United States v. Estate of Hage

Decision Date23 May 2013
Docket Number2:07-cv-01154-RCJ-VCF
PartiesUNITED STATES OF AMERICA, Plaintiff, v. ESTATE OF E. WAYNE HAGE et al., Defendants.
CourtUnited States District Courts. 9th Circuit. United States District Courts. 9th Circuit. District of Nevada

The decision following reads like a book. It tells the story of the bench trial in this case from beginning to end and contains many of the tentative findings and conclusions reached along the way, as supported by particular witness testimony and evidence received during the trial. The format is intentional. The impatient reader may be tempted to jump to the summary findings and conclusions at the end, but in so doing will be deprived of the analytical and evidentiary threat patiently perceived and conceived by the Court during the course of the trial.

This case arises out of alleged unauthorized grazing of private cattle on federal land. From March 27 to June 6, 2012, the Court held a bench trial on Plaintiff United States of America's (the "Government") Complaint for trespass against Defendants Wayne N. Hage ("Hage") in his individual capacity and Hage in his capacity as administrator of the Estate of E.Wayne Hage (the "Estate")1 , as well as the Estate's Counterclaim for declaratory judgment. The Court has read and considered the post-trial briefings it solicited.

A. The Takings Case

The present case is a civil trespass action by the Government against Wayne N. Hage ("Wayne Jr.") and the Estate of E. Wayne Hage ("Wayne Sr."). However, the Court will, for the benefit of the reader, summarize the long history of another case (the "CFC Case") litigated in the Court of Federal Claims, the U.S. Court of Appeals for the Federal Circuit, and, pending a decision on a petition for writ of certiorari, potentially the U.S. Supreme Court.

1. The CFC Case - Pretrial Rulings (Hage I)

In 1991, Wayne Sr. and his wife Jean N. Hage, now also deceased, filed an action in the Court of Federal Claims due to the United States' cancellation of their grazing permit. See Hage I, 35 Fed. Cl. 147, 156 (Ct. Cl. 1996). Wayne Jr. was not a party to the CFC Case. The court granted summary judgment to the United States on the damages claim because the grazing permit was a license, the revocation of which could not give rise to damages, but the court denied summary judgment on the takings claims and the claim for compensation for improvements, because there remained a genuine issue of material fact whether Wayne Sr. had certain water rights, forage rights, and ditch rights of way. See id. The court first rejected the United States' argument that it lacked jurisdiction over the takings claim because it lacked jurisdiction to adjudicate water rights, ruling that the Tucker Act in fact required the court to exercise jurisdiction, and that the McCarran Amendment did not affect the result. See id. 157-60. The court then rejected the United States' argument that the takings issue was unripe because an adjudication of water rights (the Monitor Valley adjudication) was pending which might affecttitle to the water. See id. at 160-64 (noting that water rights in Nevada vesting before 1905 are unaffected by later-adopted water law and exist independently of stream adjudications, which concern only the scope of such rights). The court also noted that the ditch rights of way were inherently tied to the water rights, because without the attendant ditch rights of way, the water rights were of no value. See id. at 163.

After granting summary judgment on the breach of contract claim based on cancellation of the grazing permit, the court addressed the takings claims. First, the court ruled that the Hages had no property interest in the grazing permit or the federal range land itself. See id. at 170. Second, the court denied summary judgment on the takings claim as to the Hages' water rights, ruling that the Ditch Act and Supreme Court precedent clearly established that a private party may have water rights in water on federal land, and that priority is in fact determined by local law. See id. at 172. Third, the court denied summary judgment on the ditch rights of way takings claim, because there remained a question of fact whether the Hages had such rights and whether they had exceeded the permitted scope of maintenance of or changes to the ditches. See id. at 174. Fourth, the court denied summary judgment on the forage takings claim because although water rights did not necessarily include grazing rights under the Ditch Act, it was possible that under pre-1907 Nevada law the right to bring cattle to the water and permit them to graze incidentally near the water source—because it is impossible to stop them as a practical matter—were an inextricable part of the water rights themselves if the water had been appropriated for the purpose of watering livestock. See id. 174-76. Finally, the court denied summary judgment on a cattle-impoundment takings claim and a compensation claim under 43 U.S.C. § 1752. See id. at 176-80.

2. The CFC Case - Property Rights Phase Rulings (Hage III and IV)2

Two-and-a-half years after Hage I, the Court of Federal Claims ruled preliminarily on the claims that had survived summary judgment in 1996. See Hage v. United States (Hage III), 42 Fed. Cl. 249 (1998). In the meantime, the court had permitted the Hages to amend their complaint to include a claim to the surface estate of 752,000 acres of grazing land on federal allotments. See id. at 249. The court ruled that the Hages had shown they had a property interest in the vested water rights and in the ditch rights-of-way and forage rights appurtenant thereto. See id. at 250.

a. Water Rights

Three-and-a-half years after Hage III, the court ruled that the Hages had water rights in the following bodies of water within the Monitor Valley Allotment, with priority dates between 1866 and 1878: Andrews Creek, Barley Creek, Combination Springs, Meadow Canyon Creek, Mosquito Creek, Pasco Creek, Pine Creek, Smith Creek, and White Sage Ditch. See Hage v. United States (Hage IV), 51 Fed. Cl. 570, 579 (2002). The court ruled that the Hages had water rights to the following bodies of water within the Ralston Allotment, with priority dates between 1917 and 1981: AEC Well, Airport Well, Baxter Spring, Black Rock Well, Cornell Well, Frazier Spring, Henry's Well, Humphrey Spring, Pine Creek Well, Ray's Well, Rye Patch Channel, Salisbury Well, Silver Creek Well, Snow Bird Spring, Spanish Spring, Stewart Spring, Well No. 2, and Well No. 3. See id. at 579-80. The court ruled that the Hages had water rights to the following bodies of water within the McKinney Allotment, with priority dates between 1919 and 1920: Caine Springs, Cedar Corral Springs, Mud Springs, and Perotte Springs.

b. Ditch Rights-of-Way

The court also ruled that Congress via the Ditch Act had expressly deferred to state lawconcerning the proper scope of such rights of way, and that the legislative history indicated Congress was fully aware of, and intended to codify via the Ditch Act, the custom in the American West of a fifty-foot right of way on each side of a ditch. See id. at 581-82. The court ruled that the Hages had established ditch rights of way cognizable under the Ditch Act in the following ditches: Andrews Creek Ditch, Barley Creek Ditch, Borrego Ditches, Combination Pipeline, Corcoran Ditch, Meadow Creek Ditch, Pasco or Tucker Ditch, Pine Creek Irrigating Ditch, Spanish Spring Pipeline, and White Sage Irrigation Ditch. See id. at 583. The Hages failed to show that the following ditches were cognizable under the Ditch Act: Baxter Spring Pipeline, Corcoran Pipeline, Desert Entry Ditch, Hot Well Ditch, Mount Jefferson Spring and Pipeline, and Salisbury Well Pipeline. See id. at 584. The court ruled that the USFS had the right to reasonably regulate the use of the ditches but could not deny access to vested water rights for permitted use or diversion to another beneficial use. See id. The court also held the law did not require the owner of a Ditch-Act ditch to seek permission from the USFS to maintain it. See id. at 585-86. The court went on to reaffirm that there was no property interest in a grazing permit that could support a takings claim for its revocation. See id. at 586-88.

c. The 752,000-Acre Surface Estate

Finally, although the Hages could possibly have had property rights under Mexican law that the United States would have to respect under the Treaty of Guadalupe Hidalgo, the Hages failed to show that their predecessors-in-interest actually occupied the 752,000 acres to which they claimed a surface estate prior to 1848, so they had no property rights in the surface estate. See id. at 588-89. The Hages also failed to convince the court of their grazing rights in the 752,000 area under several Congressional acts. The court then ordered briefing on the takings stage of the litigation. Id. at 592.

3. The CFC Case - Takings Phase Rulings (Hage V, VI, VII)

In an unpublished 2003 order, the Court of Federal Claims denied the United States'motion for partial summary judgment as to the takings claims, noting that the water and ditch rights predated the grazing permit system, and that the lack of a grazing permit did not destroy rights attendant to those rights. (See Order, Feb. 5, 2003, ECF No. 182, Ex. 7). In 2008, the court found that the United States had taken the Hages' water rights without compensation. Hage v. United States (Hage V), 82 Fed. Cl. 202 (2008). The court found that the impoundment of the Hages' cattle was not a taking, because the license to graze in the Meadow Canyon area was a revocable license that had been revoked, the Hages had failed to remove the cattle for a year after being warned, and the cattle were sold to cover the costs of impoundment. See id. at 209. The court then found that the United States' construction of fences around water in which the Hages had vested water rights amounted to a physical taking during those periods that the Hages had their...

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