Haystack Ranch v. Fazzio, No. 99SA120

• Decision Date: 10 April 2000
• Docket Number: No. 99SA120, No. 99SA198.
• Citation: 997 P.2d 548
• Parties: HAYSTACK RANCH, LLC, Objector-Appellant, v. Frank A. FAZZIO, Applicant-Appellee, and Richard Stenzel, Division Engineer for Water Division No. 1, Appellee pursuant to C.A.R. 1(e). Frank A. Fazzio, Plaintiff-Appellant, v. Haystack Ranch, LLC, Defendant-Appellee.
• Court: Colorado Supreme Court

997 P.2d 548

HAYSTACK RANCH, LLC, Objector-Appellant, v. Frank A. FAZZIO, Applicant-Appellee, and Richard Stenzel, Division Engineer for Water Division No. 1, Appellee pursuant to C.A.R. 1(e).

Frank A. Fazzio, Plaintiff-Appellant, v. Haystack Ranch, LLC, Defendant-Appellee.

Nos. 99SA120, 99SA198.

Supreme Court of Colorado, En Banc.

April 10, 2000.

Holly I. Holder, P.C., Holly I. Holder, Priscilla S. Fulmer, Carrie L. Ciliberto, Denver, Colorado, Attorneys for Objector-Appellant.

Friedlob, Sanderson, Raskin, Paulson & Tourtillott, LLC, Richard H. Goldberg, William B. Tourtillott, Denver, Colorado, Attorneys for Applicant-Appellee.

Ken Salazar, Attorney General, Barbara McDonnell, Chief Deputy Attorney General, Alan J. Gilbert, Solicitor General, Steven O. Sims, First Assistant Attorney General, Felicity Hannay, Deputy Attorney General, Edward Kowalski, Assistant Attorney General, Natural Resources and Environment Section, Denver, Colorado, Attorneys for Appellee State and Division Engineers.

Friedlob, Sanderson, Raskin, Paulson & Tourtillott, LLC, Richard H. Goldberg, William B. Tourtillott, Denver, Colorado, Attorneys for Plaintiff-Appellant.

Holly I. Holder, P.C., Holly I. Holder, Priscilla S. Fulmer, Carrie L. Ciliberto, Denver, Colorado, Attorneys for Defendant-Appellee.

Justice MARTINEZ delivered the Opinion of the Court.

Haystack Ranch, LLC appeals a decree of abandonment of water rights. Frank A. Fazzio, who initiated this action for a decree of abandonment, appeals from an award of attorney fees and costs assessed against him after the voluntary dismissal of his tort claim.

The water court found that Fazzio established a presumption of abandonment by showing significant periods of unexcused nonuse by the previous owners of the water rights. The water court then found that Haystack failed to rebut the presumption of abandonment by not presenting evidence demonstrating a lack of intent to abandon by the previous owners. Thus, the water court issued a decree of abandonment after finding that the previous owners abandoned the water rights.

When he filed his application for a decree declaring Haystack's water rights abandoned, Fazzio also filed a tort claim for damages to his hay crops suffered as a result of Haystack's unauthorized water diversions. On the eve of trial, Fazzio voluntarily dismissed the tort action. As a term and condition of the voluntary dismissal, the water court awarded attorney fees and costs to Haystack. Fazzio appeals the amount awarded in attorney fees and costs by the water court.

The parties brought and argued these two appeals separately, but we consolidate them here for decision. We affirm the decree of abandonment. We vacate the award of attorney fees and costs and remand with instructions.

I.

At issue in this case is the question of Haystack's water rights in the Snyder and Middleton ditches, located on Haystack Ranch (the property). The Snyder Ditch was decreed to divert 3.0 cubic feet of water per second (cfs) from Gove Creek, a tributary of West Plum Creek. The Snyder Ditch had an appropriation date of November 1, 1879. The appropriation date for the Middleton Ditch was March 3, 1888. It was decreed to divert 7.0 cfs from West Plum Creek. The property and the ditches are located in Water Division 1 (formerly Water District No. 8).

Haystack became the owner of the property in 1993. Before then, the property changed hands several times. The property's chain of title, in evidence before the water court, conveyed the Snyder Ditch each time the property passed to a new owner; the Middleton Ditch was not expressly conveyed in the deeds.

Also before the water court were the water district's diversion records for each ditch, which have sporadic and incomplete listings for the ditches. The diversion records indicate that the Snyder Ditch diverted water from 1920 to 1949, with the exception of four years. The diversion records have no listing for the Snyder Ditch from 1950 to 1966 with the exception of the years from 1955 to 1961 and 1963 to 1964. However, Joe Clayton, Water Commissioner of District No. 8 from 1963 to 1985, testified that the diversion records were incorrect regarding the recorded diversions from 1955 to 1961 and 1963 to 1964. According to Clayton's testimony, his predecessor incorrectly entered the diversions from the Robinson Ditch as Snyder Ditch diversions during those years. After 1966, the Snyder Ditch reappears in the diversion records as inactive (1967-1972), and then unusable (1973-1982). During the period between 1983 and 1998, there is no listing for the Snyder Ditch in the diversion records.

The diversion records of the Middleton Ditch follow a similar pattern. In 1917, there is a diversion listing for acreage irrigation. The diversion records have no listing for the Middleton Ditch from 1919 to 1964. During the period from 1965 to 1997, the sporadic listings of the Middleton Ditch in the diversion records indicate that the ditch was inactive from 1965 to 1969. From then to 1993, with the exception of seven years of no listings, the ditch is listed as either inactive or unusable.

In addition to the chain of title and diversion records, other documentary evidence was before the water court, including advisory reports from water engineering firms and a water law attorney. These reports indicated that in certain areas there were no physical traces of the ditches or their headgates. These reports consistently concluded that each ditch was in such bad condition that each one would require reconstruction to be usable.

Due to the state of disrepair of the ditches, Haystack diverted the Snyder Ditch water rights from 1993 to 1995 through an unauthorized alternate point of diversion and the Middleton Ditch water rights through the Kountze Ditch in 1995.¹ That same year, Haystack requested an alternate, temporary point of diversion with the water commissioner.

As a result of Haystack's use of these water rights, the water commissioner curtailed the junior water right of the Fazzio Ditch. Fazzio then filed an application of abandonment for the water rights of the Snyder and Middleton ditches and a tort action alleging injuries to his hay crops as a result of Haystack's unauthorized diversions.

On the day trial was set to begin, Fazzio voluntarily dismissed the tort action under C.R.C.P. 41(a)(2), which allows a court to dismiss the action "upon such terms and conditions as the court deems proper." As a term and condition of the voluntary dismissal, the water court awarded Haystack attorney fees and costs in the amount of $10,000 for work completed in preparation of the tort action.

After a two-day trial, the water court held that the previous owners of the property had abandoned the water rights of the Snyder and Middleton ditches. The water court found that the Snyder Ditch water rights were not used for twenty-two years, from 1950 to 1972, and that the Middleton Ditch water rights were not used for fifty-four years from 1918 to 1972. However, in 1972, Buell, Haystack's predecessor, requested and obtained removal of the ditches from the division engineer's abandonment list. In finding nonuse, the water court looked to the ditches' state of disrepair and the lack of diversion records for each ditch. This long period of unexcused nonuse, the water court held, created a rebuttable presumption of the previous owners' intent to abandon the water rights. Because Haystack failed to present sufficient evidence to rebut the presumption, the water court entered a decree of abandonment.

On appeal, Haystack challenges the water court's decree of abandonment, and Fazzio challenges the water court's award of attorney fees to Haystack. After addressing the decree of abandonment, we then turn our attention to the issue of attorney fees.

II.

Haystack asserts that the trial court erroneously found nonuse based on the non-existence of diversion records. Haystack also argues that, if the findings of nonuse are correct, Haystack rebutted the presumption of intent to abandon by presenting evidence showing the previous owners' intent not to abandon. We reject these contentions and hold that the record contains sufficient evidence to support the findings and ruling of the water court.

A.

The principles of law governing the abandonment of a water right in Colorado are well-established. The critical element of abandonment is intent. See § 37-92-103(2), 10 C.R.S. (1999) (defining abandonment as "the termination of a water right in whole or in part as a result of the intent of the owner thereof to discontinue permanently the use of all or part of the water available thereunder"); see also Beaver Park Water, Inc. v. City of Victor, 649 P.2d 300, 302 (Colo.1982). The intent to abandon a water right may be inferred through the circumstances of a case, and need not be proved directly. See City & County of Denver v. Snake River Water Dist., 788 P.2d 772, 776 (Colo.1990); Southeastern Colo. Water Conservancy Dist. v. Twin Lakes Assocs., 770 P.2d 1231, 1237 (Colo.1989).

An abandonment may occur when there is nonuse coupled with an intent to abandon. See Consolidated Home Supply v. Town of Berthoud, 896 P.2d 260, 266 (Colo. 1995). "Continued and unexplained nonuse of a water right for an unreasonable period of time creates a rebuttable presumption of intent to abandon." Snake River, 788 P.2d at 776. The determination of what constitutes an unreasonable amount of time varies with the facts of each case. See id.; see, e.g., § 37-92-402(11), 10 C.R.S. (1999) (a period of ten years of nonuse creates a rebuttable presumption of abandonment for purposes of creating the division engineer's abandonment list); Beaver Park, 649 P.2d at 302 (finding twenty years of nonuse).

Once there is a presumption of intent to abandon, the burden of going forward shifts to the water right owner to introduce evidence rebutting the presumption. See Snake River, 788 P.2d at 776; Twin Lakes, ...