Spear T Ranch, Inc. v. Knaub

• Court: Nebraska Supreme Court
• Citation: Spear T Ranch, Inc. v. Knaub, 691 N.W.2d 116, 269 Neb. 177 (Neb. 2005)
• Decision Date: 21 January 2005
• Docket Number: No. S-03-789.,S-03-789.
• Parties: SPEAR T RANCH, INC., appellant, v. Melvin G. KNAUB et al., appellees.

691 N.W.2d 116

269 Neb. 177

SPEAR T RANCH, INC., appellant, v. Melvin G. KNAUB et al., appellees.

No. S-03-789.

Supreme Court of Nebraska.

January 21, 2005.

Thomas D. Oliver for appellant.

Harriet M. Hageman and Kara Brighton, of Hageman & Brighton, for appellees George A. Davis and Loretta L. Davis.

John F. Simmons, of Simmons & Olsen Law Firm, P.C., for appellees John Gifford and Roger Gifford.

Michael J. Javoronok, of Michael J. Javoronok Law Firm, for appellees Max Olsen, Olsen Ranches, Inc., Melvin G. Knaub, Melvin G. Knaub Farms, Inc., Knaub, Inc., Melvin G. Knaub Grand Kids L.P., and Special K, Inc.

Daniel M. Placzek, of Leininger, Smith, Johnson, Baack, Placzek, Steele & Allen, for appellee Olsen Ranches, Inc.

John H. Skavdahl, of Skavdahl & Edmund Law Office, for appellee Gifford Circle Diamond Ranch, Inc.

Daniel L. Lindstrom, of Jacobsen, Orr, Nelson, Wright & Lindstrom, P.C., for appellee XL Farms, L.L.C.

Philip M. Kelly, of Douglas, Kelly, Ostdiek, Bartels & Neilan, P.C., for appellees Richard Van Pelt and Margaret Van Pelt.

Paul E. Hofmeister, of Chaloupka, Holyoke, Hofmeister, Snyder & Chaloupka, P.C., L.L.O., for appellees Hoehn Farms, Mark Hoehn, Krista Hoehn, and Allison Hoehn.

James M. Mathis and Leland K. Kovarik, of Kovarik, Ellison, Mathis & Weimer, P.C., for appellees Leeray Edens and Beverly Edens.

Albert M. Engles and Jason R. Yungtum, of Engles, Ketcham, Olson & Keith, P.C., for appellee Donahue & Rutledge, Inc.

Robert M. Brenner, of Robert M. Brenner Law Office, for appellee Darnall Ranch, Inc.

Jon Bruning, Attorney General, David D. Cookson, and Justin D. Lavene for amicus curiae State of Nebraska.

Dana W. Roper, Lincoln City Attorney, and Steven Huggenberger for amicus curiae City of Lincoln.

Steven C. Smith, of Pahlke, Smith, Snyder, Petitt & Eubanks, G.P., for amici curiae Pathfinder Irrigation District et al.

Donald G. Blankenau, of Fennemore & Craig, P.C., for amicus curiae Nebraska Groundwater Management Coalition.

Donald G. Blankenau, of Fennemore & Craig, P.C., for amicus curiae Nebraska Farm Bureau Federation.

Michael C. Klein, of Anderson, Klein, Swan & Brewster, for amicus curiae Central Nebraska Public Power and Irrigation District.

Robert J. McCormick for amicus curiae Reban Corporation.

LeRoy W. Sievers, of Knudsen, Berkheimer, Richardson & Endacott, L.L.P., for amicus curiae Nebraska State Irrigation Association.

HENDRY, C.J., WRIGHT, CONNOLLY, GERRARD, STEPHAN, McCORMACK, and MILLER-LERMAN, JJ.

CONNOLLY, J.

This appeal presents the question whether a surface water appropriator has a claim against a ground water user for interference with a surface water users' appropriation.

Spear T Ranch, Inc. (Spear T), a surface water appropriator, appeals a district court order dismissing with prejudice its complaint seeking an injunction and damages for the loss of surface water from Pumpkin Creek. The appellees are ground water irrigators in the Pumpkin Creek basin.

On appeal, Spear T argues that it has stated a claim for conversion, injunction, or trespass. The appellees, however, argue that any common-law claims are abrogated by the Nebraska Ground Water Management and Protection Act (GWMPA), Neb.Rev.Stat. §§ 46-656.01 through 46-656.67 (Reissue 1998 & Cum.Supp.2002) (now found at Neb.Rev.Stat. §§ 46-701 through 46-753 (Reissue 2004)). In the alternative, they argue that the issues should be determined by the North Platte Natural Resources District under the doctrine of primary jurisdiction.

I. BACKGROUND

Spear T filed a complaint alleging that it has surface water appropriations on Pumpkin Creek, which runs through Banner and Morrill Counties. The appellees own real property in the Pumpkin Creek basin and have irrigation wells within the boundaries of the basin. The complaint alleged that the ground water irrigation wells are hydrologically connected to Pumpkin Creek. According to Spear T, the appellees' pumping of ground water over the 4 years preceding the complaint drained water from Pumpkin Creek and deprived Spear T of its surface water appropriations; the complaint alleged that the appellees have continued to pump ground water and that Spear T has been unable to irrigate crops and provide water for livestock. Spear T alleged that the appellees converted its surface water rights to their own use without compensating Spear T and that it would be irreparably harmed if the appellees continued to use their ground water irrigation wells. The complaint sought compensation for the value of the surface water appropriations taken by the appellees or, in the alternative, special damages for the value of the water rights and other damages; it also sought an injunction.

The appellees moved under Neb. Ct. R. of Pldg. in Civ. Actions 12(b) (rev.2003) to dismiss, alleging that (1) the court lacked subject-matter jurisdiction, (2) the complaint failed to state a claim upon which relief could be granted, and (3) the complaint failed to join necessary parties. Without giving its reasoning, the court dismissed the complaint with prejudice on all three grounds. Spear T appealed.

We initially heard oral arguments in March 2004. After arguments, the appellees moved for additional briefing and reargument to address the primary jurisdiction issue. Also after arguments, 2004 Neb. Laws, L.B. 962, was passed, which changed provisions of the GWMPA. We granted the motion and ordered additional briefing and argument on the following issues: (1) primary jurisdiction; (2) primary jurisdiction because of L.B. 962; (3) the effect of L.B. 962, if any, on the appeal; and (4) whether the GWMPA or L.B. 962 has abrogated any common-law remedies that Spear T might have.

II. ASSIGNMENTS OF ERROR

Spear T assigns that the district court erred when it dismissed its complaint for lack of subject-matter jurisdiction, failure to state a claim, and failure to join necessary parties.

III. STANDARD OF REVIEW

This action involves a rule 12 motion to dismiss for failure to state a claim and a rule 12 motion to dismiss for failure to join indispensable parties. In 2003, the Nebraska rules of pleading were changed to reflect the federal rules. Thus, we apply the new rules for notice pleading. See Neb. Ct. R. of Pldg. in Civ. Actions 1 (rev.2004).

A district court's grant of a motion to dismiss is reviewed de novo. Weeder v. Central Community College, 269 Neb. 114, ___ N.W.2d ___ (2005). Complaints should be liberally construed in the plaintiff's favor and should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can not prove any set of facts in support of the claim that would entitle him or her to relief. Kellogg v. Nebraska Dept. of Corr. Servs., 269 Neb. 40, 690 N.W.2d 574 (2005).

The federal courts have made it clear that a complaint should not be dismissed merely because it does not state with precision all elements that give rise to a legal basis for recovery. Schmedding v. Tnemec Co., Inc., 187 F.3d 862 (8th Cir.1999). As a practical matter, dismissal under rule 12(b)(6) should be granted only in the unusual case in which a plaintiff includes allegations that show on the face of the complaint that there is some insuperable bar to relief. See id.

IV. ANALYSIS

The term "surface water" encompasses all waters found on the earth's surface. Richard S. Harnsberger & Norman W. Thorson, Nebraska Water Law & Administration § 1.04 at 9-10 (Butterworth Legal Publishers 1984). Here, the surface water is the stream on which Spear T has water appropriations. In contrast, ground water is defined as "`that water which occurs or moves, seeps, filters, or percolates through the ground under the surface of the land.'" Id. at 12. Accord Neb.Rev.Stat. § 46-635 (Reissue 2004).

Hydrologically, ground water and surface water are inextricably related. Ground water pumping can cause diminished streamflows. Streamflow can support the potential for subirrigation. Seepage from surface water supplies canals, and deep percolation of applied irrigation water from surface projects can recharge ground water aquifers. Harnsberger & Thorson, supra, § 5.30. Water law commentators have colorfully described this phenomenon: "[A]ll water is interrelated and interdependent. If groundwater were red, most streams would be various shades of pink; if groundwater were poisoned, the streams would also be poisoned." Richard S. Harnsberger et al., Groundwater: From Windmills to Comprehensive Public Management, 52 Neb. L.Rev. 179, 183 (1973).

But Nebraska water law ignores the hydrological fact that ground water and surface water are inextricably linked. Instead of an integrated system, we have two separate systems, one allocating streamflows and the other allocating ground water. Under constitutional and statutory provisions, streamflows are allocated by priority in time. See Neb. Const. art. XV, § 6. Ground water, in contrast, is governed by a common-law rule of reasonableness and the GWMPA. Moreover, the lack of an integrated system is reinforced by the fact that different agencies regulate ground water and surface water. The Department of Natural Resources regulates surface water appropriations. See Neb.Rev.Stat. § 61-201 et seq. (Reissue 2003 & Cum.Supp.2004). In contrast, under the GWMPA, ground water is statutorily regulated by each Natural Resources District (NRD). The tension between the two systems has long been recognized by commentators. See Harnsberger et al., supra at 182 ("[g]round and stream diverters in Nebraska are on a collision course which may occur sooner than most people think"). That day has arrived.

1. DOES SPEAR T HAVE COMMON-LAW CLAIM AGAINST APPELLEES?

We begin by determining whether Spear T has stated a claim. Spear T argues that it has stated a claim based either on the statutory rule of prior appropriation of surface water or on the tort of conversion; we reject these arguments. But as we explain below, we determine that the common law does...