Rand Prop., LLC v. Filippini ( 2016 )

IN THE SUPREME COURT OF THE STATE OF NEVADA
RAND PROPERTIES, LLC; JOHN No. 66933
CARRINGTON; TAMI CARRINGTON;
AND JOHN E. CARRINGTON AND
VIRGINIA G. CARRINGTON
DECLARATION OF TRUST DATED FILED
FEBRUARY 19, 2003,
Appellants,
APR 2 1 2016
vs.
DANIEL FILIPPINI; EDDYANN
FILIPPINI; AND JULIAN TOMERA
RANCHES, INC., BATTLE MOUNTAIN
DIVISION,
ResDondents.
ORDER OF REVERSAL AND REMAND
This is an appeal from a district court decree, an order
regarding administration of the decree, and an order granting attorney
fees and costs in a water rights action. Sixth Judicial District Court,
Lander County; Richard Wagner, Judge.
BACKGROUND
Respondents Daniel and Eddyann Filippini (collectively
Filippini) filed a complaint against Julian Tomera Ranches, Inc., Battle
Mountain Division (Tomera), and Rand Properties, LLC (Rand) on June 7,
2011 to adjudicate conflicting claims to stock and irrigation water rights
near Trout Creek. On March 6, 2012, Filippini's counsel mailed to
property owners near Trout Creek notice that water rights were subject to
final adjudication. After receiving notice, John Carrington; Tami
Carrington; and John E. Carrington and Virginia G. Carrington
Declaration of Trust joined the action. All parties stipulated to the
Carrington parties' dismissal after determining that the Carrington
parties' water rights were not in dispute. The action proceeded to
adjudication on April 8, 2013, wherein the district court established
priority dates for each of the remaining parties' stock and irrigation water
rights. The district court later issued an order awarding attorney fees
pursuant to NRS 533.190(1) and NRS 533.240(3), which required all
parties, including the previously dismissed Carrington parties, to share
the expense. Rand and the Carrington parties now appeal.
DISCUSSION
On appeal, this court reviews de novo a district court's legal
conclusions. Keife v. Logan, 119 Nev. 372, 374, 75 P.3d 357, 359 (2003).
However, we "will not disturb a district court's findings of fact if they are
supported by substantial evidence." Id. "[E]vidence that a reasonable
mind might accept as adequate to support a conclusion" is substantial
evidence. Winchell v. Schiff, 124 Nev. 938, 944, 193 P.3d 946, 950 (2008)
(internal quotation omitted).
Irrigation water rights
Rand's priority date (claim V02678)
The district court rejected Rand's claim of a vested irrigation
water right beginning in 1869, after concluding that the first diversion of
water to Rand's Trout Creek Ranch was in 1901 by Walter Dobbs:
The credible evidence shows that the first
diversion of water onto the Trout Creek Ranch
was in 1901 by Dobbs. This court finds that Rand
has only established a vested water right for 52.5
acres of irrigation; there was no actual diversion
and application of Trout Creek water at Rand's
Trout Creek Ranch until 1901. Rand has not
established an earlier right by a preponderance of
evidence. Rand claims that Dobbs' use at Trout
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Creek Ranch in 1901 relates back to an earlier
appropriation by Roth, Pankey, Blossom or
Hoffman; however, there is no evidence that the
use at Rand's Trout Creek Ranch was pursued
with reasonable diligence from 1869 (Roth) or
1871 (McBeth).
While there is statutory authority that may allow
one to change the place or manner of use of a
water right, there is no authority that would allow
one, prior to the enactment of statutory water law,
to change the place of use without creating a new
appropriation, and in turn, a new priority date.
Claim V02678 has been established for irrigation
of 52.5 acres on Trout Creek Ranch with a priority
date of 1901.
On appeal, Rand argues that the district court erred as a
matter of law in determining its priority date because a change in the
place of use of a water right does not disrupt the chain of title. Filippini
argues that the dispositive question on appeal is whether Rand is able to
establish a chain of title from 1869; Filippini claims that Rand cannot.
We conclude that the district court erred by relying on an
erroneous conclusion of law to establish Rand's priority date. In
particular, the district court concluded that changing the place of use of
water creates a new appropriation, and in turn a new priority date. As
Rand argues, "[t]he right to water acquired by prior appropriation is not
dependent upon the place where the water is used. A party having
obtained the prior right to the use of a given quantity of water, is not
restricted . . . to the use or place to which it was first applied." Union Mill
& Mining Co. v. Dangberg, 81 F. 73, 115 (C.C.D. Nev. 1897). So long as
the rights of others are not affected, a person entitled to a given quantity
of water from a stream may take it at any point of the stream, and may
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change the character of its use at will. Id. (citing Hobart v. Wicks, 15 Nev.
418, 421 (1880)). Thus, so long as Rand has not appropriated more than
the quantity of water to which he is entitled, his priority date need not be
reset.
Despite the district court's erroneous legal conclusion,
Filippini argues that there is substantial evidence in the record
demonstrating that Rand cannot link itself by chain of title to 1869.
Filippini references expert testimony to support its argument. However,
we conclude, notwithstanding the expert evidence presented, that the
district court did not make findings as to ownership links in the chain of
title; rather, it concluded that it could not establish a chain of title due to
the change in the place or manner of use.' We further conclude that the
district court's findings as to ownership in the chain of title are
insufficient for this court to properly review the matter. See Dickinson v.
Am. Med. Response, 124 Nev. 460, 471, 186 P.3d 878, 885 (2008)
(concluding that failure to make explicit factual findings prevented this
court's review). Accordingly, we vacate and remand this issue for further
proceedings regarding Rand's connection to the chain of title.
Filippini's priority date (claim V01563)
The district court determined that "Filippini is entitled,
through [James] Hughes, to 100 acres of irrigation on the Badger Ranch
with an 1871 priority." On appeal, Rand argues that the district court's
decree did not explain how Hughes was connected by title to Filippini, and
'The extent to which the district court relied on its limited finding
that there was no proof of beneficial use to reach its ultimate finding of a
1901 priority date is unclear.
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that there is no evidence showing any conveyance between 1891 and 1897.
Filippini contends that his expert testified to the existence of tax records
that establish the chain of title from 1891 through 1897. We conclude that
the district court's ruling, which specifies neither the intermediate
ownership linking Hughes and Filippini, nor the evidence relied upon to
reach its determination, is insufficient for this court to review the matter.
See id. Thus, we also vacate and remand for further proceedings on this
issue.
Stock water rights
The district court found "that cattle of the J.R. Bradley outfit
drank and diverted water from Trout Creek as early as 1862, thereby
setting a domestic stock water priority date of 1862 for all three parties."
On appeal, Rand contends there is no evidence supporting the district
court's finding of an 1862 stock water priority date for any party because
vested stock water rights, like all water rights, require an appropriator to
prove a valid chain of title. Conversely, Filippini argues that proof of a
chain of title is not required when seeking stock water rights in public
land owned by the United States, as each of the parties to this case holds
federal permits to graze on allotments within the Battle Mountain
District. We disagree.
In Nevada, stock water rights on public domains are passed by
chain of title. See Steptoe Live Stock Co. v. Gulley, 53 Nev. 163, 169-176,
295 P. 772, 773-776 (1931) (determining that plaintiff and its predecessors
in interest for the past forty years had the exclusive right to stock water
for 500 livestock on a public range). But Filippini and Tomera argue that,
under the Taylor Grazing Act, 43 U.S.C. § 315, which granted grazing
allotments on the same federal land where J.R. Bradley grazed cattle,
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each of the parties owns permits to graze cattle and horses, settling the
parties' rights. Where there is a conflict between federal and state law,
federal law prevails under the Supremacy Clause of the United States
Constitution. U.S. Const. art. VI, cl. 2. Thus, the instant question is
whether a conflict exists between federal grazing law and Nevada's water
law, providing that stock water rights pass by chain of title on public land.
We conclude that Nevada law and federal law do not conflict.
First, the Act, implemented in 1934, specifies that it does not invalidate
any existing rights. 43 U.S.C. § 315. Second, the federal law concerns
grazing rights, and although closely related to water rights, they are, even
within the Act, considered separate issues. See 43 U.S.C. § 315b.
Because state and federal law do not conflict, the stock water
rights passed by chain of title properly reflect the party's current rights to
the disputed stock water. However, as stated, the district court's findings
as to chain of title preclude this court's review. Dickinson, 124 Nev. at
471, 186 P.3d at 885. Therefore, we also vacate and remand this issue.
Certificate 12160 (permit 39377) and easement
In 1979, Leroy Horn possessed grazing preferences for 600
cattle on the Argenta Grazing Allotment. He secured certificate 12160
(permit 39377), and built the Trout Creek pipeline to water his cattle. In
1989, Horn, Tomera, and Filippini entered into a three-way contract of
sale wherein Horn agreed to sell his grazing preferences to Tomera, but
sold the Badger Ranch to Filippini. The contract specified that it included
federal grazing privileges and "all waters, water rights, rights to the use of
water, dams, ditches, canals, pipelines, reservoirs and all other means for
the diversion or use of waters appurtenant to the said property or any part
thereof, or used or enjoyed in connection therewith, and together with all
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stockwatering rights used or enjoyed in connection with the use of any of
said lands." Tomera does not dispute Rand's assertion that Tomera did
not record its rights under the contract.
In 2009, Rand purchased Trout Creek Ranch from Jack and
Loretta Broughton. Among other conveyances, the deed purported to
convey certificate 12160. In 2010, Rand cut off the flow of water to the
Trout Creek pipeline, and prohibited Tomera's access to the diversion
structure.
Consequently, Tomera filed a cross claim in the district court
arguing that it owned stock water certificate 12160, and an easement or
irrevocable license on Rand's property to access the pipeline. The district
court concluded that Rand could not own certificate 12160 because it did
not possess a grazing preference for 600 cattle at the place of use, and
therefore could not put the water to beneficial use. The district court
explained that the purpose of NRS 533.503 "is to ensure that stockwater
rights follow the livestock that are lawfully permitted to use stockwater on
the public range." With regard to the easement, the district court
concluded that "Tomera is entitled to an easement by necessity for the
access, operation, maintenance, repair, and use of the Trout Creek
pipeline and its point of diversion that lie across Rand's private
property. . . ."
On appeal, Rand argues that pursuant to NRS 533.382's
requirement that water rights be conveyed by deed, Tomera cannot be the
proper owner of certificate 12160, and that it is a bona fide purchaser
nonetheless. Tomera argues that it is the rightful owner of certificate
12160, that NRS 533.503 prohibits Rand from holding the certificate
because he does not own livestock, and that Rand's bona fide purchaser
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defense is not properly before this court because Rand did not assert it in
the district court.
We conclude that the district court erred in determining that
NRS 533.503 prohibited conveyance of certificate 12160 to Rand. NRS
533.503(2)(b) provides that the State Engineer shall not issue a stock
water appropriation certificate unless: "The forage serving the beneficial
use of the water that has been beneficially used is not encumbered by an
adjudicated grazing preference recognized pursuant to law for the benefit
of a person other than the holder of the permit." Although the statute
prevents issuance of a certificate from the State Engineer, it does not
prohibit conveyance of a certificate by a private party. Here, the
Broughtons purported to convey certificate 12160 to Rand. Thus, NRS
533.503 does not apply.
Further, Rand's argument that Tomera does not properly hold
certificate 12160 pursuant to NRS 533.382's requirement that water
rights be conveyed by deed lacks merit. Tomera purchased certificate
12160 from Horn in 1989. The requirement that conveyances of water
rights be made by deed was not added to NRS Chapter 533 until 1995.
1995 Nev. Stat., ch. 265, §§ 1,3, at 434. Thus, at the time of Tomera's
purchase, Tomera was not required by statute to obtain title by deed.
However, Rand also argues that it is a bona fide purchaser. 2
"In order to be entitled to the status of a bona fide purchaser without
2 Rand raised its bona fide purchaser defense at a hearing on May
30, 2013. Thus, the bona fide purchaser issue is properly before this court.
See Arnold v. Kip, 123 Nev. 410, 416, 168 P.3d 1050, 1054 (2007) (noting
that even arguments not raised in the district court until a motion for
reconsideration may be properly before this court).
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notice . . . [Rand] was required to show that legal title had been
transferred to [him] before [he] had notice of the prior conveyance to
[Tomera]." See Berge v. Fredericks, 95 Nev. 183, 188, 591 P.2d 246, 248
(1979). Unfortunately, this court cannot properly review Rand's bona fide
purchaser defense because the district court did not make findings
regarding whether Rand had notice. See Dickinson, 124 Nev. at 471, 186
P.3d at 885. Thus, we vacate and remand the district court's rulings
concluding that Tomera owns certificate 12160 and an easement for
further proceedings on whether Rand had notice of the conveyance to
Tom era.
Attorney fees
The district court ruled that pursuant to NRS 533.190(1) and
NRS 533.240(3), each party to the adjudication must share in the: 1) costs
and fees associated with notice and service; 2) costs and fees associated
with preparation of the general and administrative provisions; and 3) costs
associated with preparation of the hydrographic survey. For the costs
associated with service, the district court ordered that Tomera, Rand,
Filippini, and the Carrington parties split the cost equally. As to
preparation of the general and administrative provisions, the district court
ordered Rand and Tomera to share the cost. With regard to the cost of the
hydrographic survey, the district court ordered that they be shared
equally among the parties. The district court explained that the claim
adjudicated relative rights, and that each of the parties benefited from the
action.
The Carrington parties and Rand argue that the district court
abused its discretion by awarding attorney fees pursuant to NRS
533.190(1) and NRS 533.240(3) because neither statute provides for an
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award of attorney fees. Filippini argues that, pursuant to NRCP 71, an
order may be enforced against the Carrington parties although they were
dismissed from the adjudication.
We generally review a district court's decision regarding "costs
and attorney fees for an abuse of discretion." Gunderson v. D.R. Horton,
Inc., 130 Nev., Adv. Op. 9, 319 P.3d 606, 615 (2014). Under Nevada law,
"the district court may not award attorney fees absent authority under a
statute, rule, or contract." Albios v. Horizon Cmtys., Inc., 122 Nev. 409,
417, 132 P.3d 1022, 1028 (2006). Here, the district court concluded that
NRS 533.190(1) and NRS 533.240(3) permitted an award of attorney fees
to Filippini's counsel for service of Trout Creek property owners and
preparation of the general and administrative provisions.
NRS 533.190(1) provides:
At any time in the course of the hearings, the
court may, in its discretion, by order assess and
adjudge against any party such costs as it deems
just and equitable or may so assess the costs in
proportion to the amount of water right standing
allotted at that time, or the court may assess and
adjudge such costs and expenses in its final
judgment upon the signing, entry and filing of its
formal findings of fact, conclusions of law and
decree adjudicating the water rights against any
party as it deems just and equitable, or may so
assess the costs in proportion to the amount of
water right allotted and decreed in the final
judgment.
NRS 533.240(3) provides:
The cost of the suit, including the costs on behalf
of the State and of the surveys, shall be charged
• against each of the private parties thereto based
on a determination by the court of the relative
merits of the claims made by each of the private
parties. The court may assess and charge against
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any party at any time during the suit an equitable
amount to pay the costs of the survey upon its
approval of an itemized statement therefor
submitted by the State Engineer.
These statutes specifically provide for an award of costs, but
under Nevada law, attorney fees are not considered costs. See Smith v.
Crown Fin. Services of Am., 111 Nev. 277, 287, 890 P.2d 769, 776 (1995)
("Although we affirm the award of costs, we must remand the case because
the district court did not segregate the amount awarded as costs from the
amount awarded as attorney fees."). Moreover, attorney fees are not
mentioned anywhere in the statute. Therefore, the district court's award
to Filippini's counsel of attorney fees, intermingled with costs, cannot be
sustained under NRS 533.190(1) or NRS 533.240(3). Accordingly, we
reverse the award of attorney fees.
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Based on the foregoing, we
ORDER the judgment of the district court REVERSED AND
REMAND this matter to the district court for proceedings consistent with
this order.
cc: Hon. Richard Wagner, District Judge
Marvel & Kump, Ltd.
Parsons Behle & Latimer/Reno
Fallon City Attorney's Office
Schroeder Law Offices, P.C.
Gerber Law Offices, LLP
Lander County Clerk
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