City of Aurora v. Colorado State Engineer

• Decision Date: 18 January 2005
• Docket Number: No. 01SA412.,01SA412.
• Citation: 105 P.3d 595
• Parties: In the Matter of the Application for Water Rights of Park County Sportsmen's Ranch, CITY OF AURORA, a municipal corporation of the counties of Adams, Arapahoe and Douglas, acting by and through its UTILITY ENTERPRISE; Park County Sportsmen's Ranch, L.L.P., a limited liability partnership; and Kenneth J. Burke, former counsel for Park County Sportsmen's Ranch, LLP, Applicants-Appellants. v. COLORADO STATE ENGINEER, Harold D. Simpson, Division Engineer for Water Division No. 1; Colorado Water Conservation Board; Colorado State Division of Wildlife; City of Thornton; City of Englewood; City and County of Denver; County of Park; Center of Colorado Water Conservancy District; Elkhorn Ranch Home Owners Association; Upper South Platte Water Conservancy District; Board of Commissioners of County of Park; Park County Water Preservation Coalition; United States of America; Centennial Water and Sanitation District; Union Pacific Resources Company; the Frieda Wahl Trust; Steve Bargas; Kimberly Bargas; Frida Bargas; H.D. and Mary Catherine Coleman; James T. Benes; James T. Benes, Jr.; Cassandra L. Benes Trust; Tarryall Land and Cattle LLC; Magness Land Holdings, LLC; Estate of Bob Magness; Personal Representative of the Estate of Bob Magness; Town of Fairplay; Jim Campbell; James Campbell; Ruth Bartle; Indian Mountain Corporation; Jill E. Boice; Bob Burch; Robert W. Heckendorf; Michael and Vicki Lothrop; Richard A. Grenfell; David Wilson; Darrell Johns; David Johns; John Johns; Joseph G. and Joyce C. Minke; James E. Copanos; Central Colorado Cattlemen's Association; Gregory Snapp; Roy G. Doerr; Erik Taylor; Wildwood Recreational Village Assoc.; Mark and Carol Carrington; Hansludwig Kommert; and Stephen R. Cline, Objectors-Appellees.
• Court: Colorado Supreme Court

105 P.3d 595

In the Matter of the Application for Water Rights of Park County Sportsmen's Ranch,

CITY OF AURORA, a municipal corporation of the counties of Adams, Arapahoe and Douglas, acting by and through its UTILITY ENTERPRISE; Park County Sportsmen's Ranch, L.L.P., a limitedliability partnership; and Kenneth J. Burke, former counsel for Park County Sportsmen's Ranch, LLP, Applicants-Appellants. v.COLORADO STATE ENGINEER, Harold D. Simpson, Division Engineer for Water Division No. 1; Colorado Water Conservation Board; Colorado State Division of Wildlife; City of Thornton; City of Englewood; City and County of Denver; County of Park; Center of Colorado Water Conservancy District; Elkhorn Ranch Home Owners Association; Upper South Platte Water Conservancy District; Board of Commissioners of County of Park; Park County Water Preservation Coalition; United States of America; Centennial Water and Sanitation District; Union Pacific Resources Company; the Frieda Wahl Trust; Steve Bargas; Kimberly Bargas; Frida Bargas; H.D. and Mary Catherine Coleman; James T. Benes; James T. Benes, Jr.; Cassandra L. Benes Trust; Tarryall Land and Cattle LLC; Magness Land Holdings, LLC; Estate of Bob Magness; Personal Representative of the Estate of Bob Magness; Town of Fairplay; Jim Campbell; James Campbell; Ruth Bartle; Indian Mountain Corporation; Jill E. Boice; Bob Burch; Robert W. Heckendorf; Michael and Vicki Lothrop; Richard A. Grenfell; David Wilson; Darrell Johns; David Johns; John Johns; Joseph G. and Joyce C. Minke; James E. Copanos; Central Colorado

Cattlemen's Association; Gregory Snapp; Roy G. Doerr; Erik Taylor; Wildwood Recreational Village Assoc.; Mark and Carol Carrington; Hansludwig Kommert; and Stephen R. Cline, Objectors-Appellees.

No. 01SA412.

Supreme Court of Colorado, En Banc.

January 18, 2005.

As Modified on Denial of Rehearing February 14, 2005.

Duncan, Ostrander & Dingess, P.C., John M. Dingess, Linda D. Obernyer, James Birch(Special Counsel), Denver, for Applicant-Appellant City of Aurora acting by and through its Utility Enterprise.

Porzak Browning & Bushong, Glenn E. Porzak, Steven J. Bushong, Kevin J. Kinnear, Boulder, Gary L. Crandell, P.C., Gary L. Crandell, Denver, for Applicant-AppellantPark County Sportsmen's Ranch, L.L.P.

White and Steele, PC, John M. Lebsack, Jennifer L. Tryjan, David Jaffee, Suzanna Wasito, Denver, for Applicant-Appellant

Kenneth J. Burke, former counsel for Park County Sportsmen's Ranch, LLP.

John W. Suthers, Acting Attorney General, Steven O. Sims, Assistant Attorney General, Susan J. Schneider, Assistant Attorney General, Natural Resources and Environment Section, Denver, for Objectors-Appellees Colorado state engineer, Harold D. Simpson, Division Engineer for WaterDivision No. 1;Colorado Water Conservation Board; and Colorado State Division of Wildlife.

Margaret A. Emerich, City Attorney, Dennis A. Hanson, Assistant City Attorney, Thornton, for Objector-Appellee City of Thornton.

Berg Hill Greenleaf & Ruscitti LLP, David G. Hill, Melissa M. Heidman, William I. Krasniewicz, Boulder, for Objector-Appellee City of Englewood.

Denver Water Department, Patricia L. Wells, Michael L. Walker, Mary B. Rastall, Anne E. Winans, Casey S. Funk, Henry C. Teigen, Denver, for Objector-Appellee City and County of Denver, acting by and through its Board of Water Commissioners.

Bernard, Lyons, Gaddis & Kahn, P.C., Jeffrey J. Kahn, Steven P. Jeffers, Madoline E.S. Wallace, Longmont, for Objectors-Appellees Board of Commissioners of County of Park and The Upper South Platte Water Conservancy District.

Felt, Monson & Culichia, LLC, James G. Felt, James W. Culichia, Colorado Springs, for Objector-Appellee Center of Colorado Water Conservancy District.

Vranesh & Raisch, LLP, Michael D. Shimmin, Lisa C. Ledet, Boulder, for Objectors-Appellees Park County Water Preservation Coalition, and H.D. and Mary Catherine Coleman.

US Department of Interior, Robert D. Comer, Special Assistant U.S. Attorney, Thomas R. Graf, Special Assistant U.S. Attorney, Office of Regional Solicitor, Lakewood, for Objector-Appellee United States of America.

Gilbert Y. Marchand, Jr., P.C., Gilbert Y. Marchand, Jr., Moses, Wittemyer, Harrison and Woodruff, P.C., Veronica A. Sperling, Boulder, for Objector-Appellee Centennial Water and Sanitation District.

Welborn Sullivan Meck & Tooley P.C., Stephen J. Sullivan, Molly Sommerville, Denver, for Union Pacific Resources Company n/k/a Anadako Petroleum Corporation.

Gilbert Y. Marchand, Jr., P.C., Gilbert Y. Marchand, Jr., Boulder, for Objectors-AppelleesJames T. Benes, James T. Benes, Jr., and Cassandra L. Benes Trust, and Tarryall Land and Cattle, LLC.

Tienken & Hill, L.L.P., Alan G. Hill, Louisville, for Objectors-Appellees The Frieda Wahl Trust, Steve Bargas, Kimberly Bargas and Frida Bargas.

Robert E. Schween, P.C., Robert E. Schween, Aurora, for Objector-AppelleeMagness Land Holdings, LLC.

Petrock & Fendel, P.C., Frederick A. Fendel, Carmen S. Hall, Denver, for Objectors-Appellees Town of Fairplay, James Campbell, and Indian Mountain Corporation.

The Law Offices of Bennett S. Aisenberg, P.C., Bennett S. Aisenberg, H. Paul Himes, Jr., Denver, for Amicus Curiae Colorado Trial Lawyers Association.

No appearance by or on behalf of: County of Park; Elkhorn Ranch Home Owners Association; Estate of Bob Magness; Personal Representative of the Estate of Bob Magness; Jim Campbell; Jill E. Boice; Ruth Bartle; Bob Burch; Robert W. Heckendorf; Michael and Vicki Lothrop; Richard A. Grenfell; David A. Wilson; Darrell Johns; David Johns; John Johns; Joseph G. and Joyce C. Minke; James E. Copanos; Central Colorado Cattlemen's Association; Gregory Snapp; Roy G. Doerr; Erik Taylor; Wildwood Recreational Village Assoc.; Mark and Carol Carrington; Hansludwig Kommert; and Stephen R. Cline.

Justice RICEdelivered the Opinion of the Court.

Plaintiff-Appellants, Park County Sportsmen's Ranch, LLP("PCSR"), Kenneth J. Burke(PCSR's attorney at trial), and the City of Aurora, appeal from a judgment of the District Court for Water Division 1 dismissing PCSR's water rights application and awarding attorney fees and costs to objectors who successfully opposed the application.First, we affirm the water court's decision dismissing PCSR's application for lack of an adequate augmentation plan.Second, we affirm the water court's award of costs to Opposers.Finally, we reverse the water court's award of attorney fees to Opposers, except for those amounts associated with PCSR's claims for precipitation and irrigation run-off, which were frivolous from inception.Because PCSR, as Aurora's agent, litigated a frivolous claim, we affirm the water court's order joining Aurora as a party for the purposes of determining attorney fees.

I.Facts and Procedural History

PCSR is a Colorado partnership that owns a ranch in South Park, Colorado.The ranch is located within the South Park Basin, an area of about 90 square miles underlain by a natural geologic structure called the South Park Formation.The South Park Formation contains aquifers that PCSR intends to utilize in connection with a water project it calls the South Park Conjunctive Use Project (the "Project").¹If implemented, the Project would allow PCSR to pump water from the aquifers and deliver it to the City of Aurora for municipal use.

On January 30, 1996, PCSR, acting for itself and as an agent for Aurora pursuant to an express contract, filed an application for determination of conditional underground and surface water rights and for approval of an augmentation plan in the District Court for Water Division 1("water court").²

In its application, PCSR sought to establish several conditional water rights, including (1) a conditional right to withdraw a specified amount of groundwater per year from the South Park aquifers through 26 proposed wells located on PCSR's land; (2) a conditional underground storage right to store water in the cone of depression created by pumping from the 26 proposed wells; and (3) absolute and conditional rights for surface storage and recharge collection systems.

To protect against injury to existing water users, PCSR also sought approval of an augmentation plan to replace injurious depletions to the South Platte tributaries caused by its proposed groundwater pumping.In its augmentation plan, PCSR initially identified four sources of replacement water.First, PCSR identified water rights for three springs, and a small reservoir, all previously decreed in a separate proceeding.PCSR claimed these rights free of the priority system as developed water.³Second, PCSR identified as-yet undecreed conditional surface water rights with 1996 priorities, including six reservoirs, a fourth spring, and a direct flow collection system.PCSR claimed water from this fourth spring free from the priority system pursuant to the futile call doctrine and as developed water.⁴Third, PCSR identified tributary groundwater to be withdrawn by the as-yet-undecreed 26 wells described in its application, including water withdrawn from PCSR's proposed underground reservoir.Lastly, PCSR identified as-yet-undecreed underground water rights in nontributary groundwater to be withdrawn from the Laramie-Fox Hills aquifer pursuant to a separate application.

By stipulation prior to trial, PCSR withdrew its claims that any of its augmentation sources would be administered free of the priority system, and acknowledged that its claimed water rights would have to be administered with 1996 priorities.⁵PCSR also withdrew its claim to change its previously decreed water rights to allow those rights to be used for augmentation.Finally, in a separate proceeding, the water court dismissed PCSR's application for the as-yet-undecreed underground water rights in the Laramie-Fox Hills aquifer.We affirmed the water court's judgment in Park County Sportsmen's Ranch LLP v. Bargas,986 P.2d 262, 275(Colo.1999)(hereinafter Park County I...