Eagles Five, LLC v. Lawton

• Decision Date: 13 June 2012
• Docket Number: 060943902,A142394.
• Citation: 280 P.3d 1017,250 Or.App. 413
• Parties: EAGLES FIVE, LLC, an Oregon corporation; James D. Hollandsworth; and Margaret A. Hollandsworth, Plaintiffs–Respondents Cross–Appellants, v. David LAWTON and Laura Lawton, husband and wife, Defendants–Appellants Cross–Respondents.
• Court: Oregon Court of Appeals

250 Or.App. 413

280 P.3d 1017

EAGLES FIVE, LLC, an Oregon corporation; James D. Hollandsworth; and Margaret A. Hollandsworth, Plaintiffs–Respondents Cross–Appellants,

v.David LAWTON and Laura Lawton, husband and wife, Defendants–Appellants Cross–Respondents.

060943902; A142394.

Court of Appeals of Oregon.

Argued and Submitted May 4, 2011.

Decided June 13, 2012.

Peggy Hennessy, Portland, argued the cause for appellants-cross-respondents. With her on the briefs was Reeves, Kahn & Hennessy.

William J. Kuhn, Hermiston, argued the cause and filed the briefs for respondents-cross-appellants.

Before ORTEGA, Presiding Judge, and BREWER, Judge, and SERCOMBE, Judge.^*

SERCOMBE, J.

The dispute at issue in this case centers around a pipeline that runs from freshwater springs located on defendants' property across a portion of plaintiffs' land to a pump house on defendants' land. In 2006, before it could reach defendants' pump house, all the water in the pipeline was being diverted to plaintiffs' property through a valve installed on the pipeline by plaintiffs' predecessors-in-interest. For that reason, defendants placed a cap on the pipeline, shutting off the water altogether for a period of time. Plaintiffs filed an action and asserted that, pursuant to the terms of an express easement, they were entitled to take water from the pipeline and defendants had acted wrongfully. Defendants responded that the terms of the easement did not permit plaintiffs to obtain water through the valve on the pipeline. Both parties sought damages, declaratory relief, injunctive relief, and attorney fees. Following a bench trial, the trial court entered a judgment granting declaratory and injunctive relief to defendants and also giving plaintiffs limited injunctive relief. The court did not award monetary damages or attorney fees to either party. Defendants appeal, raising four assignments of error. Plaintiffs ¹ cross-appeal and raise six assignments of error. On appeal, we reverse and remand in part, and affirm in part. On cross-appeal, we affirm.

A. Factual and Procedural Background

We state the facts consistently with the trial court's express and implied findings, supplemented with uncontroverted information from the record. ² Plaintiffs and defendantsown contiguous properties, both of which were once part of a larger parcel known as Hot Lake Resort. Plaintiffs own the northwesterly portion of the original parcel, while defendants' property is located to the south and east of plaintiffs' land.

In 1968, while the entire parcel was still under single ownership, water rights for the land were approved. Springs 1 and 2, to which those water rights relate, are located on defendants' property. Water from those springs runs into a collection box at the base of the springs, which, in turn, feeds springwater into a six-inch pipeline that runs toward the east from the springs on defendants' property over a section of plaintiffs' property (the recreational vehicle (RV) park property) and ends up at a pump house on defendants' property. The pipeline has been in that location since at least 1973 (when plaintiffs' and defendants' properties were still part of the larger Hot Lake Resort parcels) and has been used to transport water to the pump house since that time.

In 1988, the RV park property was separated from the rest of the original parcel and conveyed. At that time, a series of easements, including a freshwater easement (the 1988 easement) were executed in favor of the purchaser of the RV park property.³ The 1988 easement grants

“an easement and use for a fresh water pipe running from the pump station in Lot 6 generally westerly to the RV building in lot 4; said line will run along the meander of the Old Immigrant Road, also known as the Meander Line of Tule Lake; as built.”

Later, in 1995, in light of foreclosure litigation relating to the RV park property that had the potential to extinguish the 1988 easement, an agreement reaffirming the 1988 easement was executed. In the 1995 agreement, each of the parties “reaffirms the Easements * * * and consent to the continued existence of the Easements * * * for the use and benefit of the R.V. Park and the successors and assigns of the current owner of that property.” Pursuant to the 1995 agreement, “the Easements * * * shall run with the land.” The 1995 agreement further provides that “[s]hould any legal proceeding, including arbitration, be necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to recover its reasonable costs and attorneys' fees incurred including any costs and attorneys' fees incurred on appeal.”

Defendants purchased their property in 2002. Plaintiffs purchased the RV park property in late 2004. As noted, since at least 1973, water from springs 1 and 2 flowed easterly through the pipeline to the pump house on defendants' property. In 2004, plaintiffs' predecessor in interest installed a valve into the pipeline at a point where the pipeline crosses the RV park property. The valve served to divert springwater to the RV park property before the water reached defendants' pump house. Eventually, all of the collected springwater was diverted through the valve in the pipeline before it reached defendants' pump house. Accordingly, in 2006, defendants capped the pipeline at the collection box and, thereby, prevented all flow of water into the pipeline. Defendants left the cap on the pipeline for between 11 and 13 days.

In response, plaintiffs commenced this action. In their amended complaint, plaintiffs sought, among other things, damages for breach of the 1988 easement, as preserved in the 1995 agreement, along with attorney fees pursuant to the attorney fee provision of the 1995 agreement, damages for interference with water rights, and an injunction preventing defendants from interfering with the flow of water from springs 1 and 2 through the pipeline. Plaintiffs asserted that, “[p]ursuant to the terms and conditions of easements and agreements for freshwater lines granted by the parties' predecessors in interest, [they have] an easement for running water lines to [the RV park] property from Springs 1 and 2.” ⁴ It was their position that, by capping the pipeline at the collection box, defendants had interfered with their easement and water rights.

Defendants asserted a number of counterclaims. In their first counterclaim, they sought attorney fees pursuant to ORS 20.105, asserting plaintiffs' claims were frivolous. They also sought declaratory relief pursuant to ORS 28.020. Specifically, as pertinent here, defendants asked the court to declare that (1) plaintiffs “have no right to place a valve on the 1973 pipe at any location between the spring collection box for Springs 1 and 2 and defendants' property,” (2) plaintiffs may obtain their irrigation water “by a waterline from defendants' property pursuant to the recorded easements,” and (3) defendants “have an implied easement for delivery of water through the 1973 pipe over those portions of plaintiffs property that the pipe crosses.” Defendants also sought damages from plaintiffs, an injunction to prevent plaintiffs from further interfering with delivery of water through the 1973 pipeline, and attorney fees pursuant to the terms of the 1995 agreement. In their fourth counterclaim, defendants also requested a declaration regarding several of the easement documents executed in 1988. Specifically, defendant asked for a declaration that an easement executed on June 3, 1988, did not encumber their property, the only easement that “could have affected” their property was a document dated June 28, 1988, and plaintiffs could only “obtain water for delivery to their property pursuant to the terms of the June 28, 1988 and 1995 agreements.”

B. Trial Court's Ruling

After a bench trial, the court concluded that, contrary to plaintiffs' assertions, the 1988 easement and the [250 Or.App. 419]1995 agreement are not ambiguous and do not grant any express or implied “easement that would apply to Defendants' springs 1 and 2. The language in the 1988 and 1995 agreements are straightforward—the easement only runs from the pump house westerly to the RV Park.” Thus, in order to use water from springs 1 and 2, plaintiffs would have to make arrangements for the physical transport of water from the pump house to the RV park property. Because plaintiffs had not made such arrangements, the court concluded that defendants had not interfered with plaintiffs' easement or water rights by capping the pipeline. With respect to plaintiffs' request for injunctive relief, however, the court concluded that, although plaintiffs “do not own an easement onto Defendants' property to reach springs 1 and 2,” they were entitled to injunctive relief “that will legally prevent Defendants from shutting down springs 1 or 2 or from damaging or dismantling such springs or from doing any act that would disrupt the flow of water from springs 1 and 2 to Lot 6 or Defendants' property at or near the pump house.” However, an injunction

“will only exist if and when Plaintiffs are able to expressly use their easement from Defendants' property at Lot 6 at the pump house and are able to actually transfer the water westerly to the RV Park. This will require Plaintiffs to either construct a pipeline west to the RV property from Lot 6 (pump house) or otherwise be legally able to transport such water onto the RV property.”

Thus, the judgment granted injunctive relief as follows:

“At such time as plaintiffs install the necessary piping to allow water to flow from the pump house on defendants' property to plaintiffs' property or are otherwise legally able to transport such water to the plaintiffs' property, defendants shall not interfere with the flow of said water to plaintiffs' property and are specifically enjoined from such interference.”

The court dismissed all of plaintiffs' other claims with prejudice.

With respect to defendants'...