Anderson v. Pursell

• Decision Date: 10 January 2011
• Docket Number: No. 09SA119.,09SA119.
• Citation: 244 P.3d 1188
• Parties: Mark ANDERSON, Applicant-Appellant v. Richard PURSELL; Henry R. Sebesta and Mary M. Sebesta Revocable Trust; and C & K Properties, Inc., Opposers-Appellees and Division Engineer, Water Division 2, Appellee pursuant to C.A.R. 1(e).
• Court: Colorado Supreme Court

244 P.3d 1188

Mark ANDERSON, Applicant-Appellant

v. Richard PURSELL; Henry R. Sebesta and Mary M. Sebesta Revocable Trust; and C & K Properties, Inc., Opposers-AppelleesandDivision Engineer, Water Division 2, Appellee pursuant to C.A.R. 1(e).

No. 09SA119.

Supreme Court of Colorado, En Banc.

Dec. 13, 2010.

As Modified on Denial of Rehearing Jan. 10, 2011.^*

Paul G. Anderson, LLC, Paul G. Anderson, Colorado Springs, Colorado, Attorneys for Applicant-Appellant.

Anthony L. Martinez, Esq., P.C., Anthony L. Martinez, Salida, Colorado, Attorneys for Opposer-Appellee Richard Pursell.

Jonathan S. Bender, Meghan N. Winokur, Holland and Hart, LLP, Denver, Colorado, Attorneys for Opposers-Appellees Henry R. Sebesta and Mary M. Sebesta Revocable Trust and C & K Properties, Inc.

Justice RICE delivered the Opinion of the Court.

Mark Anderson ("Anderson") challenges an April 3, 2009, water court order that granted attorney fees and costs to Henry R. Sebesta and Mary M. Sebesta Revocable Trust and C & K Properties, Inc. (collectively "Sebesta"), and Richard Pursell ("Pursell") for various stages of the litigation. We hold that the water court was correct in granting attorney fees and costs associated with the Final Decree to Pursell because he was the "prevailing party" under the parties' Water Agreement. Further, the water court was correct in both the award and the amount of attorney fees and costs to both Sebesta and Pursell for defending Anderson's Motion to Enforce because it lacked substantial justification under section 13-17-102(4), C.R.S. (2010). But, we hold that the water court incorrectly awarded attorney fees and costs to Sebesta and Pursell for defending Anderson's appeal and pursuing the underlying fee award. Therefore, we affirm in part, reverse in part, and remand to the water court to enter a judgment consistent with our opinion.

I. Facts and Procedural History

At this stage, this case involves a dispute over attorney fees. This attorney fee dispute arises from an ongoing clash over the Eureka Ditch water right, the procedural history of which is necessary to understand the attorney fee dispute now at issue.

A. The Parties and the Water Right

The Eureka Ditch flows in turn through the properties of Sebesta, Diana and Wail Hashimi ("Hashimi"),¹ Pursell, and Anderson, with each landowner owning an interest in the water right. Anderson owns 50%, Sebesta and Hashimi each own 20%, and Pursell owns 10%. The Eureka Ditch is not a simple straight line canal. Instead, it is a complex hydrological system that flows through a series of ponds and lateral ditches on the parties' land. Despite the presence of the ponds, only Anderson has storage rights to store water on his land.

On September 12, 2000, Sebesta and Anderson entered into a Joint Water Use and Maintenance Agreement ("Water Agreement").² In this agreement, the parties established that Sebesta had the right to divert water from the Eureka Ditch so long as one-half of the water remained in the ditch to supply Anderson with his allocated share.³ The parties also agreed that "[i]n the event of a dispute concerning the intent or construction of [the Water Agreement], the prevailing party shall be entitled to reasonable attorney's fees."

B. Proceedings at the Water Court

Anderson submitted an application to the division engineer seeking to, among otherthings, adjudicate absolute water rights, change his portion of the Eureka Ditch water right to allow for pond storage and other uses, and provide a plan for augmentation to replace out of priority depletions. Sebesta and Pursell both opposed the application because they were concerned that if the water court approved the application, their shares of the water right would be harmed.

1. Injunction and Stipulation

Before the water court ruled on Anderson's application, Anderson moved for injunctive relief against Sebesta and Pursell claiming that he was not receiving his share of the water from the Eureka Ditch. Anderson argued that the reason for his shortfall was that Sebesta and Pursell had both added new ponds and expanded existing ones on their land, causing more water to sit in the ponds and less water to be delivered to Anderson. Sebesta responded to this motion but Pursell did not.

The water court granted the injunction in November 2003, and ordered Sebesta and Pursell to cease diverting and storing the water and to affirmatively deliver one-half of the flow of the Eureka Ditch to Anderson. In so doing, the water court ordered Sebesta and Pursell to by-pass their ponds to ensure that Anderson would receive his share. The water court also awarded attorney fees to Anderson for the injunction.

Sebesta filed a timely Motion to Alter, Amend or Vacate the injunction. Pursell also filed a Motion to Alter, Amend or Vacate, but did so after the fifteen-day deadline. Before the water court ruled on either of the motions, Anderson and Sebesta entered into a stipulation in April, 2004. In the stipulation, Anderson agreed to dismiss the water court's injunction order against Sebesta. In exchange, Sebesta dismissed his opposition to Anderson's application. Sebesta and Anderson also agreed to reasonably accommodate each other's ownership interests in times of low flow and to cooperate in constructing and installing additional structures to facilitate the delivery of Anderson's 50% interest. The stipulation did not require Sebesta to by-pass the ponds on his land. The water court accepted the stipulation.

Neither the injunction nor the stipulation affected Anderson's pending application.

2. Final Decree

The water court ultimately held a trial on Anderson's application in November 2004, and issued a decree on the matter ("Final Decree") on February 10, 2005. The Final Decree incorporated the Water Agreement and granted Anderson much of what he requested in his application. The water court ruled, however, that Anderson's share of the water right was only in the main channel of the Eureka Ditch, that he was to bear transit losses, and that Pursell and Sebesta were not required to by-pass the ponds on their land.⁴

Anderson submitted a timely motion for costs under C.R.C.P. 54(d). Pursell, on the other hand, submitted a motion for costs and attorney fees, alleging that he was the "prevailing party" under the Water Agreement, but did so on November 2, 2005, over eight months after the fifteen-day deadline. The water court denied both motions on December 26, 2006—Pursell's because it was late and Anderson's because he was not the prevailing party. With regard to Anderson not being the prevailing party, the water court stated that "[w]hile Anderson obtained some of the relief he requested, a substantial portion of the trial surrounded the interpretation of certain aspects of the [Water Agreement] which were determined contrary to Anderson's position."

Pursell made a timely motion for reconsideration of this order.

3. Motion to Enforce

In October 2006, because he was again not receiving his share of the water right, Anderson filed a Motion to Enforce seeking to compel Pursell to comply with the injunction order and Sebesta to comply with the stipulation. Anderson also asked the water court to modify the stipulation to require Sebesta to by-pass the ponds on his land.

The water court denied this motion in an order dated December 18, 2006. It ruled that the Final Decree took precedence over the injunction order and that Sebesta and Pursell were not the reasons that Anderson was not receiving his water. Ultimately, it held that Anderson's motion was "without merit and constitute[d] a substantially frivolous claim" and awarded attorney fees to Sebesta and Pursell.

Anderson filed a notice of appeal with this Court. But, after obtaining multiple extensions of time to file his opening brief, Anderson moved to dismiss the appeal. We dismissed the appeal with prejudice and remanded to the water court without any directions concerning attorney fees.

4. Attorney Fees

After we remanded to the water court, the water court held a hearing on attorney fees associated with the Motion to Enforce. The water court made its ruling in an order dated April 3, 2009, and granted costs and attorney fees to Sebesta and Pursell. In addition to fees and costs associated with the Motion to Enforce, it granted Pursell's motion for reconsideration that he filed after being denied costs and attorney fees associated with the Final Decree. Further, the water court granted Sebesta and Pursell the costs and attorney fees that they incurred as a result of Anderson's abandoned appeal of the Motion to Enforce and in defense of Sebesta's and Pursell's motions for costs and fees.

In total, the water court awarded $51,635 in attorney fees and $833.82 in costs to Pursell and $22,493 in attorney fees and $2,300.50 in costs to Sebesta.

5. Subsequent Proceedings

While this appeal has been pending, the water court has made findings involving the same parties and issues. First, in September 2009, in a case brought against Pursell by the State Engineer, the water court ordered Pursell to release all water from the ponds on his property along the Eureka Ditch until he obtained a storage right. Second, in November 2009, the water court entered an order confirming that Anderson complied with the terms of the Final Decree.

Anderson now appeals the April 3, 2009 order of the water court granting Sebesta and Pursell costs and attorney fees for the Motion to Enforce and the appeal, and granting Pursell costs and attorney fees for all stages of the litigation.

II. Analysis

A. Pursell's Costs and Attorney Fees Stemming from the Final Decree

When the water court granted attorney fees to Sebesta and Pursell for the Motion to Enforce, it also granted Pursell's motion to reconsider its denial of costs and fees from the Final Decree. Anderson argues that the water court abused its discretion in granting Pursell's motion for reconsideration and awarding Pursell costs and attorney fees for all previous stages of...