Ute Water Conservancy Dist. v. Fontanari, 20CA2132

Docket Nº20CA2132
Citation2022 COA 125
Case DateOctober 27, 2022
CourtCourt of Appeals of Colorado

2022 COA 125

Ute Water Conservancy District, Plaintiff-Appellee,
v.

Rudolph Fontanari, Jr.; Ethel C. Fontanari; and Rudolph Fontanari, Jr. and Ethel Carol Fontanari Revocable Trust, Defendants-Appellants.

Nos. 20CA2132, 21CA0135

Court of Appeals of Colorado, Fourth Division

October 27, 2022


SUMMARY

A division of the court of appeals considers whether a utility company that has an easement to place a pipeline on the property of another may recover the expenses it incurs to relocate the pipeline after the property owner's unreasonable interference with the easement places the pipeline at risk. The division holds that, under the circumstances, the utility company may recover such expenses because the property owner's actions and refusal to compromise with the utility company made relocation of the pipeline reasonable, necessary, and foreseeable.

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Mesa County District Court No. 15CV30590 Honorable Jane A. Tidball, Judge

Driscoll Law, LLC, Jeffrey L. Driscoll, Fruita, Colorado, for Plaintiff-Appellee

Lewis Roca Rothgerber Christie LLP, Kendra N. Beckwith, Denver, Colorado, for Defendants-Appellants

OPINION

LIPINSKY JUDGE

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¶ 1 Without utility easements, homes and businesses would lack access to critical services such as power, telecommunications, internet, and water. Through easements, utilities obtain the right to place their transmission lines on private property situated between their facilities and their customers. See Wright v. Horse Creek Ranches, 697 P.2d 384, 387 (Colo. 1985) (explaining that an easement "confers upon the holder of the easement an enforceable right to use property of another for specific purposes"); Lazy Dog Ranch v. Telluray Ranch Corp., 965 P.2d 1229, 1234 (Colo. 1998) ("An easement is a right conferred by grant, prescription or necessity authorizing one to do or maintain something on the land of another 'which, although a benefit to the land of the former, may be a burden on the land of the latter.'" (quoting Barnard v. Gaumer, 146 Colo. 409, 412, 361 P.2d 778, 780 (1961))).

¶ 2 This case concerns the remedies available to a water utility when a landowner whose property is burdened by easements for the utility's water transmission line takes actions that place the transmission line at risk. We hold that, under the circumstances of this case, the trial court did not err by awarding relocation damages to the utility after finding that the landowner's actions made

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relocation of the transmission line reasonable, necessary, and foreseeable.

¶ 3 Defendants, Rudolph Fontanari, Jr. (Mr. Fontanari), Ethel C. Fontanari, and Rudolph Fontanari, Jr. and Ethel Carol Fontanari Revocable Trust (collectively, the Fontanari defendants), appeal the trial court's judgment in favor of plaintiff, Ute Water Conservancy District (Ute Water), on Ute Water's breach of contract claim. We affirm.

I. Background Facts and Procedural History

¶ 4 The trial court found the following relevant facts. Ute Water provides water to approximately 80,000 customers in a 250-square-mile service area in western Colorado. Ute Water's main transmission pipeline (the pipeline) delivers approximately two-thirds of the total volume of water to Ute Water's customers. If the pipeline were disabled, hospitals, fire stations, schools, and hundreds of residences throughout the service area would lose access to water.

¶ 5 The pipeline crosses, among other properties, two parcels of land owned by the Fontanari defendants (the parcels): a 121-acre parcel (the road parcel) and a 1.3-acre parcel (the residential parcel).

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The residential parcel includes a "residence pad" adjacent to the houses located on the parcel. (According to the parties' pleadings, Mr. Fontanari and Ethel C. Fontanari own the road parcel and Rudolph Fontanari, Jr. and Ethel Carol Fontanari Revocable Trust owns the residential parcel.)

¶ 6 In 1980, the Fontanari defendants' predecessors-in-interest executed two conveyance instruments (the conveyance instruments) granting Ute Water two perpetual easements and construction easements on the parcels (the easements). The easements granted Ute Water the right to construct and maintain the pipeline on the parcels. The easements burden the road parcel (the Mid-Continent easement) and the residential parcel (the Lamb easement).

¶ 7 Exhibit A to each conveyance instrument provides a metes and bounds description of the specific property burdened by the easements and states that the easements include "all streets, roads or highways abutting said lands." The conveyance instruments specify that the property owner reserves the right to "use and occupy said premises for any purpose consistent with the right and privileges" granted to Ute Water. In addition, the conveyance instrument for the Mid-Continent easement authorizes the property

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owner "to construct and maintain a roadway on the surface" of such easement.

¶ 8 Ute Water constructed the pipeline in 1981. At the time of its construction, the portion of the pipeline on the parcels (the Fontanari portion) was located approximately four feet under a private road on the road parcel. The Fontanari portion crossed the residential parcel at two points and covered 846 feet of the pipeline.

¶ 9 Mr. Fontanari expanded the residence pad on the residential parcel by adding fill from a nearby hillside. He widened the pad by 35 feet and lengthened it by 120 feet. After the expansion, the pad encroached onto the road parcel and increased the depth of the pipeline under the road parcel by approximately twelve feet. The expansion also covered areas that Ute Water needed to access the pipeline.

¶ 10 In 2014, Mr. Fontanari began developing the private road to accommodate the transportation of heavy equipment to and from a mine that he owns. Over the next two to three years, Mr. Fontanari placed concrete culvert pipes on top of the road (approximately four feet above the pipeline) and added between 10.22 and 11.79 feet of

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fill to increase the depth of, and to level, the road. The added fill covered approximately 300 feet of the length of the pipeline.

¶ 11 In total, Mr. Fontanari's alterations impacted approximately 350 feet of the Fontanari portion. Before making the alterations, he neither contacted Ute Water to determine the boundaries of the easements or the location of the pipeline, nor sought a court's permission to proceed with the alterations.

¶ 12 Ute Water learned of the alterations in 2014. It discovered that the alterations impacted its access to the pipeline, increased the likelihood of damage to the pipeline, and made the detection and location of leaks more difficult. Moreover, the alterations prevented Ute Water from safely and timely accessing the pipeline for routine maintenance or emergency repairs.

¶ 13 Ute Water filed a lawsuit against the Fontanari defendants under theories of declaratory relief, injunctive relief, negligence, nuisance, and trespass. The trial court dismissed Ute Water's negligence, nuisance, and trespass claims on the grounds that they were barred by the economic loss rule. Ute Water then filed an amended complaint containing a new breach of contract claim and reasserting the claims for declaratory and injunctive relief.

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¶ 14 After several failed attempts at settlement during the pendency of the lawsuit, Ute Water constructed a new section of the pipeline that bypassed the parcels and stopped using the Fontanari portion. Ute Water then severed the Fontanari portion from the pipeline and plugged each end of the Fontanari portion with concrete. At trial, Ute Water requested an award of damages in the amount of the expenses it incurred in relocating the pipeline away from the parcels.

¶ 15 Following a bench trial, the trial court entered judgment in favor of Ute Water on its breach of contract claim. In its post-trial order, the court rejected the Fontanari defendants' arguments that Ute Water had failed to substantially perform its contractual obligations under the conveyance instruments and that Ute Water had abandoned the easements. Notably, the court found - and the Fontanari defendants do not contest on appeal - that the Fontanari defendants unreasonably interfered with the easements. The court entered judgment in favor of Ute Water and against the Fontanari defendants in the amount of $557,790.31 and awarded Ute Water its relocation expenses. Because Ute Water had already relocated the pipeline, the court determined that its claims for a

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declaratory judgment and injunctive relief were moot and denied them.

II. Analysis

¶ 16 The Fontanari defendants contend that the trial court erred by (1) entering judgment in favor of Ute Water even though the case was moot. They additionally assert that, even if the case was not moot, the court erred by (2) finding that Ute Water had not abandoned the easements; (3) entering judgment in favor of Ute Water on its breach of contract claim; (4) awarding Ute Water damages in the amount of the expenses it incurred to relocate the pipeline; and (5) awarding Ute Water its costs. We address these contentions in turn.

A. Mootness

¶ 17 The Fontanari defendants assert that the trial court erred by entering judgment in favor of Ute Water because Ute Water's breach of contract claim was moot. According to the Fontanari defendants, as the court found in denying Ute Water's claim for declaratory relief, there was no justiciable controversy because Ute Water had relocated the pipeline. The Fontanari defendants contend that the relocation of the pipeline meant that Ute Water abandoned the

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easements and, therefore, Ute Water could not pursue a claim for breach of the conveyance instruments. We disagree.

¶ 18 "Mootness is a jurisdictional prerequisite that can be addressed at any stage during the proceedings." Diehl v. Weiser, 2019 CO 70, ¶ 9, 444 P.3d 313, 316. "A case is moot when a judgment, if rendered,...

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