Opinion
Case No. 2:97CV927DAK
November 26, 2003
ORDER
This matter is before the court on the Plaintiff State of Utah's (the "State") Motion to Set Aside 4481 Stipulation and Related Clinger Stipulation and Judgment, the State's Motion for Leave to File Amended Complaint to Determine Utah Lake High Water Mark at Statehood, the Defendant Landowners' First Motion for Entry of Final Judgments, the United States of America's Motion to Reconsider the Court's January 3, 2003 Order as to the United States of America, and the United States' Motion to Strike Plaintiffs Supplemental Memorandum Regarding the United State's Motion to Reconsider. The court held a hearing on these motions on October 8, 2003. At the hearing, the State was represented by J. Mark Ward, Defendant Landowners were represented by Robert C. Fillerup, the Clinger Family Partnership ("Gingers") was represented by M. Dayle Jeffs, and the United States was represented by Bill Ryan. The pro se defendants remaining in the case did not participate at the hearing, The court took the motions under advisement. The court has carefully reviewed the parties' motions, memoranda, affidavits, and exhibits as well as the facts and law relevant to the motion. Now being fully advised, the court enters the following Order.
DISCUSSION Motion to Set Aside 4481 Stipulation and Related Clinger Stipulation and Judgment
As of the court's ruling on the motions for summary judgment in September 2001, the only matters remaining in this case were the examination of evidence to determine where the boundary should be located for the property owners, other than the Davises, and to address the area referred to as the Powell Slough. Because the court determined that the process of establishing the boundaries would consume a significant amount of attorney and court time and resources, it certified the case for appeal so the State could challenge the legal basis for the court's ruling. The State did not appeal. Rather, the State sought leave to amend its Complaint to assert federal claims it believed were quit claimed to it in its settlement with the United States.
In July 2002, when the State was preparing its Motion for Leave to File a Fourth Amended Complaint, the State entered into a stipulation with the Defendant Landowners and the Clingers in order to obtain a thirty-day extension of time ("4481 Stipulation"). The Stipulation stated that from the time of the original federal patent Defendants and their predecessors-in-interest have continually used the land lakeward from the federally surveyed meander line to an elevation of no higher than 4481 feet, except at such times as water levels have interfered with their historic use. The Stipulation further states: "The Defendants need put on no further evidence to support their claims of use of the land between the meander and 4481 feet above sea level to support a finding by the court that at all relevant times the ordinary high water mark on Utah Lake was not higher than 4481 feet above sea level," On January 3, 2003, the court denied the State's request for leave to file a Fourth Amended Complaint. The State now seeks to set aside the 4481 Stipulation.
Furthermore, although this court had always assumed, based on the representations of the parties at several hearings in this case, that the area of the Powell Slough would be addressed separately after the conclusion of the other portions of the lake, the 4481 Stipulation did not exclude the Powell Slough area, Because the federal assignment of claims to the State excluded the Powell Slough but the 4481 Stipulation did not, the State could not stop the Clingers from quieting title to their property in the Powell Slough area down to the 4481 level. The State's former counsel stipulated with the Clingers to quiet title at the 4481 level and this court approved the stipulation. Because it has moved to set aside the 4481 Stipulation, the State also moves to set aside this resulting stipulation with and judgment for the Clingers.
1. 4481 Stipulation
The State contends that there are good factual and legal grounds for setting aside the 4481 Stipulation. The State argues that the 4481 Stipulation is invalid because it is manifestly unjust, interferes with the public trust doctrine, and intrudes on the court's province, The State further argues that even if the Stipulation was valid, its language does not establish the boundary.
The court will address the State's second argument first because it must first analyze the scope and effect of the 4481 Stipulation before it can properly analyze whether the stipulation is manifestly unjust, interferes with the public trust doctrine, or usurps judicial authority.
The language of the 4481 Stipulation states: "The Defendants need put on no further evidence to support their claims of use of the land between the meander and 4481 feet above sea level to support a finding by the court that at all relevant times the ordinary high water mark on Utah Lake was not higher than 4481 feet above sea level," This language does not preclude the State from putting on evidence to counter the stipulation. It also does not preclude the landowners from putting on further evidence to support the 4481 level if they have such evidence.
The court's ruling on the previous summary judgment motions quieted title in the Davises because the evidence the Davises provided as to historical use of the property was not rebutted by the State, The remaining landowners were required to put on evidence to establish the level to which the land had been historically used. The 4481 Stipulation merely establishes a prima facie case for the 4481 level, which case can be rebutted by the State or supplemented by the landowners. Nothing in the language of the Stipulation mandates that the court accept or find that the boundary level is 4481, it only states that the Stipulation may be a basis for supporting a finding by the court. Moreover, it does not preclude other supporting evidence from being submitted to support a finding by the court.
The court is concerned by allegations raised by the State regarding the landowners reliance on the stipulation as setting a boundary. State land officials assert that they have recently discovered that the lake bed in the Provo Bay area below two of the defendants' properties has been fenced, filled or diked. Defendants' counsel wrote to the State that all of the defendants "can certainly farm, fence, drain, dike, dredge and do whatever else they want to on the land [down to the 4481 level] in relation to a fanning operation." This type of action is not supported by the Stipulation alone and raises serious concerns. The boundaries of the landowners' properties have not been set by this court and no actions should be taken by landowners on land that is not included in the landowners' federal patent or tax parcel because such lands may potentially be sovereign lands.
As to the State's first argument to set aside the 4481 Stipulation, the State relies on a standard for withdrawing a stipulation from In re Durability Inc. v. Sovereign Life Insurance Co., 212 F.3d 551, 556 (10th Cir. 2000). In that case, the court stated that "if . . . the request to withdraw or amend the stipulation is made before significant prejudice to the other parties would result, promotes important equitable and legal considerations, and is not controlled by a rule of procedure, the party seeking to withdraw must simply show good reason for the request." The State contends that there are good reasons for setting aside the 4481 Stipulation because it is manifestly unjust. Wheeler v. John Deere Co., 935 F.2d 1090, 1098 (10th Cir. 1991) ("Stipulations are not absolute . . . and may be withdrawn whenever necessary to prevent manifest injustice.").
The State claims that the facts demonstrate that the 4481 level is not near the ordinary high water mark ("OHWM") at statehood. The State has submitted several maps and elevation readings from the regional engineer that appear to show that the 4481 level is too low to be the OHWM at the time of statehood and that, currently, the level is several thousands of acre feet below water. Such a boundary would privatize essentially all of Provo Bay because the bed of it sits above 4481. The landowners rely on a map used by the court in Jacobsen combined with an elevation map from the Bureau of Reclamation that puts the level of a well by Peay Cabin referred to by the Jacobsen court at the 4481 elevation. Although the evidence as to OHWM presented by the State suggests, at this point, that the OHWM is above 4481, the evidence and arguments made by the landowners precludes a finding that the 4481 level could not be supported by any facts. Furthermore, given the court's narrow reading of the 4481 Stipulation, the State may submit its evidence regarding the level of the lake in further proceedings relating to the proper location of the boundaries on each parcel Because there is some factual basis for the 4481 Stipulation and the State is not precluded from offering further evidence to rebut the 4481 level, the court concludes that the Stipulation is not manifestly unjust.
The State further argues that a court may set aside a stipulation "when points of law requiring judicial determination are involved." First of Denver Mortgage Investors v. C.N. Zundel, 600 P.2d 521, 527 (Utah 1979) (setting aside stipulation as to relative priority of competing liens). However, the determination of what liens have priority is clearly a legal determination whereas the location of the OHWM at statehood or historic use by the property owners are factual determinations, Moreover, the 4481 Stipulation states that the landowners need put on no further evidence of the OHWM to support a finding by the court. The language of the 4481 Stipulation acknowledges that the court will make the final legal determination of the OHWM. Therefore, the stipulation does not improperly intrude on the province of the court to weigh the evidence and make legal determinations. Accordingly, there is no basis for setting aside the Stipulation on these grounds.
The State next argues that the court should set aside the 4481 Stipulation because the State's lead counsel lacked actual or apparent authority to sign it and State land officials lacked knowledge of the material facts sufficient to ratify it. The State contends that the Stipulation is not the type of action that a lawyer is entitled to do without authority from his client. These arguments all assume that the Stipulation sets the boundary at 4481 and, in essence, settles the case with the landowners. Although the State's prior counsel would need his clients approval for settlement, the Stipulation does not constitute a settlement.
Moreover, "[t]hose who act through agents are customarily bound by their agents' mistakes. It is no different when the agent is an attorney." Gripe v. City of Enid, Okla., 312 F.3d 1184 (10th Cir. 2002). The Tenth Circuit has also held that "[a]n attorney is clothed with sufficient apparent authority to bind a client for services that are routinely and directly connected with the representation." City of Wichita, Kan. v. Southwestern Bell Tele. Co., 24 F.3d 1282, 1288 (10th Cir. 1994). Accordingly, the Tenth Circuit found that a city attorney bound the city when he agreed to a list of noncompetitive services with a telephone company even though the agreement was entered into without approval of the city commission because it was not outside the scope of the attorney's authority.
In this case, the State's counsel had the authority to enter into a factual evidentiary stipulation such as the 4481 Stipulation even if State land officials never authorized or knew about the 4481 Stipulation when it was entered into. The Stipulation does not amount to a settlement agreement that would require a client's approval. It merely agrees that there is prima facie evidence to support 4481 as the level to which the landowners have historically possessed or used. It does not set the ultimate boundary. Therefore, there is no basis for overturning the 4481 Stipulation based on a lack of authority.
The State further cites to the Utah Constitution and Utah statutes providing that the State holds its sovereign lands in trust for the people and that it can only be exchanged, sold, or leased for the purpose of serving the public interest. The State argues that neither its former counsel nor the State land officials had authority to enter the 4481 Stipulation under the statutory and constitutional law because the Stipulation is contrary to and interferes with the public trust doctrine. However, the 4481 Stipulation does not "deal away" sovereign lands and is, therefore, not void, The State's argument incorrectly assumes that the lands between the meander line and 4481 are State lands. However, this court has not concluded where the OHWM at statehood is located. Until that determination is made, the lands are not sovereign lands subject to the public trust doctrine.
Therefore, the court finds that there is no basis for setting aside the 4481 Stipulation. However, based on the court's construction of the scope and effect of the 4481 Stipulation, it is now the State's burden to put on evidence to rebut the 4481 level and show that the defendant landowners have not historically used or possessed their properties down to the 4481 level. The court will then make factual findings and legal conclusions based on the evidence before it.
2. Clinger Stipulation and Judgment
The State argues that the same reasons for setting aside the 4481 Stipulation apply to the Clinger stipulation and resulting judgment. However, the Clingers not only entered into a Stipulation with the State, they also obtained a judgment based on the Stipulation. Therefore, relief from such judgment is only available under Federal Rule of Civil Procedure 60(b),
The Clingers argue that under Tenth Circuit case law Rule 60(b) cannot be used to set aside a stipulation. In Cashner v. Freedom Stores, Inc., 98 F.3d 572, 578 (10th Cir. 1996), the court stated, "Rule 60(b) does not provide relief for mistakes made in the negotiations of a contract or a stipulation (which is treated like a contract). Rather, Rule 60(b)(1) deals with mistakes that occur in the judicial process of enforcing whatever rights might arise from the historic facts." In Cashner, the party's "mistake arose in connection with negotiating the underlying stipulation and not in connection with the subsequent enforcement of the Stipulation by the Court," Id. In this case, the Clingers argue that Rule 60(b) does not provide a basis for relief to the State for the mistake it made in entering into the stipulations.
However, Cashner expressly recognizes that "mistakes," entitled to Rule 60(b) relief, include situations where "an attorney in the litigation has acted without authority from a party." Id., at 576. In Cashner, the court reversed an order setting aside a stipulation because it was "undisputed that [the party] consciously entered into the stipulation with advice of counsel." Id. at 578. In this case, although the State's prior counsel may have had authority to enter into the 4481 Stipulation without the consent of his client, he also entered into a Stipulation with the Ginger's that settled the case and allowed judgment to be entered in favor of the Clingers. This type of stipulation requires the consent of a client. It is undisputed, in this case, that State land officials did not learn of the stipulation and judgment with the Clingers until new counsel was appointed and given time to go through the court record. The State's prior counsel did not have the authority to enter into the Stipulation and Judgment with the Clingers without the approval of State land officials.
Furthermore, the court does not find any prejudice in returning the Clingers to the position of the other remaining landowners who must complete the process of determining the correct boundary of their respective properties. Moreover, to the extent that the Clinger stipulation and judgment relied on the 4481 Stipulation, it relied on an improper construction of the language in the 4481 Stipulation. Accordingly, the Clinger Stipulation and Judgment is vacated.
State's Motion for Leave to File Amended Complaint
The State seeks leave to file an Amended Complaint to prove the location of the OHWM at statehood. The States asserts that the other theories it has pursued in this litigation were in essence fall back positions and the State asks for leave to try to prove the boundary the way it should have from the beginning.Defendant Landowners argue that the State's one paragraph request to file an Amended Complaint does not satisfy the prerequisites for a motion to amend, In determining whether to grant leave to amend, courts consider the presence or absence of undue delay, bad faith, dilatory motive, repeated failure to cure deficiencies in prior amendments, and prejudice to opposing parties. See Frank v. US West, Inc., 3 F.3d 1357, 1365 (10th Cir. 1993).
In its Motion for Summary Judgment to use the meander line as a default boundary, the State argued that it is impossible to establish the location of the OHWM at statehood and it submitted expert testimony to that effect. The State now argues that there is additional scientific evidence and photographic evidence that it can use to set the boundary and that this evidence should allow the State to amend its Complaint, However, such evidence has been available to the State from the inception of this case. The State simply chose not to pursue it.
In its Motion to Reconsider the Court's September 17, 2001 Order, the State argued that the real question now facing the court was what method can be used to establish a boundary based on the OHWM. The State then proposed four alternatives, one of which was taking scientific evidence on the location of the OHWM prior to Statehood. The Court's November 28, 2001 Order denied the State's Motion to Reconsider, stating that "the only determination for the court to decide now is what land the defendants possess. The State had adequate opportunity to present these alternative methods for ascertaining a boundary in its motion for summary judgment or in opposition to the defendants' motions for summary judgment." Therefore, the court declined to consider the alternative methods in the State's motion to reconsider.
The court still finds that the appropriate determination to be made at this point in the proceedings is an establishment of the landowners' historic title, usage, and possession in order to set the appropriate boundary. To the extent the State has scientific evidence of water levels, pictures, or other evidence relevant to a determination of what land was historically possessed by Defendants and their predecessors in interest, it can be presented in further proceedings on this issue. The State's Amended Complaint only reiterates issues that have already been litigated in the case and rejected by the court. Therefore, the court concludes that an amended complaint is not necessary or appropriate.
The Landowners ask for attorneys fees to be awarded because the State admits that it is just now trying "to come through the front door" to litigate the primary issue in this case. Based on that statement, the Landowners assert that the State has been acting in bad faith until this point in the litigation. The court does not find this statement to be a confession of bad faith. The State is merely requesting an opportunity to squarely address the boundary issue. Therefore, attorneys fees are not justified.
Defendant Landowners' First Motion for Entry of Final Judgments
The Landowners are moving to have final judgments entered at the 4481 level based on the 4481 Stipulation, The State opposes entry of final judgments based on their motion to set aside the 4481 Stipulation. Because the court construes the 4481 Stipulation to allow the State to put on rebuttal evidence of the 4481 level, the court finds Defendant Landowners' motion for entry of final judgments premature, There has been no final determination of the Landowners* historic use of the lands as was required by the court's previous summary judgment order. Therefore, the Landowners' motion for entry of final judgments is denied without prejudice at this time. The Landowners' may renew their motion after all of the evidence as to the proper boundary is presented.
United States' Motion to Reconsider January 3, 2003 Order As To United States
The United States asks the court to reconsider its Order of January 3, 2003 insofar as it applies to the interests of the United States in the Powell Slough. The only remaining interest the federal government has at this point is in Powell Slough, The United States advances several arguments for reconsidering the court's Order. However, the court never intended its January 3, 2003 Order to apply to the Powell Slough. At several hearings in this case, dating back to at least the State's Motion for Summary Judgment, the parties represented to the court that Powell Slough would be dealt with separately after the boundaries for the other portions of the lake were determined. Based on these representations, the court did not specifically state that the Powell Slough was excluded from its Order, however, it was not the court's intent for the Order to apply to the Powell Slough. There is no prejudice to parties regarding the assertion of claims in the Powell Slough area because that portion of the lake was always excepted. Therefore, the United States' motion is granted to the extent that it seeks a ruling that the January 3, 2003 Order does not apply to its interests in the Powell Slough.
Although there is now some dispute as to what area the Powell Slough encompasses, the parties will have to address that issue in further proceedings.
To the extent that the United States asks the court to reconsider specific language in the January 3, 2003 Order that is adverse to the United States as it relates to other portions of the lake, the court finds no basis for doing so.
United States9 Motion to Strike State's Supplemental Memorandum
The State filed a supplemental memorandum after the oral arguments were presented on the above motions. The State requested that the court reconsider the January 3, 2003 Order as to the entire lake. The United States filed a motion to strike the State's supplemental memorandum.
The court does not find it necessary to strike the State's supplemental memorandum. However, the court finds no basis for reconsidering its January 3, 2003 Order as to the entire lake. The parties to the litigation repeatedly represented to the court that the Powell Slough area was separate and would be dealt with after the conclusion of the other parcels. Therefore, the analysis for allowing the State to file a Fourth Amended Complaint to assert federal claims as to the portions of the lake that had been litigated is entirely separate from an analysis of the Powell Slough area. The State provides no basis for reconsideration of the January 3, 2003 Order other than to state that it should be dealt with the same as the Powell Slough area. As discussed above, there is a distinction between the Powell Slough and the other portions of the lake. Therefore, the court declines to reconsider its January 3, 2003 Order as to the entire lake and the State's supplemental request to do so is denied.
Appointment of Special Master
Rule 53 of the Federal Rules of Civil Procedure allows the court to appoint a special master "upon a showing that some exceptional condition requires it." Fed.R.Civ.P. 53(a), (b). The court concludes that the time necessary to take evidence with respect to each parcel and make findings as to the boundaries as to each parcel is an exceptional condition that justifies the referral of this matter to a special master. The special master shall take evidence relevant to and make findings as to the landowners' historic usage, title, and possession of their respective parcels and issue a report and recommendation as to the proper boundaries for each of the remaining parcels. See id. R, 53(c). As discussed above, due to the 4481 Stipulation, it is now the State's burden to establish that the 4481 level is not the correct boundary in relation to the landowners' historic usage, title and possession of their parcels.
Within thirty days of the date of this Order, the State may submit the names and qualifications of two proposed special masters and each group of the Defendants may submit the name and qualifications of one proposed special master. The court will then determine which of the proposed special masters will become the special master in this action and issue an order of reference to the special master. The parties may also submit a proposed schedule for proceedings before the special master for the court to consider.
The compensation of the master shall be charged to the State. Id. R. 53(a). The State has caused the parties in this action to expend a significant amount of additional and unnecessary costs due to the inefficient manner in which the State has pursued this case.
CONCLUSION
For the foregoing reasons, the Plaintiff State of Utah's Motion to Set Aside 4481 Stipulation and Related Clinger Stipulation and Judgment is GRANTED IN PART AND DENIED IN PART as outlined above, the State's Motion for Leave to File Amended Complaint to Determine Utah Lake High Water Mark at Statehood is DENIED, the Defendant Landowners' First Motion for Entry of Final Judgments is DENIED WITHOUT PREJUDICE, the United States of America's Motion to Reconsider the Court's January 3, 2003 Order as to the United States of America is GRANTED IN PART AND DENIED IN PART as outlined above, and the United States' Motion to Strike Plaintiffs Supplemental Memorandum Regarding the United State's Motion to Reconsider is DENIED,