Hedlund v. River Bluff Estates, LLC ( 2018 )

#28289-aff in pt & rem-DG
2018 S.D. 20IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA
****
RONNIE HEDLUND, KAREN
HEDLUND, VIB ENTERPRISES,
LLC and LEIMBACH DEVELOPMENT,
LLC d/b/a/ ABC STORAGE YARD, Plaintiffs and Appellants,
v.
RIVER BLUFF ESTATES, LLC, Defendant and Appellee.
****
APPEAL FROM THE CIRCUIT COURT OF
THE SIXTH JUDICIAL CIRCUIT
STANLEY COUNTY, SOUTH DAKOTA
****
THE HONORABLE MARK BARNETT
Judge
****
JAMES E. MOORE
ARON A. HOGDEN of
Woods Fuller Shultz &
Smith, PC
Sioux Falls, South Dakota Attorneys for plaintiffs
and appellants.
JACK H. HIEB
ZACHARY W. PETERSON of
Richardson, Wyly, Wise,
Sauck & Hieb, LLP
Aberdeen, South Dakota Attorneys for defendant
and appellee.
****
CONSIDERED ON BRIEFS
ON JANUARY 8, 2018
OPINION FILED 02/28/18
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GILBERTSON, Chief Justice
[¶1.] Ronnie and Karen Hedlund, individually and on behalf of their
business VIB Enterprises LLC, and Leimbach Development LLC appeal the circuit
court’s denial of their request for preliminary and permanent injunctive relief
against River Bluff Estates LLC. The Hedlunds and Leimbach argue the court
erred in concluding an adequate legal remedy exists for an alleged increase in water
drainage from River Bluff’s property. The parties also dispute whether the court’s
factual findings and legal conclusions issued after the injunction hearing are
conclusive as to further proceedings in this case. And River Bluff argues the court’s
decision is not appealable. We affirm the court’s denial of preliminary injunctive
relief and remand the case for further proceedings.
Facts and Procedural History
[¶2.] This case is a water-drainage dispute between adjoining landowners in
Fort Pierre. The Hedlunds and Leimbach operate several commercial businesses on
their properties. River Bluff Estates owns the adjoining property to the south, on
which it operates a housing development for manufactured homes. In 1998, Ronnie
Hedlund installed a drainage ditch that runs across the Hedlunds’ and Leimbach’s
properties, just north of the property line shared with River Bluff. And to the north
of that ditch lies Bass Drive, a road located entirely on the Hedlunds’ and
Leimbach’s properties. The parties’ properties are bordered to the east by
Highway 1806. For purposes of water drainage, all properties at issue are
considered “urban” rather than “rural.”
[¶3.] In 1998 and 2005, River Bluff’s predecessor in interest constructed an
embankment, referred to as the northern slope, near the property line. The purpose
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of constructing the northern slope was to create additional lots for the housing
development. The northern slope is approximately 13 feet tall and is constructed of
Pierre shale. It has a three-to-one grade without benching, compaction, or any
drainage structures. No drainage study or compaction or density tests were
conducted prior to the construction of the northern slope. Since taking possession of
the property, River Bluff has added fill dirt to lots adjacent to the embankment on
multiple occasions.
[¶4.] River Bluff’s predecessor also constructed another earthen structure,
referred to as a wing dam, on the northwest corner of its property. The purpose of
the wing dam was to protect the northern lots from drainage originating to the west
by diverting that water onto the Hedlunds’ and Leimbach’s properties. The water
diverted onto the Hedlunds’ and Leimbach’s properties would have normally
drained onto River Bluff’s property.
[¶5.] Since the physical changes to River Bluff’s property occurred, the
Hedlunds’ and Leimbach’s properties have experienced an increase in drainage. An
additional 4.6 acres of land that previously drained to the east or northeast of River
Bluff’s property now drains onto the Hedlunds’ and Leimbach’s properties. Water
from the northern slope as well as from approximately half of the lots on the
northern edge of River Bluff’s property drain directly into the drainage ditch located
on the Hedlunds’ and Leimbach’s properties. Additionally, rain events have caused
soil to move downhill and deposit at the base of the slope, causing an encroachment
of the slope onto the Hedlunds’ and Leimbach’s properties.
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[¶6.] On March 16, 2016, the Hedlunds and Leimbach filed a complaint
against River Bluff, alleging nuisance (increased drainage) and trespass
(encroachment of northern slope). The Hedlunds and Leimbach requested
preliminary and permanent injunctive relief and damages. On June 15, the
Hedlunds and Leimbach filed a motion that was premised on the same legal
theories and that again asked the circuit court to “enter a preliminary and/or
permanent injunction requiring . . . River Bluff Estates, LLC, [to] abate the
nuisance that exists due to the uncontrolled drainage of surface water from its real
property onto and across the [Hedlunds’ and Leimbach’s] real property.”
[¶7.] The circuit court held an evidentiary hearing on September 23 and
October 6, 2016, to consider the Hedlunds and Leimbach’s motion for injunctive
relief. After receiving testimony and other evidence and conducting an on-site
inspection, the court concluded the construction of the northern slope and wing dam
altered the natural drainage in a manner that was “unreasonable and clearly
intentional.” However, the court denied injunctive relief because it concluded the
Hedlunds and Leimbach had an adequate remedy at law. The Hedlunds and
Leimbach argued the drainage problems could be remedied by installing a retaining
wall for the northern slope on River Bluff’s property and either expanding the
existing drainage ditch or installing a storm sewer. In response, River Bluff argued
the drainage problems could also be remedied by raising and moving Bass Drive on
the Hedlunds’ and Leimbach’s properties. Presented with competing landscaping
proposals, the court concluded that the parties were “simply arguing over which
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side of the fence” should be landscaped and that in either case, monetary
compensation would afford adequate relief.
[¶8.] On April 5, 2017, the circuit court entered findings of fact and
conclusions of law regarding the Hedlunds and Leimbach’s motion for injunctive
relief. The court specifically found that the Hedlunds and Leimbach “show[ed]
actual success on the merits of their nuisance and trespass claims” and that they
“established a right to preliminary and permanent injunctive relief by a reasonable
certainty in every regard except for showing that the problems cannot be remedied
with money damages.” But prior to entering a judgment, the court asked the
parties to submit briefs on the question whether the court’s findings would have any
preclusive effect on future proceedings. The court concluded it had not decided the
merits of the Hedlunds and Leimbach’s complaint. Thus, the court entered an order
that denied preliminary injunctive relief and declared its earlier findings and
conclusions regarding the Hedlunds and Leimbach’s demonstration of actual
success on the merits to be “dicta.”
[¶9.] The Hedlunds and Leimbach appeal. The parties raise the following
issues:
1. Whether the Hedlunds and Leimbach have the right to
appeal the circuit court’s denial of preliminary injunctive
relief.
2. Whether the circuit court erred by denying the Hedlunds
and Leimbach’s request for preliminary injunctive relief.
3. Whether the circuit court’s factual findings and legal
conclusions issued after the injunction hearing are
preclusive as to the merits of the Hedlunds and
Leimbach’s request for permanent injunctive relief.
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Analysis and Decision
[¶10.] 1. Whether the Hedlunds and Leimbach have the right
to appeal the circuit court’s denial of preliminary
injunctive relief.
[¶11.] As an initial matter, River Bluff argues this Court lacks jurisdiction to
entertain the Hedlunds and Leimbach’s appeal. River Bluff contends that the order
appealed from in this case is an intermediate order and that the Hedlunds and
Leimbach did not file a petition seeking permission to file an interlocutory appeal as
required by SDCL 15-26A-13. According to River Bluff, “[t]he only ruling that is
arguably appealable as a matter of right at this point is the [c]ircuit court’s denial of
[the Hedlunds and Leimbach’s] motion for a preliminary injunction.” In River
Bluff’s view, the Hedlunds and Leimbach’s “claim to the remedy of injunction has
not been refused” because the court determined that their entitlement to a
permanent injunction has not yet been decided. The Hedlunds and Leimbach
respond that they were not required to file a petition under SDCL 15-26A-13
because they have the right to appeal under SDCL 15-26A-3(5).
[¶12.] The Hedlunds and Leimbach are correct. SDCL 15-26A-3(5) permits
an appeal from the refusal of the remedy of “injunction.” The remedy of “injunction
is either temporary or permanent[,]” and a preliminary injunction is one type of
temporary injunction. SDCL 21-8-1. Nearly a century ago, this Court held that the
denial of a temporary injunction may be appealed as a matter of right. Beers v. City
of Watertown, 42 S.D. 441, 444, 176 N.W. 149, 149 (1920) (applying S.D. Rev. Code
§ 3168 (1919)). There is no material distinction between SDCL 15-26A-3(5) and the
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code provision at issue in Beers. 1 Additionally, this view is consistent with
authorities on SDCL 15-26A-3(5)’s federal counterpart, 28 U.S.C. § 1292(a)(1)
(2012). See 11A Charles Alan Wright et al., Federal Practice and Procedure § 2962
(3d ed.), Westlaw (database updated Apr. 2017) (describing federal provision for
appealing the refusal of an injunction as an “exception to the final judgment rule”).
[¶13.] In light of the foregoing, SDCL 15-26A-3(5) authorizes an appeal from
an order that refuses any injunction. River Bluff acknowledges that the circuit
court denied the Hedlunds and Leimbach’s motion for a preliminary injunction.
Therefore, the Hedlunds and Leimbach’s appeal was authorized under SDCL 15-
26A-3(5), and they were not required to seek permission under SDCL 15-26A-13 to
file an appeal.
[¶14.] 2. Whether the circuit court erred by denying the
Hedlunds and Leimbach’s request for preliminary
injunctive relief.
[¶15.] The Hedlunds and Leimbach argue the circuit court erred by denying
their request for preliminary injunctive relief. “A plaintiff seeking a preliminary
injunction must establish that he is likely to succeed on the merits, that he is likely
to suffer irreparable harm in the absence of preliminary relief, that the balance of
equities tips in his favor, and that an injunction is in the public interest.” Winter v.
Nat. Res. Def. Council, Inc., 555 U.S. 7, 20, 129 S. Ct. 365, 374, 172 L. Ed. 2d 2491. S.D. Revised Code § 3168 (1919), which is materially indistinguishable from
SDCL 15-26A-3(5), applied to temporary injunctions. Compare SDCL 15-
26A-3(5) (“Appeals to the Supreme Court from the circuit court may be taken
as provided in this title from . . . [a]n order which grants, refuses, continues,
dissolves, or modifies . . . the remed[y] of . . . injunction . . . .”), with S.D. Rev.
Code § 3168(3) (1919) (“The following orders, when made by the court, may be
carried to the supreme court: . . . 3. When an order . . . grants, refuses,
modifies or dissolves an injunction . . . .”).
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(2008); accord Dacy v. Gors, 471 N.W.2d 576, 579 (S.D. 1991). The court denied
preliminary injunctive relief because it concluded the Hedlunds and Leimbach
failed to establish the likelihood of irreparable harm. In the court’s view, monetary
compensation could afford the Hedlunds and Leimbach adequate relief. As
explained below, while the court’s reason for denying preliminary injunctive relief is
incorrect, the Hedlunds and Leimbach have not established that reversible error
occurred.
[¶16.] The circuit court’s conclusion that monetary compensation can afford
adequate relief for the drainage at issue in this case is incorrect. The competing
landscaping proposals are not equivalent. Elevating Bass Drive, as River Bluff
proposes, would not prevent River Bluff’s increased drainage from entering the
Hedlunds’ and Leimbach’s properties—it would merely prevent that drainage from
penetrating farther into the Hedlunds’ and Leimbach’s properties than it already
has. And if the water invasion is permitted to continue, even as limited by
elevating Bass Drive, River Bluff could “obtain a property right by adverse
possession” to at least a portion of the Hedlunds’ and Leimbach’s properties.
Hoffman v. Bob Law, Inc., 2016 S.D. 94, ¶ 11, 888 N.W.2d 569, 573. Thus, “an
award of monetary [compensation] would not fix the underlying water drainage
issue.” Strong v. Atlas Hydraulics, Inc., 2014 S.D. 69, ¶ 17, 855 N.W.2d 133, 140.
In contrast, modifying River Bluff’s property in the manner suggested by the
Hedlunds and Leimbach would actually abate the alleged nuisance by preventing
the drainage at issue. Because the court’s conclusion that monetary compensation
would afford adequate relief is premised on River Bluff’s proposal’s ability to
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remedy the drainage, the inadequacy of River Bluff’s proposal necessarily renders
monetary compensation inadequate in this case.
[¶17.] Moreover, this case is not simply a water-drainage case. While the
Hedlunds and Leimbach allege River Bluff caused an increase in drainage on their
properties, they also allege River Bluff caused the northern slope to physically
encroach onto their properties. Because “no one should be permitted to take land of
another merely because he is willing to pay a market price for it[,]” monetary
compensation generally does not offer adequate relief in encroachment cases.
Hoffman, 2016 S.D. 94, ¶ 11, 888 N.W.2d at 573 (quoting 1 Dan B. Dobbs, Law of
Remedies § 5.10(4), at 816 (2d ed. 1993)). This case is no exception. Even if the
Hedlunds and Leimbach elevated Bass Drive as proposed by River Bluff, such
landscaping does nothing to remedy the northern slope’s physical encroachment
onto their properties.
[¶18.] Even so, River Bluff contends the circuit court’s conclusion is
supported by Magner v. Brinkman, 2016 S.D. 50, 883 N.W.2d 74. In that case, two
landowners filed an action alleging their neighbors artificially increased the amount
of drainage reaching the landowners’ property. Id. ¶ 1, 883 N.W.2d at 76. The
landowners originally sought compensation for past damages and an injunction
requiring the neighbors to reverse the drainage alterations. Id. ¶ 6, 883 N.W.2d
at 78. After a jury trial on the issue of damages, the landowners “abandoned their
request for an injunction ordering [the neighbors] to move their road and instead
asked the court to order [the neighbors] to pay for preventive and corrective
landscaping on [the landowners’] property.” Id. ¶ 7, 883 N.W.2d at 78. The circuit
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court granted the request and issued an injunction requiring the neighbors to
reimburse the landowners. Id. ¶ 18, 883 N.W.2d at 82. This Court noted that
“[b]ecause prospective damages may be measured by determining the reasonable
and necessary cost of preventing future injury, [the landowners] could have simply
sought this amount as future damages at the same time they sought the $55,000 for
past damages.” Id. ¶ 21, 883 N.W.2d at 83-84 (citations omitted). The Court
concluded the landowners had an adequate legal remedy because “the injunction
[was] no more than a simple money judgment for future damages imposed on [the
neighbors] by substituting the court’s coercive power for a jury verdict.” Id. ¶ 21,
883 N.W.2d at 84.
[¶19.] River Bluff’s reliance on Magner is misplaced. As discussed above,
landscaping the Hedlunds’ and Leimbach’s properties would merely mitigate the
effects of drainage received from River Bluff’s property; such landscaping would not
remedy either the water intrusion or the northern slope’s physical encroachment.
The same was true of the preventive landscaping at issue in Magner. See id. ¶ 7,
883 N.W.2d at 78 (describing proposed landscaping, which managed the increased
drainage rather than preventing it). But in Magner, the plaintiffs voluntarily
accepted the increased drainage and elected the remedy of damages (although
improperly pursued via court order rather than jury verdict) in lieu of an injunction
requiring the neighbors to abate the drainage. See id. ¶ 21, 883 N.W.2d at 83-84
(citing Restatement (Second) of Torts § 930 (Am. Law Inst. 1979)). Thus, instead of
seeking an injunction to enforce their property rights—as the Hedlunds and
Leimbach have done—the plaintiffs in Magner essentially consented to the transfer
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of a drainage easement. See Restatement (Second) of Torts § 930 cmt.b.
Consequently, Magner is materially distinguishable from the present case.
[¶20.] Although the Hedlunds and Leimbach are correct that what amounts
to a forced sale of property is not an adequate legal remedy for trespass and
nuisance, they have not demonstrated a basis for reversing the circuit court’s
decision to deny their request for preliminary injunctive relief. As noted above, the
Hedlunds and Leimbach must prove they are “likely to suffer irreparable harm in
the absence of preliminary relief[.]” Winter, 555 U.S. at 20, 129 S. Ct. at 374
(emphasis added). In the context of a request for preliminary injunctive relief,
“irreparable harm is measured in terms of the harm arising during the interim
between the request for an injunction and final disposition of the case on the
merits[.]” Jayaraj v. Scappini, 66 F.3d 36, 40 (2d Cir. 1995) (emphasis added).
“[T]he irreparable injury in issue at the provisional stage is only that which cannot
be prevented by a later injunction after a more complete hearing . . . .” 1 Dobbs,
supra ¶ 17, § 2.11(2) n.2, at 253 n.2 (explaining Douglas Laycock, The Death of the
Irreparable Injury Rule 113 (1991)). Thus, “[o]nly when the threatened harm would
impair the court’s ability to grant an effective remedy [after a trial on the merits] is
there really a need for preliminary relief.” 11A Wright, supra ¶ 12, § 2948.1.
[¶21.] In light of the foregoing, the Hedlunds and Leimbach have not
demonstrated the need for preliminary injunctive relief. The most recent
modifications to River Bluff’s property alleged by the Hedlunds and Leimbach
occurred in 2005, and the Hedlunds and Leimbach notified River Bluff of their
concerns by at least 2011. So at this point, the drainage at issue has been ongoing
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for years. The Hedlunds and Leimbach do not suggest any imminent change in the
status quo. 2 More importantly, they do not explain how the remedial effect of a
permanent injunction issued after a decision on the merits would be lessened in the
absence of preliminary injunctive relief. See Jayaraj, 66 F.3d at 39; 1 Dobbs, supra
¶ 17, § 2.11(2) n.2, at 253 n.2; 11A Wright, supra ¶ 12, § 2948.1. So while the
Hedlunds and Leimbach make a case for permanent injunctive relief, they do not
offer any reason to conclude they will suffer irreparable harm prior to the
disposition of the case on the merits. Therefore, while the circuit court’s reason for
denying preliminary injunctive relief was incorrect, the Hedlunds and Leimbach
have not established that the court’s error is reversible.
[¶22.] 3. Whether the circuit court’s factual findings and
legal conclusions issued after the injunction
hearing are preclusive as to the merits of the
Hedlunds and Leimbach’s request for permanent
injunctive relief.
[¶23.] The parties dispute whether the factual findings and legal conclusions
issued by the circuit court at the conclusion of the two-day hearing on the Hedlunds
and Leimbach’s motion for injunctive relief are preclusive in regard to the request
for a permanent injunction. In its order, the circuit court stated that
the determination of whether [the Hedlunds and Leimbach] are
entitled to permanent injunctive relief and/or damages will be
determined in a trial on the merits of those issues. While the
[c]ourt in its original [f]indings and [c]onclusions did comment
on the strength of the evidence regarding nuisance and trespass,
this was dicta and not an ultimate ruling on the demand for
permanent injunction, inasmuch as no notice was given of a
consolidation of the merits with the preliminary injunction.
2. For example, there is no indication that the structures on their properties are
one rainstorm away from being washed out by drainage from River Bluff or
that the northern slope is about to collapse onto their properties.
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The court’s use of the word consolidation is a reference to SDCL 15-6-65(a), which
states, in part: “Before or after the commencement of the hearing of an application
for a preliminary injunction, the court may order the trial of the action on the
merits to be advanced and consolidated with the hearing of the application.”
(Emphasis added.) The Hedlunds and Leimbach concede that the court did not
order the consolidation of their requests for preliminary and permanent injunctive
relief, but they contend that at the injunction hearing, the parties nevertheless
litigated—and that the court decided—the merits of the request for permanent
injunctive relief.
[¶24.] Even if consolidation were possible in the absence of a court order, the
circuit court correctly noted that it was precluded from deciding the merits of the
Hedlunds and Leimbach’s equitable claim for injunctive relief. The Hedlunds and
Leimbach’s equitable claim is premised on the same theories as their legal claim—
i.e., nuisance and trespass. River Bluff demanded a jury trial on the Hedlunds and
Leimbach’s legal claim, and the right to a jury trial “cannot be dispensed with,
except by the assent of the parties entitled to it; nor can it be impaired by any
blending with a claim, properly cognizable at law, of a demand for equitable relief in
aid of the legal action, or during its pendency.” Beacon Theatres, Inc. v. Westover,
359 U.S. 500, 510, 79 S. Ct. 948, 957, 3 L. Ed. 2d 988 (1959) (quoting Scott v. Neely,
140 U.S. 106, 109-10, 11 S. Ct. 712, 714, 35 L. Ed. 358 (1891)).
[I]f an issue common to both legal and equitable claims [were]
first determined by a judge, relitigation of the issue before a jury
might be foreclosed by res judicata or collateral estoppel. To
avoid this result, . . . when legal and equitable claims are joined
in the same action, the trial judge has only limited discretion in
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determining the sequence of trial[,] and “that discretion must,
wherever possible, be exercised to preserve jury trial.”
Parklane Hosiery Co. v. Shore, 439 U.S. 322, 334, 99 S. Ct. 645, 653, 58 L. Ed. 2d
552 (1979) (quoting Beacon Theatres, 359 U.S. at 510, 79 S. Ct. at 956). Indeed,
SDCL 15-6-65(a) itself requires that it “be construed and applied to save to the
parties any rights they may have to trial by a jury.” Thus, the “legal claims
involved in [this] action must be determined prior to any final court determination
of [the] equitable claims.” Dairy Queen, Inc. v. Wood, 369 U.S. 469, 479, 82 S. Ct.
894, 900-01, 8 L. Ed. 2d 44 (1962); see also, e.g., Parklane Hosiery, 439 U.S. at 334,
99 S. Ct. at 653; Mundhenke v. Holm, 2010 S.D. 67, ¶ 16, 787 N.W.2d 302, 306
(“[W]hen a case presents both a request for equitable relief and legal relief, the
proper course of action is for the trial court to bifurcate the issues and try the
equitable claims to the court and the legal claims to a jury.”).
Conclusion
[¶25.] Under SDCL 15-26A-3(5), the Hedlunds and Leimbach have the right
to appeal the circuit court’s denial of their request for preliminary injunctive relief.
Although the court erroneously concluded that monetary compensation would afford
the Hedlunds and Leimbach adequate relief in this case, the Hedlunds and
Leimbach nevertheless failed to demonstrate that they are likely to suffer
irreparable harm prior to a final disposition of the case on its merits. Therefore, the
Hedlunds and Leimbach have not demonstrated that the court’s denial of their
request for preliminary injunctive relief was reversible error. Finally, the court did
not order the trial of the action on the merits to be consolidated with the hearing on
the Hedlunds and Leimbach’s request for preliminary injunctive relief. Moreover,
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the court correctly acknowledged that because the Hedlunds and Leimbach sought
legal and equitable relief, and because River Bluff requested a jury trial, the court
was precluded from entering factual findings or legal conclusions that would have a
preclusive effect on the merits of the Hedlunds and Leimbach’s legal claims.
[¶26.] We affirm the circuit court’s denial of the Hedlunds and Leimbach’s
request for preliminary injunctive relief. We remand the case back to the court for
further proceedings on the Hedlunds and Leimbach’s legal and equitable claims. To
preserve River Bluff’s right to a jury trial, the Hedlunds and Leimbach’s legal
claims must be decided by a jury before the court decides whether to grant
permanent injunctive relief. Dairy Queen, 369 U.S. at 479, 82 S. Ct. at 900-01.
[¶27.] SEVERSON, KERN, and JENSEN, Justices, and KONENKAMP,
Retired Justice, concur.
[¶28.] KONENKAMP, Retired Justice, sitting for ZINTER, Justice,
disqualified.
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