The claimant, Thomas Kuss, is denied any recovery or relief under IC 13-2-2.5-10(b) and IC 13-2-2.5-10(b)(3).
FINDINGS OF FACT
1. This proceeding is governed by the administrative adjudication act (IC 4-21.5) and 310 IAC 0.6.
2. At issue in this proceeding is IC 13-2-2.5 (sometimes referred to as the "groundwater emergency chapter").
3. As defined in IC 13-2-2.5-1, a "nonsignificant ground water withdrawal facility" means the ground water withdrawal facility of a person that, in the aggregate, has a withdrawal capability of less than one hundred thousand (100,000) gallons of ground water in one (1) day.
4. Also as defined in IC 13-2-2.5-1, a "significant ground water withdrawal facility" means the ground water withdrawal facility of a person that, in the aggregate from all sources and by all methods, has the capability of withdrawing one hundred thousand (100,000) gallons of ground water or more in one (1) day.
5. Thomas Kuss of RR 1, Fair Oaks, Indiana ("Kuss") is the owner of a well on property in his possession located in the northwest quarter (NW 1/4) of section 33, township 30 north, range 7 west in Newton township, Jasper county, Indiana (the "well").
6. Pursuant to IC 13-2-2.5, Kuss caused a written complaint to be delivered to the department of natural resources (the "Department") on July 12, 1988 asserting that the well had failed to furnish its normal supply of potable water.
7. Within twenty-four (24) hours after receipt of the written complaint, an on-site investigation identified in Finding 7 disclosed:
(a) The well was a nonsignificant ground water withdrawal facility.
(b) The well was constructed before December 31, 1985.
(c) The well had failed to furnish its normal supply of water.
(d) There had been a substantial lowering of the level of ground water in the area that resulted in the failure of the well to furnish its normal supply of water.
(e) The well and its equipment were functioning properly at the time of the failure.
(f) The well had failed as a result of the lowering of the ground water level in the area.
(g) The lowering of the ground water level was such that it:
(1) exceeded normal seasonal water level fluctuations; and
(2) substantially impaired continued use of the ground water resource in the area.
9. Robert Churchill, David Dekock, Paul DeVries, Paul DeYoung, Donald Fieldhouse, Richard Gardner, Dye Family Farms, Inc., George Hamstra, Alvin Hoffman, Don Jarvis, Edward Kingma, Richard Kohlhagan, Liebert Mercier, Albert Mulson, North Newton School Corporation, Prudential Insurance Company of America, Inc. (doing business as "Fair Oak Farms"), Tim Schuster, Ronald Sipkema and James Wiers (collectively referred to as the "significant well owners") each operated "significant ground water withdrawal facilities" in Jasper county or Newton county, Indiana from the same aquifer where the well is located during the summer of 1988.
10. Water withdrawal operations by the significant well owners are reasonably believed to have caused the failure of the well.
11. The emergency ground water chapter establishes within IC 13-2-2.5-13 a legal mechanism for the issuance of a temporary order by the director of the department (the "Director") to declare a ground water emergency and to restrict the quantity of water that a person may extract from a significant ground water withdrawal facility.
12. The Director by temporary order declared on July 13, 1988 a ground water emergency in response to the written complaint as filed
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by Kuss and as supported by the subsequent inspection through employees of the Department. The area included within the ground water emergency was the portion of Jasper county and Newton county, Indiana bounded by the Kankakee River on the north, U.S. Highway 231 on the east, State Road 14 on the south and the Illinois state line on the west.
13. The temporary order further required the significant well owners to provide Kuss with an adequate temporary provision of an adequate supply of potable water at the site of the well within twenty-four (24) hours after service of the temporary order.
14. The temporary order contained a notice of hearing to be held pursuant to IC 13-2-2.5-3(a) and IC 4-21.5-4.
15. "Ultimate authority" is defined within the administrative adjudication act within IC 4-21.5-1-15 to mean an individual or panel of individuals in whom the final authority of an agency is vested by law or executive order.
16. With respect to the temporary order issued under IC 13-2-2.5-3(a), the Director was the "ultimate authority" for the Department. That temporary order is not the subject of this proceeding.
17. In addition to providing for the declaration of a ground water emergency within IC 13-2-2.5-3, the ground water emergency chapter establishes a legal mechanism to determine permanent reasonable compensation to the owner of a nonsignificant ground water withdrawal facility in existence before January 1, 1986 which has suffered the failure or substantial impairment of the facility caused by withdrawals from a significant ground water withdrawal facility.
18. IC 13-2-2.5-11(b) will specify after July 1, 1989 that IC 13-2-2.5--10(b)(2) and 10(b)(3) are implemented by order of the Commission. The current language of IC 13-2-2.511(b) does not reference subdivision 10(b)(3), but this omission is a clerical error which is corrected with the enactment by the 1989 General Assembly of Section 4 of Enrolled House Bill 1592.
19. The Commission is the ultimate authority for the Department under IC 13-2-2.5-10(b)(2) and IC 13-2-2.5-10(b)(3). These provisions are at issue in this proceeding.
20. As provided in IC 13-2-2.5-10(b)(2) and 10(b)(3), timely and reasonable compensation which may be granted by the Commission consists of and is limited to:
(2) reimbursement of expenses reasonably incurred by the complaint to:
(A) obtain an immediate temporary provision at the prior point of use of an adequate supply of potable water; and
(B) provide timely and reasonable compensation as provided in subdivision (3)(A) and (3)(B); and
(3) either:
(A) the restoration of the affected nonsignificant ground water withdrawal facility to its former relative capability;
(B) the permanent provision at the point of use of an alternative potable supply of equal quantity; or
(C) the permanent restriction or scheduling of the ground water withdrawals of the significant ground water withdrawal facility such that the affected water well continues to produce its normal supply of water or its normal supply of potable water if the well normally furnishes potable water.
21. IC 13-2-2.5-11(b) provides that, before the Commission enters an initial determination of its order for the matters described in Finding 20, the Department shall conduct an investigation and provide affected persons with an informal opportunity to contribute to the investigation.
22. In accordance with IC 13-2-2.5-11(b), the Department conducted an investigation of this matter and sought input from the parties to this proceeding.
23. In the absence of an affirmative defense by the significant well owners, the evidence supports the issuance by the Commission of an order for timely and reasonable compensation against the significant well owners and in favor of Kuss. The order would require the significant well owners to provide for the replacement of the well in compliance with the following:
(A) The replacement well shall be drilled into the bedrock aquifer to a depth of no less than one hundred (100) feet below the land surface (but not to exceed one hundred fifty (150) feet below the land surface unless otherwise approved by the department).
(B) The replacement well shall be equipped with a new submersible pump installed at a minimum depth of eighty (80) feet below the land surface and at least ten (10) feet above the bottom of the replacement well.
(C) All work shall be done by a water well driller or plumbing contractor licensed in Indiana.
(D) The replacement well shall be constructed in accordance with IC 25-39-1.5 and 310 IAC 16.
24. Kuss had experienced difficulties with the well beginning in the first year (approximately 1980) that large scale irrigation activities took place in the vicinity. [Deposition of Thomas Kuss taken on February 28, 1989 (the "Kuss Deposition"), page 6, line 12.1]
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25. Kuss again experienced difficulties with the well in 1982; and in that year, Thomas Kuss, his wife Alma Kuss, and several other people brought a civil action against Prudential Insurance Company of America ("Prudential") and others in which damages were claimed as a result of the loss of water and for other reasons. [Kuss Deposition, page 19.]
26. On September 16, 1985, the civil action referenced in Finding 25 was resolved by the execution of a written "Settlement Agreement" between Kuss (and the other plaintiffs) and Prudential. Kuss identified the Settlement Agreement as "Prudential Exhibit #111 during the Kuss Deposition and indicated an understanding of the Settlement Agreement. (Kuss Deposition, pages 19, 22 and 23.1
27. Paragraph 2 of the Settlement Agreement provides that "Prudential does not intend to affect the permanent water supply available to the Plaintiffs by mining the water resource in Newton and Jasper Counties, Indiana and will curtail irrigation to the extent ordered by the DNR [Department] to prevent such mining by Prudential. As used in this paragraph 'to mine' means the withdrawal of water exceeding natural replenishment."
28. Paragraph 9 of the Settlement Agreement provides that "The undersigned Plaintiffs, and each Plaintiff for themselves, their executors, administrators, heirs, successors and assignees, hereby remise, release and forever discharge Prudential, its agents, employees, tenants, successors and assigns, from all liabilities, claims and causes of action for all damages to date and for all damages which may be hereinafter incurred as a result of Prudential's well siting, water pumping and irrigation operations to date as well as Prudential's future water pumping and irrigation operations, excluding damages from subsidence, so long as such water pumping and irrigation operations are conducted in accordance with the terms of this Settlement Agreement, including all claims which were, or could have been asserted in the Lawsuit, including but not limited to, all claims arising from and including the following:
a. Costs of repairing wells to standards meeting or exceeding DNR (Department) guidelines;
b. Costs of drilling new wells if necessary if existing wells cannot be repaired due to the size of casing (or alternatively, for reimbursing costs for the new wells which may have been drilled);
c. Costs for miscellaneous expenses in connection with such modifications of water systems, including grading and seeding, cost of equipment, etc.;
d. Costs of purchasing and installing water treatment equipment of the type generally used in the area for those Plaintiffs who claim a problem with respect to water quality in either new or old wells;
e. Costs of drilling additional new wells for persons who claim water quality problems in new wells;
f. Damages arising from alleged crop losses or devaluation of Plaintiff's real estate;
g. Damages arising from the alleged creation of a nuisance by the pollution of Plaintiffs' water supply;
h. Damages arising from the alleged depreciation of Plaintiffs' air quality;
i. Damages arising from the alleged reduction in stream flows and lake levels and the alleged harm caused to indigenous and migratory fish, wildlife and waterfowl;
j. Damages arising from the alleged deleterious effect on the Plaintiffs' health and comfort;
k. All costs, expenses incurred by Plaintiffs to date in the course of the lawsuit, such as expert witness fees, etc.;
l. All of Plaintiffs' attorneys' fees; and
m. All other damages, costs and expenses that Plaintiffs, their successors or assigns, may have suffered or incurred or will suffer or incur in the future as a result of Prudential's irrigation and pumping operations on Fair Oaks Farm. The undersigned Plaintiffs, and each Plaintiff, for themselves, their administrators, heirs, executors, successors and assigns, hereby also remise, release and forever discharge any person or entity which may become the owner of Fair Oaks Farms, or any part thereof, from all liabilities, claims and causes of action for all damages which may be incurred at any time as a result of water pumping and irrigation operations on Fair Oaks Farms, so long as such water pumping and irrigation operations are conducted in accordance with the terms of this Settlement Agreement. It is the intent of the Plaintiffs that this release shall be a covenant running with the land and binding the Plaintiffs and each of them and on all successive grantees of the real estate owned by the Plaintiffs. The Plaintiffs shall each execute a short-form of this release with the understanding that such short-form shall be placed of record in the Office of the Recorder of the county in which such real estate is located."
29. Paragraph 12 of the Settlement Agreement provides that "[t]his Settlement Agreement embodies and sets forth the whole agreement between the Plaintiffs
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and Prudential. There are no promises, terms, conditions or obligations other than those contained herein; and this Settlement Agreement shall supersede all previous communications, representations, discussions, understandings, negotiations, offers or agreements, either verbal or written, between the parties hereto."
30. As a result of entry into the Settlement Agreement, Kuss received a gross amount of $15,000. A fee of $5,000 was paid to his attorney so that Kuss received a net amount of $110,000. [Kuss Depositor, pages 20 and 21.]
31. The Settlement Agreement is in the nature of a contract which may establish an "accord and satisfaction".
32. An accord and satisfaction is an affirmative defense. [Trial Rule 8(C).]
33. The burden of persuasion and the burden of going forward with an affirmative defense rests with the party seeking its protection. [IC 4-21.5-3-14(c)]
34. Before the hearing on which a party intends to assert an affirmative defense, the party shall, to the extent possible, disclose any affirmative defense specified by law on which the party intends to rely. If a prehearing conference is held in the proceeding, a party notified of the conference shall disclose the party's affirmative defense in the conference. [IC 4-21.5-3-14(c) and 310 IAC 0.6-1-5(a).]
35. The Commission has exclusive jurisdiction (subject to judicial review under IC 4-21.5-5) to determine whether relief should be granted under IC 13-2-2.5-10(b)(2) and 10(b)(3).
36. The question of the extent of administrative jurisdiction, when a proceeding includes issues that are beyond administrative competence, is governed by the doctrine of primary jurisdiction. The doctrine essentially holds that when any part of the proceeding is within the exclusive jurisdiction of the agency, the whole proceeding must first be heard by the agency. [Shlens v. Egnatz (1987 Ind. App.), 508 N.E.2d 44, 46.]
37. Because the Commission has exclusive jurisdiction to grant relief under IC 13-2-2.5-10(b)(2) and 10(b)(3), the application of the Settlement Agreement must first be heard and determined by the Commission. [This result is also consistent with Hacker v. DNR, City of Huntington, 4 Caddnar 35 (July 1987) where the Commission found, that depending upon its terms, a "release" could constitute an affirmative defense to an action brought under the ground water emergency chapter.]
38. The Settlement Agreement potentially constitutes an affirmative defense specified by Law which is properly at issue under the administrative adjudication act, generally, and in this proceeding, specifically.
39. A prehearing conference was held in this proceeding on November 29, 1988 at which time Prudential intervened as a party. Prudential then also communicated its intention to rely upon the Settlement Agreement. [Report of First Prehearing Conference entered on November 30, 1989.]
40. A second prehearing conference was conducted in this proceeding on March 8, 1989. At that time, a schedule was established for filing any motions for summary judgment.
41. IC 4-21.5-3-23 controls motions for summary judgment filed within the administrative adjudication act.
42. IC 4-21.5-3-23(b) provides in pertinent part that a summary judgment shall be rendered "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits and testimony, if any, show that a genuine issue as to any material fact does not exist and that the moving party is entitled to judgment as a matter of law."
43. Prudential filed its "Motion for Summary Judgment" and accompanying "Motion to Publish Depositions" of Thomas Kuss and Mark Basch and "Memorandum in Support of Motion for Summary Judgment" on March 27, 1989.
44. Kuss filed his "Combined Response to Prudential's Motion for Summary Judgment and Motion for Entry of Judgment in Favor of Kuss" and accompanying "Memorandum in Opposition to Prudential's Motion for Summary Judgment and in Support of Request for Judgment for Kuss" on April 19, 1989.
45. Prudential filed its "Reply Memorandum in Support of Motion for Summary Judgment" on April 28, 1989.
46. An "Order for the Publication of Depositions of Thomas Kuss and Mark Basch" was entered on May 2, 1989. In accordance with the order, the depositions were received and were then published on May 15, 1989.
47. The essence of the effort by Prudential to obtain a summary judgment is that the Settlement Agreement entered between Prudential and the Plaintiffs in the civil action (including Kuss) constitutes an affirmative defense in favor of Prudential and against Kuss.
48. In his effort to obtain a summary judgment, Kuss argues that the Settlement Agreement was breached by Prudential because its irrigation activities have resulted in "mining" of the aquifer which serves the well. A contract which has been breached has no force and effect.
49. In the
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alternative, Kuss argues that the Settlement Agreement does not have application to claims arising subsequent to its execution.
50. The central issue in this proceeding is whether or not the Settlement Agreement has vitality.
51. The Settlement Agreement is a proper subject for summary judgment since questions of law are involved in the construction and interpretation of its terms. [Mullen v. Tucker, (1987 Ind. App.), 510 N.E.2d 711.]
52. As set forth in Finding 27, Paragraph 2 of the Settlement Agreement states that "Prudential does not intend to affect the permanent water supply available to the Plaintiffs by mining the water resource in Newton and Jasper Counties." The Settlement Agreement is then conditioned upon Prudential complying with all orders of the Department which curtail irrigation to prevent mining.
53. The pronouncement of Prudential's intention not to mine expressed, at most, a subjective mental state which was immediate to execution of the Settlement Agreement. If the pronouncement was capable of breach, the breach must be established by some objective showing that on September 16, 1985, Prudential intended to mine the water resource in Newton and Jasper Counties. No evidence is presented which supports that proposition.
54. More properly, Paragraph 2 must be read as a whole and in context. Prudential did not promise not to mine. Prudential promised to comply with all orders of the Department which would curtail mining.
55. Orders issued by the Department under the ground water emergency chapter are not fashioned upon a determination that mining has occurred; nor does the definition of "to mine" used in the Settlement Agreement have application in the ground water emergency chapter.
56. The evidence is, however, unrefuted that Prudential has complied with all orders by the Department which curtail its irrigation. [Kuss Deposition, page 28; Deposition of Mark Basch taken on February 28, 1989, page 12.]
57. Prudential has not breached the terms of Paragraph 2 of the Settlement Agreement.
58. As provided in Finding 28, Paragraph 9 provides that Kuss and the other Plaintiffs in the civil action did "remise, release and forever discharge Prudential... from all liabilities, claims and causes of action for all damages to date and for all damages which may be hereinafter incurred as a result of Prudential's well siting, water pumping and irrigation operations to date as well as Prudential's future water pumping and irrigation operations.
59. The Settlement Agreement covers future damages and acknowledged that Prudential might continue irrigation.
60. The Settlement Agreement has application to claims arising subsequent to its execution.
61. The Settlement Agreement constitutes an affirmative defense in favor of Prudential and against Kuss releasing Prudential from liability under IC 13-2-2.5-10(b)(2) and IC 13-22.5-10(b)(3).
62. A genuine issue as to a material fact does not exist in this proceeding. As a consequence of the Settlement Agreement, Prudential is entitled to a judgment in its favor as a matter of law.