State ex rel. Office of the State Eng'r v. United States

• Decision Date: 11 January 2013
• Docket Number: No. 30,824.,30,824.
• Citation: 296 P.3d 1217
• Parties: STATE of New Mexico ex rel. OFFICE OF the STATE ENGINEER, Thomas C. Turney, Plaintiffs–Appellees, v. UNITED STATES of America, Elephant Butte Irrigation District, City of El Paso, New Mexico State University, Stahman Farms, Other Claimants to be Determined, and Unknown Claimants, Defendants, and John D. Baca, Subfile Defendant–Appellant.
• Court: Court of Appeals of New Mexico

296 P.3d 1217

STATE of New Mexico ex rel. OFFICE OF the STATE ENGINEER, Thomas C. Turney, Plaintiffs–Appellees,

v. UNITED STATES of America, Elephant Butte Irrigation District, City of El Paso, New Mexico State University, Stahman Farms, Other Claimants to be Determined, and Unknown Claimants, Defendants,andJohn D. Baca, Subfile Defendant–Appellant.

No. 30,824.

Court of Appeals of New Mexico.

Oct. 24, 2012.

Certiorari Denied, Jan. 11, 2013, No. 33,918.

DL Sanders, Special Assistant Attorney General, Richard A. Allen, Special Assistant Attorney General, Martha C. Franks, Special Assistant Attorney General, Santa Fe, NM, for Appellees.

Peters Law Firm, LLC, Lee E. Peters, Las Cruces, NM, for Appellant.

OPINION

FRY, Judge.

{1} This case involves a dispute over ownership of a ground water right on approximately twenty-eight acres of elevated bench lands on Appellant John D. Baca's farm property in Salem, New Mexico. In the course of a subfile proceeding initiated by the Office of the State Engineer (OSE) in order to determine ownership of water rights on Baca's farm, the district court appointed a special master to try the matter. The special master filed a report recommending that the district court grant ownership of the disputed water right to Baca. Upon the OSE's written objections to the report, the district court rejected the special master's report in part and then entered an order declaring that Baca did not have a water right on the disputed bench lands.

{2} Baca appeals, arguing that the district court was bound by the factual findings and legal conclusions entered by the special master and that the court improperly re-weighed the evidence and applied an erroneous standard of review in rejecting the special master's report. We agree and conclude that the district court's actions were improper under the standard of review established by our case law. We therefore reverse the district court's order and remand for the district court to consider the OSE's remaining objection on the issue of abandonment of the water right.

I. BACKGROUND

{3} The present case arose as a subfile proceeding in the course of a general adjudication of water rights in the lower Rio Grande stream system.¹ At issue in this particular subfile proceeding is a disputed water right on Baca's farm in Salem, New Mexico. Baca purchased the 132–acre farm in 1981. For purposes of the subfile proceeding, Baca's property was divided into two distinct areas: (1) the “valley lands,” consisting of forty-two acres; and (2) the “bench lands,” consisting of approximately twenty-eight acres that were terraced into eighteen benches that took the shape of a chevron when viewed from the air. The subfile for Baca's property consists of five water rights, only one of which is at issue in this appeal. This disputed water right is associated with the bench lands and, more specifically, it is the right to ground water produced from a well for the upper sixteen benches (the disputed benches) on Baca's property.

{4} Over the span of four years beginning in 2001, the OSE sent a series of offers of judgment to Baca during the subfile phase of the adjudication in order to reach an agreement on this disputed water right. When the parties were unable to come to an agreement on this water right, the district court referred the matter to a special master pursuant to its authority under Rule 1–053 NMRA.

{5} Rule 1–053 governs the appointment and use of special masters in district court proceedings. In non-jury cases, a district court is permitted to refer a matter to a special master upon a showing of an exceptional condition or “in matters of account and of difficult computation of damages.” Rule 1–053(B). In this case, the district court appointed attorney Stephen Snyder as special master after determining that exceptional conditions warranted the referral. The district court's order of reference directed the special master to “hear and determine all claims and contentions of the parties” and to “make findings of fact and conclusions of law and prepare and file a report” with the court at the conclusion of the proceedings. SeeRule 1–053(E)(1) (requiring the special master to prepare a report on the matter submitted to him and file the report with the court).

{6} The parties tried two issues before the special master: (1) whether a predecessor in interest to Baca established a ground water right on the disputed benches and, if so, (2) whether Baca abandoned this water right. In the proceedings before the special master, the OSE took the position that a water right was never established for the disputed benches because water from the well was not put to beneficial use on these benches. See Hydro Res. Corp. v. Gray, 2007–NMSC–061, ¶ 21, 143 N.M. 142, 173 P.3d 749 (stating the general principle that “[g]round water, like surface water, must be appropriated and applied to beneficial use before a vested water right will result”). Alternatively, the OSE claimed that Baca had abandoned any water right that may have once existed on the disputed benches. Over the course of a three-day trial before the special master, the parties presented testimony from lay and expert witnesses as well as documentary evidence in the form of aerial photographs and affidavits in support of their positions.

{7} Following the hearing, the special master filed a report with the district court in which he found that irrigation ground water rights were established on the disputed benches and that Baca had not abandoned this water right. The OSE objected to the special master's report and, following a hearing, the district court entered an order rejecting in part the special master's report.

{8} The district court disagreed with a majority of the special master's findings of fact concerning the testimony and documentary evidence presented at trial. In particular, the district court found that “the record d[id] not support [t]he [s]pecial [m]aster's [f]indings that irrigation water has ever been used to grow a crop on the disputed bench lands.” The district court also rejected the special master's reliance on a declaration of water rights filed by Baca shortly after the farm purchase. In addition, the court rejected the special master's conclusion that water was put to beneficial use on the disputed benches. The district court held that Baca did not have a water right on the disputed bench lands. Because the court determined that a ground water right had not been established on the disputed bench lands, the court did not address the OSE's objections to the special master's findings on abandonmennt. This appeal followed.

II. DISCUSSION

{9} On appeal, Baca's overarching argument is that the district court improperly disregarded the special master's report. Specifically, Baca argues that the district court was bound by the factual findings entered by the special master because the findings were supported by substantial evidence and that the court improperly re-weighed the evidence and applied an erroneous standard of review in rejecting the special master's report. After delineating the proper standard of review in this case, we examine whether the district court's specific reasons for rejecting the special master's report withstand scrutiny.

A. Standard of Review

{10} Because this case involves proceedings before a special master and a district court's subsequent review of the special master's report, two standards of review are relevant in this case: the standard the district court applies to review of the special master's report and the standard that our Court applies to review of the district court's order.

1. District Court's Review of Special Master's Report

{11} Rule 1–053(E)(2) provides that in non-jury actions, “the [district] court shall accept the [special] master's findings of fact unless clearly erroneous.” Our case law—with one exception—has equated the term “clearly erroneous” with the familiar substantial evidence standard of review.

{12} We begin with Lopez v. Singh, in which our Supreme Court interpreted the rule's language as directing that “the findings of the [special] master, if supported by substantial evidence, are binding upon the trial court.” 53 N.M. 245, 247, 205 P.2d 492, 493 (1949). The Court went on to state that “findings will not be set aside merely because the record tends to show that they are not supported by the weight of the evidence.” Id. The Court observed that the New Mexico rule applicable to a special master's findings was, at the time Lopez was decided, identical to its federal counterpart and cited with approval federal case law defining the standard of review. Id. at 247–48, 205 P.2d at 493. “[S]o far as the finding of the [special] master ... who saw the witnesses depends upon conflicting testimony or upon the credibility of witnesses, or so far as there is any testimony consistent with the finding, it must be treated as unassailable.” Id. at 247, 205 P.2d at 493 (internal quotation marks and citation omitted). Applying this standard to the case before it, the Court in Lopez concluded that the district court, which had modified some of the special master's findings and rejected others, had improperly weighed the evidence. Id. at 248–49, 205 P.2d at 493–94. Because the special master's findings were supported by substantial evidence, the Supreme Court reversed the district court's order and remanded with instructions to reinstate the special master's findings. Id. at 249, 205 P.2d at 494.

{13} Our Supreme Court continued to apply the standard of review stated in Lopez in three subsequent cases. In Purdy v. Tucker, the Court affirmed the district court's confirmation of the referee's report, stating that “[i]f ... the testimony before the referee was conflicting, or if it depended upon the credibility of the witnesses, and the referee found the facts from that testimony, his findings in this particular are not subject to attack, and are binding...