June 19, 2013

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Colorado Supreme Court: Substantive Errors in Parties’ Stipulated Decrees Properly Corrected by Water Court

January 24, 2013 by Leave a Comment

The Colorado Supreme Court issued its opinion in Concerning the Application for Water Rights of: Ginn Battle South, LLC, Ginn Battle North, LLC, Ginn-LA Battle One, LTD., LLLP, Ginn-LA Battle One A, LLC and Ginn Development Company, LLC in Eagle County, Colorado Concerning the Application for Water Rights of: Town of Minturn in Eagle, Grand, and Town of Minturn v. Tucker on Tuesday, January 22, 2013.

CRS § 37-92–304(10)—Correction of Substantive Errors in Water Court Decrees—Interpretation of Stipulations.

The Town of Minturn filed a 2005 application for changes of water rights and a 2007 application for new water rights; approval of a plan for augmentation, including exchange; and conditional appropriative rights of exchange. More than thirty parties filed Statements of Opposition. Following a series of negotiations between Minturn and the Opposers, the water court granted Minturn’s applications and entered stipulated decrees in 2010. Following entry of these decrees, Minturn realized that the consumptive use numbers on which it had relied in calculating its monthly maximum limitations for diversion from the Minturn Ditch Water Right and Minturn Well Nos. 1 and 2 Water Rights did not reflect actual monthly usage data. Instead, the numbers mistakenly reflected Minturn’s use as stated in billing statements, which run a month behind the actual usage month. Minturn also realized that the month of April was not included as a winter month in the “consumptive use factors” section due to a drafting error in a previous settlement agreement later carried over into the original decrees.

Minturn conferred with all Opposers regarding its intention to correct the decrees to conform the monthly maximum limitations and consumptive use factors to its actual historical monthly usage in accord with the parties’ expectations. Each Opposer agreed to the proposed corrections except J. Tucker, Trustee (Tucker), who opposed the corrections on the ground that the parties’ earlier stipulations precluded the water court from making the requested changes. Following the submission of briefs and affidavits from both parties, the water court granted Minturn’s request to correct the substantive errors in the decrees pursuant to its authority under CRS §37-92-304(10). Tucker appealed.

The Supreme Court upheld the corrected findings of fact, conclusions of law, judgment, and decrees of the water court. CRS §37-92-304(10) grants the water court discretion within a three-year period to correct substantive errors in a water decree. The parties’ stipulations anticipated that actual monthly historical consumptive use numbers would be used in the decrees’ monthly limitations. The original decrees mistakenly did not contain these numbers, contrary to the intent of the parties. The water court did not abuse its discretion in entering the corrected decrees. Accordingly, the Court affirmed the water court’s judgment.

Summary and full case available here.

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Colorado Supreme Court: Adverse Possession of Interest in Water Right Affirmed but Water Court Order Reversed In Part for Reconstruction of Easement to Ensure Water Rights Respected

December 4, 2012 by Leave a Comment

The Colorado Supreme Court issued its opinion in Archuleta v. Gomez on Monday, December 3, 2012.

Water Law—Adverse Possession of Legal Interest in Water—Enlargement of Consumptive Use—Injunction—Costs—CRCP 54(d)—Attorney Fees—CRS § 13-17-102(4).

This adverse possession dispute is between neighboring property owners—Ralph Archuleta  and Theodore Gomez—over legal interests in water and easement rights for three ditches diverting water from the Huerfano River in the Arkansas River Basin. The Archuleta Ditch extends across Gomez’s upper (westernmost) parcel of irrigated land but does not reach Gomez’s nonadjacent lower parcel or Archuleta’s parcel, which lies immediately to the east of Gomez’s lower parcel. Manzanares Ditch No. 1 cuts across the southeastern corner of Gomez’s lower parcel and the southern part of Archuleta’s parcel. Manzanares Ditch No. 2 runs across the northern part of Gomez’s lower parcel and previously extended to the northern part of Archuleta’s adjoining parcel until Gomez plowed it under, severing the connection to Archuleta’s property.

The Supreme Court affirmed the judgment of the water court in part, concluding that (1) Gomez adversely possessed Archuleta’s legal interests in the Archuleta Ditch and Manzanares Ditch No. 1; (2) awarding costs to Gomez was within the trial court’s discretion under CRCP 54(d); and (3) each party was responsible for its own attorney fees because the water court could reasonably find that Archuleta’s position in the litigation was not substantially frivolous, groundless, or vexatious pursuant to CRS § 13-17-102(4). Because Gomez wrongfully interfered with Archuleta’s water and easement rights for Manzanares Ditch No. 2 and enlarged the use of that ditch’s water, the Court reversed the water court’s judgment in part, directing it to enter an injunction for reconstruction of Manzanares Ditch No. 2 and an easement across the northern part of Gomez’s lower parcel to Archuleta’s adjoining parcel, so that Archuleta will receive the flow of water his legal interest in this ditch entitles him to divert.

Summary and full case available here.

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Colorado Court of Appeals: Landowners Who Sold Property Rights Not Allowed to Sever Shares in Mutual Ditch Company from Land in Violation of Previously Existing Conservation Easement

June 12, 2012 by Leave a Comment

The Colorado Court of Appeals issued its opinion in Mesa County Land Conservancy, Inc. v. Allen on June 7, 2012.

Conservation Easement—Mutual Ditch Shares—Summary Judgment—Injunctive Relief.

In this dispute over a conservation easement encumbering mutual ditch shares, defendants Sam and Susie Allen appealed the trial court’s judgment (1) granting summary judgment in favor of plaintiff Mesa County Land Conservancy, Inc. (Mesa Land Trust); (2) denying the Allens’ motions for summary judgment; and (3) granting injunctive relief in favor of Mesa Land Trust. The judgment was affirmed.

In 1990, the United States, acting by and through the Farmers Home Administration, granted a deed of conservation easement (1990 Easement) to Mesa Land Trust. The conservation easement covered 140 acres of land and provided that “[a]ll water rights held at the date of this conveyance shall remain with this land.” It was recorded in the Mesa County real estate records. At the time of the conveyance, the United States held nine shares of capital stock in a mutual ditch company, the Big Creek Reservoir Company (Big Creek Shares).

The Allens purchased the property in 1993, subject to the 1990 Easement and their deed specifically referred to the Big Creek Shares. In 2007, the Allens sold the property, but purported to exempt the Big Creek Shares from the conveyance. Mesa Land Trust sought declaratory and injunctive relief against the Allens for violating the terms of the 1990 Easement by attempting to sever the Big Creek Shares from the land.

The Allens filed two motions for summary judgment on grounds that the Big Creek Shares were not encumbered by the 1990 Easement because it did not comply with CRS § 38-30.5-104(5) or with article 8 of Colorado’s Uniform Commercial Code (UCC). Mesa Land Trust moved for summary judgment, seeking a declaratory judgment that the Big Creek Shares could not be exempted from the conveyance. The trial court issued a permanent injunction in favor of Mesa Land Trust, requiring the Allens to convey the Big Creek Shares to the purchasers and prohibiting them from severing them from the property. The Allens appealed.

In 2003, the General Assembly amended certain parts of the conservation easement statutes. The Allens argued that the 1990 Easement is invalid because the definition of “conservation easement” in the relevant statute in effect in 1990 did not authorize encumbrance of water rights; and (2) the 1990 Easement does not comply with the notice requirements of the 2003 amendment of CRS § 38-30.5-104(5). Mesa Land Trust argued that the 1990 Easement is valid because the definition of conservation in the statute in effect when the 1990 Easement was created—the 1976 statute—allowed water rights to be encumbered, and if the 2003 amendment to the notice requirement applies retroactively, it is unconstitutionally retrospective.

The Court of Appeals determined that (1) the statutory language was ambiguous before the 2003 amendments; (2) the legislature intended to clarify, and not to change, the statute; and (3) the statute includes a provision that the 2003 amendment applies to previously created conservation easements. Therefore, the Court held that the legislature intended the statute to apply retroactively. It then considered whether it was unconstitutionally retrospective.

Mesa Land Trust contended that the 2003 amendment is unconstitutionally retrospective solely as to the notice requirement because it impairs Mesa Land Trust’s vested rights in the Big Creek Shares. The Allens responded that Mesa Land Trust does not have any vested rights in the Big Creek Shares because the 1976 statute did not recognize conservation easements encumbering water rights as valid interests in land. The Court disagreed with the Allens, finding that the 1976 statute did authorize the creation of conservation easements encumbering water rights (this was clarified by the 2003 amendment).

The Court also agreed with the trial court that application of the 2003 notice requirement to easements that predated the enactment of that requirement would be unconstitutional. If the requirement were imposed, it would render all pre-existing conservation easements covered by that requirement invalid unless, by chance, a grantor complied with a sixty-day notice provision that did not exist when the easement was created.

Finally, the Allens argued that the Big Creek Shares are securities subject to a previous version of the UCC. The Court rejected this argument, finding that it is well established that the UCC does not apply to mutual ditch shares as they are not corporations in a legal sense but merely vehicles for individual ownership of water rights. Accordingly, the trial court’s judgment was affirmed.

Summary and full case available here.

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2013-06-19 05:30:44