Cent. Utah Water Conservancy Dist. v. Upper E. Union Irrigation Co., No. 20111028.

• Court: Utah Supreme Court
• Writing for the Court: Justice PARRISH
• Citation: 321 P.3d 1113,747 Utah Adv. Rep. 4
• Decision Date: 15 November 2013
• Docket Number: No. 20111028.
• Parties: CENTRAL UTAH WATER CONSERVANCY DISTRICT, Plaintiff and Appellant, v. UPPER EAST UNION IRRIGATION COMPANY, East River Bottom Water Company, and Timpanogos Canal Company, Defendants and Appellees.

321 P.3d 1113
747 Utah Adv. Rep. 4

CENTRAL UTAH WATER CONSERVANCY DISTRICT, Plaintiff and Appellant,
v.
UPPER EAST UNION IRRIGATION COMPANY, East River Bottom Water Company, and Timpanogos Canal Company, Defendants and Appellees.

No. 20111028.

Supreme Court of Utah.

Nov. 15, 2013.

[321 P.3d 1116]

Edwin C. Barnes, Steven E. Clyde, Katherine E. Judd, Salt Lake City, for appellant.

Thomas W. Seiler, Jamis M. Gardner, Provo, for appellee Upper East Union Irrigation Company.

Robert L. Jeffs, Randall L. Jeffs, Provo, for appellee East River Bottom Water Company.

Robert C. Fillerup, Orem, for appellee Timpanogos Canal Company.

Justice PARRISH, opinion of the Court:
INTRODUCTION

¶ 1 This appeal arises from the Central Utah Water Conservancy District's (CUWCD) January 7, 2003 agreement (Agreement) to improve irrigation structures belonging to Upper East Union Irrigation Company (UEU), East River Bottom Water Company (ERB), and Timpanogos Canal Company (TCC) (collectively, Canal Companies) in exchange for rights to the increased water flow arising from the improvements. CUWCD failed to complete its obligations under the Agreement. After negotiations with the Canal Companies broke down, CUWCD filed a declaratory action to establish its contractual rights.

¶ 2 The district court ruled that because CUWCD breached its obligations under the Agreement, UEU and ERB were entitled to enforce the bargained-for damages provisions, resulting in the loss of CUWCD's prospective water rights. CUWCD appeals, asserting that the district court erred by: (1) granting summary judgment in favor of the Canal Companies, (2) failing to recognize that UEU and ERB received the benefit of their bargain, (3) refusing to reconsider its summary judgment ruling, (4) rejecting CUWCD's claims that its performance was excused under the doctrine of impracticability, (5) failing to recognize CUWCD's tender of cash in lieu of performance, and (6) refusing to allow CUWCD to amend its pleadings to add allegedly necessary parties.

¶ 3 We affirm the judgment of the district court in its entirety. Specifically, we hold that CUWCD's breach was material because UEU and ERB did not receive the benefit of their bargain. And the breach was not excused by the doctrine of impracticability or CUWCD's tender of cash in lieu of performance. Therefore, the district court appropriately entered summary judgment in favor of UEU and ERB and was under no obligation to reconsider its ruling. Finally, the district court did not abuse its discretion when it refused to allow CUWCD to amend its pleadings to join allegedly necessary parties.

BACKGROUND

¶ 4 CUWCD, ERB, UEU, TCC, Brigham Young University (BYU), and Provo City Corporation (Provo) entered into an Agreement to affect the diversion and conveyance of water from the Provo River throughout the Provo and Orem areas. ¹ The Agreement describes the scope of the project as follows:

[321 P.3d 1117]

PROJECT DESCRIPTION: The project would convert portions of existing open ditch water delivery systems of both the ERB and UEU to a piped delivery system.... The proposed project includes the piping of portions of both the ERB and UEU canal systems, the rehabilitation of the TCC [D]iversion, and the replacement or enlargement of an existing 1,500–foot section of 30? HDPE pipe in the TCC piped system.
The Agreement required that ERB and UEU abandon their existing diversion in favor of the improved TCC Diversion. CUWCD agreed to undertake and pay all costs for these improvements. In return, the Canal Companies agreed to convey to CUWCD the rights to the water that would be conserved as a result of the improvements and to convey by quitclaim deed the percentage of water rights CUWCD already owned in the Canal Companies.

¶ 5 To insure against CUWCD's breach, the Agreement required that CUWCD place quitclaim deeds in escrow, representing the water rights it would receive upon completion of the agreed-to improvements. The Agreement states that “[i]n the event CUWCD defaults in the performance of its obligation to construct the project as defined in this Agreement ... [the Canal Companies] may request the delivery of th[ese] escrowed quitclaim deed[s] as [their] sole remedy.” The Agreement states that the project will be completed by April 15, 2004.

¶ 6 By May 3, 2004, CUWCD had substantially completed the improvements to the piping portions of the canal systems as required by the Agreement. But it had not completed, nor even begun to replace, the TCC Diversion.

¶ 7 On March 30, 2007, almost three years after the improvements were to have been completed, CUWCD sent a letter to the Canal Companies “to summarize and confirm our discussions and negotiations” related to the replacement of the TCC Diversion. CUWCD stated that it would not be possible to complete the TCC Diversion work based on “environment[al] and permitting concerns,” and that “[i]n lieu of further work on the diversion structure, [CUWCD] offers to pay to [the Canal Companies], collectively, the sum of $75,000.” CUWCD further stated that “this letter will also serve as a tender of that sum of money together with [CUWCD]'s prior work and improvements ... under Utah Code Ann. [section] 78–27–1 as full performance of [CUWCD]'s obligations under [the] Agreement.” It concluded by stating that if the Canal Companies did not expressly reject its offer by April 16, 2007, CUWCD would consider its purported tender accepted. The Canal Companies did not respond to CUWCD's letter.

¶ 8 On June 11, 2007, the Canal Companies sent written notice informing CUWCD that it had defaulted on its obligation to replace the TCC Diversion. Thirty days after sending the default letter, the Canal Companies requested delivery of the escrowed quitclaim deeds under the damage provisions of the Agreement because CUWCD had not commenced to cure its default. In the interim, CUWCD filed the complaint in the underlying lawsuit seeking a judicial determination that the Canal Companies had accepted CUWCD's purported tender by failing to timely object. The Canal Companies individually responded by filing answers, counterclaims, and cross-claims.

¶ 9 After the parties had completed discovery, UEU filed a motion for partial summary judgment, arguing that CUWCD's offer of payment in lieu of performance was not a valid tender of performance and that CUWCD's obligation to reconstruct the TCC Diversion was not excused by the doctrine of impracticability. UEU further alleged that CUWCD's breach was material because CUWCD had not substantially completed its contractual obligations.

¶ 10 TCC also sought partial summary judgment. It concurred in UEU's motion for partial summary judgment, arguing that a valid tender offer requires tender of the amount due or the performance required under the contract. ERB also sought partial summary judgment, concurring in UEU's summary judgment motion and raising essentially the same arguments made by UEU and TCC.

[321 P.3d 1118]

¶ 11 CUWCD opposed the motions, arguing that it had substantially performed all of its obligations under the Agreement and that, in any case, the parties had waived any objection to CUWCD's tender of payment in lieu of performance. CUWCD also filed a motion for leave to assert the additional affirmative defense that the Canal Companies had failed to join necessary parties. Specifically, CUWCD argued that the United States Department of the Interior (DOI) and the Utah Reclamation Mitigation Conservation Commission (URMCC) were necessary and indispensable parties because “federal funds were used to create the saved water rights” and the saved water rights were to benefit, in part, federal purposes.

¶ 12 The district court granted the Canal Companies' motions for partial summary judgment, ordered the delivery of the quitclaim deeds in favor of UEU and ERB, and reserved ruling on the issue of TCC's appropriate remedy.

¶ 13 Because the district court ruled only on the Canal Companies' motions for partial summary judgment, CUWCD filed a motion to stay the proceedings, arguing that the district court's ruling was not a final judgment, that the district court had not addressed CUWCD's requested declaratory relief regarding title to the canals, and that the district court had not considered the District's entitlement to equitable relief in quantum meruit. “[CUWCD] requested that the district court stay execution and delay release of the quitclaim deeds to UEU and ERB to address these open issues, preserve the status quo, and prevent injustice.” Additionally, CUWCD filed a motion to reconsider, arguing that the district court's decision to release the quitclaim deeds resulted in an unconscionable forfeiture.

¶ 14 The district court denied CUWCD's motion to reconsider and subsequently entered summary judgment in favor of UEU and ERB. The court directed that its order be entered as a final judgment pursuant to rule 54(b) and released the quitclaim deeds to UEU and ERB. The district court also entered partial summary judgment in favor of TCC, reserving the issue of appropriate remedies and staying any further proceedings on that issue pending resolution of this appeal.

¶ 15 CUWCD timely appealed and we have jurisdiction under Utah Code section 78A–3–102(3)(j).

STANDARD OF REVIEW

¶ 16 Because CUWCD raises a number of issues, we briefly set forth the overarching standard of review here. We then discuss the specific standards of review for each issue within the section analyzing that issue.

¶ 17 The bulk of CUWCD's asserted errors arise in the context of the district court's grant of summary judgment in favor of UEU and ERB. Summary judgment is proper only where “there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law.” Utah R. Civ. P. 56(c). “In considering a grant of summary judgment, we review the [district] court's legal decision for correctness, giving no deference, and review the facts and inferences to be drawn...