                                 I N    T H E   C O U R T      O F      A P P E A L S     O F    T E N N E S S E E
                                                                                                                                 FILED
                                                             A T     K N O X V I L L E                                           May 19, 1999

                                                                                                                            Cecil Crowson, Jr.
                                                                                                                            Appellate C ourt
                                                                                                                                Clerk
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F o r   A p p e l l a n t s                                                              F o r    A p p e l l e e    S t a t e      o f     T e n n e s s e e

D A V I D A .       S T U A R T                                                          J O H N K N O X W A L K U P
S t u a r t &       V a n R i p e r                                                      A t t o r n e y G e n e r a l        a n d       R e p o r t e r
C l i n t o n ,     T e n n e s s e e
                                                                                         C Y N T H I A L . P A D U C H
                                                                                         S e n i o r C o u n s e l

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                                                                                         T e n n e s s e e

                                                                                         P E T E R D . V A N D E V A T E
                                                                                         K n o x v i l l e , T e n n e s s e e


                                                                                         F o r    A p p e l l e e s J o e K i d d
                                                                                         a n d    w i f e , B e u l a h K i d d

                                                                                         D A V I D E . R O D G E       R S
                                                                                         K r a m e r , R a y s o n     , L e a k e ,
                                                                                             R o d g e r s & M o       r g a n
                                                                                         O a k R i d g e , T e n       n e s s e e




                                                                           1
                        O P I N IO N




REVERSED AND REMANDED                  Susano, J.




                             2
                  This appeal requires us to determine whether the lower

court erred when it conducted a bench trial on the merits of the

parties’ respective claims and thereafter issued a permanent

injunction, all in the face of a written demand for a jury trial.



         `        Appellant Elk View Land and Gravel, Inc.1 ("Elk View")

is engaged in mining operations on one side of State Highway 297

in Campbell County.                    Appellee State of Tennessee ("State")2,

initiated this action by filing a complaint against Elk View and

others for right of entry and for a permanent injunction to abate

a nuisance in Campbell County.                              The State alleged that Elk View

had obstructed a culvert under State Highway 297, thereby causing

a hazardous condition on the road and thereby also causing

flooding on the property of Joe Kidd and his wife, Beulah Kidd.

The trial court issued the requested permanent injunction.                                                       Elk

View appeals, raising issues that present the following questions

for our review:



                  1. Did the trial court err in refusing to
                  afford the appellants a jury trial?

                  2. Did the trial court err in conducting the
                  proceedings in this cause as a final trial on
                  the merits and in issuing a permanent
                  injunction, rather than conducting the
                  proceedings as a hearing on the State's
                  request for a temporary injunction and other
                  interlocutory matters?

                  3. Did the trial court err in dismissing the
                  appellants' counterclaims?

                  4. Did the trial court err in dismissing
                  appellants' third-party claims?


         1
          We re fer to Elk V iew as the rep resentative ap pellant. The appellants a re Elk Vie w Land an d Grave l, Inc.;
Elk View Land and Gravel, Inc. d/b/a F irst Sand and Grave l Company; Ge orge Spalding, Individu ally and d/b/a First
Sand and Gravel C ompan y; Stanley Lay, Ind ividually and d /b/a First Sand and Gra vel Comp any; and, ap parently,
Barba ra Lay.

         2
          Appellees Joe Kidd, his wife, Beulah Kidd, and Campbell County adopted, by reference, the brief of the
State of Tennessee pursuant to the provisions of Rule 27(j), T.R.A.P.

                                                            3
We reverse the judgment of the trial court and remand for a jury

trial on the issues made by the pleadings.



                   On January 3, 1997, the State filed a complaint for

right of entry and for a permanent injunction to abate a nuisance

in Campbell County.                      The complaint sought to have the condition

allegedly caused by Elk View's act of "placing a berm or dam at

the outlet end of a cross drain under State Route 297 declared a

public nuisance.”                    It likewise sought “to permanently enjoin [Elk

View] from interfering with the natural drainage of water under

or around State Route 297."                              In conjunction with the filing of

the State’s complaint, the State obtained, ex parte, a

restraining order pursuant to Rule 65.03, Tenn.R.Civ.P.,

directing Elk View to remove the berm or dam that it had placed

on the property at the outlet end of the cross drain under State

Route 297.             The State further requested that a hearing be held on

February 3, 1997, regarding its request for an injunction

"enjoining [Elk View] from interfering with the natural drainage

of water or, in the alternative, mandatorily enjoining Defendants

from continuing to obstruct the natural drainage of water, and/or

ordering an immediate right of entry in order to abate the

nuisance on behalf of the State."                                    Although a hearing was

scheduled as requested, the parties agreed to continue the

hearing and re-schedule it at a mutually-agreeable time.                                                          On

March 12, 1997, an agreed order was entered dissolving the

restraining order.3



         3
          Elk View filed a third-party complaint on March 10, 1997, seeking inverse condemnation. On the same
day, Barbara Lay, wife of the defendant-appellant Stanley Lay, requested permission to intervene in the subject
matter bec ause of her o wnership inter est in the prop erty that is the subje ct of this action. H er petition wa s granted.
We assume , but do not know for sure, that Attorn ey David A. Stuart, who re presents Mr. Lay on this appeal, also
represents h is wife before this c ourt.

                                                               4
           The parties agreed to a June 20, 1997, hearing.   That

hearing was conducted over three non-consecutive days.     On July

24, 1997, the trial court issued the following memorandum

opinion:



           In this cause the State of Tennessee has
           filed a petition seeking to abate a nuisance it
           alleges has been created by the Defendants
           placing a dam at the outlet end of a cross
           drain under State Route #297 in Campbell
           County. The Defendants have filed a denial
           and a cross [sic] action alleging an inverse
           condemnation and also filed an intervening
           complaint and/or a third party complaint
           against Joe Kidd, et ux wherein it is alleged
           that Mr. Kidd is responsible to a degree for
           the flooding problem.

           This case was heard in length over three
           days and many exhibits filed therein along
           with the testimony from numerous witness
           [sic].

           The culvert in question in this case has
           been in place for over fifty years under a
           County Road and later a State road when the
           same was taken over by the State Highway
           department.

           The Defendant, Elk View Land and Gravel,
           Incorporated, has a mining operation underway
           on the North side of State Highway 297 and
           Joe Kidd, et ux own the land on the south
           side of #297 highway on the inlet side of the
           culvert in question. On the outlet side of
           the tile, Elk View has placed a spoil berm
           along the side of the highway and also placed
           spoil in front of the culvert and installed
           an additional culvert about 32 inches higher
           and in the berm to control the flow of the
           water.

           It is the holding of the Court that the
           actions of the Elk View Land and Gravel,
           Inc., have created a nuisance in the area
           both to Mr. Kidd and to the general public.
           The proof clearly shows that numerous wrecks
           have occurred when vehicles come upon the
           flooded was [sic] on the roadway. The
           defendants have clearly diverted the natural
           flow of the water as the same has been for
           many years. The court feels that this has
           been done to keep the water out of their
           mining operation despite approved plan[s] for
           mining the area which show the water was to


                                 5
                   be channeled to a settlement pond area and
                   then into a stream.

                   The Court holds that the Petitioner is
                   entitled to the relief sought against the
                   defendant, Elk View Land and Gravel, Inc.
                   The court further feels that the defendants
                   claim for inverse condemnation is without merit
                   and that the defendants third party claim against
                   Joe Kidd is also without merit. The court
                   finds that the sale [sic] cause of the problem
                   in this matter is the placing of the berm
                   around the outlet end of the pipe and damming
                   of the water.



An order and injunction was entered on August 7, 1997.                                                      It

incorporates the court's memorandum opinion of July 24, 1997.4



                   Elk View's first two issues challenge the right of the

trial court to conduct a hearing on the merits in the face of Elk

View’s demand for a jury trial.                                  It argues that it participated

in the hearing below, justifiably believing that the trial court

was addressing only the State's request for a temporary

injunction and its own request for a temporary injunction,5 and

not the merits of the other issues raised by the pleadings.                                                          It

further asserts that the confusion over the purpose of the

hearing can be traced to the restraining order of January 3,

1997, obtained ex parte, which did not comply with the

requirements of Rule 65.03(5), Tenn.R.Civ.P., in that the

restraining order did not state that it would expire at the end

of a period “not to exceed fifteen days.”                                         Id.       On March 12,

1997, the trial court entered an agreed order that the


         4
           As Elk View notes in its brief, a discrepancy exists between the trial court's memorandum opinion dated
July 24, 19 97, and its m emorand um opinio n dated M arch 26, 1 998, the latte r opinion b eing filed in resp onse to E lk
View's motion for new trial. The court's memorandum opinion dated March 26, 1998, indicates that "[a]ll issues
were covered in this hearing except the inverse condemnation hearing," thus contradicting its earlier opinion dated
July 24, 1997, in which the court stated that the "claim for inverse condemnation is without merit." Both opinions
relate to the same three-day hearing.

         5
          Elk View had filed a m otion for a tem porary injun ction regard ing the draina ge prob lem, in which m otion it
argued tha t clearing out the culvert unde r the Kidd s’ driveway wo uld correc t the flooding o n the latter’s pro perty.

                                                             6
restraining order had expired at the end of the fifteen-day

period.   Elk View contends, therefore, that in light of its

demand for a jury trial, the bench trial "insisted upon by the

State was for the purpose of attempting to present sufficient

evidence for the court to issue a temporary injunction" pursuant

to Rule 65.04, Tenn.R.Civ.P.    (Emphasis added).



           Elk View argues on this appeal that it did not orally

stipulate in open court that it waived its right to a jury trial,

nor did it enter into a written stipulation evidencing its

consent to a bench trial, the two methods of waiving a previously

and properly demanded trial by jury that are contemplated by Rule

39.01(a), Tenn.R.Civ.P.



           Although the State acknowledges that Elk View made a

demand for a jury trial, it argues that Elk View waived its right

to a jury trial "when [it] agreed to a hearing on the merits of

the State's Injunction...and all pending Motions."    In support of

this argument, the State refers to the following discussion among

counsel and the trial court in open court on June 20, 1997:



           MS. PADUCH: Can I ask a question here? If
           we are meeting on Thursday, what we are going
           to be discussing is the State's seeking to
           have the action of Elk View Land and Gravel
           declared a nuisance and to have that abated,
           and by doing that to get an injunction. All
           of these matters about water quality level
           really aren't going to be heard on the merits
           on Thursday. There is a motion to dismiss
           pending by the State as far as the inverse
           that doesn't have anything to do with this,
           and then there is a motion to dismiss pending
           --

           THE COURT:   We will take up the motions first
           Thursday.

           MS. PADUCH: Right. But I don't think we are
           going to be getting into water quality levels

                                  7
whatsoever on Thursday's hearing. That is
what -- I just want to come prepared for what
we are talking about Thursday. As I
understand it, we are talking about the
State's -- the State is the one that started
all this trying to get an injunction.

THE COURT: We will take up the two motions
first, then we will go into the hearing on
the merits and resolve everything except the
inverse condemnation matter.

MS. PADUCH: Are you saying, although I don't
have a dog in this fight, but are you saying
you are going to have a merits on the entire
suit that has been brought, the third-party
claim of --

THE COURT:    Except the inverse condemnation.

MR. STUART: Well, the inverse condemnation
and the third-party complaint for trespass
against the Kidds. I would assume that would
have to wait a further hearing, and what we
would be doing Thursday would be our request
for an injunction and the State's request for
an injunction; is that right?

THE COURT: Is that what --

MS. PADUCH: Right. And the only other
things pending are motions to dismiss.

MR. STUART:    And the motions, yes.

THE COURT:    Yes.

MS. PADUCH: Okay. That is what I was
saying, I don't think Mr. Owens has anything
to add to that if all we are doing is a
motion to dismiss.

THE COURT: Well, that would be up to Mr.
Rodgers whether he --

MS. PADUCH:    You are right, it is, but I --

MR. RODGERS: Well, if we are excluding only
the condemnation and dealing with everything
else, then that includes whatever they claim
we are dumping on them in the way of impure
water going under the pipe, and so we are
into water quality. If that is being
excluded along with the inverse condemnation,
then, no, I don't need him back. And I need
the instruction of the Court as to how broad
our hearing on Thursday is.

THE COURT: Is that what you are contending
about the trespass?


                        8
          MR. STUART: Yes. That goes to the merits of
          our suit for trespass. And we are not going
          to be ready for a trial --

          THE COURT:    Okay.

          MR. STUART: -- a full-blown trial on that
          issue Thursday.

          THE COURT:    Okay.

          MS. PADUCH: That is what I was trying to
          raise. I think we are just talking about the
          motions and the injunction that the State is
          trying to get.

          THE COURT:    Okay.    I don't believe we would
          need him.



The State also relies on the following discussion from the

hearing of June 26, 1997:



          THE COURT: I take it we are going to take up
          these motions first? Let me see --

          MS. PADUCH: Your Honor, if we could, if we
          could deal with, actually, the injunction
          first, since all the parties that need to be
          here for the motions have to sit through all
          of this and --

          THE COURT: Okay. Let me see counsel just
          one second. I couldn't hear you.

          MS. PADUCH:    I am sorry.

          THE COURT:    That air conditioning.

          MS. PADUCH: Everyone who has to be here for
          the injunction as far as the parties is going
          to have to be around for the motions, and
          there is going to be witnesses testifying
          that don't have anything to do with the
          motions, so if we could be heard on the
          injunction first.

          THE COURT: Do you want to just go ahead and
          hear the parties and then --

          MS. PADUCH:    Yeah.

          THE COURT:    -- hear the principals and --

          MS. PADUCH: And then take care of the
          motions after, maybe, hopefully get a ruling
          on the injunction --

                                    9
          THE COURT:   Okay.

          MS. PADUCH: -- and then deal with the
          motions, if necessary, at that point.

          THE COURT: Okay. That is fine with me.
          Just, let's see, you are the moving party,
          you will go first and then --



          The State argues that "no one disagreed as to the

purpose of the hearing and the manner in which it would proceed,"

and that these discussions in court indicate that a jury trial

was waived by all the parties pursuant to Rules 38.05 and 39.01,

Tenn.R.Civ.P.   In support of its waiver argument, the State cites

the following four cases, in each of which the court found that a

party’s right to a jury trial had been waived: Russell v.

Hackett, 190 Tenn. 381, 230 S.W.2d 191 (1950); Leiberman v.

Bowden, 121 Tenn. 496, 119 S.W. 64 (1908); Davis v. Ballard, 946

S.W.2d 816 (Tenn.App. 1996); Agricultural Insurance Company v.

Holter, 44 Tenn.App. 661, 318 S.W.2d 433 (1958).



          Furthermore, the State denies the appellants' assertion

that the June 20, 1997, hearing was for a "temporary injunction,"

arguing that it has never used the term "temporary injunction" in

any of its court filings.



          We address first the issues pertaining to the

appellants' demand for a jury trial and the propriety of the

trial court’s action in conducting a bench trial on the merits.



          Rule 38, Tenn.R.Civ.P., provides for a jury trial as of

right:



                               Rule 38.02

                                   10
         Any party may demand a trial by jury of any
         issue triable of right by jury by demanding
         the same in any pleading specified in Rule
         7.01 or by endorsing the demand upon such
         pleading when it is filed....

                            *   *    *

                            Rule 38.05

         The failure of a party to make demand as
         required by this rule constitutes a waiver by
         the party of trial by jury. A demand for
         trial by jury as herein provided may not be
         withdrawn without the consent of all parties
         as to whom issues have been joined.



(Emphasis added).   Rule 39.01, Tenn.R.Civ.P., also addresses

trial by jury:



          When trial by jury has been demanded as
          provided in Rule 38, the action shall be
          designated upon the docket as a jury action.
          The trial of all issues so demanded shall be
          by jury, unless (a) the parties or their
          attorneys of record, by written stipulation
          filed with the court or by oral stipulation
          made in open court and entered in the record,
          consent to trial by the court sitting without
          a jury or (b) the court upon motion or of its
          own initiative finds that a right of trial
          by jury of some or all of those issues does
          not exist under the Constitution or statutes
          of the state of Tennessee.



(Emphasis added).



          In its brief, the State provides excerpts from the

hearings on June 20 and 26, 1997, and argues that these excerpts

indicate that Elk View stipulated in open court that it waived

its right to a trial by jury.   On the contrary, the transcript

clearly indicates that Elk View notified the court that it could

not be prepared for "a full-blown trial" by the time of the

hearing scheduled for June 26, 1997, and that at no time did Elk

View stipulate in court, or in writing, that the case was to be

                                11
heard by the court without a jury.     In addition, the transcript

clearly indicates confusion regarding the breadth of the

proceedings that were to occur following the hearing of June 20,

1997.   Furthermore, the cases cited by the State in support of

its waiver argument are distinguishable from the facts before us

in this case.   In Davis and Russell, the right to a trial by jury

was waived by a party’s failure to appear in court; and in

Agricultural Insurance Company, the right to a jury trial was

waived by the failure of a party to object in open court to a

trial by the court without a jury.     In the case sub judice, Elk

View did appear in court for the hearing, and as we have noted,

did properly notify the court of its demand for a jury trial.

Finally, in Lieberman, the Supreme Court found sufficient

evidence in the record to support a determination that the right

to a jury trial had been waived; we do not reach such a

conclusion in the instant case.



           In view of the substantial doubt in the record as to

whether Elk View gave up its demanded trial by jury, we are

unwilling to conclude that it gave up this important

constitutionally-protected and statutorily-guaranteed right.      See

Rule 38.01, Tenn.R.Civ.P.   We find that Elk View was justified in

believing that the court’s three-day hearing was, in fact, for

the purpose of addressing preliminary matters and not for the

purpose of adjudicating the substance of the parties’ respective

claims.



           We conclude that Elk View did not waive its right to a

trial by jury, and thus, the trial court erred in ruling on the

merits of the case.   We reverse the judgment of the trial court



                                  12
and remand for a jury trial on the issues made by the pleadings.6

Costs of the appeal are assessed to the appellees.




                                    __________________________
                                    Charles D. Susano, Jr., J.


CONCUR:



________________________
Houston M. Goddard, P.J.



  (Not Participating)
Don T. McMurray, J.




     6
       The State does not contend in its brief that the issues made by the
pleadings are outside the purview of those that are properly submitted, upon
request, to a jury.

                                      13
