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City of Blackwell v. Wooderson

Court of Appeals of Oklahoma, Division III

May 12, 2017

CITY OF BLACKWELL, Plaintiff/Appellant,

          Mandate Issued: 06/06/2017


          Dale E. Cottingham, Dean A. Couch, Lewis T. LeNaire, GableGotwals, Oklahoma City, Oklahoma, for Plaintiff/Appellant,

          Kaylee P. Davis-Maddy, Doerner Saunders Daniel & Anderson, LLP, Oklahoma City, Oklahoma, for Defendants/Appellees.

          Bay Mitchell, Presiding Judge

         ¶1 Plaintiff/Appellant the City of Blackwell (the "City") appeals the trial court's grant of summary judgment in favor of Defendants/Appellees Bruce Wooderson, Matthew Moreland, Lisa Moreland, and Jimmie D. Moreland (collectively, "Defendants") in City's action seeking temporary and permanent injunctive relief against Defendants related to the parties' water rights on the Chikaskia River. The City also appeals the trial court's denial of its Motion for Leave to Amend Petition. Following our review of the record and applicable law, we REVERSE the decision of the trial court and REMAND for further proceedings.

         ¶2 Defendants are farmers who grow and sell crops in Grant County and Kay County and who hold various surface water permits from the Oklahoma Water Resources Board ("OWRB") which give them the right to draw a certain amount of water (measured by both volume and rate of flow) from the Chikaskia River and its tributaries to irrigate their crops. The City holds a senior and superior surface water permit which also allows it to draw a certain amount of water from the Chikaskia River to provide its residents with a reliable water supply. The City filed suit against Defendants March 11, 2014 alleging that Defendants' irrigation practices reduced the flow of water at the point in the Chikaskia River where the City drew its water ("the diversion point"), causing the City's pumps to cavitate (draw more air than water) and compelling the City to cease drawing water otherwise authorized by its senior appropriation right. The City also claimed this inability to draw water caused it to issue proclamations restricting municipal water use. The City sought to enjoin the Defendants from irrigating their crops when two gauges maintained and monitored by the United States Geological Survey ("USGS"), one of which was located upstream from the parties' diversion points and one of which was located downstream from the City's diversion point, measured the volume of the river to be at certain levels or below.

         ¶3 The parties proceeded through initial discovery, and the City moved for a hearing on its request for a temporary injunction. Following the hearing on June 20, 2014 and continued to July 8, 2014, the trial court ruled from the bench at the conclusion of the hearing that the City had not met its burden of proof for the court to issue a temporary injunction enjoining Defendants from drawing water when the river dropped to a certain level at those two measuring points. The City did not appeal that ruling. On December 24, 2014, the City filed its Motion for Leave to Amend Petition. The City sought to amend its petition to request a declaratory judgment to determine at which point the Defendants' irrigation practices constituted actionable interference in the City's superior water right. Further, the City's proposed Amended Petition removed any request for injunctive relief. By response filed January 7, 2015, Defendants opposed the City's Motion for Leave to Amend Petition arguing that (1) the City's request for leave to amend was unduly delayed, (2) the proposed Amended Petition essentially sought to relitigate the matters determined at the temporary injunction hearing, (3) the OWRB had determined that there was enough water for all parties to exercise their water rights; and (4) the interests of justice would not be served by allowing the City to amend its original Petition. On January 7, 2015, Defendants also filed a Motion for Summary Judgment as to the City's original Petition arguing that the undisputed facts presented at the temporary injunction hearing established that the City was not entitled to a permanent injunction and the City could not show that Defendants' irrigation practices damaged the City.

         ¶4 At a hearing held February 11, 2016, the trial court denied the City's Motion for Leave to Amend and granted summary judgment in favor of Defendants. The City appealed these rulings arguing that, as to the denial of its Motion for Leave to Amend Petition, the trial court erred in not adhering to the liberal standing of granting leave to amend pleadings when justice so requires and by failing to find that its amendment would be prejudicial to Defendants. Additionally, the City argues the trial court erred in refusing leave to amend on grounds of futility and by finding that the controversy between the parties was not sufficiently actual to justify declaratory relief. As to the grant of summary judgment in Defendants' favor, the City argues that the trial court's judgment was premature as a matter of law after the denial of a temporary injunction because the hearing was not consolidated into a trial on the merits and no schedule for further discovery had yet been established.

         ¶5 First, we review the trial court's refusal to grant the City leave to amend its Petition. The denial of leave to amend is a matter of discretion, which will not be disturbed unless that discretion is abused. Prough v. Edinger, Inc., 1993 OK 130, ¶8, 862 P.2d 71, 75. The trial court's discretion regarding whether to allow an amendment is limited by 12 O.S. §2015, which requires that leave to amend be given if justice requires. Id. However, a court does not abuse its discretion where denial of leave to amend is based on: 1) undue delay; 2) bad faith or dilatory motive by the movant; 3) repeated failure to cure deficiencies by amendments previously allowed; 4) undue prejudice to the opposing party; or 5) futility of amendment. Prough, ¶9.

         ¶6 The City's proposed Amended Petition asked the trial court to issue a declaratory judgment ruling upon "the point at which the reduced flow of the Chikaskia River at [the City's] pump withdrawal diversion point resulting from Defendants'... diversions of water... constitutes actionable impairment and/or interference with [the City's] vested appropriation rights under 82 O.S. §105.5." [1] In their briefing to the trial court, Defendants argued the City's Motion for Leave to Amend should be denied because the claims presented in the proposed Amended Petition were futile; specifically, that determination of the declaratory judgment claim would essentially be relitigating the claims already presented to the trial court at the temporary injunction hearing. [2]

         ¶7 The City countered that opposing a party's motion for leave to file an amended petition based on futility was "functionally equivalent to the question whether a complaint may be dismissed for failure to state a claim...." Gohier v. Enright, 186 F.3d 1216, 1218 (10th Cir. 1999). See also Bittle v. Okla. City University, 2000 OK CIV APP 66, ¶¶11-12, 6 P.3d 509, 513-14 (stating that a trial court's denial of leave to amend based on "futility" meant the trial court "must have implicitly believed... [the plaintiff] could not amend to state a cognizable claim..."). The City argued Defendants' position failed to recognize the difference between a claim for injunctive relief and the relief provided by the Oklahoma Uniform Declaratory Judgments Act, 12 O.S. §§1651-1657 ("DJA" or "Act"), which gives district courts authority to "determine rights, status, or other legal relations" under "any statute... whether or not other relief is or could be claimed...." Id. at §1651. On the other hand, to obtain the "extraordinary remedy" of temporary injunctive relief, the City needed to show it was entitled to such through "clear and convincing evidence." E.g. Lippitt v. Farmers Ins. Exchange, 2010 OK CIV APP 48, ¶6, 233 P.3d 799, 801. The City argued, even if it did not meet this high burden for injunctive relief, that did not foreclose the possibility of declaratory relief. The City further noted that, since the time the temporary injunction hearing was held, Defendants had applied for and received from the OWRB seven new surface water permits on the Chikaskia River.

         ¶8 To invoke the jurisdiction of the court under the DJA, several conditions must exist:

(1) [T]here must exist a justiciable controversy; that is to say, a controversy in which a claim of right is asserted against one who has an interest in contesting it; (2) the controversy must be between persons whose interests are adverse; (3) the party seeking declaratory relief must have a legal interest in the controversy, that is to say, a legally protectible ...

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