Rocky Ford Irrigation Co. v. Kents Lake Reservoir Co.
| Decision Date | 13 July 2020 |
| Docket Number | No. 20170290,20170290 |
| Citation | 469 P.3d 1003 |
| Parties | ROCKY FORD IRRIGATION COMPANY, Appellant, v. KENTS LAKE RESERVOIR COMPANY and Does 1 Through 200, Appellees, and Beaver City, Intervenor and Appellee. |
| Court | Utah Supreme Court |
Attorneys:1
Stephen E.W. Hale, Matthew E. Jensen, J. Mason Kjar, Salt Lake City, for appellant
John H. Mabey, Jr., David C. Wright, Salt Lake City, for appellees Kents Lake Reservoir Company and Does 1 through 200
Justin W. Wayment, Christian Jones, Cedar City, for intervenor-appellee
AMENDED OPINION*
{¶ 1} This case comes to us on direct appeal from the Fifth District Court. Kents Lake Reservoir Company2 and Rocky Ford Irrigation Company both acquired water rights in the Beaver River in the late nineteenth century. But as both water rights and irrigation techniques evolved, the administration of the Beaver River grew increasingly complex. Eventually Rocky Ford sued Kents Lake seeking clarification regarding the priority of the parties' rights and Kents Lake's obligations as to river administration and measurement. Rocky Ford lost on each of its claims below and appealed. We affirm in part, reverse in part, and remand.
{¶ 2} Around 1870, settlers began diverting water from the Beaver River and conveying it through canals and ditches to their crops. These initial rights were direct flow rights—the right to take water from the source and apply it directly to the end use without reservoir storage. After most of the base flow of the Beaver River was allocated via direct flow rights, water users constructed reservoirs to store spring runoff and winter flows to allow for later use on their crops.
{¶ 3} Kents Lake (along with its shareholders) and Rocky Ford each acquired various direct flow rights and corresponding priority dates throughout the late nineteenth and early twentieth centuries. They also obtained storage rights in reservoirs they built. Today, Kents Lake retains an 1890 storage right to divert water into the Upper Kents Lake and Middle Kents Lake Reservoirs (collectively, the "South Fork Reservoirs"), which it constructed in the headwaters of the Beaver River System. And Rocky Ford retains a 1907 storage right to divert water into the Minersville Reservoir, which it constructed at the bottom of the Beaver River System.
{¶ 4} In the early 1900s, the Fifth District Court conducted a general adjudication of the Beaver River that culminated in the 1931 Beaver River Decree (Decree). The Decree established and confirmed priority dates and use limitations on Beaver River water rights, including direct flow rights acquired by Rocky Ford in 1870, storage rights in Minersville Reservoir acquired by Rocky Ford in 1907, storage rights in the South Fork Reservoirs acquired by Kents Lake in 1890, and direct flow rights for certain Kents Lake shareholders.3 The Decree also divided the Beaver River into an upper and lower portion, with the Patterson Dam serving as the dividing line. Water users located above the dam were denominated "upper users" and allowed to divert water before "lower users"—despite later priority dates.4
{¶ 5} Finally, the Decree required users to "promptly install and perpetually maintain suitable ... measuring devices at or [as] near as possible to their respective points of diversion or at such other points as may be designated in their decree, for the measurement of all water diverted hereunder for consumptive uses." Under the Decree, water users were "permanently enjoined from diverting ... any water for such consumptive purposes through any ditch, canal, conduit or other device not provided with proper headgates, control works, and measuring devices."
{¶ 6} A few years after the Decree was entered, Kents Lake sought to build an additional reservoir—Three Creeks Reservoir. In order to obtain rights to store water in this new reservoir, Kents Lake filed two applications with the State Engineer. One application sought to reallocate some of Kents Lake's current storage in the South Fork Reservoirs to Three Creeks Reservoir (a change to its existing storage right). The other sought to store additional water in Three Creeks Reservoir (a new storage right). The State Engineer reviewed the applications and put the other Beaver River System water users on notice of Kents Lake's proposed changes. Rocky Ford protested both applications, but the State Engineer ultimately approved them because he found that each would put the water toward a beneficial use and not impair existing rights.5
{¶ 7} In 1953 Rocky Ford and Kents Lake entered into an agreement (Agreement) that provided, among other things, that (1) Rocky Ford would not protest Kents Lake's planned change application regarding Three Creeks Reservoir—an application seeking to add an optional storage right in the reservoir to some of Kents Lake's preexisting direct flow rights; (2) Kents Lake would not oppose Rocky Ford's planned enlargement of its reservoir; and (3) Rocky Ford has an exclusive right to store all water available to it from November 1 to April 1 each year.
{¶ 8} As agreed, Kents Lake then submitted the new change application. And as promised, Rocky Ford did not protest. The State Engineer approved the application and granted Kents Lake's request for these "direct storage changes." Kents Lake now had a direct storage right (in addition to its direct flow right)—allowing it to either use the water directly (as it was previously entitled to do) or store it in Three Creeks Reservoir. And Kents Lake eventually perfected its changed use pursuant to Utah Code sections 73-3-12 and -17, receiving certification from the State Engineer of its right to the changed use "subject to prior rights." UTAH CODE § 73-3-17 (1953).
{¶ 9} Beginning in the 1970s, Beaver River water users began to gradually convert from flood irrigation to sprinkler systems—more efficient watering mechanisms that require less water and produce less return flows.6 Some upper river users stored these efficiency gains, reducing the amount of water flowing downstream. This reduction in flow can adversely affect lower users (like Rocky Ford) if there is insufficient water to fulfill their rights.
{¶ 10} This is what allegedly happened here. As a result, in 2003 Rocky Ford asked the State Engineer to enhance oversight of Beaver River water storage. Over the next year and a half, Rocky Ford, Kents Lake, and the State Engineer corresponded about improved storage regulation. And the State Engineer found that Kents Lake's measurement devices were deficient.
{¶ 11} Unsatisfied, Rocky Ford filed suit in November 2010, seeking damages, declaratory relief, injunctive relief, and rescission of the 1953 Agreement. In support of its claims, Rocky Ford pointed to Kents Lake's alleged water right interference, conversion of water rights, and negligence. Rocky Ford asserted that its water rights had been injured by Kents Lake's direct storage changes and failure to measure water usage in accordance with the 1931 Decree. Kents Lake filed a counterclaim seeking clarification of the parties' water rights under the Agreement. Three years later, Beaver City intervened.
{¶ 12} Following discovery, Rocky Ford moved for partial summary judgment, asserting that (1) Kents Lake's direct storage changes maintain their original 1890 priority date (from the underlying right) only to the extent they do not injure Rocky Ford's direct flow rights, and (2) Rocky Ford's direct flow rights are not subordinated or waived under the plain language of the Agreement. The district court denied the motion. In so doing, the court concluded that Rocky Ford had "intentionally waived its direct flow rights against [Kents Lake] through its entrance into the 1953 agreement" and that Kents Lake could continue to store its water "even to the detriment of [Rocky Ford]'s direct flow rights."
{¶ 13} The parties then stipulated to dismissal of all damages claims (including the water right interference claim), leaving only claims for declaratory relief, injunctive relief, and rescission of contract. At trial, the court's denial of Rocky Ford's motion for summary judgment precluded any evidence about the priority of the direct storage changes or the meaning of the Agreement. The court instead focused on Kents Lake's measurement obligations and the continued efficacy of the Agreement. During the three-day bench trial, the court refused to admit evidence from Rocky Ford's expert about the impact of sprinklers on the Beaver River's return flows.
{¶ 14} In June 2016, the district court denied Rocky Ford's request for injunctive and declaratory relief. It denied any request for relief for Kents Lake's alleged interference with Rocky Ford's direct flow rights on the ground that Rocky Ford had failed to carry its burden of proving injury to its rights caused by the direct storage changes. And it further denied the request for relief regarding Kents Lake's measurement obligations on the ground that Kents Lake had followed the State Engineer's instructions.
The court also declined to rescind the 1953 Agreement, concluding that Rocky Ford had not proved material breach, impracticability, frustration of purpose, or mutual mistake. Lastly, the court sua sponte awarded attorney fees to Kents Lake and Beaver City under Utah Code section 78B-5-825.
{¶ 15} The district court later denied Rocky Ford's rule 59 motion seeking reversal of the fee award. Rocky Ford appealed the court's decision denying the motion for partial summary judgment, its entry of final judgment, and its award of attorney fees. This court...
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