Polo Ranch Co. v. City of Cheyenne

• Decision Date: 30 January 2003
• Docket Number: No. 01-92.,01-92.
• Citation: 2003 WY 15,61 P.3d 1255
• Parties: POLO RANCH COMPANY, and John N. Morris and Norma B. Morris, Appellants (Plaintiffs), v. CITY OF CHEYENNE, Board of Public Utilities, Appellee (Defendant).
• Court: Wyoming Supreme Court

61 P.3d 1255

2003 WY 15

POLO RANCH COMPANY, and John N. Morris and Norma B. Morris, Appellants (Plaintiffs), v. CITY OF CHEYENNE, Board of Public Utilities, Appellee (Defendant).

No. 01-92.

Supreme Court of Wyoming.

January 30, 2003.

Henry F. Bailey, Jr. of Bailey, Stock and Harmon, P.C.; and Steven F. Freudenthal of Herschler, Freudenthal, Salzburg & Bonds, Cheyenne, WY, Representing Appellants. Argument by Mr. Bailey.

J. Kent Rutledge and James C. Kaste of Lathrop & Rutledge, P.C.; and Matthew H. Romsa of Romsa Law Office, P.C., Cheyenne, WY, Representing Appellee. Argument by Mr. Rutledge.

Before HILL, C.J., and GOLDEN, LEHMAN,¹ and KITE, JJ., and ROGERS, D.J.

LEHMAN, Justice.

[¶ 1] This is an appeal from the partial entry of summary judgment by the district court ruling 1) that appellants Polo Ranch Company, John N. Morris, and Norma B. Morris (collectively "PRC"), do not have any right to drill for subsurface water on the lands subject to a 1955 agreement ("Agreement") entered into between John H. Bell ("Bell"),² predecessor to PRC, and appellee City of Cheyenne Board of Public Utilities ("City"); 2) that PRC is barred by the doctrine of res judicata from relitigating the meaning of the term "exclusive" as used within the Agreement; and 3) that the grant of exclusive drilling rights to the City within the Agreement did not violate public policy. We affirm.

ISSUES

[¶ 2] PRC advances these issues:

I. Whether the court erred by failing to rule that under the prior appropriation doctrine, the [City's] exclusive right to drill for groundwater within the agreement area between 1956-1958 does not preclude Polo or its successors in interest from later developing groundwater subject to administration by the Wyoming State Engineer's office consistent with the [City's] prior adjudicated rights?

II. Whether the court erred by failing to rule that since the [City] has established its senior appropriations as contemplated by the exclusive drilling provision of the 1955 agreement, subsequent groundwater use by plaintiffs and their successors in interest within the agreement area should not be charged against plaintiff Polo Ranch Company's annual entitlement under the 1955 agreement?

III. Whether the court erred in ruling that the City's "exclusive" right was established in prior litigation even though that issue was not actually and necessarily litigated in the prior case?

City restates the issues as:

I. Is Polo Ranch barred from re-litigating issues related to the extent, scope, and validity of the City's exclusive right to drill for underground water on lands covered by the 1955 Agreement?

II. If not, is the City's exclusive right to drill for underground water on lands covered by the 1955 Agreement effective as against Polo Ranch and its successors in interest?

III. If not, does the City's exclusive right to drill for underground water on lands covered by the 1955 Agreement violate public policy?

IV. If not, does the City have, and must it resort to, an administrative remedy?

V. Did the trial court correctly determine that water produced and used by Polo Ranch's successors in interest, in violation of the City's exclusive drilling rights should be charged against Polo Ranch's annual free allocation of water?

FACTS AND HISTORICAL BACKGROUND

[¶ 3] On September 29, 1955, the Agreement was entered into between Bell and the City.³ The essence of the Agreement was to give the City the right to drill for subsurface water under the lands of what is now known as Polo Ranch and to use the water produced therefrom, subject to delivery of a portion of the water to Bell. The Agreement was properly recorded with the Laramie County Clerk and filed with the Wyoming State Engineer. The Agreement was entered into for the benefit of the "executors, administrators, heirs and assigns of the parties," thereby obligating and binding PRC as Bell's successor in interest. The Agreement has not since been amended, and no other contracts have been entered into between PRC and the City that govern the pumping of water from under the lands described in the Agreement.

[¶ 4] On August 2, 1990, the City filed a complaint against PRC for recovery of pumping expenses owed by PRC under the Agreement.⁴ Numerous claims, counterclaims, and the assertion of affirmative defenses followed. On September 4, 1992, the district court entered an order stating 1) that the Agreement was clear and unambiguous and that the City had the exclusive right to develop and use the Polo Ranch groundwater, and 2) that PRC was restricted from utilizing its share of the water on lands other than those described in the Agreement, and was prohibited from selling the water. The City then filed an amended and supplemental complaint which requested that the district court issue a declaration that the City had the exclusive right to drill the subsurface water on the lands described in the Agreement. Ultimately, all unresolved claims went to bench trial before the district court.

[¶ 5] On June 18, 1996, the district court issued its findings of fact and conclusions of law that stated that the lands contained within the subdivision developed by Polo Ranch remained subject to the 1955 Agreement, as there had been no action by the City releasing these lands from the Agreement, and that the City retained the exclusive right to drill wells on that land in the future. However, the court also provided that because the City took no action when it knew or should have known that the land would be used for residential purposes which would require wells, the City had waived any right to charge the existing residential production against PRC's allocation under the Agreement. Later, the district court's judgment was entered which confirmed the district court's ruling.

[¶ 6] This judgment was then appealed to this court. However, such appeal was limited in scope to the validity of the district court's rulings 1) that the City had complied under the Agreement concerning its duty to develop wells on the specified land; 2) that the City could properly require PRC to pay for backflow prevention necessary to protect the City's water system; and 3) that the City could require PRC to disconnect its taps from the City's lake lines or enter into an agreement concerning such water usage. No appeal was taken as to the City's exclusive right to develop and use the Polo Ranch groundwater, including PRC's assertion that the Agreement violated public policy. See Polo Ranch Co. v. City of Cheyenne, 969 P.2d 132, 135-36 (Wyo.1998)

.

[¶ 7] The present litigation was commenced on October 7, 1997, when PRC filed its complaint seeking recovery of hay crop losses allegedly incurred in 1996 as a result of the City's refusal to provide irrigation water as required under the Agreement. On January 8, 1998, the City filed a First Amended Answer and Counterclaim which, in part, requested a declaratory judgment concerning the extent and scope of the City's exclusive right to drill and use subsurface water pursuant to the Agreement. PRC filed its amended complaint on May 14, 1999, which added a claim for declaratory judgment concerning the extent and scope of the exclusive right to drill clause within the Agreement. The City then added additional claims, in part, requesting a declaratory judgment prohibiting PRC from drilling for underground water. Subsequently, the parties filed cross motions for summary judgment, with the district court ruling PRC did not have any right to drill for subsurface water on the lands subject to the Agreement; PRC was barred by the doctrine of res judicata from relitigating the meaning of the term "exclusive" as used within the Agreement; and that the grant of exclusive drilling rights to the City within the Agreement did not violate public policy. The district court then entered final judgment on less than all claims in this case pursuant to W.R.C.P. 54(b), and this appeal followed.

STANDARD OF REVIEW

[¶ 8] Our standard of review is well established. We recently reiterated this standard of review in Amoco Prod. Co. v. Board of County Comm'rs of County of Sweetwater, 2002 WY 154, ¶ 10, 55 P.3d 1246, ¶ 10 (Wyo.2002) (quoting Bevan v. Fix, 2002 WY 43, ¶ 13, 42 P.3d 1013, ¶ 13 (Wyo.2002)):

Summary judgment is appropriate if the record, viewed in the light most favorable to the non-moving party, reveals that no genuine issues of material fact exist and the prevailing party is entitled to judgment as a matter of law. Worley v. Wyoming Bottling Co., Inc., 1 P.3d 615, 620 (Wyo.2000); Terry v. Pioneer Press, Inc., 947 P.2d 273, 275 (Wyo. 1997); Davis v. Wyoming Medical Center, Inc., 934 P.2d 1246, 1250 (Wyo.1997); W.R.C.P. 56(c). A fact is material if it establishes or refutes an essential element of a claim or defense. Tidwell v. HOM, Inc., 896 P.2d 1322, 1324 (Wyo. 1995). In evaluating summary judgment, we apply the same standards as the trial court, without affording any deference to the trial court's decisions on issues of law. Wilder v. Cody Country Chamber of Commerce, 868 P.2d 211, 216 (Wyo.1994).

We also recognized in Bevan v. Fix, at ¶ 26 (citing In re HC, 983 P.2d 1205, 1209 (Wyo. 1999) and Ahearn v. Anderson-Bishop Partnership, 946 P.2d 417, 422 (Wyo. 1997)), we may uphold the grant of summary judgment upon any proper legal ground finding support in the record.

DISCUSSION

Res Judicata/Judicial Estoppel

[¶ 9] PRC argues the district court erred in holding that it was barred by the principles of res judicata from obtaining a declaratory judgment from the district court as to the meaning of the word "exclusive" as used within the Agreement and from asserting that the exclusive rights of the City granted under the Agreement are unenforceable because they violate public policy. In essence, PRC asserts that these issues were not actually and necessarily litigated in the previous action commenced between PRC and the City, and the issues decided in the prior adjudication are...