Spear T Ranch v. NEBRASKA DNR, S-04-639.

• Decision Date: 08 July 2005
• Docket Number: No. S-04-639.,S-04-639.
• Citation: 270 Neb. 130,699 N.W.2d 379
• Parties: SPEAR T RANCH, INC., appellant and cross-appellee, v. NEBRASKA DEPARTMENT OF NATURAL RESOURCES, appellee and cross-appellant.
• Court: Nebraska Supreme Court

699 N.W.2d 379

270 Neb. 130

SPEAR T RANCH, INC., appellant and cross-appellee, v. NEBRASKA DEPARTMENT OF NATURAL RESOURCES, appellee and cross-appellant.

No. S-04-639.

Supreme Court of Nebraska.

July 8, 2005.

Thomas D. Oliver for appellant.

Jon Bruning, Attorney General, and Justin D. Lavene for appellee.

Steven C. Smith, of Pahlke, Smith, Snyder, Petitt & Eubanks, G.P., Scottsbluff, for amici curiae Pathfinder Irrigation District et al. Michael C. Klein, of Anderson, Klein, Swan & Brewster, Holdrege, for amicus curiae Central Nebraska Public Power and Irrigation District.

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

WRIGHT, J.

I. NATURE OF CASE

Spear T Ranch, Inc. (Spear T), filed a claim for damages with the State Claims Board under the State Tort Claims Act, Neb.Rev.Stat. § 81-8,209 et seq. (Reissue 2003). The board denied the claim, and Spear T subsequently brought an action against the Nebraska Department of Natural Resources (Department). Spear T alleged that the Department was negligent in failing to protect Spear T's surface water appropriations and that the Department had permitted the diversion of water from Spear T's land, which greatly reduced the value of the land and resulted in an unauthorized taking of its property without compensation. Spear T appeals from the order of the Morrill County District Court which granted the Department's motion for summary judgment and dismissed its amended petition with prejudice.

II. SCOPE OF REVIEW

In reviewing a summary judgment, an appellate court views the evidence in the light most favorable to the party against whom the judgment is granted and gives such party the benefit of all reasonable inferences deducible from the evidence. Johnson v. United States Fidelity & Guar. Co., 269 Neb. 731, 696 N.W.2d 431 (2005).

Whether a petition states a cause of action is a question of law, regarding which an appellate court has an obligation to reach a conclusion independent of that of the trial court. McGinn v. State Farm Mut. Auto. Ins. Co., 268 Neb. 843, 689 N.W.2d 802 (2004).

III. FACTS

Spear T is a Nebraska corporation that owns land in Morrill County. Pumpkin Creek flows through Spear T's land, and it has two surface water appropriations on Pumpkin Creek. Water appropriation A-6811 is a permit dated November 16, 1954, to divert 2.57 cubic feet per second of water. Water appropriation A-9051 is dated December 21, 1956, and permits a diversion of 1.6 cubic feet per second.

Spear T initially filed a claim for damages with the State Claims Board pursuant to the State Tort Claims Act. The board denied the claim, and Spear T subsequently brought this suit against the Department.

In its first cause of action, Spear T claimed that the Department had negligently failed to protect its appropriations by controlling the amount of ground water taken from the Pumpkin Creek basin by hydrologically connected ground water users. It claimed that this negligence arose from a common-law duty of the Department to protect surface water appropriations. Spear T claimed that as a result of the Department's negligence, Pumpkin Creek had become brackish and unsuitable for raising crops or watering livestock. Spear T claimed damages for the loss of crops and a reduction in property and aesthetic value.

Spear T also alleged that Neb.Rev.Stat. § 46-226 (Reissue 2004) imposed a duty upon the Department to make proper arrangements for the determination of priorities of the right to use the public waters of the state and to determine the same. It alleged that the Department's failure to determine priorities between surface water appropriators and ground water users had directly resulted in damages to Spear T.

As to its cause of action for inverse condemnation, Spear T claimed that Neb. Rev.Stat. § 46-159 (Reissue 2004) prohibited the diverting of water from the creek to the detriment of a party unless previous compensation is ascertained. Spear T asserted that the Department's inaction had resulted in the inverse condemnation of its vested property rights without just compensation, in violation of the Fifth Amendment to the U.S. Constitution and Neb. Const. art. I, § 21. It also claimed that the Department's actions deprived it of its constitutional rights under color of law, thereby violating 42 U.S.C. § 1983 (2000).

Spear T sought general damages for the reduction in value of its property caused by the Department's alleged negligence and for the resulting loss of hay and reduced pasture rental. It requested special damages for the loss of aesthetic value of the property and other damages allowed by law. It also sought an injunction requiring the Department to cease issuance of well permits in the Pumpkin Creek basin and to restrict the amount of water pumped from upstream wells.

The Department demurred, claiming that the petition was insufficient to state a cause of action sounding in either negligence or inverse condemnation. The district court sustained the demurrer as to Spear T's action for inverse condemnation, and Spear T was allowed to amend. Its amended petition was identical to the original petition in nearly all respects, the main exception being that Spear T eliminated all references to a violation of 42 U.S.C. § 1983.

The Department moved for summary judgment, claiming that Spear T's action was barred by applicable statutes of limitation and that it had no duty to regulate ground water use to protect Spear T's surface water rights. The Department also asserted other affirmative defenses.

Following a hearing, the district court sustained the Department's motion for summary judgment. It found that the Department had no legal duty to protect surface water appropriators from the activities of ground water users. The court also granted the Department's motion for an order dismissing Spear T's claim for inverse condemnation. Spear T timely perfected an appeal, and the Department has cross-appealed.

IV. ASSIGNMENTS OF ERROR

Spear T assigns the following restated errors to the order of the district court: The court erred (1) in finding that the Department had no duty to protect surface water appropriators from the effects of ground water use and (2) in finding that Spear T had no cause of action for inverse condemnation against the Department.

The Department assigns the following restated errors on cross-appeal: The district court erred (1) in failing to find that Spear T's claim was barred by the statute of limitations; (2) in failing to find that even if the Department had a duty to protect surface water appropriators from the effects of ground water irrigation, such claims were not appropriate under the State Tort Claims Act; and (3) in failing to find that Spear T had not exhausted all available administrative remedies prior to seeking judicial review.

V. ANALYSIS

1. SPEAR T'S ARGUMENT

Spear T asserts that the Department had both a common-law duty and a statutory duty to protect the rights of surface water appropriators. As to the statutory duty, it relies upon § 46-226, which provides: "The department shall make proper arrangements for the determination of priorities of right to use the public waters of the state and determine the same. The method of determining the priority and amount of appropriation shall be fixed by the department." Spear T claims this language placed a duty upon the Department to regulate all of the waters of the state through a system of priorities. It claims that the Department had a statutory duty to establish a method for determining priority between the surface water appropriators and the ground water users, and to fix the amount of water that hydrologically connected ground water users could extract from Pumpkin Creek. Spear T also relies upon Neb.Rev.Stat. § 61-206(1) (Cum.Supp.2004), which states: "The Department of Natural Resources is given jurisdiction over all matters pertaining to water rights for irrigation ... except as such jurisdiction is specifically limited by statute." Spear T concludes this means that the Department has exclusive jurisdiction to hear and adjudicate all matters pertaining to water rights.

2. DEPARTMENT'S ARGUMENT

The Department claims that it had no duty to protect appropriators of surface water from the activities of ground water users. It argues that because it had no duty, it cannot be held actionable in a claim for negligence or inverse condemnation.

The Department asserts that the Legislature is the body with authority to implement the state's water policy and that the Legislature has delegated the authority to regulate surface water to the Department and has delegated the authority to regulate ground water, including hydrologically connected ground water, to the natural resources districts. It argues that pursuant to law, the Legislature has authorized the Department to regulate surface water appropriations and to protect the rights of surface water appropriators from encroachment by other surface water appropriators.

3. RESOLUTION

The legal issue presented is whether the actions or inactions of the Department constituted negligence. The threshold issue in any negligence action is whether the defendant owes a legal duty to the plaintiff. Fu v. State, 263 Neb. 848, 643 N.W.2d 659 (2002). The question of whether a legal duty exists for actionable negligence is a question of law dependent on the facts in a particular situation. Anderson v. Nashua Corp., 246 Neb. 420, 519 N.W.2d 275 (1994). Regarding questions of law, an appellate court is obligated to reach a conclusion independent of the determination made by the court below. Trimble v. Wescom, 267 Neb. 224, 673 N.W.2d 864 (2004).

(a) Common-Law Duty

Spear T relies upon State, ex rel. Sorensen, v. Mitchell Irrigation District, 129 Neb. 586, 262 N.W. 543 (1935), and State v. Birdwood Irrigation District, 154 Neb. 52, 46 N.W.2d 884 (1951), to support its position that the Department had a...