Twin Creeks Farm & Ranch, LLC v. Petrolia Irrigation Dist.

• Decision Date: 07 April 2020
• Docket Number: DA 19-0076
• Citation: 399 Mont. 431,461 P.3d 91,2020 MT 80
• Parties: TWIN CREEKS FARM & RANCH, LLC, Claimant, Appellee, and Cross-appellant, v. PETROLIA IRRIGATION DISTRICT, Objector, Appellant, and Cross-Appellee, Daniel W. Iverson and Wilks Ranch Montana, Ltd, Notice of Intent to Appear.
• Court: Montana Supreme Court

399 Mont. 431

461 P.3d 91

2020 MT 80

TWIN CREEKS FARM & RANCH, LLC, Claimant, Appellee, and Cross-appellant,

v. PETROLIA IRRIGATION DISTRICT, Objector, Appellant, and Cross-Appellee,Daniel W. Iverson and Wilks Ranch Montana, Ltd, Notice of Intent to Appear.

DA 19-0076

Supreme Court of Montana.

Submitted on Briefs: October 30, 2019

Decided: April 7, 2020

For Objector, Appellant, and Cross-Appellee: John R. Christensen, Christensen Fulton & Filz, PLLC, Billings, Montana, Joseph L. Breitenbach, Hedger Friend, PLLC, Billings, Montana

For Claimant, Appellee, and Cross-Appellant: John E. Bloomquist, Bloomquist Law Firm, P.C., Helena, Montana

Justice Beth Baker delivered the Opinion of the Court.

¶1 Petrolia Irrigation District ("PID") and Twin Creeks Farm & Ranch, LLC ("Twin Creeks") appeal the Water Court’s rulings in adjudicating two of Twin Creeks’s water rights claims. We affirm the Water Court’s determination that Twin Creeks abandoned one claim by nonuse because the intent to abandon occurred concurrently with the nonuse. With respect to the second claim at issue, we conclude that the Water Court misapprehended the effect of testimony regarding its historical use and remand for further consideration.

FACTUAL AND PROCEDURAL BACKGROUND

¶2 Twin Creeks owns property along Flatwillow Creek in Petroleum County. Flatwillow Creek’s headwaters are in the Big Snowy Mountains and it flows to its confluence with the Musselshell River. Twin Creeks’s property consists of three different historical ranches, including the Damschen/Hansen¹ property, which is the subject of this appeal. Most of the property’s irrigated land was patented to either Marie or Samuel Smith in the early 1900s. At some point, the Smiths sold the property to Ernest Hansen, whose irrigation history is unclear from the record. From 1950 to 1965, Ernest Hansen leased the ranch to Elliot Trump. The Damschen brothers ("Damschen") acquired the property in 1965. In 1982, Damschen filed statements of claim for direct flow irrigation from Flatwillow Creek. PID objected to the claims. Twin Creeks’s predecessors, Mike and Janna Taylor, acquired the Damschen property and the associated water right claims in the mid-1990s. The Preliminary Decree for Basin 40B was issued in 2011. The Taylors objected to Department of Natural Resources and Conservation ("DNRC") issue remarks on the statements of claim. Twin Creeks purchased the property from the Taylors in 2015.

¶3 There were five Twin Creeks claims at issue before the Water Court. The court held a hearing on August 28-30, 2018, in Winnett, Montana. The Water Court issued its Closing Order in December 2018, ordering changes to four of the claims and removing the issue remarks. The statements of claim at issue on appeal are 40B 109102-00 (the "102 claim") and 40B 109104-00 (the "104 claim").

The 102 Claim

¶4 On July 22, 1904, Samuel Smith filed a notice of appropriation for Flatwillow Creek and its tributary for 500 miner’s inches to irrigate 45 acres in Section 35, T14N, R29E, located on the Hansen property with a May 18, 1904 priority date. This area was referred to as the "Lost World" at trial and is downstream of the 104 claim’s place of use. Smith’s desert-land entry documents support irrigation in the early 1900s.² Based on that evidence, the Water Court found the notice of appropriation was perfected and used on the 102 claim’s place of use.

¶5 Damschen filed a statement of claim in 1982 for 45 acres on the Hansen property based on the 1904 Samuel Smith notice of appropriation. Damschen claimed 3,000 gallons per minute ("gpm"), or 6.68 cubic feet per second ("cfs"), based on pump capacity.

¶6 In 2005, DNRC examined the claims and reduced the flow rate to 1.70 cfs based on the agency’s 17.00 gpm per acre standard. DNRC also inserted an issue remark based on the 1971 Water Resources Survey,³ which identified zero acres irrigated. Twin Creeks’s predecessors, the Taylors, objected to the flow rate and to the DNRC issue remark. PID filed an objection, asserting that the 102 claim was abandoned.

¶7 The Water Court found that nonuse of the claim between 1948 and 1971 showed a lack of intent to continue irrigating with the 1904 Samuel Smith water right; it thus found that the May 18, 1904 priority date was abandoned. The court found that Damschen began irrigating the field after the Damschens acquired the property in 1965. Based on the last evidence of nonuse—the 1971 Water Resources Survey—the court assigned a December 31, 1971 priority date for the 102 claim and restored the 3,000 gpm flow rate based on pump capacity. Twin Creeks appeals the 1971 priority date, asserting that the right had not been abandoned and that the 1904 priority date is correct.

The 104 Claim

¶8 On July 23, 1904, Marie Smith filed a Notice of Water Right in support of a desert-land patent application. The notice of appropriation claimed 300 miner’s inches to irrigate 210 acres in portions of Sections 20, 28, 29, and 30, T14N, R29E with a July 10, 1903 priority date. The place of use for the 104 claim is located within the boundaries of the Hansen property, upstream from the 102 claim’s place of use. Damschen filed a statement of claim in 1982 and claimed the 1903 priority date based on Marie Smith’s notice of appropriation.

¶9 In 2005, DNRC added an issue remark during the claim examination, noting the 1971 Water Resources Survey that identified 151 irrigated acres in the claimed place of use, not the 210 acres Damschen claimed. In 2011, PID objected to the 104 claim, asserting that only 15 acres were irrigated prior to 1954. Alternatively, PID argued that even if a 210-acre right had been perfected, all but 15 acres had been abandoned. In 2012, the Taylors objected to the DNRC issue remarks on the 104 claim’s flow rate and irrigated acreage.

¶10 The Water Court found that PID had failed to overcome the presumption that the elements of the 104 claim were correct as filed—thereby resolving the DNRC issue remark and establishing the full 210 maximum irrigated acres. It also found that PID had failed to establish a long period of nonuse sufficient to support a finding of abandonment. PID appeals these findings.

STANDARDS OF REVIEW

¶11 We review the Water Court’s findings of fact to determine whether they are clearly erroneous. Skelton Ranch, Inc. v. Pondera Cty. Canal & Reservoir Co. , 2014 MT 167, ¶ 26, 375 Mont. 327, 328 P.3d 644 (citing Weinheimer Ranch v. Pospisil , 2013 MT 87, ¶ 19, 369 Mont. 419, 299 P.3d 327 ). A finding is clearly erroneous if it is not supported by substantial evidence, if the trial court misapprehended the effect of the evidence, or if our review of the record convinces us that a mistake has been made. Skelton Ranch , ¶ 27.

¶12 "Substantial evidence is evidence which a reasonable mind might accept as adequate to support a conclusion, even if the evidence is weak or conflicting." Skelton Ranch , ¶ 27 (citing Arnold v. Boise Cascade Corp. , 259 Mont. 259, 265, 856 P.2d 217, 220 (1993) ). The evidence need not amount to a preponderance of the evidence, but it must be more than a scintilla. Skelton Ranch , ¶ 27 (citing State v. Shodair , 273 Mont. 155, 163, 902 P. 2d 21, 26 (1995) ). "This standard is deferential, and not synonymous with the clear error standard. A reviewing court may still find a factual finding is clearly erroneous even though there is evidence to support it." City of Helena v. Cmty. of Rimini , 2017 MT 145, ¶ 13, 388 Mont. 1, 397 P.3d 1 (citing Skelton Ranch , ¶ 27 ). We review such evidence in a light most favorable to the prevailing party and leave the trial court to determine the credibility of witnesses and the weight assigned to their testimony. Only a Mile, LLP v. State , 2010 MT 99, ¶ 10, 356 Mont. 213, 233 P.3d 320 (citing In re Water Complaint of Kelly , 2010 MT 14, ¶ 25, 355 Mont. 86, 224 P.3d 640 ).

DISCUSSION

The 102

¶13 Twin Creeks argues on appeal that the Water Court erred when it found the 1904 priority date for the 102 claim abandoned based on nonuse from 1948 to 1971 and Hansen’s intent to abandon. It asserts that the court should have viewed intent through the actions of Damschen, not of Hansen, and that Twin Creeks successfully rebutted the presumption of abandonment because it demonstrated continuous use by Damschen and his successors. In response, PID urges this Court to affirm the Water Court’s finding because Twin Creeks failed to present evidence sufficient to rebut the presumption of abandonment due to Hansen’s nonuse.

¶14 Abandonment of a water right requires both nonuse and intent to abandon. 79 Ranch v. Pitsch , 204 Mont. 426, 432, 666 P.2d 215, 218 (1983). To find abandonment, there must be a "concurrence" of nonuse and intent. See Roland v. Davis , 2013 MT 148, ¶ 32, 370 Mont. 327, 302 P.3d 91 (citing Shammel v. Vogl , 144 Mont. 354, 359, 396 P.2d 103, 106 (1964) ) ("Abandonment involves a voluntary act that requires ‘a concurrence of act and intent.’ "); 79 Ranch , 204 Mont. at 433, 666 P.2d at 218 ("There must be a concurrence of nonuse and intent to abandon."); Thomas v. Ball , 66 Mont. 161, 167, 213 P. 597, 599 (1923) (citing Featherman v. Hennessy , 42 Mont. 535, 540, 113 P. 751, 753 (1911) ) ("To constitute abandonment there must be a concurrence of act and intent—the relinquishment of possession and the intent not to resume it for a beneficial use.").

¶15 Whether a water right has been abandoned is a question of fact that depends on the conduct, acts, and intent of the parties claiming the use of the water. Heavirland v. State , 2013 MT 313, ¶ 31, 372 Mont. 300, 311 P.3d 813 (citing Power v. Switzer , 21 Mont. 523, 529, 55 P. 32, 34 (1898) ). Intent to abandon a water right may be inferred from all of the circumstances of the case and need not be proved directly. Heavirland , ¶ 31 (citing Denver by Bd. of Water Comm’rs v. Snake River Water Dist. , 788 P.2d 772, 776 (Colo. 1990) ). A long period of continuous nonuse creates a rebuttable presumption of intent to abandon; the...