Cal. Pines Prop. Owners Ass'n v. Pedotti
| Decision Date | 24 May 2012 |
| Docket Number | No. C066315.,C066315. |
| Citation | 206 Cal.App.4th 384,141 Cal.Rptr.3d 793,12 Cal. Daily Op. Serv. 5695,2012 Daily Journal D.A.R. 6800 |
| Court | California Court of Appeals Court of Appeals |
| Parties | CALIFORNIA PINES PROPERTY OWNERS ASSOCIATION, Plaintiff and Appellant, Robert Pedotti, Defendant and Respondent. v. Robert PEDOTTI, Defendant and Respondent. |
OPINION TEXT STARTS HERE
Minasian, Spruance, Meith, Soares & Sexton, Oroville, Paul R. Minasian and Dustin C. Cooper for Plaintiff and Appellant.
Law Offices of Gifford & Harr and Tom Gifford for Defendant and Respondent.
California Pines Property Owners Association (the Association) appeals after the trial court resolved a dispute over water diversion rights in favor of defendant Robert Pedotti.
The Association owns land in the community of California Pines in Modoc County, California, including the land where Donovan Reservoir (Reservoir) and its dam are located. Pedotti owns the nearby 1,761–acre Diamond C Ranch (Ranch), where he has raised over 1,000 head of cattle and farmed alfalfa and other natural grasses for livestock.
Pedotti and the Association are assignees of a 1986 50–year water storage agreement (the Agreement) entered into by predecessor owners. Among other things, the Agreement provides: Pedotti has a right to certain water that flows into the Reservoir (Ranch Water) 1 and certain water delivery systems that can divert Ranch Water out of the Reservoir. Pedotti needs the Reservoir to store Ranch Water for Ranch operations. At the same time, the Association needs the Ranch Water to maintain the Reservoir level and the aesthetic value of the waterfront area of the California Pines subdivision. Thus, Pedotti can store Ranch Water in the Reservoir, but he cannot impede the flow of Ranch Water into the Reservoir, and he must use “best efforts” to maintain a full Reservoir, subject to natural circumstances beyond Pedotti's control. The Agreement does not define “best efforts.”
The dispute between the parties involves Pedotti's use of Ranch Water in 2006 through 2008. The trial court ruled in Pedotti's favor on each of the Association's causes of action.
On appeal the Association contends (1) “best efforts” means the efforts required of a fiduciary; (2) in interpreting the Agreement, the trial court should have considered extrinsic evidence of the circumstances surrounding the making and the pre-dispute implementation of the Agreement; (3) substantial evidence does not support certain trial court findings; (4) the trial court erred in requiring the Association to prove breach of contract elements on its cause of action for violation of the licenses; and (5) the trial court erred in concluding that Pedotti's water interest had priority over the Association's interest.
Addressing the Association's first contention in the published portion of this opinion, we conclude that when a contract does not define the phrase “ best efforts,” the promisor must use the diligence of a reasonable person under comparable circumstances, not the diligence required of a fiduciary.
In the unpublished portion of this opinion, we address the Association's remaining contentions, concluding: the trial court did not err in ruling that the extrinsic evidence proffered by the Association was not relevant; the Association fails to establish that the trial court's findings are not supported by substantial evidence or that any error was prejudicial; any error in requiring the Association to prove breach of contract elements was harmless because the evidence supports the trial court's finding that Pedotti did not violate the licenses; and on the relevant issue as to whether Pedotti breached the Agreement and violated the licenses, the trial court found that he did not, and the evidence supports the trial court's findings.
We will affirm the judgment.
Viewing the evidence in the light most favorable to the prevailing party, giving him the benefit of every reasonable inference and resolving all conflicts in the evidence in support of the judgment ( As You Sow v. Conbraco Industries (2005) 135 Cal.App.4th 431, 454, 37 Cal.Rptr.3d 399), we glean the following from the record.
In 1960, the State Water Rights Board, now the State Water Resources Control Board (Board), issued a license for diversion and use of water, license No. 6293. License No. 6293 grants the licensee a right to use Ranch Water from the Rye Grass Swale in an amount not to exceed 565 acre feet per year for the purpose of irrigation. The license designated a specific geographic area (a “place of use” that is now part of the Ranch) where the water could be put to beneficial use.
In 1972, the Board issued a second license for diversion and use of water, license No. 9869, granting the licensee a right to use Ranch Water from the Rye Grass Swale in an amount not to exceed 669 acre feet per year, with a maximum withdrawal of 400 acre feet in any one year, for purposes of irrigation, stockwatering, and recreational uses. Stockwatering is using water for commercial livestock. (Cal.Code Regs., tit. 23, § 669.) Once again, the license designated a specific place of use (now another part of the Ranch that is contiguous with the place of use for license No. 6293) where the water could be put to beneficial use.
To cooperate in the use of the licenses, the Agreement was originally entered into between Leisure Industries, Inc. (Leisure), the predecessor owner of the Reservoir land, and Judith Carlsberg and the estate of Arthur Carlsberg, the former Ranch owners. The Agreement specified that Leisure would allow the Ranch to continue to store Ranch Water in the Reservoir, and the Ranch would not “impede the flow of Ranch Water” into the Reservoir and would “use its best efforts to maintain the water level” of the Reservoir to an elevation of at least 4,353 feet above sea level (the level at which the Reservoir is considered full), “subject to natural disasters, Acts of God, and other physical forces” beyond the control of the Ranch.
In 1992 Leisure assigned its interests in the Agreement to the Association, and in 1993 Pedotti purchased the Ranch and acquired interests in the Agreement and the licenses from the Carlsberg family.
Pedotti has been irrigating with Ranch Water since he purchased the Ranch. Water collected under each license was “commingled” in the Reservoir and flowed out of the Reservoir through the same outlet. Although Pedotti could estimate how much Ranch Water went to each license's place of use, he could not distinguish the water collected under each license when the water was drawn from the Reservoir.
Pedotti used a flood irrigation system (open earthen ditches) to move Ranch Water to irrigate his pastures and fields. To divert water from the Reservoir to the Ranch, Pedotti opened a sliding gate which allowed Ranch Water to flow through a conduit from the Reservoir to a distribution box. From the distribution box, Ranch Water flowed through valves; one valve carried water north and the second valve carried water west. Ranch Water travelled from the valves to the various pastures and fields on the Ranch through six to eight miles of ditches. Because he had a gravity-feed system, Pedotti could not use Ranch Water outside the designated places of use in 2006 through 2008.
Flood irrigation was typical for ranches in Modoc County with “low input sustainable livestock operations,” and it was an adequate and appropriate irrigation system for the Ranch. Most flood irrigated pasture systems in Modoc County used earthen ditches to deliver water to the fields.
Pedotti's expert witness was Dr. Donald Lancaster, who had been the farm advisor and county director for the University of California Cooperative Extension Service in Modoc County for 32 years. As farm advisor, Dr. Lancaster worked with farmers and ranchers on crop and pasture irrigation and management. He published a book on irrigated pasture management in northeastern California, and he also conducted research and published on the subject of irrigation systems. In addition, he worked with the manager of the Ranch in the 1980's before Pedotti purchased it. Dr. Lancaster was familiar with the Reservoir, observed Pedotti irrigate the Ranch with Ranch Water, and worked with Pedotti on his irrigation and ranch management practices.
The Association's expert witness was Mr. Edward Schmit, a civil engineer who never worked on a flood irrigation or stockwatering system for a ranch in northeastern California. (RT 142, 150) He worked with landowners in northeastern California only once, on a wetlands restoration project near the city of Adin in 1996 and 1997. Although he admitted it would be important for him to see how Pedotti irrigated his fields, Mr. Schmit did not visit the Ranch or observe Pedotti irrigate. Mr. Schmit saw Pedotti's property over a fence and from an airplane in 2009 at a time when Pedotti did not use any Ranch Water.2
According to Dr. Lancaster, an enclosed pipe would be the most efficient water delivery system, but such a system was not practical for many flood-irrigated systems. Dr. Lancaster opined that given the system in place at the Ranch and the scope of Pedotti's livestock production, it would not be economically feasible for Pedotti to replace his flood irrigation system with a wheel line or center pivot sprinkler system. It would cost over $200,000 to install a wheel line to irrigate 500 acres. In addition, because of the sediment in the reservoir water, Pedotti would have to filter the water to prevent the nozzles in the sprinklers from clogging up. A pivot system for 500 acres would cost at least $500,000. Such a system would require installing a pump, main line and towers and converting overhead power lines to underground systems. A sprinkler irrigation system was also inappropriate for the Ranch because it requires a reliable source of water and there was insufficient Ranch Water available for such a system.
Pedotti typically...
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