Clear Springs Foods, Inc. v. Clear Lakes Trout Co.

Citations: 40 P.3d 119; 136 Idaho 761; 2002 Ida. LEXIS 9Docket: 26925

Court: Idaho Supreme Court; January 18, 2002; Idaho; State Supreme Court

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In the case of Clear Springs Foods, Inc. v. Clear Lakes Trout Company, the Idaho Supreme Court affirmed the SRBA district court's decision regarding a water rights dispute between two adjacent fish hatchery operators. Clear Lakes Trout Company (Appellant) contested the water rights of Clear Springs Foods, Inc. (Respondent), arguing that its water rights stemmed from a distinct water source, thus granting it priority despite being filed after the Respondent's claims. Both parties filed claims to water from springs flowing into Clear Lake, which feeds into the Snake River. Appellant claimed two rights from separate streams, with priority dates of June 23, 1966, and July 21, 1967, while Respondent claimed two rights from the same western stream, with priority dates of August 28, 1966, and January 24, 1972.

The Idaho Department of Water Resources (IDWR) determined that both parties' rights originated from the same hydrologically connected springs. Following a bifurcated trial, the special master concluded that Appellant's rights did not derive from a separate source and recommended decrees consistent with IDWR's findings. Despite Appellant's motions to amend and challenge the special master's recommendations, the SRBA district court upheld the special master's rulings, leading to the affirmation by the Supreme Court.

The SRBA district court issued partial decrees affirming Respondent's water rights, prompting Appellant to file a motion to alter or amend the judgment, which was denied, leading to this appeal. The appeal raises three key issues: 1) whether the district court erred in determining that the parties' water rights originated from the same source, 2) whether it erred in finding that Appellant's water rights had multiple points of diversion, and 3) whether attorney fees should be awarded on appeal.

Idaho Code 42-1412(5) permits the SRBA district court to conduct a non-jury trial on water right objections under Idaho Civil Procedure rules. The court may appoint a special master, whose findings of fact, once adopted by the district court, are considered the court's findings. The special master's conclusions of law, while persuasive, are not binding. The district court's conclusions of law are subject to free review by this Court.

In the discussion, Appellant claims the court erred in finding that their water rights derived from the same source as Respondent's. Appellant argues their rights stem from a separate eastern stream, which historically does not affect the western stream from which Respondent's rights originate, asserting that their water right should have priority. The Court clarifies that during a non-jury case, the trial court acts as a fact-finder and is not bound to view evidence in favor of the plaintiff. Under Idaho law, the IDWR director's report is considered prima facie evidence of water rights, and the burden is on Appellant to provide substantial evidence to prove that the eastern stream differs from the western stream to overcome the presumption established by the director’s report.

Substantial evidence is defined as relevant evidence that a reasonable mind could accept to support a conclusion, falling between a scintilla and a preponderance. In this case, both the special master and the SRBA district court concluded that the Appellant failed to prove its case regarding the source of water rights, leading to the granting of Respondent's motion for involuntary dismissal. The special master noted that the historical dividing point between the eastern and western streams remained unclear after the Appellant's presentation. It was determined that while there may have been two distinct stream flows initially, the Appellant's current diversion structures have merged these flows into a single eastern pool, making it impossible to identify the source of the water contained within. The SRBA district court found that all four water rights derive from a common water channel, not defined by their diversion points. The Appellant's arguments primarily contest the factual findings made by the special master and the district court. The responsibility for weighing evidence and meeting the burden of proof lies with the trier of fact, while appellate review focuses on whether the findings are supported by substantial evidence and if the conclusions of law are appropriately derived from these findings. Testimony regarding the historical dividing point was conflicting, with various estimates presented; however, some evidence suggested that the dividing point no longer exists due to dam construction, complicating the assessment of water sources from the eastern and western streams.

Testimony indicated a distinction between eastern and western streams, though conflicting evidence existed. The Appellant claimed the streams separated underwater but did not mix; eastern stream water flowed eastward while western stream water flowed westward. Appellant contended that Mr. Eastman’s testimony, which noted that Respondent did not divert from the eastern stream yet acknowledged both streams originated from the Snake River Aquifer, was overlooked. The Appellant bore the responsibility to provide substantial evidence proving the streams came from different sources, which the SRBA district court concluded was not met. Despite conflicting testimony, both the SRBA district court and the special master affirmed the involuntary dismissal motion, agreeing with the director's report that Appellant failed to prove its claims.

Regarding the point of diversion, a 1980 agreement allowed Respondent’s dike construction on Appellant's property while ensuring modifications that benefited Appellant. This agreement included provisions for water rights allocation and allowed disputes over priorities. Appellant argued the SRBA district court incorrectly ruled that this agreement barred it from challenging the changes in Respondent's diversion points, claiming its consent was limited to the western stream. Moreover, Appellant alleged that the SRBA district court erroneously found it had waived objections to diversion points.

However, the special master noted that despite the source being the primary dispute, Appellant also contested the point of diversion. Appellant’s attorney had stated at trial that the source was the only issue, and the 1980 agreement validated Respondent's diversion points. The special master reasoned that even if Appellant was not estopped, its arguments regarding diversion would still fail. The SRBA district court upheld the special master's findings, determining that Appellant had abandoned its point of diversion argument by consistently framing the dispute as solely about the source in pre-trial documents and during the trial.

The agreement permits certain disputes regarding party priorities but explicitly excludes disputes over the point of diversion. The Respondent is allowed to maintain its diversion works, provided changes benefit the Appellant. Evidence indicates the Appellant consistently identified the source as the sole issue in the initial trial phase. The SRBA district court concluded that the Appellant is estopped from raising the diversion argument, a finding supported by substantial evidence. Consequently, the Court upheld the decision to prevent the Appellant from presenting evidence on the point of diversion. Regarding attorney fees, the Respondent's request was denied as the Court did not find the appeal to be frivolous or without merit. The Court affirmed the SRBA district court's determination that both parties' water rights originate from the same source, upheld the involuntary dismissal of the Appellant's claims, and awarded costs to the Respondent, Clear Springs Food, Inc., without granting attorney fees. Chief Justice TROUT and Justices SCHROEDER, KIDWELL, and McDERMOTT concurred.