID THE DISTRICT COURT ERR IN FINDING MCKAY IN PRIVITY WITH THE STATE OF IDAHO AND THUS BOUND BY THE 1979 JUDGMENT?

McKay, the respondent herein, asserts lack of privity as an additional issue on appeal and as an alternative argument to affirm the judgment. McKay seeks reversal of the district court's conclusion that McKay was bound by the 1979 Judgment. Therefore we begin by addressing McKay's challenge to the district court's finding of privity, which was an assumption made by the district court to began its analysis under the 1979 judgment. We note there is no question that the Project is bound by the 1979 judgment.

We first must determine whether McKay...