Fellows v. Office of Water Commissioner

August 10 2012
DA 11-0340
IN THE SUPREME COURT OF THE STATE OF MONTANA
2012 MT 169CHARLES E. FELLOWS, an Individual,
Plaintiff and Appellant,
v.
THE OFFICE OF WATER COMMISSIONER for
the Perry v. Beattie Decree Case No. 371,
and all JOHN DOE WATER USERS,
Defendants and Appellees.
APPEAL FROM: District Court of the Ninth Judicial District,
In and For the County of Teton, Cause No. DV 11-0110
Honorable Laurie McKinnon, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
Peter G. Scott (argued); Gough, Shanahan, Johnson & Waterman, PLLP,
Helena, Montana (for Charles Fellows)
For Appellees:
Michael J. L. Cusick (argued); Attorney at Law, Bozeman, Montana (for
Patrick Saylor, Ottis and Sylvia Bryan and Farmers Cooperative Canal
Company)
Holly Jo Franz (argued); Franz & Driscoll, PLLP, Helena, Montana (for
Teton Cooperative Reservoir Company)
John Bloomquist; Doney, Crowley, Payne. Bloomquist, P.C., Helena,
Montana (for Teton Cooperative Canal Company, Eldorado Cooperative
Canal Company)
David Weaver; Nash, Zimmer, Weaver & Grigsby, PLLC, Bozeman,
Montana (for John E. Peebles and William S. Peebles)
Argued: May 23, 2012
Submitted: May 30, 2012
Decided: August 10, 2012
Filed:
__________________________________________
Clerk
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Chief Justice Mike McGrath delivered the Opinion of the Court.
¶1 Charles E. Fellows appeals from the District Court’s order dismissing his
complaint. We reverse and remand for further proceedings.
PROCEDURAL AND FACTUAL BACKGROUND
¶2 Fellows owns a water right in Spring Creek near Choteau, Montana, decreed in
1892 in Sands Cattle and Land Co. v. Jackson, Case No. 727. He claims that the flow of
Spring Creek is or was for many years recharged by water seeping from the natural
channel of the Teton River. He claims that the practice of diverting water from the
natural channel of the Teton River, implemented by the District Court’s water
commissioner on the Teton, has adversely affected the water available to satisfy his water
right in Spring Creek.
¶3 A portion of the water rights used in the upper reaches of the Teton River was
decreed in 1908 in Perry v. Beattie, Case No. 371.1 One of the senior (in time) water
rights decreed in Perry was a right to a flow rate of 300 miner’s inches of water decreed
to the Choteau Cattle Company. 2 At the time of the Perry decree Choteau Cattle’s point
of diversion was, and still is, located downstream from a porous gravel section of the
Teton riverbed near Choteau, sometimes referred to as the Springhill Reach. At the time
of the Perry decree and for many years thereafter, Teton River water flowed down its
natural channel and through the Springhill Reach to where Choteau Cattle exercised its
1
The decrees in Sands and in Perry were entered by the Eleventh Judicial District Court
for Teton County, which is now in the Ninth Judicial District.
2
A miner’s inch is a method of measuring the flow of water, and 100 inches is equivalent
to 2.5 cubic feet of water per second. Section 85-2-103, MCA.
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water right. In order for Choteau Cattle to exercise its senior right, more than 300
miner’s inches of water had to remain in the channel to account for the water that seeped
into the ground as the River flowed through the Springhill Reach. Fellows claims that
this seepage water recharged Spring Creek and is a source of the water that he uses from
Spring Creek.
¶4 In the 1950s or 1960s (the date is not clear and may be as late as the 1970s) the
District Court’s water commissioner administering the Perry v. Beattie water rights
pursuant to § 85-5-101, MCA, began diverting Choteau Cattle’s 300 miner’s inches of
water out of the Teton and into the Bateman Ditch, which transports the water around the
Springhill Reach before returning it to the natural channel just above Choteau Cattle’s
point of diversion. In some times of the year no water at all flows through the natural
channel of the Teton River because of the diversion through the Bateman Ditch. The
Bateman Ditch diversion was implemented without express approval of the District Court
and apparently without any other agreement in writing. The Bateman diversion was
implemented for the benefit of upstream appropriators with rights junior to Choteau
Cattle’s right, enabling them to exercise their water rights without having to allow more
than 300 inches to flow through the Springhill Reach to arrive at Choteau Cattle’s point
of diversion. While some of the benefitted users hold rights under the Perry decree, the
practice also benefits one holder of a non-decreed right. Choteau Cattle does not claim
any rights to use the Bateman Ditch and does not claim the Ditch as a point of diversion.
¶5 In February, 2011, Fellows filed a complaint against the water commissioner
administering the Perry v. Beattie decree. The complaint contained a claim as a
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dissatisfied water user under § 85-5-301(1), MCA; claims based upon private and public
nuisance and negligence; and requests for a writ of prohibition, an injunction and
declaratory relief. The District Court ordered that Fellows serve notice of his lawsuit on
persons who hold decreed water rights in the Teton River. The District Court
subsequently ordered briefing on several issues, including whether Fellows had standing
to sue under § 85-5-301(1), MCA, as a dissatisfied water user.
¶6 Fellows claims that diverting the flow of the Teton River before it gets to the
gravel section of the riverbed diminishes the flow of Spring Creek and interferes with his
Spring Creek water right. He claims that Spring Creek and the Teton River are
hydrologically connected via water seepage from the Springhill Reach; that he can prove
the connection; that a source of his right is the Teton River; and that his Spring Creek
right is senior to many of the rights later decreed in Perry v. Beattie. Fellows claims that
as a matter of law he has the right to have the flow of the Teton River remain as it was at
the time of the Perry decree and for many decades thereafter: flowing down the natural
channel and through the Springhill Reach. He contends that the water commissioner’s
practice of diverting the Teton River around the Springhill Reach is contrary to the Perry
decree, and that it adversely impacts his Spring Creek water right. He contends that there
is no justification for diverting Choteau Cattle’s water down the Bateman Ditch,
especially since Choteau Cattle expressly disclaimed any right to use the Ditch to satisfy
its water right.
¶7 Montana has a statewide process for the adjudication of water rights pursuant to
Art. IX, sec. 3(4) of the Montana Constitution. Montana Trout Unlimited v. Beaverhead
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Water Co., 2011 MT 151, ¶ 2, 361 Mont. 77, 255 P.3d 179. The Legislature created a
Water Court presided over by a chief and an associate water judge with jurisdiction that
encompasses “all matters relating to the determination of existing water rights within the
boundaries of the state of Montana.” Section 3-7-224(2), MCA. The law also provides
for four water divisions presided over by specifically designated water judges with
authority to adjudicate existing water rights. Section 3-7-101, MCA. Finally, state
district court judges have jurisdiction over certain cases that involve existing water rights
and supervision of the distribution of water. Title 3, Ch. 7, Pt. 2, MCA; Title 85, Ch. 2,
MCA. The rights of all appropriators in the Teton River and Spring Creek are currently
being adjudicated by the Montana Water Court. The Water Court has issued temporary
preliminary decrees but not all objections have been resolved and the Water Court has not
issued a final decree.
¶8 After briefing and oral argument the District Court dismissed Fellows’ complaint
on the ground that it failed to state a claim upon which relief could be granted under M.
R. Civ. P. 12(b)(6). The District Court held that Fellows lacked standing to bring an
action under § 85-5-301(1), MCA, as a dissatisfied water user unless he could prove a
hydrological connection between Spring Creek and the Teton River. Further, the District
Court determined that while Fellows had prayed for a declaratory judgment, no such
declaration could be issued without first determining the Spring Creek-Teton River
connectivity issue. The District Court determined that its authority under § 85-5-301(1),
MCA, was limited to enforcing the Perry decree, and that it did not have authority to
determine Fellows’ Spring Creek right. However, the District Court did recognize that it
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could protect Fellows’ interests by granting “relief appropriate and necessary” pending
final adjudication of all the rights by the Water Court.
¶9 The District Court determined that Fellows was not entitled to a writ of prohibition
to halt the water commissioner from diverting the Choteau Cattle water through the
Bateman Ditch. The Bateman diversion, the court determined, is a way to maximize the
beneficial use of Teton River water for appropriators who hold rights under the Perry
decree and is therefore not unlawful. In addition, the court determined that Fellows had
an adequate remedy at law under § 85-2-406(2), MCA, which allows a district court to
certify certain water distribution controversies to the Water Court. Finally, the court
determined that all of Fellows’ other causes of action could only be addressed if he
brought an action under § 85-2-406(2), MCA, and that the water commissioner was
entitled to judicial immunity under § 2-9-112, MCA.
¶10 The District Court held that Fellows could file an amended complaint requesting
certification to the Water Court under § 85-2-406(2), MCA, and held in abeyance the
claims for injunctive or declaratory relief pending anticipated action by the Water Court
under that statute. Fellows did not file an amended complaint, but instead appealed to
this Court.
STANDARD OF REVIEW
¶11 A district court’s decision dismissing a complaint under M. R. Civ. P. 12(b)(6) is
reviewed as an issue of law to determine whether it is correct. This Court will construe
the complaint in a light most favorable to the plaintiff, deeming all factual allegations to
be true. This Court will affirm the dismissal only if it finds that the plaintiff is not
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entitled to relief under any set of facts that could be proven in support of the claims.
Missoula YWCA v. Bard, 1999 MT 177, ¶ 3, 295 Mont. 260, 983 P.2d 933; Hauschulz v.
Michael Law Firm, 2001 MT 160, ¶¶ 7-8, 306 Mont. 102, 30 P.3d 357; Meagher v. Butte-
Silver Bow County, 2007 MT 129, ¶¶13-14, 337 Mont. 339, 160 P.3d 552.
DISCUSSION
¶12 The issue on appeal is whether the District Court properly applied § 85-5-301(1),
MCA, and dismissed Fellows’ complaint for failure to state a claim upon which relief can
be granted.
¶13 Section 85-5-301, MCA, provides, in part, that “[a] person owning or using any of
the waters of the stream . . . who is dissatisfied with the method of distribution of the
waters of the stream . . . by the water commissioner . . . and who claims to be entitled to
more water than the person is receiving . . . may file a written complaint, duly verified,
setting forth the facts of the claim.” This statute, designed to be the “most practical and
effective means yet devised” to effectuate water right decrees, Quigley v. McIntosh, 110
Mont. 495, 508, 103 P.2d 1067, 1073 (1940), forms a basis for Fellows’ complaint.
¶14 The District Court determined that Fellows’ standing to bring a dissatisfied water
user complaint under § 85-5-301(1), MCA, was dependent upon his being able to prove a
hydrological connection between the Teton River and Spring Creek. The court in turn
determined that Fellows had to initiate a separate proceeding under § 85-2-406, MCA, so
that the connectivity issue could be determined by the Water Court.
¶15 Under current Montana law the jurisdiction to determine existing water rights rests
exclusively with the Water Court. Mildenberger v. Galbraith, 249 Mont. 161, 166, 815
8
P.2d 130, 134 (1991). A district court may supervise the distribution of rights to the use
of water which have previously been decreed by a district court. Baker Ditch Co. v.
District Court, 251 Mont. 251, 255, 824 P.2d 260, 262 (1992). However, a district court
currently lacks authority to adjudicate water rights. In re Petition of the Deadman’s
Basin Water Users Association, 2002 MT 15, ¶ 15, 308 Mont. 168, 40 P.3d 387.
¶16 A long line of cases has constrained the application of § 85-5-301, MCA, to
disputes arising within the confines of a prior water rights decree entered by a district
court. The only purpose of a dissatisfied water user petition is to provide a summary
proceeding to enforce rights determined under a prior decree. In re Kelly, 2010 MT 14, ¶
31, 355 Mont. 86, 224 P.3d 640. The “whole question” in such a proceeding is whether
the water commissioner is distributing water to the respective users according to the
applicable decree. Quigley v. McIntosh, 110 Mont. 495, 499-500, 103 P.2d 1067, 1069
(1940); Allen v. Nichols, 143 Mont. 486, 495, 392 P.2d 82, 86 (1964). A district court
hearing a dissatisfied water user’s complaint may not adjudicate water rights, but may
only enforce rights determined in a prior decree. Luppold v. Lewis, 172 Mont. 280, 288-
289, 563 P.2d 538, 542 (1977). Therefore, the duty of the water commissioner appointed
under the Perry decree is to administer the rights determined in that decree, and a petition
filed under § 85-5-301, MCA, complaining of the actions of the commissioner is limited
to consideration of the rights under that decree. Since Fellows does not derive his Spring
Creek water right from the Perry decree, § 85-5-301, MCA, does not provide a
mechanism for him to complain of the actions of the water commissioner under the Perry
decree.
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¶17 Fellows also requested that the District Court issue relief in the form of a
declaratory judgment under §§ 27-8-101, et seq., MCA. The District Court declined to
consider that relief, however, unless Fellows first obtained certification to the Water
Court for a determination of his water right in Spring Creek. However, as the District
Court emphasized, the issue of whether there is a hydrological connection between the
Teton River and Spring Creek is at the heart of this dispute. The declaratory judgment
statutes serve a remedial purpose, and are to be liberally construed to settle and afford
“relief from uncertainty and insecurity with respect to rights, status, and other legal
relations.” Section 27-8-102, MCA. A district court may declare “rights, status, and
other legal relations whether or not further relief is or could be claimed.” Section 27-8-
201, MCA. Declaratory judgment relief has been invoked in cases involving water rights.
Mont. DNRC v. Intake Water Co., 171 Mont. 416, 558 P.2d 1110 (1977) (action seeking
declaration that appropriator did not have a valid water right); McDonald v. State, 220
Mont. 519, 722 P.2d 598 (1986) (original proceeding seeking declaratory judgment as to
the constitutionality of statutes requiring quantification of water rights); and Mustang
Holdings, LLC v. Zaveta, 2006 MT 234, 333 Mont. 471, 143 P.3d 456 (action seeking
declaratory judgment as to whether a party had the right to divert water through a ditch).
¶18 The District Court disposed of Fellows’ complaint on a motion to dismiss under
M. R. Civ. P. 12(b)(6). It is well established that in considering a motion to dismiss the
district court must construe the complaint in a light most favorable to the plaintiff and
must deem all factual allegations of the complaint to be true. Dismissal for failure to
state a claim is proper only if the district court finds that the plaintiff is not entitled to
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relief under any set of facts that could be proven in support of the claims. Missoula
YWCA, ¶ 3; Hauschulz, ¶¶ 7-8; Meagher, ¶¶13-14. In this case Fellows’ verified
complaint alleged that the flow of the Teton River through the Springhill Reach is the
source for his decreed water rights on Spring Creek; that the decree in the Perry case
requires that water be delivered to downstream appropriators through the natural channel
of the Teton River, including the Springhill Reach; that long after the decree in the Perry
case the water commissioner altered the method of water distribution on the Teton River
by bypassing and de-watering the Springhill Reach; and that this had impaired his senior
decreed water rights.
¶19 The allegations of Fellows’ complaint, which at this stage are presumed to be true,
are clearly sufficient to invoke the District Court’s power to issue a declaratory ruling.
While Fellows’ ability to prove a hydrological connection between the Teton River and
Spring Creek is clearly a lynchpin of his case, he is not required to prove that connection
to prevent his complaint from being dismissed for failure to state a claim under M. R.
Civ. P. 12(b)(6).
¶20 Montana law recognizes that ground water and surface water may in fact be
connected. Montana Trout Unlimited v. DNRC, 2006 MT 72, ¶ 9, 331 Mont 483, 133
P.3d 224. The District Court determined that Fellows’ standing was a threshold issue that
depended on the existence of a Teton River-Spring Creek connectivity, but then
dismissed the complaint without giving him the chance to prove connectivity and without
assuming the truth of his allegations.
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¶21 Fellows’ factual allegations and his request for a declaratory ruling are sufficient
to invoke the District Court’s power to issue a declaratory ruling on the issue of
connectivity. The Fellows right was not part of the 1908 adjudication in Perry, but was
decreed in the 1892 Sands case. His right to Spring Creek water cannot be automatically
subordinated to rights decreed in Perry and we agree with the District Court that if
Fellows can prove hydrological connectivity between Spring Creek and the Teton River,
then the next step should be certification to the chief water judge under § 85-2-406(2)(b),
MCA.
¶22 The District Court is reversed and this case is remanded for further proceedings
consistent with this opinion.
/S/ MIKE McGRATH
We concur:
/S/ JAMES C. NELSON
/S/ PATRICIA COTTER
/S/ MICHAEL E WHEAT
/S/ BRIAN MORRIS
/S/ BETH BAKER
/S/ JIM RICE
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