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Riddle v. Lanser

Supreme Court of Alaska

April 6, 2018

ROBERT RIDDLE, d/b/a FAIRBANKS PUMPING AND THAWING, Appellant,
v.
ERIC LANSER, Appellee.

          Appeal from the Superior Court No. 4FA-11-03117 CI of the State of Alaska, Fourth Judicial District, Fairbanks, Bethany Harbison, Judge.

          William R. Satterberg, Jr., Fairbanks, for Appellant.

          Susan Orlansky, Reeves Amodio LLC, Anchorage, for Appellee.

          Before: Stowers, Chief Justice, Winfree, Maassen, Bolger, and Carney, Justices.

          OPINION

          STOWERS, CHIEF JUSTICE

         I. INTRODUCTION

         A nuisance is "a substantial and unreasonable interference with the use or enjoyment of real property."[1] The Right to Farm Act provides that an agricultural facility or an agricultural operation at an agricultural facility used for commercial purposes cannot become a nuisance based on changes in surroundings if it was not a nuisance when it started.[2] This appeal presents the question whether odors emanating from a farmer's storage of septage[3] on his farmland created a nuisance to adjacent landowners when the trial court found the farmer was not engaged in commercial agricultural operations but was actually using the farm's septage lagoons to store septage from his separate septic pumping and storing business. We affirm the superior court's finding that the storage of septage created a nuisance and its conclusion that the storage of septage was not protected by the Right to Farm Act.

         II. FACTS AND PROCEEDINGS

         A. Riddle's Farming And Septage Storing Activities

         Robert Riddle began acquiring land on Eielson Farm Road near Fairbanks in 2005. The land Riddle purchased was covered by a Farm Conservation Plan[4] issued to a previous owner of the land. In 2005 Riddle began putting in a road and fencing and clearing land. He also acquired farming equipment and maintained both livestock and a pasture that produced sod, potatoes, hay, wheat, and oats.

         Riddle also owned Fairbanks Pumping and Thawing, a business that pumps privately owned septic tanks in the Fairbanks area. Prior to 2005 Riddle paid Golden Heart Utilities approximately 11 cents per gallon to dump the septage he collected. In 2005, the same year he purchased his farmland and began developing his farm, Riddle constructed five septage lagoons on his farm property and began dumping collected septage into the lagoons. The septage lagoons occupied approximately 2 acres of his 500-plus-acre farmland. Riddle did not spread any septage during the winter of 2009. In 2010 Riddle began accepting septage from Bigfoot Pumping and Thawing in addition to the septage from his own company, charging Bigfoot 5 cents per gallon, which was less than half of Golden Heart Utilities' price. Bigfoot dumped at least 2.5 million gallons of septage into the lagoons in 2010 and more than 3.6 million gallons in each of the next two years. Riddle began spreading some septage on his farmland in June 2010.[5]

         At trial witnesses confirmed that applying human waste to soil is an accepted farming practice and has long-term beneficial impacts on soil. The Environmental Protection Agency (EPA) specifically encourages the use of domestic septage for fertilizer.[6] Witnesses testified to the importance of spreading fertilizer, including septage, on fields in order to increase the soil's fertility. Witnesses also testified that Riddle's lagoons likely did not contain enough septage to develop the full potential from the land even if all of the stored septage was spread on his fields.

         B. Initial Permitting Process

         In order to legally apply septage to his fields, Riddle was required to secure permits from the EPA, the Alaska Department of Environmental Conservation (Department), and the Fairbanks North Star Borough (Borough). In April 2007 the Department authorized Riddle to apply domestic septage to his farm through a Solid Waste Disposal Permit. The permit authorized Riddle to apply domestic septage from private septic tanks and sewage sludge from Golden Heart Utilities Sewage Treatment Plant. The permit also allowed Riddle to compost sludge acquired from Golden Heart Utilities, but it did not allow him to apply septage from other sources. Riddle acknowledged in his permit application the possibility that offensive odors could become a nuisance, but he committed to covering his septage stockpiles with non-breathable covers and to using odor inhibitors if necessary. The permit indicated that the Department could revoke the permit if Riddle did not control the smell, but the Department eventually adopted the position that the Right to Farm Act prevented it from enforcing the odor control provisions of the permit pending the outcome of this litigation.

         In September 2007, after a public hearing, the Borough approved a conditional use permit that allowed Riddle to apply septage to his fields. Riddle testified before the Borough Planning Commission that he dumped all of his septage at Golden Heart Utilities but did not disclose that he was already storing septage on his property. Riddle also testified that he would store septage in a holding cell the size of an Olympic swimming pool, and-contrary to his representation to the Department-that he would not haul septage to the facility or store it there during the winter months; he also stated that he would store septage in the lagoon only during the summer "as [he was] transitioning stuff around." The conditional use permit allowed Riddle to apply biosolids to the property but required that "the principal use of the property... be agricultural in nature" and that the biosolids be used to "support... the agricultural use." The permit prohibited him from using the property principally to dispose of biosolids.

         In March 2011 Riddle filed a proposed Revised Farm Plan allowing him to construct septage lagoons, and the Division of Agriculture approved the revised plan in April. Under the Farm Plan agriculture must be the primary use of the property and the septage lagoons must be used only to support farming. Riddle did not disclose to the Division that he had already constructed his septage lagoons and had been using them to store septage his septic pumping company had collected from his customers.

         C. Lanser's Development Activities

         In 2007 Eric Lanser, a real estate developer, purchased land on Eielson Farm Road adjacent to Riddle's property. Lanser subdivided the property and refurbished a pre-existing house. Although Lanser did not report any smells when he first purchased the land, he attended the 2007 Borough hearing on Riddle's application for a conditional use permit to express his concerns about possible smells emanating from Riddle's farm. Lanser began building and selling new residences soon after his acquisition of the Eielson Farm Road land.

         Lanser testified that he first smelled odors from Riddle's farm in May 2010, after Riddle had begun accepting septage from Bigfoot Pumping and Thawing. Lanser first contacted Riddle to request that Riddle "fix" the odors; he then contacted the Borough, which told Lanser that the Department would handle complaints.

         In 2010 and 2011 other residents near Riddle's farm also began complaining about the odor. Department representatives went to Eielson Farm Road 10 or 11 times to verify the existence of odors but smelled odors only once. The Department determined that Riddle's farm did not present a public health danger. Lanser continued to develop lots and build and sell residences.

         D. Pre-Trial Proceedings

         Lanser sued Riddle and the Department in December 2011. Lanser alleged public and private nuisance and negligence and sought injunctive and declaratory relief. Upon the Department's motion, the superior court dismissed the Department from Lanser's suit.

         In April 2012 Superior Court Judge Randy M. Olsen held a four-day hearing on Lanser's motion for a preliminary injunction. Riddle contended that the Right to Farm Act shielded him from liability for private nuisance. The court noted the wide disparity in testimony regarding the strength and frequency of the odor, and it found that "Lanser ha[d] offered no convincing evidence that [Riddle's] farm [was] a sham." The court denied Lanser's request for a preliminary injunction; it also denied Riddle's motion to dismiss the complaint for failure to state a claim.

         In August 2012 Lanser served discovery requests on Riddle. Lanser requested information regarding the acreage Riddle cultivated, the amount of crops he produced, the amount of crops sold, the volume of septage on the property, the revenue he earned from storing septage, and other information regarding the operation of Riddle's businesses on the property. Riddle objected to Lanser's discovery requests regarding his farming operations; he contended that Lanser's requests were irrelevant given the superior court's finding from the preliminary injunction hearing that Riddle was operating a legitimate farm. Riddle also filed a motion for summary judgment.

         Lanser moved to compel responses to his discovery requests, and based on Riddle's summary judgment motion Lanser moved to expedite his motion to compel. Lanser also filed a motion for an Alaska Civil Rule 56(f) continuance to give him time to respond to Riddle's summary judgment motion. The superior court granted Lanser's motion for continuance but denied his motion for expedited consideration.

         Riddle opposed Lanser's motion to compel and reiterated his view that the superior court's preliminary injunction findings disposed of all issues related to whether Riddle was operating a legitimate farm. In November 2012 the court granted Lanser's motion to compel; it concluded that Riddle's "refusal to respond to the discovery requests [was] unreasonable under [Alaska] Civil Rule 37(g)[][7] and may form the basis for an award to [Lanser] of reasonable expenses, including attorney's fees, caused by the conduct."

         Following the retirement of Judge Olsen the case was reassigned to Superior Court Judge Bethany Harbison. Riddle asked Judge Harbison to reconsider Judge Olsen's November 2012 order. Judge Harbison denied that request, explaining that "[d]iscovery is not limited by the findings made by the court denying the request for a preliminary injunction or by testimony at the preliminary injunction hearing." Judge Harbison also noted that although a trial on the merits may be merged with the hearing on the preliminary injunction, when this occurs the parties will typically "receive clear and unambiguous notice of the court's intent" to combine those proceedings, which did not occur here.[8] Judge Harbison concluded that Judge Olsen had made only preliminary findings that did not limit the scope of discovery.

         Pursuant to the superior court's November 2012 order, Lanser moved for attorney's fees and costs under Civil Rule 37(g), requesting about $15, 000. Riddle opposed Lanser's motion. The court deferred ruling on the motion until any post-trial application for fees.

         In ruling on Riddle's summary judgment motion, the superior court determined that Riddle began a farming enterprise in 2005, that he was engaged in farming, and that he used septage from Fairbanks Pumping and Thawing to fertilize his farm. Because the court concluded that there was a question of material fact whether the purpose of Riddle's farm was commercial agriculture, it denied Riddle's motion for summary judgment on the private nuisance claim. But it did grant summary judgment against Lanser with respect to his public nuisance and negligence claims. Lanser does not appeal these rulings.

         E. Trial And The Superior Court's Decision

         The superior court presided over an 11-day bench trial in July and September 2013. The parties re-presented testimony from the preliminary injunction hearing rather than incorporating or referencing previous testimony. In November 2013 the court issued its decision.

         In its findings of fact, the court found by clear and convincing evidence that Fairbanks Pumping and Thawing - Riddle's company - had been dumping septage into Riddle's lagoons since 2005 but that there was no way to determine how much septage Fairbanks Pumping and Thawing had dumped because Riddle did not keep records. It found that the volume of septage dumped into Riddle's septage lagoons dramatically increased in the winter of 2009-2010 when Bigfoot Pumping and Thawing began dumping septage into the lagoons. The court found that Bigfoot dumped over 2.5 million gallons of septage onto the lagoons in 2010, over 3.7 million gallons in 2011, and over 3.6 million gallons in 2012. Comparatively, Riddle applied only 174, 000; 1, 084, 000; and 377, 000 gallons of septage to his fields in those three years.

         The court noted Riddle's explanation that he "did not actually apply any of the septage to the land until 2010 because it took from 2005 to 2010 to accumulate enough septage to use on the fields, " but it did not find that explanation credible. And the court noted Riddle's testimony that weather conditions often prevented him from applying septage to the fields, but it concluded that if that testimony were true, "weather and field conditions prevent him from making use of more than three-quarters of the total amount of septage that is dumped into his lagoons."

         The court also noted Riddle's testimony that he was using some of the septage for compost, which required him to let the septage sit in the lagoons while the water evaporated and then add wood chips to the dewatered and degraded septage. But the court observed that Riddle's Solid Waste Disposal Permit from the Department did not permit him to treat or dewater the septage before applying it to his property. And although Riddle asserted that he intended to request a modification of his permit, the court stated that he likely would not be able to do so given his previous "material misrepresentations" to the various permitting bodies. The court found that the septage being composted in the lagoons could not be intended for fanning because composting was beyond the scope of Riddle's permit and that the remaining septage had not been applied to the land and therefore also was not used for farming purposes. The court credited testimony that Riddle could have applied all of the septage he had to the land and still not have met the nutrient needs of the soil.

         The court found that odors from Riddle's lagoons intensified in early 2010 because of the dramatic increase of septage dumped during the preceding winter. The court found that the odors from the septage lagoons made "engaging in outdoor activities . . . extremely unpleasant, and the odors interfere[d] with ordinary activities such as barbequing, gardening, and sitting outdoors. The odors clearly interfere[d] with Lanser's outdoor activities on the land, which include[d] building houses and preparing the land for development."

         The court then engaged in a two-step analysis to determine whether Riddle's septage lagoons constituted a private nuisance: (1) whether Riddle's septage lagoons would be a private nuisance in the absence of the Right to Farm Act, and (2) whether the lagoons, if a private nuisance, were "an agricultural facility or an agricultural operation at an agricultural facility" protected by the Right to Farm Act.[9]

         The superior court concluded that "Lanser . . . proved by clear and convincing evidence that Riddle's septage lagoons would be a private nuisance if... not for the [Right to Farm] Act." The court acknowledged that applying human septage to enrich soil is an accepted agricultural practice, but it concluded that "[t]he septage lagoons unreasonably interfere with Lanser's use and enjoyment of his property." The court also found that Riddle was aware that his "lagoons would unreasonably interfere with Lanser's use and enjoyment of his property"; the court pointed to Riddle's numerous misrepresentations during the permitting process as evidence that Riddle was aware of the risk and "acted recklessly and/or intentionally."

         The court next concluded that Riddle was not shielded from liability as a private nuisance by the Right to Farm Act. It characterized the evidence at trial as suggesting that Riddle's property was not an "agricultural facility" that was "used or [was] intended for use in the commercial production or processing of crops, livestock, or livestock products." The court found that Riddle "ha[d] not sold any crops at all, nor ha[d] he sold any farm products, nor ha[d] he received any income from farming." The court acknowledged that Riddle had allowed a neighbor to sharecrop a portion of his land. And it found that Riddle "seem[ed] to be growing sod for sale" and that "[i]t may be that at some point in the future, his farm will be used in the commercial production of crops or livestock."[10] But although the court conceded that "Riddle may be in the process of developing a nascent commercial farming enterprise, " it found that Riddle would have already started selling his products if that were his actual intent.

         The court observed that the Right to Farm Act does not provide a definition for "commercial" and recognized that farmers often work their farms for several years before earning any income from farming. Thus the court explained that Riddle's lack of profits from his farming activities and the fact that he earned significantly more income from his septage storage business were not dispositive of the question whether Riddle operated a commercial agricultural facility. But it found that "Riddle's farm appear[ed] to be a 'hobby farm' rather than a commercial farm" and that if this was the case, "his land [was] not an 'agricultural facility' . . . protected by the Act."

         We do not rely on the court's findings that Riddle's farm appeared to be a hobby farm and that Riddle sold no crops and therefore do not decide whether they were clearly erroneous. It is evident, however, that the court found that Riddle's agricultural operations did not produce any significant income, and that the vast majority, if not all, of Riddle's income was derived from his septic pumping and storing businesses. The court explained that over the last four years Riddle earned more than $600, 000 from septage pumping and storage.

         Despite the court's findings, the court determined that it did not need to decide whether Riddle's farm was an agricultural facility because it found that Riddle's septage lagoons were not an "agricultural operation."[11] It found that Riddle was not operating the lagoons "as an incident to or in conjunction with agricultural activities" because the lagoons were being used to store and treat septage rather than to fertilize the soil. And although the court noted that "Riddle intends that the septage disposal business he is operating on his farm will also, at some point in the future, support commercial farming activities, " it concluded that "the [Right to Farm] Act does not offer protection from a nuisance that may later support a farming activity[;] [r]ather, the [Right to Farm] Act protects a farming activity that later becomes a nuisance because of subsequent expansion or adoption of new technology." According to the court, "[i]n order to be protected, the septage must be intended for use in fanning from the onset." The court therefore found that the Right to Farm Act did not shield Riddle from private nuisance liability.

         The superior court ordered Riddle to abate the nuisance and provided specific steps for Riddle to take, including implementing a deodorizer system, "monitor[ing] andkeep[ing] records of the amounts of septage dumped into the lagoons, " and "keep[ing] and maintain[ing] records of his abatement efforts and of any odor complaints he receive[d]." The court awarded Lanser his full costs pursuant to Alaska Civil Rules 54[12] and 79, [13] and 40% of his attorney's fees under Alaska Civil Rule 82(b)(3) based on "vexatious or bad faith conduct" and "reasonableness of the claims and defenses pursued by each side."[14] The court also awarded Lanser fees and costs under Civil Rule 37(g) as discovery sanctions.

         Riddle appeals.

         III. STANDARD OF REVIEW

         "We review questions of law and the trial court's application of the law to facts de novo."[15] "In exercising our independent judgment, we will adopt the rule of law that is most persuasive in light of precedent, reason, and policy."[16] "We review a trial court's factual findings under a clearly erroneous standard. A factual finding is clearly erroneous when we are 'left with a definite and firm conviction on the entire record that a mistake has been made.' "[17]

         "We review awards of costs and attorney's fees for abuse of discretion, which exists if an award is arbitrary, capricious, manifestly unreasonable, or improperly motivated."[18] And "[w]e review a trial court's decision to impose sanctions for discovery violations for abuse of discretion."[19] But whether the trial court correctly applied the law in awarding attorney's fees or sanctions is a question of law that we review de novo.[20]And while we review for abuse of discretion the decision whether to enhance attorney's fees or to sanction a party because of an unreasonable legal position, the question whether that position was unreasonable will usually be a legal question subject to de novo review.[21]

         IV. DISCUSSION

         Riddle argues that the septage lagoons on his property were not a nuisance. And he argues that even if the septage lagoons would normally constitute a nuisance, he is shielded from private nuisance liability by the Right to Farm Act. Finally, he contests the superior court's decision to grant attorney's fees above the ...


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