Orange Cove Irrigation Dist. v. Los Molinos Mutual Water Co. ( 2018 )

Filed 12/12/18
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(Tehama)
----
ORANGE COVE IRRIGATION DISTRICT, C078323, C078888
Plaintiff, Cross-complainant and (Super. Ct. No. CI3811)
Appellant,
v.
LOS MOLINOS MUTUAL WATER COMPANY,
Defendant, Cross-defendant and
Respondent.
APPEAL from a judgment of the Superior Court of Tehama County, John J.
Garaventa, Judge. Reversed.
O’Laughlin & Paris, William Charles Paris, III and Timothy J. Wasiewski for
Plaintiff, Cross-complainant and Appellant.
Gallery & Barton, Jesse William Barton for Defendant, Cross-defendant and
Respondent.
The owner of an appropriative right to water in a creek sought declaratory relief to
determine whether, under the judicial decree that established the right, it may (1) use
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water appropriated to it on a year around basis and not only during the irrigation season;
(2) use or transfer its water outside of the creek’s watershed; and (3) make these changes
in the use and location of use without obtaining prior approval of the creek’s water
master or the superior court.
The trial court declared the decree did not give the owner these rights. We reverse
the judgment.
FACTS AND PROCEEDINGS
Mill Creek drains a watershed of approximately 135 square miles. It begins at the
base of Mt. Lassen and travels in a westerly direction until it drains into the Sacramento
River near the towns of Tehama and Los Molinos in Tehama County. In a year of normal
rainfall, Mill Creek’s volume is approximately 250 cubic feet per second (cfs) when the
irrigation season begins.
By a stipulated decree issued in 1920, the Tehama County Superior Court
adjudicated water rights in Mill Creek. It declared the natural flow of the water up to a
total rate of 203 cfs had been appropriated by the parties appearing before it for use upon
their and other persons’ lands. The decree entitled these original owners of the water
rights and their successors to continue diverting from Mill Creek a total of 203 cfs of
water, and it allotted them shares in the amount of water each could divert. It entitled the
owners to use or dispose of their share of water in any manner, at any place, or for any
purpose, or in accordance with whatever agreement the owners may make with any other
person or entity.
As part of the decree, the court also appointed a water master of Mill Creek to
implement its order. The decree gave the water master exclusive authority to divert and
apportion the water during the irrigation season according to the decree’s terms, measure
the diversions, and control and superintend the diversions and the gates and ditches used
to divert the water.
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By succession of interest, respondent Los Molinos Mutual Water Company (Los
Molinos) is the current water master of Mill Creek. It also holds water rights entitling it
to receive approximately 140 cfs of the 203 cfs diverted from the creek. As the water
master, it diverts and apportions the water during the irrigation season and delivers it to
its shareholders and the other owners of decreed water rights through a system of canals
and ditches.
Typically, Los Molinos has delivered Mill Creek water from April to October each
year primarily to irrigate pastures and orchards and for watering stock. Due to limitations
in its conveyance system, Los Molinos combines the diverted water and delivers it on a
rotational basis instead of simultaneously. Each rotation takes generally 12 to 14 days,
but it takes longer during a drought or later in the season as Mill Creek flows decrease.
By the middle of July, all of Mill Creek’s available surface water, by then down to a
volume of less than 100 cfs, is being diverted. By August, the owners’ demand exceeds
the supply of water. In September, the rotation period can exceed 18 days due to the lack
of water. Meeting the water needs of all the owners becomes impossible because
deliveries may occur less than twice a month.
In October, water demand decreases as harvest occurs, but there is almost no flow
in Mill Creek downstream from Los Molinos’s last diversion dam except for a small
amount bypassed by Los Molinos and another rights holder at the request of the state to
support salmon migration.
As rains begin in November, Los Molinos shuts down its system of canals and
ditches for maintenance and repair while flows in Mill Creek begin to increase.
The record indicates Mill Creek is usually low in October, but flows increase
afterward. A study prepared for the State Water Resources Control Board found that
from 1998 to 2012, average daily flows in Mill Creek below Los Molinos’s last diversion
dam were greater than 50 cfs only 28 percent of the month of October, but were greater
than 85 cfs approximately 98 percent of the time from November 1 through May 31.
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With limited exceptions, Los Molinos does not divert or deliver any water again
until April, when the cycle repeats. It does not provide irrigation water in the winter
months because pasture vegetation and orchard trees are dormant and irrigation is not
necessary. It has never delivered water 365 days a year for any purpose.
Appellant Orange Cove Irrigation District (District) supplies water for parts of
Fresno and Tulare Counties in Central California. It receives its water from the federal
Central Valley Project under a contract with the United States Bureau of Reclamation.
In 2000, the District acquired decreed rights to Mill Creek water. Its rights
authorized it to receive approximately 10.5 cfs of the diverted 203 cfs. The District’s
predecessors in interest historically used the water to irrigate land within Los Molinos’s
service area. The District acquired only the rights to the water; it did not purchase any
land within the Mill Creek watershed.
The District acquired the water rights to offset fees imposed on its purchase of
federal water. Federal law imposed a surcharge on the District’s purchase of Central
Valley Project water to fund environmental restoration projects. (Pub.L. No. 102-575,
§§ 3406(b)(1), (c)(1); 3407(b) (Oct. 30, 1992) 106 Stat. 4706.) The District hoped to
offset the surcharge by having Los Molinos hold its water rights in trust and use the water
to increase flows in Mill Creek to improve salmon migration. For a variety of reasons,
however, the District was not able to use its Mill Creek water rights as planned.
In 2009, the District determined to put its water rights to other uses, including
municipal, industrial, agricultural or environmental uses by a downstream user. In the
meantime, the District issued Los Molinos a license to continue using its share of Mill
Creek water.
In 2010, the District granted an option to a private developer to purchase some of
its Mill Creek water rights. The developer intended to use the water for a redevelopment
project in Napa County. Los Molinos submitted comments as part of the redevelopment
project’s environmental review. It stated it had always been its understanding and
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practice “that the rights adjudged in the 1920 decree are seasonal in nature, and limited to
the irrigation season, which typically lasts from April to October.” Ultimately, the
developer did not exercise its option to acquire the District’s rights.
Following Los Molinos’s comments on the project, District representatives met
with Los Molinos representatives to discuss the District’s plan to transfer its water rights
to a person or entity located outside the Mill Creek watershed for any reasonable use.
Los Molinos, acting as water master, stated it would not agree to implement any transfer
of Mill Creek water that was (1) outside of what it considered to be the irrigation season;
(2) to be used outside of the Mill Creek watershed; or (3) not approved by the superior
court as being consistent with any applicable law.
In 2013, the District revoked Los Molinos’s license to use its Mill Creek water
rights and stated it intended to make alternative beneficial use of them “within the basin
of origin, downstream of the historic point of diversion.”
In response, Los Molinos said it “will not agree to transfer any of the water
claimed by [the District] unless and until a Tehama County judge determines the water
rights can be transferred in the manner requested by [the District] consistent with the
requirements and limitations (e.g. season of use, purpose of use, amount of use, place of
use, point of diversion, etc.) contained in the [1920] Decree and California Water Code
section 1706.”
The District brought this action against Los Molinos for declaratory relief. It
sought a declaration that (1) the 1920 decree authorized it to use its water rights year
round and not just during the irrigation season; (2) the decree did not prohibit it from
transferring its rights for use outside the Mill Creek watershed; (3) Los Molinos as water
master was not authorized to grant or deny prior approval for the District’s proposed
transfer of water rights on the basis the transfer will result in injury to another as defined
in Water Code section 1706; (4) Los Molinos was not authorized by the decree to
determine the quantity of water the District may transfer; (5) Los Molinos was not
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authorized by the decree to refuse to effectuate a proposed transfer of water on condition
the Superior Court approved the transfer; and (6) Los Molinos breached its duties by
refusing to effectuate the District’s proposed transfer. The District also sought attorney
fees.
Following a trial based on stipulated facts, the trial court entered judgment against
the District. The court ruled the decree (1) authorized the water right owners to use their
water only during the irrigation season; (2) did not authorize the owners to use their water
at any place; and (3) required any change to the purpose or place for using the water to be
approved by Los Molinos or the court. The court reformed the phrase “at all times”
wherever it appeared in the decree to mean “at all times during the irrigation season.”
Accordingly, the court also held Los Molinos did not breach its duties under the decree.
The District filed a notice of appeal against the judgment.
The trial court also awarded attorney fees to Los Molinos. In its judgment, it cited
no authority for awarding the fees. However, at a later hearing on a motion for fees
brought by Los Molinos, the court awarded fees of $53,248.75 under Code of Civil
Procedure section 1021.5. The District filed a separate notice of appeal from this order.
We have consolidated the appeals for purposes of argument and decision.
DISCUSSION
I
Denial of Declaratory Relief
The District contends the trial court misinterpreted the 1920 decree. It claims the
decree’s plain language, its structure, and the rights owners’ historical conduct establish
the decree (1) authorizes the District to use its water rights any time of year and not only
during the irrigation season; (2) authorizes the District to use its water rights outside of
the Mill Creek watershed and Los Molinos’s service area; and (3) does not require it to
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obtain prior approval from Los Molinos or the superior court to change the purpose or
place for using the water. We agree.
A. The Decree
To analyze the parties’ arguments, we first review the decree in detail. Doing so,
we see its potentially conflicting nature of granting owners the right to use their water at
any time, at any place, and for any purpose, while also requiring the water master to
apportion and measure the diverted water only during the irrigation season. To resolve
this conflict, we are tasked to interpret the decree as a whole so as to give effect to the
mutual intentions of the court that approved it and the parties who agreed to it. (State of
California v. Continental Ins. Co. (2012) 55 Cal.4th 186, 195; Dow v. Lassen Irrigation
Co. (2013) 216 Cal.App.4th 766, 780-781.)
The decree resulted from a stipulation by the parties in Los Molinos Land Co. v.
Clough (Super. Ct. Tehama County, 1920, No. 3811). Prior to that action, Los Molinos’s
predecessor in interest and the other eight parties to the decree had appropriated and
diverted water from Mill Creek (then known as the Los Molinos River) in the aggregate
amount of 203 cfs. (Decree, § I.) The water had been used by the parties “for the benefit
of the several tracts of land” they owned and “certain other tracts of land” they did not
own. (§ I.) The water continued to be needed “for useful and beneficial purposes” upon
those lands. (§ I.)
The decree’s section III entitled the parties and their successors “to divert from
[Mill Creek] in the aggregate all of the water flowing therein whenever such gross flow
shall not exceed a total of two hundred and three (203) cubic feet per second, and at all
other times all of the water flowing therein up to a total of two hundred and three (203)
cubic feet per second.” (§ III, italics added.)
The decree allotted to each of the parties a specific share of the 203 cfs and
prioritized the order in which each could receive the water. (§ IV.) No matter the share,
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section IV of the decree authorized each party to divert its share whenever water was
running in Mill Creek. Seven of the nine parties were entitled to divert their shares “at all
stages of the flow” in the creek. The District’s water rights originated from one of these
original parties, Mary Runyon. The decree granted the remaining two parties the right to
divert water “at all times.” For these other parties, the decree authorized diversions no
matter how much water was flowing in the creek.
In addition to delineating the parties’ water rights, the decree vested broad
discretion in each of the parties to decide how it diverted its share of the water and how
and where it used its water. Regarding the diversion of water, section VII of the decree
states: “Each of said parties is and will be at all times entitled to take and divert from
[Mill Creek] the quantity of water herein and hereby allotted to such party at such point
or points on said river as such party may see fit, and by such means as such party may see
fit to adopt, or to procure such quantity of water to be diverted from said river for the
benefit of such party under any arrangement with any other person or corporation, or by
or through any diversion works constructed or operated by any other person or
corporation.” (§ VII, italics added.)
Section VII of the decree granted the parties discretion to determine how and
where to use their water as follows: “Each of said parties is and will be at all times
entitled to use or dispose of the share allotted to such party of the water of said river in
any manner, at any place, or for any purposes which such party may desire, or in
accordance with whatever agreement or arrangement such party may make with any
other person or corporation.” (§ VII, italics added.)
The decree sought to equalize each party’s rights, subject to the draw priorities it
established, and it superseded any rights of priority held by riparian users. Section VII
states the quantities of water each party is entitled to divert from Mill Creek include
whatever quantities the parties are entitled to divert “by virtue of owning land riparian
thereto” or by virtue of any grant from a riparian owner or any appropriation of water
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previously made. Section VII continues: “Except as herein expressly declared, no
priority of right in respect to the waters of said river exists as between said parties, the
right of each of them in respect to said water being on a parity with the rights of all of the
others of said parties, and all of them being entitled to exercise simultaneously and
continuously their several rights as herein defined.” (§ VII, italics added.)
The decree entitled certain of the parties to continue using a diversion ditch to
receive their Mill Creek water. The ditch, known as Runyon Ditch, conveys diverted
Mill Creek water to parties south of the creek. (§§ VII, X, XIV.) Los Molinos’s and the
District’s predecessors in interest were two of those parties and also co-owners of the
ditch. The decree’s section VIII entitled the ditch’s co-owners to continue using Runyon
Ditch to receive diverted Mill Creek water. (§ VIII.)
We note that, according to the District’s option agreements with the developer
mentioned above, the rights it acquired were derived from those referred to in the decree
“as the rights of Mary Runyon, et al., on the Runyon Ditch and/or Buena Vista Lateral
. . . .” The Buena Vista Lateral or ditch system transports water from Runyon Ditch. It
appears the Runyon rights are pre-1914 rights, as the decree states the water rights of Ms.
Runyon and certain other parties are subject to an indenture dated April 21, 1911, in
which Ms. Runyon both received and transferred rights. (§ V.) The parties also assume
in their arguments that the rights associated with the 1920 decree are pre-1914 rights.
Appropriative rights obtained before 1914 are not subject to the state’s statutory scheme
for acquiring appropriative water rights. (Nicoll v. Rudnick (2008) 160 Cal.App.4th 550,
557.)
In order to carry out its provisions, the decree established the position of water
master. It appointed Los Molinos’s predecessor in interest as the water master of Mill
Creek and also of Runyon Ditch. (§§ VIII, X, XIV.) For ease of reference, we will refer
to the water master and Los Molinos interchangeably, as Los Molinos holds that
responsibility today.
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Unlike its provisions allowing the owners to exercise their rights at any time and
in any manner, the decree established the irrigation season as the time of year when the
water master was required to perform its duties on Mill Creek. We quote section X of the
decree: “As [the Mill Creek] Water Master [Los Molinos] shall at all times during the
irrigation season of each calendar year make or cause to be made in conformity with the
provisions of this decree the necessary apportionment of the water then flowing in [Mill
Creek] among the several ditches and canals then being maintained or operated by or for
the parties . . . ; and shall discharge all such other duties as normally belong to the office
of Water Master. As such Water Master it shall at all such times have and exercise
control over and superintend any and all diversions of water from said river by all such
ditches and canals, and the opening and closing or changing or regulating of any and all
gates or other appliances whereby such diversions of water from said river shall be
effected; and for that purpose shall have authority to enter upon any land of any of said
parties upon which there shall be any ditch, canal, [etc.] for the diversion or conveyance
of water, and to direct and superintend the placing and installation of proper gates for
controlling the diversion of water from said river and proper devices for the measurement
and registration of the quantities of water being from time to time diverted and conveyed
by such ditches, canals or other means.” (§ X, italics added.)
The decree also requires Los Molinos to measure the flows during the irrigation
season. Under the decree’s section XII, Los Molinos is to “take or cause to be taken at
intervals of not exceeding one week throughout the period of time between the first day of
May in each calendar year and the close of the irrigating season of such year, accurate
measurements of the gross flow of [Mill Creek], and also of the quantity of water flowing
in each ditch or canal . . . and shall keep accurate records of such measurements in
permanent form . . . .” (§ XII, italics added.)
The decree imposes similar responsibilities on Los Molinos as water master of
Runyon Ditch. The decree requires Los Molinos to perform its duties on Runyon Ditch
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at all times and whenever requested, but it is to deliver water using the ditch to the extent
the owner is entitled to the water from Mill Creek at the time of delivery. Of relevance
here, section XIV of the decree requires Los Molinos “at all times [to] take proper steps
to control and restrict and keep account of the quantities of water from time to time being
diverted from said Runyon Ditch by any and all persons so that there shall at all times
remain in said ditch sufficient water to make up the aggregate of the quantities of water
[to which the other owners] shall be entitled to have flowing in said ditch at such times.
It shall, whenever requested by any person entitled to receive water from said Runyon
Ditch, open and close the diversion gates on said Runyon Ditch in such way as to supply
to such person the quantity of water desired not exceeding the quantity to which such
person may at such time be entitled by reason of his rights in respect to the waters of
[Mill Creek]. No water shall at any time be diverted from said Runyon Ditch, and no
diversion gate thereon shall at any time be opened or closed, except by or through [Los
Molinos], [subject to exceptions not relevant here]. No alteration or change . . . in any
diversion gate along [Runyon Ditch] shall at any time be made except by or through [Los
Molinos].” (§ XIV, italics added.)
The decree required the parties to comply with any reasonable rules and
regulations implemented by Los Molinos regarding the diversion of water from Mill
Creek and Runyon Ditch, subject to orders of the trial court. (§§ X, XIV.) It also
authorized Los Molinos, the owners, and their successors to apply to the court for an
order defining or revoking Los Molinos’s powers and duties or modifying the decree’s
terms, except no one could seek to modify the terms defining the extent of the parties’
water rights or providing for the appointment of a water master. (§ XIII.)
The decree enjoined the parties and their successors from ever taking or
attempting to take or divert any water from Mill Creek or Runyon Ditch in excess of what
the decree allotted to them. (§ XVIII.) It also enjoined them from asserting any right
inconsistent with the decree, interfering with or obstructing any other party’s rights under
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the decree, or from interfering with or obstructing Los Molinos as the water master from
carrying out the decree’s provisions. (§ XVIII.)
We turn to the District’s arguments.
B. Using Water Outside of the Irrigation Season
The trial court ruled the decree prevented the District from using its water outside
of the irrigation season. The court noted the decree appointed Los Molinos to apportion
water during the irrigation season, gave it the authority to control and superintend the
diversions of water only during the irrigation season, and required it to measure flows in
Mill Creek and its ditches only during the irrigation season. From these points, the court
reasoned: “While Sections VII [entitling the owners to divert and use water ‘at all
times’] and XIV [requiring Los Molinos to control diversions from Runyon Ditch ‘at all
times’ and ensure it has sufficient water ‘at all times’] use the phrase ‘at all times,’ the
Court must construe the Decree as a whole. The Court has considered the entire Decree,
not just the individual provisions contained therein; and has interpreted the Decree with
the intention of the parties at the time of its entry in mind. The Court determines that the
intent of the Decree is to mean ‘at all times during the irrigation season’ as that phrase is
modified and recited in Section X [requiring Los Molinos to apportion water during the
‘irrigation season’].”
The District contends the trial court’s interpretation is incorrect. It claims the
interpretation is contrary to the decree’s plain language, which in sections III and VII
allows owners to use their rights at all times. It also argues the interpretation is
inconsistent with the decree’s structure. It claims that as constructed, the decree does not
suggest one should look to the limitations on the duties of the water master to define the
rights of the owners. The District further contends the parties’ conduct before this action
arose shows the exercise of water rights was not limited to the irrigation season. Los
Molinos has delivered water in every month of the year when needed, and other decreed
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rights to Mill Creek water were used outside of the irrigation season to enhance the
creek’s salmon and steelhead runs or respond to drought.
We agree with the District that the trial court misinterpreted the decree.
“ ‘The fundamental goal of contractual interpretation is to give effect to the mutual
intention of the parties.’ (Bank of the West v. Superior Court [(1992)] 2 Cal.4th [1254,]
1264; see Civ. Code, § 1639.) ‘Such intent is to be inferred, if possible, solely from the
written provisions of the contract.’ (AIU [Ins. Co. v. Superior Court (1990)] 51 Cal.3d
[807,] 822; see Civ. Code, § 1639.) ‘If contractual language is clear and explicit, it
governs.’ (Bank of the West v. Superior Court, supra, 2 Cal.4th at p. 1264.) ‘ “The ‘clear
and explicit’ meaning of these provisions, interpreted in their ‘ordinary and popular
sense,’ unless ‘used by the parties in a technical sense or a special meaning is given to
them by usage’ ([Civ. Code,] § 1644), controls judicial interpretation. (Id., § 1638.)”
[Citations.]’ (Waller v. Truck Ins. Exchange, Inc. [(1995)] 11 Cal.4th [1,] 18.)” (State of
California v. Continental Ins. Co., supra, 55 Cal.4th at p. 195.)
“ ‘On the other hand, “[i]f the terms of a promise are in any respect ambiguous or
uncertain, it must be interpreted in the sense in which the promisor believed, at the time
of making it, that the promisee understood it.” ([Civ. Code], § 1649; see AIU Ins. Co. v.
Superior Court, [supra,] 51 Cal.3d [at p.] 822.)’ (Bank of the West v. Superior Court,
[supra,] 2 Cal.4th [at pp.] 1264-1265.) ‘The mutual intention to which the courts give
effect is determined by objective manifestations of the parties’ intent, including the words
used in the agreement, as well as extrinsic evidence of such objective matters as the
surrounding circumstances under which the parties negotiated or entered into the
contract; the object, nature and subject matter of the contract; and the subsequent conduct
of the parties. (Civ. Code, §§ 1635-1656; Code Civ. Proc., §§ 1859-1861, 1864;
[citations].)’ (Morey v. Vannucci (1998) 64 Cal.App.4th 904, 912; see also People v.
Toscano [(2004) 124 Cal.App.4th 340,] 345.)” (People v. Shelton (2006) 37 Cal.4th 759,
767.)
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“The whole of a contract is to be taken together, so as to give effect to every part,
if reasonably practicable, each clause helping to interpret the other.” (Civ. Code,
§ 1641.) “[W]here there are several provisions or particulars, such a construction is, if
possible, to be adopted as will give effect to all.” (Code Civ. Proc., § 1858.)
The decree grants the owners the right to use their Mill Creek water at any time,
subject to one exception. They may divert their water “whenever” water is flowing in the
creek. (§ III.) They may divert their shares “at all stages of the flow” and “at all times,”
and by such means as they see fit. (§§ IV, VII.) They are “at all times entitled to use or
dispose” of their shares “in any manner, at any place, or for any purpose . . . or [and this
is the exception] in accordance with whatever agreement or arrangement such party may
make with any other person or corporation.” (§ VII.)
The 1920 decree itself is such an “agreement or arrangement.” Each of the parties
stipulated to the terms of the decree, and the court entered it as its judgment. Thus, to the
extent specific terms in the decree limit the parties’ right to use their water, those terms
control. “Where two provisions appear to cover the same matter, and are inconsistent,
the more specific provision controls over the general provision. (Code Civ. Proc.,
§ 1859.)” (Starlight Ridge South Homeowners Assn. v. Hunter-Bloor (2009)
177 Cal.App.4th 440, 447.)
Nothing in the decree, however, expressly prohibits owners from diverting or
using Mill Creek water outside of the irrigation season. As stated above, the decree
imposes limitations on the owners’ ability to divert water during the irrigation season.
During that time of year, only the water master may divert water from Mill Creek for the
owners. (§ X.) Also during that time of year, the water master is required to measure
regularly the flow in Mill Creek and the amount of water being diverted from the creek.
(§ XII.) The owners are subject to the rules and regulations the water master adopts
regarding its apportionment of water. (§ X.)
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But the decree does not expressly limit the owners’ actions outside of the
irrigation season. There is nothing in the decree that limits the owners’ rights to obtain
Mill Creek water to only the irrigation season. The water master’s office, authority, and
responsibilities are as “prescribed and defined” in the decree. (§ X.) And nothing in the
decree gives the water master authority to control diversions of water from Mill Creek
outside the irrigation season. With no conflicting agreement in place, the owners are free
to divert water according to their decreed rights; that is, at any time.
Los Molinos claims the trial court properly limited the District’s use of its rights to
the irrigation season because under the decree’s plain language, the water master enforces
the decree, apportions the water, and measures the diverted water only during the
irrigation season. As a result, Los Molinos asserts, there are no rights to apportion water
outside of that season. If it cannot apportion water, the decree’s provisions cannot be met
during that time.
Los Molinos’s interpretation turns the decree on its head. The ultimate authority
to control and exercise the water rights belongs to the owners, not the water master. The
water master’s authority is to apportion and divert the water as the court and the owners
have agreed, not to declare there are no rights to apportion when it is not authorized to
divert water. Los Molinos’s argument expands its authority beyond what the decree gave
it.
That the decree requires Los Molinos to apportion the water during the irrigation
season does not mean the owners cannot divert or use the water outside of the irrigation
season. The decree grants the owners the right to use their water at any time, limited only
by the decree’s terms regarding the water master’s responsibility during the irrigation
season. In fact, the decree sets forth how the owners may obtain water outside of the
irrigation season. It expressly grants the owners the right to divert their share of the
water “by such means as such party may see fit to adopt, or to procure such quantity of
water to be diverted from said river for the benefit of such party under any arrangement
15
with any other person or corporation, or by or through any diversion works constructed or
operated by any other person or corporation.” (§ VII.)
Los Molinos argues the decree’s structure reflects the owners’ intent to prohibit
diversions outside of the irrigation season. It asserts the decree’s first part defines only
individual rights to quantities of water, and the second part imposes a collective
limitation on when the water could be used by requiring the measurement and
apportionment to occur only during the irrigation season and only through the water
master.
Los Molinos’s understanding of the decree’s structure is incorrect. The decree’s
first part sections I through IX, does more than just allot quantities of water. It also
settles and equalizes all competing claims and grants the parties the right to divert and
use the water as they see fit. Indeed, the decree prohibits the owners from amending
these provisions that define and adjudge the extent of the owners’ rights. (§ XIII.)
The decree’s second part, sections X through XVII, establishes the water master
and defines its responsibilities. In more specific terms than the decree’s first part, this
part imposes on the water master the duties of diverting the water and measuring the
flows during the irrigation season, and operating and maintaining the diversion system of
canals, ditches, and gates. These duties conflict with the first part’s grant of authority to
the owners to divert the water, but only to the extent the owners seek to divert water
during the irrigation season. The second part does not conflict with the owners’ rights
outside of the irrigation season.
Los Molinos argues its and the owners’ historical conduct and the District’s
conduct prior to this action show all parties believed the decreed water rights would exist
only during the irrigation season. It claims any deliveries of water it made outside of the
normal irrigation season were limited and were only for irrigation purposes. It has never
delivered water 365 days of a year.
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The historical conduct as outlined above shows the owners exercised their water
rights primarily during the irrigation season, but it does not show the owners could not
exercise their rights outside of the irrigation season.
Los Molinos admits there have been times during dry or wet years when the
“irrigation season,” as Los Molinos defines it, has either expanded or contracted based
upon water demands. At times it has delivered water for stock watering as early as
January or as late as December. For example, in 2014, an exceptionally dry year, it
delivered water for a two-week period in January and February for stock watering and
irrigation purposes. It stopped when rains came and enough water had been delivered.
More significantly, Los Molinos’s conduct as a water rights owner and the
conduct of another owner show that at least these owners believe they may control and
exercise their rights outside of the irrigation season, even to put their water to a use other
than irrigation. Los Molinos has entered into agreements with the state to keep water in
Mill Creek it was otherwise entitled to divert for agricultural purposes in order to enhance
flows for fish migration, including during times outside of the normal irrigation season.
In 1990, the state agreed to provide ground water to Los Molinos in exchange for Los
Molinos bypassing an equivalent amount of Mill Creek surface water to support fish
migration. In this agreement, Los Molinos also agreed the state could divert and use its
water downstream for fish and wildlife purposes. Los Molinos participated in this
agreement as a water rights owner; as the water master, it only coordinated the releases.
It and the state renewed the agreement in 2007. In the 2007 version, Los Molinos
specified it would release its water in the spring and also from October 15 through
November 30.
In 1996, Jones, Inc., a landowner within Los Molinos’s service area and an owner
of water rights, agreed to forgo any deliveries of its water throughout the year so the
water could be used to aid fish migration in Mill Creek. Los Molinos agreed to add this
water to the amount it previously agreed to bypass under the 1990 agreement. Also in
17
this 1996 agreement, Los Molinos agreed to bypass an additional 10 cfs of its Mill Creek
water from October 15 through December 31. This agreement was valid for 11 years.
In 2008, The Nature Conservancy purchased water rights from Jones, Inc. It
continues to bypass its share of water in the spring and from October 15 to November 30
to support fish migration. Los Molinos also continues to bypass its additional 10 cfs of
water.
During the drought year of 2014, Los Molinos and The Nature Conservancy
entered into agreements with the state to bypass water which was otherwise available for
agricultural use from October 15 through December 31 of that year to support fish
migration.
These bypass agreements show Los Molinos interprets the decree to give it, as an
owner of water rights, the authority to access and direct the use of its appropriated water
outside of the irrigation season. This is consistent with the express language of the
decree entitling the owners to divert and use their water at any time, and is the same right
the District seeks to exercise.
Los Molinos asserts these agreements merely require it to operate its dams in a
certain manner; they are not claims of water rights outside the irrigation season. That
assertion is not correct. By these agreements, Los Molinos controlled and exercised its
water rights outside of the irrigation seasons. It admitted it exercised these rights as an
owner, not as the water master.
The decree’s express language, as well as its structure and historical
implementation, lead us to conclude the District is authorized to divert its water outside
of the irrigation season.
C. Using Water Outside of Los Molinos’s Service Area
The District sought a declaration that the decree did not prohibit it from using its
water outside of the Mill Creek watershed. Although the trial court noted the decree
18
authorized owners to use their Mill Creek water “at any place, or for any purpose,” it
ruled the decree prevented the District from diverting water outside the basin unless it or
Los Molinos approve it.
The court relied on provisions in the decree it believed showed that the original
owners and the superior court contemplated diversions only from Mill Creek, not
diversions of Mill Creek water from another waterway or location downstream. Section
VII authorized the parties to divert “from said river” their allotments “at such point or
points on said river, as such party may see fit . . . .” (§ VII, italics added.) The same
section declared the diversion rights given to the parties included whatever water the
parties were entitled “to divert from said river by virtue of owning land riparian
thereto . . . .” (Ibid., italics added.) Each party is entitled to use or dispose of its share
“of the water of said river . . . .” (Ibid., italics added.) These provisions led the court to
state the decree did not authorize an owner to move the diversion point to some location
not on Mill Creek.
The trial court set forth additional reasons for its interpretation. It said if water
was diverted at a location outside of Mill Creek, the water master could not enforce the
decree’s terms. The decree’s section X gives the water master authority during the
irrigation season to enter upon the lands of the owners on which there is a canal, gate, or
other structure used for conveying water in order to control all diversions “from said
river” and the placement and operation of gates and measurement devices that are used
for “such diversions of water from said river . . . .” (§ X.) The court said the water
master had neither the ability nor the authority to travel to locations outside its system to
install measuring devices to ensure the transferee of the District’s water rights was
diverting the proper amount of water. The court believed conveying water outside the
system would render the water master impotent.
The court also indicated that transferring the water out of the Mill Creek basin
would harm other users. The decree adjudged both appropriative rights and riparian
19
rights. Riparian rights, however, could not be transferred apart from the riparian land.
The court said the District moving its rights out of the watershed would be inconsistent
with riparian rights and result in harm to others.
The trial court believed that interpreting the decree to allow an owner to use water
outside of the service area would create an absurdity. It explained: “The intended
purpose of the Decree was to allocate water among the various parties. If the Water
Master or the Court would now permit the transfer of this scarce resource out of the basin
when the system barely functions because of the short water supply, the system would
become compromised and conflicts would arise. ‘The court shall avoid an interpretation
which will make a contract extraordinary, harsh, unjust, inequitable or which would
result in absurdity.’ [Citations.] [¶] The Court finds that the Decree does not empower
all water right holders to use their water at any place.”
The District claims the trial court interpreted the decree incorrectly for a number
of reasons. The decree expressly authorizes the District to use its share of the water
allotted to it “in any manner, at any place, or for any purpose . . . .” (§ VII.) Nowhere
does the decree limit water use to the creek’s watershed or Los Molinos’s service area.
The District also faults the trial court for finding a risk of harm to other owners
when the District has yet to propose a specific diversion or use. The stipulated facts did
not specify a particular change of use or allege a specific injury. Also, the court found a
change of use would result in conflicts over an inadequate delivery system without citing
to evidence of any specific injury. Because the case was not an adjudication of a specific
change of use, the District claims the court’s finding of injury is premature.
The District claims the parties’ conduct shows that water is used outside of the
Mill Creek watershed regularly. Most of Los Molinos’s northern service area is outside
of the creek’s watershed. Also, Los Molinos agreed that as part of the 1990 and 2007
bypass agreements, the bypassed water could be used by the state and diverted
downstream after it reached the Sacramento River, outside of Los Molinos’s service area.
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The District further argues the trial court’s concern with possible injury to riparian
rights is unfounded. The parties to the decree agreed to a single set of rules to govern
both riparian and decreed rights, allocating each party a share of the flow and expressly
eliminating any priority of riparian rights over decreed rights.
We note that the parties argue over whether the issue is the right to use water
outside of the Mill Creek watershed or Los Molinos’s service area. Because the service
area may include areas both inside and outside of the watershed, we focus on the right to
use water outside of the service area.
We agree with the District that the trial court’s interpretation of the decree is
incorrect.
The decree expressly authorizes each water rights owner to use its share of the
water allotted to it “in any manner, at any place, or for any purpose” or according to
whatever agreement it enters into with others. (§ VII.) Nowhere does the decree limit
water use to the creek’s watershed or Los Molinos’s service area.
The decree’s provisions regarding where the water can be diverted do not change
the District’s right to choose where the water will be used. In 1920, “it had long been the
law of California (as it still is today) ‘that the person entitled to the use of water may
change the place of diversion, or the place where it is used, or the use to which it was first
applied, if others are not injured by such change.’ (Ramelli v. Irish (1892) 96 Cal. 214,
217; see generally Hutchins, The California Law of Water Rights [(1956)] p. 177 [change
in place of use].)” (Barnes v. Hussa (2006) 136 Cal.App.4th 1358, 1367-1368.) Water
Code section 1706 and its predecessor statute codified this rule.1 Accordingly, although
1 Water Code section 1706 states: “The person entitled to the use of water by virtue
of an appropriation other than under the Water Commission Act or this code may change
the point of diversion, place of use, or purpose of use if others are not injured by such
change, and may extend the ditch, flume, pipe, or aqueduct by which the diversion is
made to places beyond that where the first use was made.” (Wat. Code, § 1706.)
21
the decree contemplated the water would be diverted only from Mill Creek, the law
allows the District to use the water elsewhere if it can do so without injuring the rights of
others to the water. (Id. at p. 1369.)
Even if the water can be diverted only from Mill Creek, nothing in the decree
stops an owner from using the water elsewhere after it has been diverted. An owner
could construct a means to convey the water from the point of diversion on Mill Creek to
the water’s eventual place of use. The diversion requirement does not compel an owner
to use its water only within Los Molinos’s service area.
Contrary to the trial court’s reasoning and Los Molinos’s argument, allowing an
owner to use its water outside of Los Molinos’s service area does not thwart the water
master from performing its duties and enforcing the decree. Whether an owner leaves its
water in the creek to be diverted downstream or conveys it somewhere after Los Molinos
diverts it, Los Molinos can still measure the water to ensure the owner does not receive
more than its allotted share. It need only calculate the proper allocation and either leave
that amount in the creek or superintend the appropriated amount through its system of
canals and ditches to the owner’s property or conveyance system, where it can measure
the volume delivered. Nothing requires it to follow the water outside of its service area.
Under either circumstance, it is able to ensure the owner diverts no more than its allotted
share.
The trial court’s finding of harm was speculation. No facts of any actual transfer
were before the court from which it could find injury would occur. The trial called only
for a legal interpretation of the decree. Of course, an actual transfer of rights by the
District must not harm any other legal user (Wat. Code, § 1706), but such a determination
cannot be made where no transfer is proposed.
Los Molinos contends the trial court’s interpretation correctly protects riparian
rights. If the court treated the riparian rights as appropriative and freely transferable, it
could give riparian right holders the authority to transfer their rights even though riparian
22
rights are annexed to the land. Los Molinos asserts that the District argues the decree
effectively created new, undefined rights.
Los Molinos’s argument is a red herring in at least three respects. First, the
transferability of riparian rights is not before us. The District’s water rights are
appropriative, not riparian. Whether the decree’s authorization to use the water at any
place was intended to vest in riparian owners a right to transfer their water rights apart
from their riparian land is a question we need not decide in order to determine as an
abstract question of interpretation whether owners of appropriative rights may use their
water in any place.
Second, as already stated, Water Code section 1706 provides that owners of
appropriative rights may change the place of diversion even though riparian owners may
not. (Wat. Code, § 1706.) No court has interpreted that statute to require riparian rights
also to be transferable.
Third, the riparian owners under the decree have no priority of right. The decree
expressly equalized the owners’ rights to the water and eliminated any priority riparian
owners may have had to it under common law. Thus, in the abstract, an owner’s riparian
rights do not prevent the District from using its water outside of Los Molinos’s service
area.
Los Molinos further claims the conduct of the parties supports the trial court’s
interpretation. Mill Creek water has always been diverted only from Mill Creek and,
while not all of it may be used within the creek’s watershed, all of it has been diverted
and used within Los Molinos’s service area. Moreover, Los Molinos’s use of Mill Creek
water to enhance fish migration is a use of water within the creek’s watershed to benefit
fishery resources in Mill Creek. Los Molinos argues whether downstream users gain an
incidental benefit is beside the point.
Los Molinos ignores the decree’s language. Water diverted from Mill Creek may
be used anywhere. The historical use of water within Los Molinos’s service area does
23
not alter the decree’s express and unambiguous terms. And although the diversion of Los
Molinos’s water downstream may be an “incidental benefit,” it nonetheless was a benefit
Los Molinos contractually conferred on a downstream user, which is the same right the
District seeks to exercise. The District is entitled to use its water outside of the service
area.
D. Prior Approval by Los Molinos or the Superior Court
The trial court held any change of use or the place of use required prior approval
by the court or the water master. The court based its conclusion on the operation of
Water Code section 1706 in light of the water master’s control of diversions under the
decree. The court reasoned: “If Water Code section 1706 applies and riparian rights are
excluded within the application of this section, then the Water Master has total control
over diversions from Mill Creek and the Runyon ditch,” as indicated by the decree’s
terms granting the water master control over diversions during the irrigation season. The
court ruled that because the water master has total control, and because the decree does
not authorize year-round diversions or out-of-basin transfers, any change to the purpose
or place of using Mill Creek water required prior approval.
The District contends the trial court erred in its interpretation. It claims the decree
does not require an owner, either expressly or by implication, to obtain the water master’s
or the court’s approval before changing the place or purpose of using its water. The
water master in effect serves a ministerial function of allocating waters according to the
terms of the decree.
The District argues that even if the water master had discretion to determine
whether an owner’s proposed change injured another party, the change would be
presumed to be noninjurious and would not become wrongful until a party was injured,
and the injured party would have the burden of proving the injury.
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Moreover, the owners have made changes to their use of water without seeking
prior approval. Neither Los Molinos, Jones, Inc., nor The Nature Conservancy sought
prior approval from Los Molinos or the court before changing the use of their water from
irrigation to fish enhancement.
We agree with the District that the trial court’s holding is incorrect. The court
created a condition that does not exist in the decree, and it did so based on a
misunderstanding of the extent of control the decree grants to Los Molinos and of the
operation of Water Code section 1706.
Nothing in the decree subjects changes to use or location to the water master’s or
court’s prior approval. Los Molinos’s authority is as “prescribed and defined” in the
decree (§ X) and nowhere does the decree prescribe or define any authority by Los
Molinos to approve a proposed change in the use, location, or point of diversion. The
decree vests the superior court with continuing jurisdiction, but the court’s continuing
authority is limited to addressing petitions by the water master or rights owners to define
the water master’s power, replace the water master, or modify any provision of the decree
except those that establish the owners’ water rights. (§ XIII.) The decree does not
authorize the court to exercise its continuing jurisdiction over an owner’s decision to
change its use or location of using the water.
The trial court implied the water master had authority to approve changes in use
because it controls the apportionment and delivery system. The effect of the court’s
ruling, however, is to vest authority over an owner’s water right in the water master. The
owners gave the water master limited authority to control diversions during the irrigation
season and to control the system of canals and ditches the water master uses to deliver the
water according to the terms of the decree. The owners did not vest in the water master
the authority to control the water right or the discretion to determine where, how, or in
what manner an owner exercised its water right. The water rights belong to the owners,
not the water master.
25
Moreover, Water Code section 1706 does not provide the water master with the
discretion it seeks. The trial court interpreted the statute to place the burden on the
District to establish a proposed change will not injure other owners before making the
change, but this misreads the statue. Nothing in the statute requires a water rights owner
to seek prior approval before changing its use. Indeed, this court had held that a party
who claims another party’s change of use injures its right to water bears the burden of
proving the injury. (Barnes v. Hussa, supra, 136 Cal.App.4th at pp. 1365-1366.) Owners
of pre-1914 appropriative rights are entitled to proceed with a change of use, location, or
point of diversion until the change is enjoined. (Slater, Cal. Water Law & Policy (2011)
§ 2.26, p. 2-121.)
Los Molinos argues the District has not cited any provisions in the decree that give
the owners any retained authority to do anything it may not. If, Los Molinos contends,
the decree does not give it the authority to deny changes it believes are inconsistent with
the decree or would impair its obligations, then this ability “must have been given to the
Decreed water users,” but no such provision exists in the decree. Instead, the decree
enjoins the owners from interfering with any other owner’s rights or the water master’s
work in carrying out the decree. Because the owner’s “privileges” must yield to this
injunction, Los Molinos contends it has the ability to prevent the exercise of that
“privilege.”
Los Molinos’s argument is not persuasive. Nothing in the injunction contained in
the decree expressly or implicitly gives Los Molinos the authority to approve or deny
proposed changes of use. Under the decree and Water Code section 1706, Los Molinos
and the other parties to the decree may seek to enjoin a change upon a showing of injury.
But nothing in the decree or the law requires the District to obtain approval from Los
Molinos or the superior court before changing its use or location of using its water.
26
II
Appeal from Attorney Fee Award
Because we reverse the trial court’s judgment denying the District’s requests for
declaratory relief, we must reverse the attorney fee award premised upon Los Molinos
being the successful party in the judgment. (See City of Sacramento v. State Water
Resources Control Bd. (1992) 2 Cal.App.4th 960, 978-979 [reversing attorney fee award
under Code of Civil Procedure section 1021.5 premised on the parties prevailing on the
judgment reversed].)
DISPOSITION
The judgment denying declaratory relief and the order awarding attorney fees are
reversed. Costs on appeal are awarded to the District. (Cal. Rules of Court, rule
8.278(a).)
HULL , Acting P. J.
We concur:
BUTZ , J.
RENNER , J.
27