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Cappel v. State, Department of Natural Resources

Supreme Court of Nebraska

December 22, 2017

Rodney Cappel et al, appellants and cross-appellees,
State of Nebraska Department of Natural Resources, an executive department and agency of the state of Nebraska, and Jeff Fassett, in his official capacity as director of the department of Natural Resources, appellees and cross-appellants.

         1. Motions to Dismiss: Appeal and Error. A district court's grant of a motion to dismiss is reviewed de novo.

         2. Motions to Dismiss: Pleadings: Appeal and Error. When reviewing an order dismissing a complaint, the appellate court accepts as true all facts which are well pled and the proper and reasonable inferences of law and fact which may be drawn therefrom, but not the plaintiff's conclusion.

         3. Actions: Public Officers and Employees. A suit against a state official in his or her official capacity is not a suit against the official, but, rather, a suit against the official's office.

         4. Actions. A suit against a state agency is a suit against the State.

         5. Eminent Domain: Words and Phrases. Inverse condemnation is a shorthand description for a landowner suit to recover just compensation for a governmental taking of the landowner's property without the benefit of condemnation proceedings.

         6. Actions: Eminent Domain. The initial question in an inverse condemnation case is whether a compensable taking or damage has occurred.

         7. Eminent Domain: Property. A takings analysis begins with an examination of the nature of the owner's property interest.

         8. Waters: Property. The right to appropriate surface water is not an ownership of property. Instead, the water is viewed as a public want and the appropriation is a right to use the water.

         [298 Neb. 446] 9. Irrigation Districts: Waters. Rights of irrigation in Nebraska are limited in their scope by the language of their creation and subject to reasonable regulations subsequently adopted by virtue of the police power of the State.

         10. Constitutional Law: Actions: Legislature. Neb. Const, art. V, § 22, provides that the State may sue and be sued and that the Legislature shall provide by law in what manner and in what courts suits shall be brought.

         11. Constitutional Law: Legislature: Immunity: Waiver. Neb. Const, art. V, § 22, permits the State to lay its sovereignty aside and consent to be sued on such terms and conditions as the Legislature may prescribe.

         12. ___: ___: ___: ___. Neb. Const, art. V, § 22, is not self-executing, but instead requires legislative action for waiver of the State's sovereign immunity.

         13. Immunity: Waiver. Waiver of sovereign immunity is found only where stated by the most express language of a statute or by such overwhelming implications from the text as will allow no other reasonable construction.

         14. Jurisdiction: Appeal and Error. An appellate court has an independent duty to decide jurisdictional issues on appeal, even if the parties have not raised the issue.

         15. Actions: Jurisdiction. Lack of subject matter jurisdiction may be raised at any time by any party or by the court sua sponte.

         16. Jurisdiction: Appeal and Error. When a trial court lacks the power, that is, jurisdiction, to adjudicate the merits of a claim, an appellate court also lacks the power to adjudicate the merits of the claim.

         17. Taxation: Irrigation Districts: Waters. Neb. Rev. Stat. § 46-141 (Reissue 2010) allows taxpayers to request a refund for water taxes paid by filing a request in the office of the secretary of the district.

         18. Taxation: Waters. Neb. Rev. Stat. § 2-3226.05(2) (Cum. Supp. 2016) allows taxpayers to request a local refund of occupation taxes after following the applicable procedures.

         Appeal from the District Court for Hitchcock County: James E. Doyle IV, Judge. Affirmed in part, and in part reversed and remanded with directions.

          Stephen D. Mossman, Ryan K. Mcintosh, and Patricia L. Vannoy, of Mattson Ricketts Law Firm, for appellants.

          Douglas J. Peterson, Attorney General, Justin D. Lavene, and Kathleen A. Miller for appellees.

         [298 Neb. 447] Heavican, C.J., Miller-Lerman, Cassel, Stacy, Kelch, and Funke, JJ.

          Kelch, J.


         This case involves the administration of the Republican River Compact. Appropriators Rodney Cappel; Steven Cappel; Cappel Family Farm LLC; C & D Cappel Farms, L.L.C.; and Midway Irrigation, Inc. (collectively the Cappels) appeal the order of the district court for Hitchcock County that dismissed their complaint without leave to amend, upon the motion of the State of Nebraska Department of Natural Resources and Jeff Fassett, its director (collectively the DNR). The DNR cross-appeals. We hold that the Cappels failed to state a claim for inverse condemnation, but we conclude that the district court erred in failing to find that it lacked subject matter jurisdiction over the Cappels' remaining claims for relief under 42 U.S.C. § 1983 (2012), due process, and restitution, which were barred by sovereign immunity. Therefore, we affirm in part, and in part reverse and remand with directions to dismiss for lack of subject matter jurisdiction those claims barred by sovereign immunity.


         The Cappels own farmland throughout the Republican River Basin. They irrigate their farmland with ground water from wells located within the Middle Republican Natural Resources District and receive surface water appropriations from the Frenchman Valley Irrigation District. As such, they are subject to the integrated management plan and associated surface water controls adopted jointly by the Middle Republican Natural Resources District and the DNR.

         The administration of water in the Republican River Basin is subject to the Republican River Compact (hereinafter the Compact), which is an interstate compact between Nebraska, Kansas, and Colorado that regulates the consumption of the basin's waters and allocates a certain amount of surface water [298 Neb. 448] to each state, depending on the amount of surface water available in the basin each year. The DNR is responsible for ensuring Nebraska's compliance with the Compact.

         In January 2013 through 2015, the DNR's hydrologic forecast indicated that without essential action, Nebraska's consumption of water from the Republican River would exceed its allocation under the Compact. Accordingly, the DNR declared a "Compact Call Year" and issued closing notices to holders of surface water permits for each of those years. As a result of the closing notices, the Cappels were barred from using the surface waters of the Republican River and its tributaries to irrigate their crops. However, the Cappels were still obligated to pay the costs associated with owning irrigated acres, including taxes and assessments. And DNR did not curtail ground water use, which allegedly continued to deplete streamflow in the Republican River Basin to the future detriment of surface water users. The Cappels themselves had drilled new irriga-tional wells because they could not irrigate their land with surface water.

         The Cappels did not challenge the DNR's 2013 through 2015 compact call year orders or corresponding closing notices as provided in Neb. Rev. Stat. § 61-206 (Reissue 2009). Instead, in December 2015, they filed a verified complaint against the DNR in the district court for Hitchcock County, followed by a verified amended complaint. They alleged a cause of action under 42 U.S.C. § 1983, due to deprivation of their property rights and violations of their due process rights. The Cappels also alleged that they had been subject to an inverse condemnation in that the closing notices and administration of the Republican River amounted to an uncompensated physical and regulatory taking under Neb. Const, art. I, §§ 3 and 21, and the U.S. Const, amends. V and XIV. Further, the Cappels alleged that they had suffered damages when they were deprived of the benefits of condemnation proceedings, in violation of their due process rights, and when DNR allowed excessive ground water pumping to the detriment of the their surface water [298 Neb. 449] appropriations. The Cappels sought reimbursement for occupation taxes paid to the Middle Republican Natural Resources District and water taxes paid to the Frenchman Valley Irrigation District, money damages, and restitution.

         The DNR filed a motion to dismiss under Neb. Ct. R. Pldg. § 6-1112(b)(1) and (6), alleging lack of subject matter jurisdiction and failure to state a claim upon which relief can be granted. Following a hearing, the district court issued a written order dismissing the amended complaint pursuant to § 6-1112(b)(6), without leave to amend. It determined beyond a doubt that the Cappels could plead no set of facts that would entitle them to relief under their theories of recovery and that amendment would be futile. Specifically, the district court found that it had subject matter jurisdiction, because the Cappels' claims were not barred by the State's sovereign immunity and therefore overruled the DNR's motion based on § 6-1112(b)(1). However, it determined that neither the closing notices nor the adopted integrated management plans amounted to a physical or regulatory taking. Additionally, the district court held that the closing notices and adopted plans did not violate the Cappels' due process rights and that the Cappels had failed to state a claim under 42 U.S.C. § 1983. Finally, the district court ruled that the Cappels were not entitled to restitution for taxes paid in 2013 through 2015.

         The Cappels filed this appeal in the Nebraska Court of Appeals, and the DNR cross-appealed. We moved the case to our docket and ...

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