Title: Willadsen v. Christopulos

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Willadsen v. Christopulos1987 WY 5731 P.2d 1181Case Number: 86-154Decided: 01/27/1987Supreme Court of Wyoming
JACK WILLADSEN AND DUANE 
WILLADSEN, PETITIONERS,

 
 
v.

 
 
GEORGE L. CHRISTOPULOS, 
WYOMING STATE ENGINEER, AND THE WYOMING STATE BOARD OF 
CONTROL, RESPONDENTS.

 
 
Petition for review from 
the Board of Control.

 
 
Keith G. Kautz of Sawyer, 
Warren & Kautz, Torrington, for petitioners.

 
 
A.G. McClintock, Atty. 
Gen., Steven R. Shanahan, Sr. Asst. Atty. Gen., and Jennifer Hager, Asst. Atty. 
Gen., for respondent George L. 
Christopulos, Wyoming State Engineer.

 
 
A.G. McClintock, Atty. 
Gen., Steven R. Shanahan, Sr. Asst. Atty. Gen., and Phil Tabor, Asst. Atty. 
Gen., for respondent Wyoming State Bd. 
of Control. 

 
 
Before BROWN, C.J., and THOMAS, CARDINE, URBIGKIT 
and MACY, JJ.

 
 

MACY, 
Justice.

 
 

[¶1.]     This case comes before 
us on a certification from the district court. We are asked to review an order 
of the Wyoming State Board of Control.

 
 

[¶2.]     We reverse and remand 
for further proceedings in accordance with the directions contained in this 
opinion.

 
 

[¶3.]     On November 25, 1981, 
the State Engineer's office received a complaint from petitioners Jack and Duane 
Willadsen alleging in substance that an irrigation well located upstream from 
them was depleting the stream flow and thus interfering with their surface water 
rights. The State Engineer's office thereafter undertook an investigation and 
issued a written report of its findings in April 1985. In its report, the State 
Engineer's office concluded that it could not substantiate that the irrigation 
well was depleting stream flow. On that basis, the State Engineer concluded that 
no regulation of the well was required.

 
 

[¶4.]     On April 8, 1985, 
petitioners protested the State Engineer's finding and requested a hearing 
before the Board of Control. At the hearing, the State Engineer's report was 
received into evidence, and expert witnesses testified on behalf of each party. 
On February 10, 1986, the Board of Control entered its order wherein, among 
other things, it concluded as a matter of law:

 
 
"5. THAT the Willadsens, 
as Contestants, have the burden of showing a lack of substantial evidence for 
the decision of the State Engineer as they are the part[ies] appealing the 
decision of the State Engineer.

 
 
"6. THAT from the 
evidence before the Board of Control, there is no conclusive evidence of 
measurable interference * *.

 
 
"7. THAT from the record 
there is substantial evidence supporting the decision of the State Engineer. And 
said decision was not arbitrary, capricious [or] an abuse of discretion on the 
part of the State Engineer."

 
 
On the basis of these 
conclusions, the Board of Control ordered that the decision of the State 
Engineer be upheld.

 
 

[¶5.]     Petitioners present the 
following issues for our review:

 
 
"A. Did the Board of 
Control apply the proper standard of review and burden of proof in considering 
the appeal of the Petitioners?

 
 
"B. Did the Board of 
Control err in its application of Wyo. Stat. Sec. 41-3-911(b) to only measurable 
interference to Cottonwood Creek by Cottonwood No. 1 Well?

 
 
"C. Is the decision of 
the Board of Control supported by substantial evidence?

 
 
"D. Were the findings and 
conclusions of the State Engineer arbitrary and 
capricious?"

 
 

[¶6.]     The issues set out by 
the State Engineer are as follows:

 
 
"I. IS THE DECISION OF 
THE BOARD OF CONTROL SUPPORTED BY SUBSTANTIAL EVIDENCE?

 
 
"II. WERE PETITIONERS 
AFFORDED ALL DUE PROCESS PROTECTIONS?

 
 
"III. DID THE BOARD OF 
CONTROL APPLY THE PROPER STANDARD OF REVIEW?

 
 
"IV. WERE THE FINDINGS OF 
THE STATE ENGINEER ARBITRARY, CAPRICIOUS OR AN ABUSE OF 
DISCRETION?

 
 
"V. DOES THIS COURT LACK 
JURISDICTION SINCE PETITIONERS HAVE FAILED TO SERVE ALL 
PARTIES?"

 
 

[¶7.]     Finally, the Board of 
Control sets forth the following issues:

 
 
"I. DOES PETITIONERS' 
FAILURE TO SERVE A PARTY IN INTEREST, THE BOARD OF CONTROL OR ITS ATTORNEY, DENY 
THE COURT OF SUBJECT MATTER JURISDICTION OVER THIS ADMINISTRATIVE 
APPEAL?

 
 
"II. WERE THE 
PETITIONERS' [sic] PROVIDED THEIR FULL DUE PROCESS RIGHTS? 

 
 
"III. IS THE DECISION OF 
THE BOARD OF CONTROL SUPPORTED BY SUBSTANTIAL EVIDENCE?"

 
 

[¶8.]     We address first the 
jurisdictional issue raised by the State Engineer and the Board of Control. They 
contend that petitioners' failure to serve their petition for review by the 
district court upon the Board of Control or its attorney denied the district 
court jurisdiction over the subject matter of petitioners' appeal. In support of 
their claim, respondents cite First National Bank of Thermopolis v. Bonham, 
Wyo., 559 P.2d 42, 50 (1977), wherein this Court stated the general rule that 
all parties whose interest will be affected by an appeal must be served, and the 
appellate court does not acquire jurisdiction until that is done. While 
recognizing the legitimacy of the general rule, we do not find it to be 
controlling in this case. In First National Bank of Thermopolis v. Bonham, the 
district court was unaware that all parties had not been served with the 
petition for review until a motion to dismiss the petition was filed. That is 
not true in the present case. Here, petitioners' certificate of service of their 
petition for review clearly states that the adjudication officer for the Board 
of Control and the hearing examiner were served with copies of the petition. In 
addition, the Board of Control filed a response to the petition concurrently 
with its petition for certification of this case to the Supreme Court. Finally, 
the Board of Control failed to object in any manner prior to this appeal to not 
being served with a copy of respondents' petition for 
review.

 
 

[¶9.]     In the absence of a 
timely objection and evidence showing that service was not accomplished as 
provided by Rule 5, W.R.C.P., we hold that a certificate of service indicating 
that a copy of the petition for review was served on the Board of Control is 
sufficient to confer jurisdiction on the district court. A mere statement in an 
appeal brief that the Board of Control or its attorney was not served with the 
petition for review does not make it an issue for review under any appeal 
standard.

 
 

[¶10.]  Having concluded that there is no 
jurisdictional problem, we turn to the remaining issues raised by the parties. 
Because those issues are interrelated, we will discuss them 
together.

 
 

[¶11.]  The record demonstrates that both 
petitioners and respondents assumed that the purpose of the hearing before the 
Board of Control was to determine, in accordance with appellate review 
standards, whether or not the findings contained in the State Engineer's report 
were arbitrary, capricious, or an abuse of discretion. First, petitioners' 
"PROTEST TO REPORT OF STATE ENGINEER AND REQUEST FOR HEARING" prayed for a 
hearing on the State Engineer's investigation report and conclusions. Second, 
petitioners alleged in their petition for review before the district court that 
they "appealed" the report to the Board of Control. Third, respondents admitted 
in their response to the petition for review that petitioners "appealed" the 
report to the Board of Control. Fourth, the Board of Control applied appellate 
review standards in finding that there was "substantial evidence supporting the 
decision of the State Engineer" and that the decision "was not arbitrary, 
capricious [or] an abuse of discretion."

 
 

[¶12.]  The parties involved in this action have 
been operating under a mistaken assumption. The hearing before the Board of 
Control did not constitute an appeal, and its purpose was not to review the 
report prepared by the State Engineer's office. The purpose of the hearing 
before the Board of Control was to adjudicate the question of whether or not the 
upstream irrigation well was interfering with petitioners' downstream flow. The 
report merely constitutes evidence tending to negate the alleged interference; 
it does not constitute a decision or order subject to review by the Board of 
Control or by this Court. 

 
 

[¶13.]  Section 41-3-911(b), W.S. 1977,1 merely provides that upon receipt 
of a written complaint of a water appropriator alleging interference by a junior 
right, the State Engineer will undertake an investigation to determine if the 
alleged interference exists and shall report his findings to all interested 
parties. If the complainant is dissatisfied with the result of the State 
Engineer's investigation, he may seek relief under § 41-3-911(c), W.S. 1977.2 Under that statutory section and 
the applicable provisions of the Wyoming Administrative Procedure Act, the 
standard applicable to an adjudicatory hearing before the Board of Control, 
unless otherwise stated, is the "preponderance of the evidence" standard 
customarily used in civil cases. Amerada Hess Pipeline Corporation v. Alaska 
Public Utilities Commission, Alaska, 711 P.2d 1170, 1179 n. 14 (1986); 
Intermountain Health Care, Inc. v. Board of County Commissioners of Blaine 
County, Idaho, 107 Idaho 248, 688 P.2d 260, 263 (1984), quoting E. Cleary, 
McCormick on Evidence § 357 (3d ed. 1984).

 
 

[¶14.]  Because the Board of Control failed to 
apply the preponderance of the evidence standard and instead applied the 
substantial evidence test applicable to appellate review of an agency decision, 
we find that petitioners were denied due process. As evidenced by the Board of 
Control's conclusions of law, petitioners not only had the burden of showing a 
lack of substantial evidence for the decision of the State Engineer, but they 
also had the virtually impossible task of proving conclusively that there was 
evidence of measurable damage. The use of these standards at an evidentiary 
hearing violates due process.

 
 

[¶15.]  We, therefore, reverse and remand this 
case to the Board of Control for rehearing to determine whether petitioners can 
prove their claim by a preponderance of the evidence.

 
 

THOMAS, J., filed a concurring 
and dissenting opinion.

 
 
FOOTNOTES

 
 

1 Section 41-3-911(b), 
W.S. 1977, provides:

 
 
"Any appropriator of 
either surface or underground water may file a written complaint alleging 
interference with his water right by a junior right. Complaints are to be filed 
with the state engineer and are to be accompanied by a fee of one hundred 
dollars ($100.00) to help defray costs of investigation. This section is not 
applicable to interference between two (2) surface water rights. Upon receiving 
the complaint and fee, the state engineer shall undertake an investigation to 
determine if the alleged interference does exist. Following the investigation, 
the state engineer shall issue a report to all interested parties stating his 
findings. The report may suggest various means of stopping, rectifying or 
ameliorating the interference or damage caused thereby."

 
 

2 Section 41-3-911(c), 
W.S. 1977, provides:

 
 
"Any interested 
appropriator who is dissatisfied with the results of the foregoing procedure may 
proceed under the applicable provisions of the Wyoming Administrative Procedure Act [§§ 
9-4-101 through 9-4-115]. If a hearing is to be held, it shall be held before 
the appropriate water division superintendent. The superintendent shall report 
to the board of control at its next meeting. The board shall issue its order to 
include findings of fact and conclusions of law."

 
 

THOMAS, Justice, concurring and 
dissenting.

 
 

[¶16.]  This court has articulated our reluctance 
to treat with constitutional questions unless that is absolutely necessary. 
Marion v. City of 
Lander, Wyo., 394 P.2d 910 (1964), 
cert. denied 380 U.S. 925, 85 S. Ct. 929, 13 L. Ed. 2d 810, reh. denied, 380 U.S. 989, 85 S. Ct. 1352, 14 L. Ed. 2d 283 (1965). It is not 
necessary to invoke any constitutional principle to decide this case, and 
consequently it is inappropriate to conclude that the Board of Control denied 
due process to the petitioners by failing to apply the preponderance of evidence 
standard. That simply was a mistake of law which flowed from the initial mistake 
by the Board of Control in assuming that it was in the posture of a reviewing 
body rather than recognizing that its duty was to conduct the contested case 
hearing required by the Wyoming Administrative Procedure Act, § 16-3-101, et 
seq., W.S. 1977, in accordance with the provisions of § 41-3-911(c), W.S. 
1977.

 
 

[¶17.]  If we turn to the applicable provision of 
the Wyoming Administrative Procedure Act, § 16-3-108(a), W.S. 1977, we find that 
it provides in pertinent part as follows:

 
 
"In contested cases 
irrelevant, immaterial or unduly repetitious evidence shall be excluded and no sanction shall be imposed or order 
issued except upon consideration of the whole record or such portion thereof as 
may be cited by any party and unless supported by the type of evidence commonly 
relied upon by reasonably prudent men in the conduct of their serious 
affairs. * * *" (Emphasis added.)

 
 

[¶18.]  In Steadman v. Securities and Exchange 
Commission, 450 U.S. 91, 101 S. Ct. 999, 67 L. Ed. 2d 69, reh. denied 451 U.S. 933, 101 S. Ct. 2008, 68 L. Ed. 2d 318 (1981), § 7(c) of 
the federal Administrative Procedure Act, 5 U.S.C. § 556(d), was construed by 
the Supreme Court of the United States. In pertinent part § 
7(c) of the federal Administrative Procedure Act provides:

 
 
"* * * A sanction may not 
be imposed or rule or order issued except on consideration of the whole record 
or those parts thereof cited by a party and supported by and in accordance with 
the reliable, probative and substantial evidence. * * *" 5 U.S.C. § 
556(d)

 
 

[¶19.]  This language is substantially similar to 
the language found in the Wyoming Administrative Procedure Act, § 16-3-108(a), 
W.S. 1977, and the Supreme Court of the United States held that in adopting that 
language Congress intended to provide a preponderance of the evidence standard 
in contested case hearings before an administrative agency. The Court examined 
the legislative history relating to the statute and concluded that the language 
was "intended to establish a standard of proof and that the standard adopted is 
a traditional preponderance of the evidence standard." Steadman v. Securities 
and Exchange Commission, supra, 101 S. Ct.  at 1008.

 
 

[¶20.]  In Bender v. Clark, 744 F.2d 1424 (10th 
Cir. 1984), the Tenth Circuit Court of Appeals considered an instance in which a 
contested case hearing was not required but rather an informal hearing was held. 
That Court concluded that when an agency elects to hold a hearing the proper 
standard of proof must be used, and adopted the standard of preponderance of the 
evidence.

 
 
"It is well settled that 
where Congress has failed to establish the degree of proof required in an 
administrative proceeding, the judiciary is the traditional, and the most 
appropriate, forum to prescribe the standard. [Citations omitted.] Hence, we 
must determine the appropriate standard of proof required in an administrative 
proceeding conducted to decide whether a particular tract subject to federal oil 
and gas leasing is within a KGS.

 
 
"The traditional standard 
required in a civil or administrative proceeding is proof by a preponderance of 
the evidence. [Citations omitted.]" Bender v. Clark, supra, 744 F.2d  at 1429.

 
 
This holding was 
consistent with Steadman v. Securities and Exchange Commission, supra (see n. 
22). It also is compatible with Davis, Administrative Law Treatise, Evidence, § 
16.9 (1979). As one encyclopedia expresses the concept:

 
 
"As a general rule the 
comparative degree of proof by which a case must be established is the same 
before an administrative tribunal as in a judicial proceeding - that is, a 
preponderance of the evidence." 2 Am.Jur.2d, Administrative Law, § 392 at 199 
(1962). (Footnote omitted.)

 
 
On the basis of these 
authorities I am prepared to agree that in a contested case hearing before an 
administrative agency in the state of Wyoming the standard for the burden of proof 
is a preponderance of the evidence.

 
 

[¶21.]  I would leave the matter at that and 
simply require upon remand that the Board of Control impose the burden upon the 
Willadsens of establishing the interference with their water right by a 
preponderance of the evidence. That burden is appropriately placed upon the one 
who is challenging a decision before an administrative agency. See Pan American 
Petroleum Corporation v. Wyoming Oil and Gas 
Commission, Wyo., 446 P.2d 550 
(1968).

 
 

[¶22.]  I would hold that, without invoking any 
constitutional premise, the Board of Control committed an error of law in 
requiring any higher standard of proof than that of a preponderance of the 
evidence with respect to the Willadsens. Recognizing, as I have indicated, that 
this error probably followed from the error in concluding that the matter was 
before the Board of Control for review rather than a contested case hearing, I 
believe it is appropriate to furnish the Board of Control with guidance in 
proceeding with any further hearings in this case.

 
 

[¶23.]  With this exception I concur with the 
opinion of the majority, and I certainly agree as to the disposition of the case 
on the merits.