Sage Creek Drainage Area, Matter of, Nos. 87-528

• Docket Nº: 88-92
• Citation: 763 P.2d 644, 234 Mont. 243
• Case Date: October 11, 1988
• Court: United States State Supreme Court of Montana

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763 P.2d 644 234 Mont. 243 In the Matter of the Adjudication of the Existing Rights to
the Use of all the Water, Both Surface and Underground,
Within the SAGE CREEK DRAINAGE AREA, Including all
Tributaries of the Sage Creek in Liberty and Hill Counties,
Montana.
In the Matter of the Adjudication of the Existing Rights to
the Use of all the Water, Both Surface and Underground
Within the BOULDER RIVER DRAINAGE AREA Including all
Tributaries of the Boulder River, Tributary of the
Yellowstone River, in Sweet Grass and Park Counties,
Montana. Nos. 87-528, 88-92. Supreme Court of Montana. Submitted Sept. 13, 1988.
Decided Oct. 11, 1988.

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[234 Mont. 244] Moore, Rice, O'Connell & Refling, David Moon, argued, J. David Penwell, argued, Bozeman, for appellant.

Lilly, Andriolo & Schraudner, Leanne Schraudner, argued, Matthew W. Williams, Bozeman, Edward Borer, Keith Tokerud, argued, Great Falls, Kenneth P. Pitt, Asst. U.S. Atty., Missoula, Eileen Shore, Dept. Fish, Wildlife & Parks, Helena, Linda Hickman, Water [234 Mont. 245] Master, Bozeman, John R. Hill, Jr., argued, U.S. Dept. Justice, Denver, Colo., for respondent.

SHEEHY, Justice.

We determine in these cases consolidated for appeal that there is no right of appeal granted to a water right claimant under the state water rights adjudication process [Sec. 85-2-201, -243, MCA], except from a final decree entered under Sec. 85-2-234, MCA; that the Montana Rules of Civil Procedure are included in the rules that govern the practice of the Water Courts [Rule 1.II(2), Water Claims Examination Rules]; that Rule 54(b) of the Montana Rules of Civil Procedure provides for and allows a water right claimant to seek and procure from the Water Court an express direction for the entry of a final judgment as to his water right claim, upon the express determination of the Water Court that there is no just reason for delay; and that such action of the Water Court under Rule 54(b) would be and constitute a final judgment within the meaning of Sec. 85-2-235, MCA, providing for appeals from the Water Court.

In each of the above captioned cases, we were presented with the common issue of the appealability from an interlocutory order of the Water Court. Since we have not before spoken on this precise issue, we consolidated the captioned cases for disposal as to that issue, reserving decision if need be on the remaining issues on each cause. Oral argument was granted and heard on the common issue of appealability and now, having fully considered the matter, we determine that in each case the appeal must be dismissed, subject to further proceedings in the Water Court as hereafter discussed.

NO. 87-528 (SAGE CREEK)

Rambo Grain and Cattle Company, the Lazy DX Ranch, and Terry and Mary Stevenson separately appeal from an order of the Water Court, dated October 18, 1987, modifying an earlier temporary preliminary decree entered in the Sage Creek Drainage adjudication, holding that the doctrine of collateral estoppel bars these appellants from claiming any water rights different from those found in an earlier District Court judgment outside the Water Court.

Sage Creek Colony has also appealed, and Burkhartsmeyer Land Company has cross-appealed, though these parties appear to be content with the October 18, 1987 order of the Water Court.

In 1974, Burkhartsmeyer, Rambo, Stevenson (now Lazy DX [234 Mont. 246] Ranch) and Black Butte Ranch (not a party to the appeal) filed a complaint in the District Court, Twelfth Judicial District, Hill County, under Sec. 85-2-406(2), MCA, against Sage Creek Colony. The plaintiffs in that case claimed that Sage Creek Colony was interfering with their water rights in Sage Creek. All of the parties relied on notices of appropriation to establish their respective water rights. The Hon. W.W. Lessley, sitting in 1982 as a district judge in that case, made findings of fact and conclusions of law. The court determined that Sage Creek Colony had the earliest priority dates established in 1890 and 1891. Rambo and Burkhartsmeyer were accorded one early right each, with a priority date of 1898. Other water rights claimed by Rambo, Burkhartsmeyer and Stevenson were denied by the District Court because the alleged current places and uses of the waters failed to match the land described in the prior notices.

No appeal by any party was taken from the District Court judgment entered under Sec. 85-2-406(2), MCA. Later, in the Water Court proceedings adjudicating the Sage Creek Drainage area, a preliminary decree was issued on December 29, 1983 by the Water Court. The preliminary decree was ordered changed by the Water Court on

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August 27, 1984, to a "temporary preliminary decree." Objections to the temporary preliminary decree were filed by Burkhartsmeyer, Rambo, Sage Creek Colony, and other parties. Burkhartsmeyer objected that the water rights accorded the parties by the 1982 decree in the District Court action had not been included in the temporary preliminary decree of the Water Court. After hearing, the water master prepared a report and Judge Lessley, by order, adopted the report on October 18, 1987, which conformed the parties' rights to water in Sage Creek pursuant to the 1982 District Court decree. The Water Court held that collateral estoppel applied to these parties as between themselves because of the 1982 decree in the District Court action, and that the rights of the parties as between themselves had there been finally adjudicated.

Sage Creek appealed from the Water Court order; Rambo followed suit, as did the Stevensons. Burkhartsmeyer also filed a notice of appeal.

Rambo and Stevenson both contend that appeal in this case should lie. Sage Creek and Burkhartsmeyer each contend that an appeal does not lie.

Sage Creek argues that the Water Court order of October 18, 1987 is clearly interlocutory and settles a very narrow issue, whether collateral[234 Mont. 247] estoppel bars these parties from further litigating their water rights in the Water Court. It contends that the only appeal permitted in Water Court proceedings is from a final decree entered under Sec. 85-2-234, MCA, for which the right of appeal is granted in Sec. 85-2-235, MCA.

Burkhartsmeyer likewise contends that an appeal does not lie from an interlocutory order. It cites Bostwick v. Department of Highways (1980), 188 Mont. 313, 613 P.2d 997, and distinguishes our earlier decisions in State ex rel. Greely v. Water Court (Mont.1984), 691 P.2d 833, 41 St.Rep. 2373; and Esther McDonald v. State of Montana (Mont.1986), 722 P.2d 598, 43 St.Rep. 1397. Burkhartsmeyer further contends that Sec. 85-2-235, MCA, is not ambiguous and that no appeal lies in Water Court proceedings except from a final decree.

On the other hand, Rambo argues that an appeal should lie in this case because as to these parties, the decision of the Water Court applying collateral estoppel is a "final decree" of their water rights, since they cannot litigate any further. Rambo also argues that a literal reading of Sec. 85-2-235, MCA, makes no sense now and will cause backlogs in the Supreme Court when final decrees are finally entered in the various basins of Montana.

Stevensons and the Lazy DX Ranch also argue that their rights are now definitely resolved by the Water Court, that the objection deadlines for water rights in the temporary preliminary decree for Sage Creek is now over and hence there can be no subsequent attack on these particular uses. Stevensons then argue that unless an appeal is now allowed, the result would be waste, duplication of effort, and overall uncertainty which cannot be the legislative intent under Sec. 85-2-234, MCA.

NO. 88-092 (BOULDER RIVER DRAINAGE)

In the Boulder River Drainage adjudication, Don C. Cowles appeals from an order of...