Mission Viejo Co. v. Willows Water Dist.

• Decision Date: 16 September 1991
• Docket Number: 90SA218,Nos. 90SA217,s. 90SA217
• Citation: 818 P.2d 254
• Parties: MISSION VIEJO COMPANY, a California corporation; Highlands Ranch Development Corporation, a Colorado corporation; and Centennial Water and Sanitation District, a quasi-municipal corporation and political subdivision of the State of Colorado, Objectors-Appellants, v. WILLOWS WATER DISTRICT, a quasi-municipal corporation and political subdivision of the State of Colorado, Applicant-Appellee. MISSION VIEJO COMPANY, a California corporation; Highlands Ranch Development Corporation, a Colorado corporation; and Centennial Water and Sanitation District, a quasi-municipal corporation and political subdivision of the State of Colorado, Plaintiffs-Appellants, v. WILLOWS WATER DISTRICT, a quasi-municipal corporation and political subdivision of the State of Colorado, Defendant-Appellee.
• Court: Colorado Supreme Court

Page 254

818 P.2d 254

MISSION VIEJO COMPANY, a California corporation; Highlands

Ranch Development Corporation, a Colorado corporation; and

Centennial Water and Sanitation District, a quasi-municipal

corporation and political subdivision of the State of

Colorado, Objectors-Appellants, v.WILLOWS WATER DISTRICT, a quasi-municipal corporation andpolitical subdivision of the State of Colorado,

Applicant-Appellee.

MISSION VIEJO COMPANY, a California corporation; Highlands

Ranch Development Corporation, a Colorado corporation; and

Centennial Water and Sanitation District, a quasi-municipal

corporation and political subdivision of the State of

Colorado, Plaintiffs-Appellants, v.WILLOWS WATER DISTRICT, a quasi-municipal corporation andpolitical subdivision of the State of Colorado,

Defendant-Appellee.

Nos. 90SA217, 90SA218.

Supreme Court of Colorado En Banc.

Sept. 16, 1991.

Moses, Wittemyer, Harrison & Woodruff, P.C., Charles N. Woodruff and Veronica A. Sperling, Boulder, for objectors-appellants and plaintiffs-appellants.

Saunders, Snyder, Ross & Dickson, P.C., William J. Kirven, III, David E. Bellack, Denver, and Robert J. Flynn, Englewood, for applicant-appellee and defendant-appellee.

Justice LOHRdelivered the opinion of the Court.

In these consolidated cases, the appellants, Mission Viejo Company, Highlands Ranch Development Corporation, and Centennial Water and Sanitation District(collectively, the Highlands Ranch group) appeal from an order of the District Court, Water Division 1(water court), determining that the appellee, Willows Water District(Willows), may be issued permits for additional wells withdrawing nontributary ground water underlying the Highlands Ranch property owned by Mission Viejo.¹The order left for future resolution other issues presented by the consolidated cases.We conclude that an appeal cannot be taken from the water court's determination of the additional wells issue absent a direction for entry of judgment and a determination that there is no just reason for delay, under C.R.C.P. 54(b).Accordingly, we dismiss the appeal.

I.

Willows owns permits issued by the State Engineer for eight wells drawing water from the Arapahoe formation underlying the Highlands Ranch property and has obtained final ² decrees for three of the wells and partly final, partly conditional decrees for the other five.The Arapahoe formation in this area contains nontributary ground water outside the boundary of any designated ground water basin.³Production of water from the Arapahoe formation over time can be expected to lower the water level and diminish hydrostatic pressure, thereby decreasing the capability of the wells to produce water.Additionally, the rate of flow limitations in the permits and decrees preclude production at a rate adequate to meet peak demands of Willows' customers.To address these problems, Willows applied to the State Engineer in 1988 for permits to construct additional wells ⁴ to supplement the original wells in order to produce the water decreed to those wells.The additional wells would enable Willows to produce water at an increased rate, but total annual production would continue to be limited to the amounts specified in the original permits and decrees.

In response, the Highlands Ranch group initiated a declaratory judgment action in water court, case no. 88CW079, seeking a determination that Willows had no right to construct additional wells without Mission Viejo's consent.In that same action, the Highlands Ranch group requested an injunction to prevent construction of the additional wells.In a separate proceeding, Willows and the State Engineer moved the water court to invoke its retained jurisdiction in the actions in which Willows had obtained decrees for the eight wells, case nos.W-8284-76 and W-9310-78, to determine whether Willows was entitled to additional wells.The water court granted the motion to invoke its retained jurisdiction, and the Highlands Ranch group objected to any determination that Willows was entitled to additional wells.Also pending in the water court were cases85CW163and85CW170 in which Willows sought final decrees for water rights adjudicated conditionally to five of the original eight wells.In June 1989 the water court consolidated all the foregoing cases for trial.

The water court heard the consolidated cases between August 29, 1989, and September 7, 1989.On April 3, 1990, the court issued its memorandum of decision and order for the consolidated cases.The court's findings and conclusions relate almost entirely to the issues of the legal requirements for obtaining a final decree for the conditional water rights and the quantification of such rights in a final decree, issues posed by cases85CW163and85CW170.The court resolved the matter of the entitlement of Willows to additional wells to enable it to produce decreed quantities of water by the following paragraph:

After having secured a final decree--or, as formerly, an absolute decree--replacement or additional wells may be permitted where necessary to allow the decree holder to continue to secure the decreed amounts of water.The rights to replacement or additional wells may be limited in this case by the question of whether Willows has access to land to place them on.That issue is not involved in the present case.[⁵

The court then ordered Willows to submit a proposed final decree with respect to three of the five wells for which a final decree had not been obtained earlier and directed a further hearing to address an unresolved issue as to the final decree for the other two wells.The Highlands Ranch group sought review of the water court's determination concerning Willows' right to permits for additional wells by taking separate appeals from one of the retained jurisdiction actions, case no. W-8284-76, ⁶ and the declaratory and injunctive action, case no. 88CW079.The former was assigned case number 90SA217 and the latter case number 90SA218 in this court.

Willows moved to dismiss the appeals for lack of a final judgment.We denied the motion without prejudice to present the issue again in Willows' brief on the merits.Willows elected not to raise the issue again in its brief or in oral argument.We conclude, however, that in the absence of water court determinations of finality and no just reason for delay, as required by C.R.C.P. 54(b), we lack jurisdiction to consider the merits of the water court's order on the additional wells issue.

II.

A summary of the facts, legal standards and resulting legal issues determinative of Willows' right to construct additional wells will provide relevant background for determining whether the water court's resolution of the issues constituted final judgments in the cases appealed.The rights of Willows to withdraw ground water from the Arapahoe formation underlying the Highlands Ranch are based on a complex series of transactions concerning that ranch, located in Douglas County, and owned at one time by Lawrence C. Phipps, Jr. and one of his associated entities.The eight wells are situated on the Highlands Ranch.The basic documents evidencing consent of the Phipps interests for Willows to construct the wells are two letter agreements.The first was between the Phipps interests and Crow Western Corp. pursuant to which Crow Western would construct two wells, now referred to as PA-1 and PA-2, ⁷ and receive seventy-five percent of the ground water produced therefrom, and the Phipps interests would receive the remaining twenty-five percent.A very similar letter agreement was entered into between the Phipps interests and the Phipps 1527 Company with respect to wells PA-5 to PA-8.By a series of intermediate transfers Willows obtained the interests of the well developers under the letter agreements as well as the retained rights of the Phipps interests.Willows also sought and obtained judicial decrees adjudicating final water rights to three of the eight wells and a combination of final and conditional rights to the other five.One of the intermediate transferors of the Phipps interests was Mission Viejo, which now owns the Highlands Ranch.The question of the right of Willows to construct additional wells arose before Mission Viejo transferred its rights under the letter agreements to Willows, and those transfer instruments specifically reserve as unresolved the issue of whether Willows can obtain permits for additional wells to produce nontributary ground water authorized under its permits and decrees.A like reservation was included in Willows' water rights decrees for the eight wells by stipulation between Willows and Mission Viejo.

The requirement of landowner consent for drilling wells on lands owned by another is derived from statute.At the time the well permits for the eight wells involved in this case were applied for and granted, the governing statute was 1963 C.R.S. § 148-18-36, adopted bych. 441, sec. 1,§ 148-18-36,1973 Colo.Sess.Laws 1520, and commonly referred to as Senate Bill 213.As the parties agree, this statute required the consent of the owner of the land on which a well was to be drilled as a condition to issuance of a permit by the State Engineer to construct a well to withdraw nontributary water outside the boundaries of a designated ground water basin.The statute was subsequently amended by legislation commonly referred to as Senate Bill 5, making the consent requirement more explicit, § 37-90-137(4)(b)(II), 15 C.R.S.(1990), providing more specifically for quantification of permitted withdrawals based on the amount of water underlying the land on which a well was to be drilled, and providing for the first time, in section 37-90-137(10), that owners of permits issued pursuant to section 37-90-137(4)"shall be entitled to the issuance of permits for additional wells," to be constructed on the land that supplied the basis for quantification of the ground water to be withdrawn.Ch. 285, sec....