Hedlund v. River Bluff Estates, LLC

908 N.W.2d 766

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.

28289

Supreme Court of South Dakota.

CONSIDERED ON BRIEFS ON JANUARY 8, 2018

OPINION FILED February 28, 2018

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.

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 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.

[¶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 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.

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 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...