Appeal from the District Court of Ramsey County, Northeast Judicial District, the Honorable John C. McClintock, Judge.
The opinion of the court was delivered by: Maring, Justice.
[¶1] Kenneth Hager, Agathy Baker, Irene Streifel, Raymond Hager, Cecelia Parkos, and Bernice Bays (collectively "Hagers") appeal from a judgment and an amended judgment: (1) dismissing their claims against the City of Devils Lake ("City") for inverse condemnation, nuisance, and negligence; (2) determining the City had an irrevocable permissive license to maintain a storm sewer system upon their land; and (3) ordering them to pay a portion of the City's costs. We modify the judgment and, as modified, affirm, concluding: (1) res judicata and collateral estoppel did not preclude the City from raising a statute of limitations defense; (2) the district court did not err in concluding the Hagers' claims were barred by the statute of limitations; (3) the City acquired an easement by estoppel to maintain a storm sewer system upon the Hagers' property; and (4) the district court did not abuse its discretion in awarding costs to the City.
[¶2] The disputes in this case center upon two parcels of land owned by the Hagers, which the parties have denoted the larger parcel and the smaller parcel. The larger parcel contains approximately 170 acres and lies contiguous to the eastern edge of Hagers' Northdale Subdivision of Devils Lake. The smaller parcel is a 72 foot by 50 foot strip of land within the city limits in Hagers' Northdale Subdivision.
[¶3] The Hagers originally owned the land which now comprises Hagers' Northdale Subdivision, as well as the contiguous larger parcel to the east. The Hagers requested the City to construct a storm sewer system to facilitate development of a residential subdivision. In response to the Hagers' request, the City constructed a storm sewer system including two storm water pipelines which diverted storm water onto the larger parcel. The project was completed in 1980 at a cost of approximately $144,000. The City paid $18,000 of these costs, with the remainder assessed against property benefitted by the project, including property owned by the Hagers. The Hagers ultimately developed their land west of the larger parcel into a residential subdivision, called Hagers' Northdale Subdivision, and sold the lots. The Hagers allege that, in 1991, the City installed a culvert and dug drainage ditches on the larger parcel, resulting in additional storm water being discharged onto the larger parcel. The Hagers contend the City's construction and maintenance of the storm sewer system hindered their use of, and restricted their access to, the larger parcel, resulting in a taking of the property by inverse condemnation.
[¶4] The Hagers also contend that, during the summer of 1998, the City entered upon the smaller parcel without their permission and placed municipal utilities on and under the property. They also allege that the City graded the property and made it into a road. They contend that the City's actions constituted a taking of the property by inverse condemnation.
[¶5] In 2001, the Hagers brought an action against the City seeking damages for the City's placement of municipal utilities on the smaller parcel, damages for trespass for the City's discharge of storm water onto the larger parcel, and compensation for the City's removal and disposal of the Hagers' personal property from the smaller parcel in 1999. The parties stipulated that only two issues, compensation for removal of the Hagers' personal property on the smaller parcel and whether the City had acquired a prescriptive easement on the larger parcel, would be tried, and all other issues and claims would be dismissed without prejudice. After a bench trial, the district court found that the City had trespassed upon the smaller parcel and removed items belonging to the Hagers, and the court awarded damages of $100, which were offset by a bill the Hagers owed to the City for removing other debris from the property. The court further held that, because the Hagers had requested the City to construct the storm sewer system to aid in the development of their adjoining property, the City's use of the property on the larger parcel was permissive and did not give rise to a prescriptive easement.
[¶6] In July 2005, the Hagers brought the present action alleging four claims: (1) inverse condemnation for drainage of storm water onto the larger parcel; (2) nuisance created by drainage of storm water onto the larger parcel; (3) negligent design and construction of the storm sewer system; and (4) inverse condemnation for installation of municipal utilities on and under the smaller parcel. The City counterclaimed, seeking easements for its storm sewer system on the larger parcel and fee simple title to the smaller parcel if the Hagers were successful on their inverse condemnation claim.
[¶7] The City moved for summary judgment, seeking dismissal of the Hagers' claims and granting of an irrevocable permissive license upon the larger parcel. The district court concluded the statute of limitations had run on all of the Hagers' claims and ordered the claims dismissed. The court also concluded that the City had an irrevocable permissive license upon the larger parcel to maintain the existing storm sewer system. The City moved for reconsideration for the district court to correct a perceived clerical error and to establish a precise legal description of the portion of the larger parcel subject to the irrevocable license. After a hearing, the court reaffirmed its prior holdings and adopted a metes and bounds description of the property subject to the City's irrevocable license. The court also ordered the Hagers to pay the City's costs in the amount of $13,872.57, and judgment was entered on December 4, 2008. On December 8, 2008, the Hagers filed objections to the taxation of costs and disbursements. On January 30, 2009, the Hagers filed an appeal from the December 4 judgment. The district court subsequently ordered that the taxation of costs be amended, and on March 12, 2009, an amended judgment was entered reducing the costs awarded to the City to $6,936.28. The Hagers filed an amended notice of appeal from both judgments on March 16, 2009.
[¶8] The Hagers contend that, because the only defense raised by the City in the first action to the trespass claims on the larger parcel was a prescriptive easement, resolution of that issue in the first case prevents relitigation of the City's liability for inverse condemnation under the doctrines of res judicata and collateral estoppel. Thus, the Hagers contend, the City was barred from raising new defenses based upon the statute of limitations in this case. The Hagers' argument is premised upon a misinterpretation of the effect of a dismissal without prejudice.
[¶9] The parties in this case agreed to try only two issues in the first case: compensation for personal property removed from the smaller parcel and whether the City had acquired a prescriptive easement on the larger parcel. The parties expressly stipulated that all other issues and claims, including the trespass claim for damages on the larger parcel, were dismissed without prejudice.
[¶10] We outlined the application of res judicata and collateral estoppel in Riverwood Commercial Park, L.L.C. v. Standard Oil Co.,Inc., 2007 ND 36, ¶ 13, 729 N.W.2d 101 (quoting Ungar v. North Dakota State Univ., 2006 ND 185, ¶ 11, 721 N.W.2d 16):
Res judicata, or claim preclusion, prevents relitigation of claims that were raised, or could have been raised, in prior actions between the same parties or their privies. Thus, res judicata means a valid, existing final judgment from a court of competent jurisdiction is conclusive with regard to claims raised, or those that could have been raised and determined, as to [the] parties and their privies in all other actions. Res judicata applies even if subsequent claims are based upon a different legal theory. Collateral estoppel, or issue preclusion, forecloses relitigation of issues of either fact or law in a second action based on a different claim, which were necessarily litigated, or by logical and necessary implication must have been litigated, and decided in the prior action.
[¶11] Dismissal of a claim or action without prejudice has no res judicata effect because there has been no decision on the merits and no right or remedy of the parties is affected:
A dismissal without prejudice is, by definition, not res judicata:
"A dismissal `without prejudice' allows a new suit to be brought on the same cause of action. The words `without prejudice', as used in judgment, ordinarily import the contemplation of further proceedings, and, when they appear in an order or decree, it shows that the judicial act is not intended to be res judicata of the merits of the controversy."
Black's Law Dictionary 1603 (6th ed. 1990). We have previously held that a dismissal without prejudice has no res judicata effect:
"A dismissal `"without prejudice," means that no right or remedy of the parties is affected, the use of the phrase simply shows that there has been no decision of the case upon the merits, and prevents the defendant from setting up the defense of res adjudicata.'"
Sellie v. North Dakota Insurance Guaranty Ass'n, 494 N.W.2d 151, 159 (N.D. 1992) (quoting Olson v. Coalfield School District No. 16, 54 N.D. 657, 210 N.W. 180, 181-182 (1926)).
Furthermore, the court's order of dismissal clearly indicated the court envisioned further proceedings:
"The Court is in doubt-because of the passage of time -whether it presently has jurisdiction to continue with this proceeding based upon the petition filed in this case dated April 27, 1994.
"Accordingly, in order to resolve such doubt for the benefit of all interested persons (and particularly [Cindy]) the Court does hereby dismiss the petition herein without prejudice to the right of the petitioner to commence a new and separate action based upon the same facts as alleged herein, or those facts plus any new and additional ones having come to the attention of the petitioner."
In re C.M., 532 N.W.2d 381, 382-83 (N.D. 1995). As we further explained in Albrecht v. Metro Area Ambulance, 1998 ND 132, ¶ 13, 580 N.W.2d 583, "[a]fter a court enters an order of dismissal without prejudice, the action is ended, and there is no longer an action pending before the court."
[¶12] The Hagers argue that, because the City had not raised other defenses to their trespass claim in the first action, "[r]esolution of the prescriptive easement issue amounted to adjudication of the liability portion of the claim for trespassing upon the larger parcel." When the district court resolved the prescriptive easement issue, however, the claim for damages for trespass had been dismissed without prejudice and there was no longer a trespass claim pending before the court. See id. The court at that point could not determine the liability portion of a claim which was no longer before the court. The only res judicata or collateral estoppel effect of the earlier action arose from the sole related issue actually tried in the prior action: the City would be collaterally estopped to again raise the issue of a prescriptive easement. Beyond that, when the Hagers brought their second action raising inverse condemnation, nuisance, and negligence claims relating to the discharge of water onto the larger parcel, it was a new action and the City was entitled to raise any and all other defenses it wished, whether raised in the first action or not. If the parties had intended that the City be precluded from raising new defenses if the Hagers brought a subsequent action, they could have explicitly provided so in their stipulation to dismiss without prejudice.
[¶13] We conclude the City was not barred from raising defenses based upon the statute of limitations in this case.
[¶14] The Hagers contend that the district court erred in concluding that their claims were barred by the applicable statutes of limitations.
[¶15] The Hagers contend that the statutes of limitations on their inverse condemnation, nuisance, and negligence claims relating to the larger parcel have not run because new causes of action, and new limitations periods, arise each time storm water is discharged onto the larger parcel. In support of their argument, the Hagers rely upon Rynestad v. Clemetson, 133 N.W.2d 559 (N.D. 1965). Rynestad, however, is not controlling under the facts in this case.
[¶16] Rynestad had sued several neighboring landowners, alleging these landowners through "various ditching operations" had caused excess surface water to flow onto Rynestad's land "in increased volume and in a different manner than they ordinarily would have come upon the plaintiff's land in the natural course of drainage." Id. at 562. Rynestad also sued the township supervisors, alleging their failure to maintain and clear ditches along township roads of accumulated soil, sand, and debris had caused excess water to flow onto Rynestad's land. Rynestad sought an injunction and writ of mandamus ordering the neighboring landowners to fill and level the drainage ditches they had constructed and ordering the township supervisors to open the ditches along the township roads. Rynestad also sought damages for past injuries done to her land by the drainage ditches.
[¶17] The district court held Rynestad was not entitled to an injunction or a writ of mandamus and dismissed her claims. This Court reversed, holding that Rynestad was entitled to injunctive relief and a writ of mandamus. The Court ordered the case remanded to the district court with instructions to order the neighboring landowners to "fill drainage ditches which they have constructed across their property" and to order the township supervisors "to maintain the ditches along the township roads described in the plaintiff's complaint so as to allow the surface water to follow its natural course of drainage." Id. at 566. In so holding, this Court addressed the defendants' statute of limitations defense:
All of the defendants have set up the affirmative defense of statute of limitations, contending that the plaintiff's cause of action, if any she had, is barred by such statute. We do not believe that the plaintiff's action is so barred. Improperly draining surface water onto the land of another is an injury for which action may be maintained by the person having title to, or possession of, the property onto which the water is drained, at the time the injury was caused. If damages are recurrent or continuing, the remedy is by successive actions ...