Rocky Ford v. Kents Lake

AMENDED OPINION
This opinion is subject to revision before final
publication in the Pacific Reporter
2020 UT 47IN THE
SUPREME COURT OF THE STATE OF UTAH
ROCKY FORD IRRIGATION COMPANY,
Appellant,
v.
KENTS LAKE RESERVOIR COMPANY and DOES 1 THROUGH 200,
Appellees,
and
BEAVER CITY,
Intervenor and Appellee.
No. 20170290
Heard December 10, 2018
Reheard March 11, 2020
Filed July 13, 2020
On Direct Appeal
Fifth District, Beaver County
The Honorable Paul D. Lyman
No. 100500156
Attorneys:1
Stephen E.W. Hale, Matthew E. Jensen, J. Mason Kjar,
Salt Lake City, for appellant
______________________________________________________________________________
After this opinion originally issued (2019 UT 31, --- P.3d ---),
the parties and State Engineer filed petitions for rehearing, seeking
substantive changes to Parts II(A) and (B) of the original opinion.
We granted the petitions and reheard the case. This opinion
replaces our initial decision.
1Attorneys for amicus curiae Utah State Engineer: Sean D.
Reyes, Att’y Gen., Norman K. Johnson, Julie L. Valdes, Assist. Solic.
Gen., Salt Lake City.
ROCKY FORD v. KENTS LAKE
Opinion of the Court
John H. Mabey, Jr., David C. Wright, Salt Lake City,
for appellees Kents Lake Reservoir Company and
Does 1 through 200
Justin W. Wayment, Christian Jones, Cedar City,
for intervenor-appellee
ASSOCIATE CHIEF JUSTICE LEE authored the opinion of the Court, in
which CHIEF JUSTICE DURRANT, JUSTICE HIMONAS, JUSTICE PEARCE,
and JUSTICE PETERSEN joined.
ASSOCIATE CHIEF JUSTICE LEE, opinion of the Court:
This case comes to us on direct appeal from the Fifth
District Court. Kents Lake Reservoir Company2 and Rocky Ford
Irrigation Company both acquired water rights in the Beaver River
in the late nineteenth century. But as both water rights and
irrigation techniques evolved, the administration of the Beaver
River grew increasingly complex. Eventually Rocky Ford sued
Kents Lake seeking clarification regarding the priority of the
parties’ rights and Kents Lake’s obligations as to river
administration and measurement. Rocky Ford lost on each of its
claims below and appealed. We affirm in part, reverse in part, and
remand.
I. BACKGROUND
Around 1870, settlers began diverting water from the
Beaver River and conveying it through canals and ditches to their
crops. These initial rights were direct flow rights—the right to take
water from the source and apply it directly to the end use without
reservoir storage. After most of the base flow of the Beaver River
was allocated via direct flow rights, water users constructed
reservoirs to store spring runoff and winter flows to allow for later
use on their crops.
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2There is some inconsistency in the spelling of this party’s name
in the briefing and the record. The briefs on appeal use the “Kents
Lake” formulation. But in the lower court, the party is often
referred to as “Kent’s Lake.” We stick with the former formulation
except when quoting from the district court record.
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A. The Parties’ Initial Direct Flow and Storage Rights in the
Beaver River System
Kents Lake (along with its shareholders) and Rocky Ford
each acquired various direct flow rights and corresponding priority
dates throughout the late nineteenth and early twentieth centuries.
They also obtained storage rights in reservoirs they built. Today,
Kents Lake retains an 1890 storage right to divert water into the
Upper Kents Lake and Middle Kents Lake Reservoirs (collectively,
the “South Fork Reservoirs”), which it constructed in the
headwaters of the Beaver River System. And Rocky Ford retains a
1907 storage right to divert water into the Minersville Reservoir,
which it constructed at the bottom of the Beaver River System.
In the early 1900s, the Fifth District Court conducted a
general adjudication of the Beaver River that culminated in the 1931
Beaver River Decree (Decree). The Decree established and
confirmed priority dates and use limitations on Beaver River water
rights, including direct flow rights acquired by Rocky Ford in 1870,
storage rights in Minersville Reservoir acquired by Rocky Ford in
1907, storage rights in the South Fork Reservoirs acquired by Kents
Lake in 1890, and direct flow rights for certain Kents Lake
shareholders.3 The Decree also divided the Beaver River into an
upper and lower portion, with the Patterson Dam serving as the
dividing line. Water users located above the dam were
denominated “upper users” and allowed to divert water before
“lower users”—despite later priority dates.4
Finally, the Decree required users to “promptly install and
perpetually maintain suitable . . . measuring devices at or [as] near
as possible to their respective points of diversion or at such other
points as may be designated in their decree, for the measurement
of all water diverted hereunder for consumptive uses.” Under the
Decree, water users were “permanently enjoined from diverting . . .
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3 We refer to Kents Lake and Kents Lake’s shareholders
collectively as “Kents Lake.”
4 This divide was approved because lower users usually
benefitted from return flows. Return flows refer to water that is not
consumed by plants or evaporation and ultimately flows back,
either above or below ground, into the source. Flood irrigation, the
primary method of water use employed at the time of the Decree,
consumed only 40 percent of the diverted water, leaving 60 percent
to evaporate or reenter the Beaver River as return flows.
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ROCKY FORD v. KENTS LAKE
Opinion of the Court
any water for such consumptive purposes through any ditch, canal,
conduit or other device not provided with proper headgates,
control works, and measuring devices.”
B. Kents Lake’s New Reservoir and Change Applications
A few years after the Decree was entered, Kents Lake
sought to build an additional reservoir—Three Creeks Reservoir.
In order to obtain rights to store water in this new reservoir, Kents
Lake filed two applications with the State Engineer. One
application sought to reallocate some of Kents Lake’s current
storage in the South Fork Reservoirs to Three Creeks Reservoir (a
change to its existing storage right). The other sought to store
additional water in Three Creeks Reservoir (a new storage right).
The State Engineer reviewed the applications and put the other
Beaver River System water users on notice of Kents Lake’s
proposed changes. Rocky Ford protested both applications, but the
State Engineer ultimately approved them because he found that
each would put the water toward a beneficial use and not impair
existing rights.5
In 1953 Rocky Ford and Kents Lake entered into an
agreement (Agreement) that provided, among other things, that
(1) Rocky Ford would not protest Kents Lake’s planned change
application regarding Three Creeks Reservoir—an application
seeking to add an optional storage right in the reservoir to some of
Kents Lake’s preexisting direct flow rights; (2) Kents Lake would
not oppose Rocky Ford’s planned enlargement of its reservoir; and
(3) Rocky Ford has an exclusive right to store all water available to
it from November 1 to April 1 each year.
As agreed, Kents Lake then submitted the new change
application. And as promised, Rocky Ford did not protest. The
State Engineer approved the application and granted Kents Lake’s
request for these “direct storage changes.” Kents Lake now had a
direct storage right (in addition to its direct flow right)—allowing
it to either use the water directly (as it was previously entitled to
do) or store it in Three Creeks Reservoir. And Kents Lake
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5 Rocky Ford challenged the State Engineer’s approval,
eventually appealing the case to this court. We upheld the
approved changes and concluded that Kents Lake could divert
water into Three Creeks Reservoir if it would have been available
for storage in South Fork Reservoirs. Rocky Ford Irr. Co. v. Kents Lake
Reservoir Co. (Rocky Ford I), 135 P.2d 108, 114 (Utah 1943).
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eventually perfected its changed use pursuant to Utah Code
sections 73-3-12 and -17, receiving certification from the State
Engineer of its right to the changed use “subject to prior rights.”
UTAH CODE § 73-3-17 (1953).
C. Irrigation Changes and Rocky Ford’s Lawsuit
Beginning in the 1970s, Beaver River water users began to
gradually convert from flood irrigation to sprinkler systems—more
efficient watering mechanisms that require less water and produce
less return flows.6 Some upper river users stored these efficiency
gains, reducing the amount of water flowing downstream. This
reduction in flow can adversely affect lower users (like Rocky Ford)
if there is insufficient water to fulfill their rights.
This is what allegedly happened here. As a result, in 2003
Rocky Ford asked the State Engineer to enhance oversight of
Beaver River water storage. Over the next year and a half, Rocky
Ford, Kents Lake, and the State Engineer corresponded about
improved storage regulation. And the State Engineer found that
Kents Lake’s measurement devices were deficient.
Unsatisfied, Rocky Ford filed suit in November 2010,
seeking damages, declaratory relief, injunctive relief, and rescission
of the 1953 Agreement. In support of its claims, Rocky Ford pointed
to Kents Lake’s alleged water right interference, conversion of
water rights, and negligence. Rocky Ford asserted that its water
rights had been injured by Kents Lake’s direct storage changes and
failure to measure water usage in accordance with the 1931 Decree.
Kents Lake filed a counterclaim seeking clarification of the parties’
water rights under the Agreement. Three years later, Beaver City
intervened.
Following discovery, Rocky Ford moved for partial
summary judgment, asserting that (1) Kents Lake’s direct storage
changes maintain their original 1890 priority date (from the
underlying right) only to the extent they do not injure Rocky Ford’s
direct flow rights, and (2) Rocky Ford’s direct flow rights are not
subordinated or waived under the plain language of the
Agreement. The district court denied the motion. In so doing, the
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6In contrast to flood irrigation, which consumes only 40 percent
of the diverted water and leaves the remainder for return flows,
sprinkler irrigation consumes about 75 percent of the diverted
water and leaves only 25 percent for return flows.
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ROCKY FORD v. KENTS LAKE
Opinion of the Court
court concluded that Rocky Ford had “intentionally waived its
direct flow rights against [Kents Lake] through its entrance into the
1953 agreement” and that Kents Lake could continue to store its
water “even to the detriment of [Rocky Ford]’s direct flow rights.”
The parties then stipulated to dismissal of all damages
claims (including the water right interference claim), leaving only
claims for declaratory relief, injunctive relief, and rescission of
contract. At trial, the court’s denial of Rocky Ford’s motion for
summary judgment precluded any evidence about the priority of
the direct storage changes or the meaning of the Agreement. The
court instead focused on Kents Lake’s measurement obligations
and the continued efficacy of the Agreement. During the three-day
bench trial, the court refused to admit evidence from Rocky Ford’s
expert about the impact of sprinklers on the Beaver River’s return
flows.
In June 2016, the district court denied Rocky Ford’s request
for injunctive and declaratory relief. It denied any request for relief
for Kents Lake’s alleged interference with Rocky Ford’s direct flow
rights on the ground that Rocky Ford had failed to carry its burden
of proving injury to its rights caused by the direct storage changes.
And it further denied the request for relief regarding Kents Lake’s
measurement obligations on the ground that Kents Lake had
followed the State Engineer’s instructions. The court also declined
to rescind the 1953 Agreement, concluding that Rocky Ford had not
proved material breach, impracticability, frustration of purpose, or
mutual mistake. Lastly, the court sua sponte awarded attorney fees
to Kents Lake and Beaver City under Utah Code section 78B-5-825.
The district court later denied Rocky Ford’s rule 59 motion
seeking reversal of the fee award. Rocky Ford appealed the court’s
decision denying the motion for partial summary judgment, its
entry of final judgment, and its award of attorney fees. This court
heard argument on the appeal and published an opinion in July
2019. Rocky Ford Irr. Co. v. Kents Lake Reservoir Co., 2019 UT 31, ---
P.3d ---. The parties and State Engineer thereafter filed petitions for
rehearing, seeking substantive changes to Parts II(A) and (B) of the
original opinion. We granted the petitions and reheard the case in
March 2020. This opinion replaces our prior opinion.
II. DISPOSITION
Five principal questions are presented for review. (A) Did
the district court err in denying Rocky Ford’s motion for summary
judgment? (B) Did it err in refusing to declare that Kents Lake could
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not store its efficiency gains? (C) Did it err in refusing to declare
that Kents Lake must measure its usage consistent with the
requirements of the Beaver River Decree? (D) Did it err in refusing
to rescind the 1953 Agreement? (E) Did it err in awarding attorney
fees to Kents Lake and Beaver City?
We reverse in part, affirm in part, and remand. We reverse
the court’s denial of Rocky Ford’s motion for summary judgment,
the denial of Rocky Ford’s request for declaratory judgment as to
Kents Lake’s measurement obligations under the Decree, and the
decision awarding attorney fees to Kents Lake and Beaver City. But
we affirm the court’s decision refusing to declare that Kents Lake
could not store its efficiency gains and the decision refusing to
rescind the 1953 Agreement. And we remand for further
proceedings on points identified below.
A. The District Court Erred in Denying
Rocky Ford’s Motion for Summary Judgment
We first consider whether the district court erred in
denying Rocky Ford’s motion for partial summary judgment.
Rocky Ford’s motion sought judgment as a matter of law on two
points: (1) that Rocky Ford’s direct flow rights are not subordinated
or waived under the terms of the 1953 Agreement, and (2) that
Kents Lake’s direct storage changes maintain their original 1890
priority date (from the underlying right) only to the extent they
don’t harm Rocky Ford’s direct flow rights. The district court
denied the motion, declining to enter declaratory judgment on
either point. It based its ruling solely on the terms of the
Agreement, concluding that Rocky Ford had unambiguously
subordinated its direct flow rights to Kents Lake’s rights through
the Agreement, and that Kents Lake’s direct storage changes
accordingly could harm Rocky Ford’s direct flow rights without
losing their original senior priority.
We hold that Rocky Ford was entitled to declaratory
judgment on the second point noted above, but not on the first.
First, we hold that the Agreement does not unambiguously
subordinate Rocky Ford’s direct flow rights, and thus that
summary judgment on this theory was inappropriate.7 Second, we
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7In so doing we reject only the district court’s determination
that the Agreement unambiguously subordinates Rocky Ford’s
direct flow rights. We do not affirmatively declare that the
(continued . . .)
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ROCKY FORD v. KENTS LAKE
Opinion of the Court
hold that Kents Lake’s direct storage changes retain their original
priority only to the extent they do not injure Rocky Ford’s direct
flow rights. Third, we hold that despite this conclusion, Rocky Ford
has not preserved any viable claim for such injury on the record
before us on appeal.
In other words, our judgment is technically a reversal of
the district court—we hold that Rocky Ford was entitled to
judgment as a matter of law on the second point on which it sought
a declaration of its rights. But the practical effect of our decision is
ultimately in line with the district court’s disposition: Kents Lake’s
direct storage changes retain their original priority over Rocky
Ford’s direct flow rights. That effect follows, however, not from the
terms of the 1953 Agreement, but from the fact that Rocky Ford has
thus far brought no viable claim of injury.
1. The 1953 Agreement Does Not Unambiguously
Subordinate Rocky Ford’s Direct Flow Rights
In its motion for summary judgment, Rocky Ford first
asked the district court to declare that its direct flow rights are not
subordinated or waived under the terms of the 1953 Agreement.
The district court denied that request. In fact, it reached the
contrary conclusion, holding that the 1953 Agreement was clear
and unambiguous in establishing that Rocky Ford intentionally
subordinated its direct flow rights to Kents Lake’s rights.
The district court’s ruling focused on the recital paragraphs
of the Agreement. The first two recital paragraphs state that both
Rocky Ford and Kents Lake have “various rights in the Beaver
River.”8 The fourth recital paragraph identifies the priority dates of
some of these rights.9 And the fifth recital paragraph describes the
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Agreement does not in fact subordinate Rocky Ford’s direct flow
rights. See infra ¶ 25.
8The relevant text of these clauses is as follows: “WHEREAS,
Rocky Ford has various rights to the use of water of the Beaver River
and its tributaries, including Application No. 1215, Certificate No.
2388, issued by the State Engineer of the State of Utah; and
WHEREAS Kent’s Lake has various rights to the use of waters of
the Beaver River and its tributaries . . . .” (Emphasis added.)
9The full text of this clause is as follows: “WHEREAS, the
priority date of the water right of Kent’s Lake for its said 1660 acre
(continued . . .)
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purpose of the Agreement: “to provide for the practical
administration of storage under the water rights mentioned above
and to prevent future controversy concerning the diversion of
storage under said water rights . . . .” (Emphasis added.) The
Agreement then sets forth its terms in greater detail.
The district court believed that the conflict between Rocky
Ford and Kents Lake hinged on which of Rocky Ford’s water rights
were implicated by the fifth recital clause’s reference to the “above”
rights. The court held that the “above” rights referred to in the fifth
recital implicated not only the rights detailed in paragraph four,
but also Rocky Ford’s various rights referred to in paragraph one.
It was “baffle[d] . . . to learn that [Rocky Ford] want[ed it] to read
‘various rights’ to mean ‘various rights except Rocky Ford’s direct
flow rights.’” To interpret the contract to waive only part of Rocky
Ford’s rights, the court reasoned, “would nullify the 1953
agreement.” The court thus concluded that Rocky Ford had
unambiguously waived its direct flow rights and given Kents
Lake’s changed use outright senior priority.
Kents Lake does not defend this analysis on appeal. It
effectively concedes that there is at least a reasonable dispute about
whether the reference to “above rights” in the fifth recital refers
only to those rights specifically detailed in paragraph four, or also
to Rocky Ford’s “various rights” referenced in paragraph one. With
this in mind, we reverse the district court’s decision on summary
judgment to the extent it was based on the determination that the
Agreement unambiguously established that Rocky Ford’s direct
flow rights are subordinated to Kents Lake’s rights.
But we also decline to render a judgment endorsing Rocky
Ford’s interpretation of the Agreement. On this record and in this
posture, we cannot conclude that the Agreement unambiguously
supports Rocky Ford’s position either. Instead we base our
summary judgment decision on other grounds (see infra Part
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feet is 1890, and the priority date of Rocky Ford under its Certificate
No. 2388 for 25,477.5 acre feet is February 25, 1907, and the priority
date of Kent’s Lake Application No. 13420 for 1193 acre feet is
March 8, 1940, and the priority date of the direct flow rights of the
various stockholders of Kent’s Lake referred to herein have priority
dates of 1890 and earlier . . . .”
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ROCKY FORD v. KENTS LAKE
Opinion of the Court
II(A)(2)), and leave the parties to decide whether to seek to litigate
the interpretation of the Agreement on remand.10
2. Kents Lake’s Changes Retain Original Priority Only to the
Extent They Do Not Injure Rocky Ford’s Rights
Rocky Ford also sought a declaration that Kents Lake’s
direct storage changes retain their original priority only to the
extent they don’t harm Rocky Ford’s direct flow rights. The district
court denied that request on the basis of its interpretation of the
Agreement. Because it concluded that Rocky Ford’s rights were
clearly and unambiguously subordinated under the terms of the
Agreement, the district court held that Kents Lake’s direct storage
changes could harm Rocky Ford’s direct flow rights with no effect
on Kents Lake’s priority.11
We reverse. The district court’s conclusion fails to the
extent it relies on the above-noted interpretation of the Agreement.
It is also contrary to law. Kents Lake’s direct storage changes
presumptively retain the original priority date of the underlying
water right to the extent they do not injure other water rights that
were vested at the time of the change.
This is made clear in the Utah Code. The code provides that
a water user may seek to change its rights in a water source by filing
a change application with the State Engineer. UTAH CODE § 73-3-3
(1953). A change application requests a change in the “place of
diversion or use” of the water for a purpose other than that
“originally appropriated.” Id. Because such a changed use is not
permitted “if it impairs any vested right,”12 id., other water users
are entitled to file a protest of a proposed change with the State
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10It is not apparent that the interpretation of the Agreement will
merit attention on remand given our conclusions below that
(a) Rocky Ford’s direct flow rights remain junior to Kents Lake’s
direct storage rights absent proof of injury, and (b) Rocky Ford has
asserted no viable claim for injury. But we leave the question
whether further proceedings on the Agreement are appropriate for
the parties and the district court on remand.
11This conclusion was also reiterated in the final judgment. See
infra Part II(B).
12The statute does suggest that a change could impair a vested
right if there were “just compensation,” UTAH CODE § 73-3-3 (1953),
but that is not at issue in this case.
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Engineer, id. § 73-3-7 (1953). The State Engineer reviews
impairment claims and approves a change application if there is
“reason to believe” that the approval will not impair vested water
rights. Searle v. Milburn Irr. Co., 2006 UT 16, ¶ 31, 133 P.3d 382; see
also UTAH CODE § 73-3-3 (1953).
When the State Engineer does approve a change
application, it approves those changes “subject to” existing vested
water rights. UTAH CODE § 73-3-17 (1953). In Rocky Ford Irrigation
Co. (Rocky Ford I), this court explained that our affirmance of an
approved change was “limited to a determination of whether there
is probable reason to believe that . . . approval of the application
will injure the vested rights of the protestants,” and that Rocky
Ford “could seek proper redress by a suit for damages or . . .
injunctive relief if Kents Lake[‘s changes did in fact] unlawfully
interfere[] with [its] rights.” 135 P.2d 108, 113–14 (Utah 1943).
Similarly, in affirming changes in American Fork Irrigation Co. v.
Linke, we explained that “[i]f, in executing the plan [to convert
direct flow rights to storage rights], the plaintiffs interfere with or
diminish the rights of others, a remedy is available, particularly since
the trial court approved the application subject to the rights of others
and without prejudice thereto, and since approval of plaintiffs’
application . . . simply allows them to proceed with a plan
specifically conditioned by the trial court on respecting the rights of
others.” 239 P.2d 188, 192 (Utah 1951) (emphases added) (footnotes
omitted). And in Whitmore v. Murray City, we held that “Murray
City, by obtaining permission from the state engineer to change its
point of diversion, only obtained a right to do so if no prior vested
rights were affected. The recording of its certificate gave it no greater
right.” 154 P.2d 748, 751 (Utah 1944) (emphasis added).
Because a change to a water right is made subject to
preexisting water rights, it is clear that the change cannot harm
those preexisting water rights. A subsidiary point is also implicit:
The change maintains its original priority only so long as it does
not harm preexisting rights. We highlighted this principle in Hague
v. Nephi Irrigation Co., where we explained that “[w]hen water has
been lawfully appropriated, the priority thereby acquired is not lost
by changing the use for which it was first appropriated and applied,
or the place at which it was first employed, provided that the
alterations made . . . shall not be injurious to the rights acquired by others
prior to the change.” 52 P. 765, 769 (Utah 1898) (emphases added)
(citation omitted).
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ROCKY FORD v. KENTS LAKE
Opinion of the Court
There is a presumption that a changed water right retains
its original priority date unless and until an injury to preexisting
vested water rights is established.13 This presumption dates back to
early statehood, and we reaffirm it today. In this case, it means that
Kents Lake’s changed right retains priority over Rocky Ford’s
rights so long as Kents Lake’s changed water storage does not
injure Rocky Ford’s direct flow rights.
Kents Lake’s only real opposition to this conclusion is its
assertion that Rocky Ford has no viable claim alleging that Kents
Lake’s direct storage changes resulted in injury to Rocky Ford’s
direct flow rights. We ultimately agree with Kents Lake on this
point, concluding (in Parts II(A)(3) and II(B)) that Rocky Ford’s
claims of injury from Kents Lake’s direct storage changes are either
waived or not supported by this record. That conclusion, however,
goes only to the application of the declaration of law that Rocky Ford
asked for on summary judgment—a declaration that Kents Lake’s
changed right retains priority over Rocky Ford only to the extent it
does not injure Rocky Ford. Rocky Ford’s proposed declaration14
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13The question whether there is an injury to vested water rights
is highly fact-specific, and is determined on a case-by-case basis in
actions between appropriators. See, e.g., Rocky Ford I at 114; see also
Wayment v. Howard, 2006 UT 56, ¶ 9, 144 P.3d 1147.
14The precise nature of the declaration sought by Rocky Ford is
a bit unclear on this record. In its motion for summary judgment,
Rocky Ford explained that its motion “d[id] not seek to establish”
interference, but only to “establish that [] Kents Lake’s storage
under the direct storage changes is prohibited, as a matter of law,
from [interfering with] Rocky Ford’s direct flow rights.” While
Rocky Ford did assert that “Kents Lake’s storage does, in fact,
[interfere with] Rocky Ford’s water rights,” it acknowledged that
“proof of that [interference] involves disputes of fact such that trial
will be necessary on that issue.” So Rocky Ford’s motion seemed to
explicitly request only a clarification of the governing law.
Yet at least one part of the motion also seemed to advert to a
request for an application of such law in its favor—a specific
“declaration from the court establishing the priority of Rocky
Ford’s direct flow rights” in relation to Kents Lake’s direct storage
changes. But this difference is immaterial to our disposition. To the
extent Rocky Ford was seeking the latter sort of declaration, such
(continued . . .)
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was correct. And the district court erred in refusing to enter
summary judgment on this narrow point.
3. Rocky Ford Has No Viable Claim for Injury on This Record
Our determination that Kents Lake’s direct storage
changes maintain their original priority date only to the extent they
do not injure Rocky Ford’s direct flow rights might seem to
necessitate a remand on this point—for a determination whether
Kents Lake’s direct storage changes have in fact injured Rocky
Ford’s direct flow rights, opening the door to potentially rebutting
the presumption of original priority.15 Yet Kents Lake asserts that
Rocky Ford is barred from advancing any such claims under
doctrines of “waiver, release, ratification, or . . . estoppel.” Rocky
Ford disagrees, asserting that while it may have waived some such
claims, it has not waived all of them. We agree with Kents Lake. We
hold that any claims for injury that might rebut the presumption
that Kents Lake’s direct storage changes retain their original
priority have either been waived or have not been proven on this
record. And we therefore see no need for such claims to be litigated
on remand—unless the district court identifies a basis for admitting
new evidence in the proceedings on remand.16
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request overlaps completely with the relief it sought at trial on its
interference claim. And that claim fails on this record for reasons
explained below. See infra Parts II(A)(3) and II(B).
In so stating we are not holding that proof of interference
15
would necessarily require a change in priority—just that it could
potentially do so. See infra ¶ 57 n.27.
16 We acknowledge that the court’s denial of Rocky Ford’s
motion for summary judgment precluded most evidence
concerning the priority of the direct storage changes, including
evidence from Rocky Ford’s expert about the impact of sprinklers
on the historical return flows to the Beaver River.
That said, we do not foreclose the possibility that Rocky Ford
could identify a basis for introducing the excluded evidence either
on remand or in a future proceeding in which it asserts an
interference claim. Our conclusion that Rocky Ford has no viable
claim for injury is based on the record before us. That record may
change if, in light of our reversal of its denial of summary
judgment, the district court identifies a basis for admitting more
evidence on remand than it did in the original trial. Our decision
(continued . . .)
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ROCKY FORD v. KENTS LAKE
Opinion of the Court
Because the parties’ briefing on this question revealed
some confusion in our law governing claims of injury that may
rebut the presumption of original priority, we take this opportunity
to clarify that law. In the paragraphs below, we first clarify how the
presumption of original priority can be rebutted under our law and
then explain why Rocky Ford has thus far failed to do so. Because
Rocky Ford has made no viable claim of injury that could rebut the
presumption that Kents Lake’s direct storage changes retain their
original priority, we conclude that there is no basis for such claim
on the current record.
a. Rebutting the presumption of original priority:
impairment versus interference
An aggrieved party may allege an injury sufficient to
defeat the presumption of original priority by either protesting a
change during the application process or bringing a claim after the
change has been approved. A party can, in other words, allege
either prospective injury stemming from another water user’s
proposed change, or actual injury stemming from another water
user’s actual change. The parties agree on this much, and we affirm
that these are the two avenues available for potentially rebutting
the presumption of original priority.
Rocky Ford, however, labels both types of claims
“impairment.” Kents Lake, by contrast, refers only to protest
during the change application process as an “impairment” claim.
And it refers to a claim brought later on as an “interference” claim.
This confusion is understandable given our past cases,
which have sometimes used the terms “impairment” and
“interference” interchangeably.17 But we agree with Kents Lake
______________________________________________________________________________
today does not preclude the possibility that if that happens, Rocky
Ford may be able to assert a successful interference claim based on
such additional evidence. Today we simply hold that the evidence
in the record thus far does not support a viable interference claim.
See, e.g., Searle v. Milburn Irrigation Co., 2006 UT 16, ¶¶ 37, 39,
17
133 P.3d 382 (holding that “the courts are at all times fully
empowered to protect vested rights from impairment” and that
“the courts . . . remain open to water users whose rights face
impairment” even after a change is approved); Current Creek Irr. Co.
v. Andrews, 344 P.2d 528, 536 (Utah 1959) (Crockett, C.J., dissenting)
(continued . . .)
14
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that these are distinct legal claims meriting distinct labels. We
clarify that “impairment” claims are statutory claims brought
under Utah Code sections 73-3-3 and 73-3-7 during the change
application process, and that “interference” claims are
common-law claims brought under our case law after the change
application process ends. Though both are claims that allege injury
to preexisting vested water rights, there are important differences
between statutory impairment claims and common-law interference
claims. And we think the differences are best captured by using the
term “impairment” to refer to statutory claims brought during the
change application process and the term “interference” to refer to
common-law claims brought after the change application process.18
We suggested such a terminological distinction in our
decision in Wayment v. Howard, 2006 UT 56, 144 P.3d 1147. There
we referred to statutory claims available during the administrative
application process as “impairment” claims. And we described the
common-law claim at issue in that case (brought after the
administrative application process) as one of “interference.” Id.
¶¶ 9, 13 n.11. We thus clarified in Wayment that “impairment” and
“interference” are distinct. See id. ¶ 9 (“A determination of
interference, much like one of impairment, is best viewed as a
mixed question of fact and law.”); id. ¶ 13 n.11 (“While this may be
true for impairment, we need not and do not reach the issue of
whether we apply a de minimus [sic] standard to interference.”).
We maintain that distinction here, and clarify that “impairment”
and “interference” are distinct claims available at different stages
of the administrative and adjudicative process involving water
______________________________________________________________________________
(noting in an injunctive relief case the difficulty of knowing
“whether [a new well] impaired the flow of others”); Whitmore v.
Murray City, 154 P.2d 748, 750 (Utah 1944) (noting that the “state
engineer did not adjudicate the priority . . . but merely determined
that it could use the water . . . as long as it did not interfere with the
prior rights of others”).
18Today we speak only to the difference between statutory
impairment claims and common-law interference claims. In so
doing we do not address enforcement actions brought by the State
Engineer under Utah Code section 73-2-25(2)(a) when she finds that
a person “is diverting, impounding, or using water in violation of
an existing water right.”
15
ROCKY FORD v. KENTS LAKE
Opinion of the Court
rights. In so doing, we endorse the Wayment terminology as a
matter of Utah water law going forward.
We do so for two main reasons. First, the distinction
between “impairment” and “interference” is important to the
extent it highlights the two distinct roles our courts play in water
law cases: (1) reviewing administrative decisions regarding water
rights,19 and (2) adjudicating the water rights themselves
(including their priority).20 This court’s review of impairment
claims falls under the first category, while our review of
interference claims falls under the second. This is because
impairment refers to a plaintiff’s protest of proposed changes (and
appeal of State Engineer decisions on those proposed changes21),
while interference refers to a plaintiff’s petition for an adjudication
of water rights (whether priority or otherwise) once an approved
change causes actual harm. Because the changes have only been
proposed during the application stage, the preliminary decision
about whether there is “reason to believe” that they will injure
vested rights is appropriately left to the State Engineer (with the
opportunity for judicial review). Searle, 2006 UT 16, ¶¶ 2, 37. But
once the changes are actually implemented and a water user can
bring an interference suit, determining whether the changes
actually injure vested rights “is a matter ultimately left to a final
judicial determination of rights.” Id. ¶ 37.
______________________________________________________________________________
19See Searle, 2006 UT 16, ¶ 35 (explaining that when a district
court “review[s] the state engineer’s decision to approve or reject
an application” it is “not sitting in its capacity as an adjudicator of
rights,” but rather as one “charged with ensuring that the state
engineer correctly performed an administrative task”).
20See E. Bench Irr. Co. v. State, 300 P.2d 603, 607 (Utah 1956)
(holding that “the extent or priority of rights” an applicant hopes
to acquire from a proposed change is an issue that “cannot be
adjudicated on . . . an [administrative] appeal” because “no cause
of action for the adjudication of such rights can accrue at that
time”); United States v. Dist. Ct., 242 P.2d 774, 777 (Utah 1952)
(explaining that the relevant “statute[s] make[] no provision for the
determination of the priorities of the applicant and the protestants
or the extent of their rights,” but “leave[] the adjudication of the
rights . . . to the courts in another kind of proceeding”).
21See, e.g., Rocky Ford I (reviewing the State Engineer’s
determination of an impairment claim); see also supra ¶ 6 n.5.
16
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Second, our decision to preserve a distinction between
statutory impairment and common-law interference is supported
by the fact that different burdens of proof apply to each. At the
change application stage, an applicant bears the burden of giving
the State Engineer “reason to believe” that the proposed changes will
not impair existing water rights. See id. ¶¶ 2, 34, 53 (emphasis
added). And other water users may protest this showing by
producing “either direct or circumstantial evidence that sufficiently
undermines the applicant’s showing that the use proposed can be
accomplished without impairing vested rights.” Id. ¶ 2; see also
UTAH CODE § 73-3-7 (1953). By contrast, once the change
application process ends, the burden is on the opponent of the
change to show by a preponderance of the evidence that the change has
interfered with its water rights. See Searle, 2006 UT 16, ¶¶ 38, 42
(explaining that the “preponderance standard” applies to “a final
adjudication of rights,” such as an interference claim). In sum, once
the change application process ends, the burden of persuasion
shifts from the applicant to the aggrieved party and the standard of
proof increases from “reason to believe” to a “preponderance of the
evidence.”
The availability of claims both during and after the change
application process is no accident. Nor is the difference in the
applicable burden of proof. Our bifurcated system reserves the
resources of parties, courts, and the State Engineer for those
instances in which actual harm occurs to vested rights, which can
be difficult to predict at the time of a change application.22 Under
this framework, water users can wait and see if a change actually
injures their vested rights before deciding to assert a claim, rather
than protest every application that could conceivably impact them
out of an abundance of caution. And the fact that it’s easier to
propose changes than stop them encourages experimentation and
innovation. See id. ¶ 36 (noting that the “reason to believe” standard
is “a fairly low burden” which “balance[s] . . . the two policy goals
of putting water to the most beneficial use possible while
simultaneously guarding vested rights”). This lighter burden is
possible because “courts [remain] at all times fully empowered to
protect vested rights from [injury]” through the doctrine of
interference. Id. ¶ 37.
______________________________________________________________________________
22Consider this case, which alleges harm from a change
application approved nearly seventy years ago.
17
ROCKY FORD v. KENTS LAKE
Opinion of the Court
b. Rocky Ford has failed to show that Kents Lake’s
direct storage changes have injured its rights
Kents Lake claims that Rocky Ford has waived any claim
for statutory impairment by failing to protest during the change
application process. And it notes that Rocky Ford waived its
common-law interference claim for damages when that claim was
dismissed with prejudice shortly before trial. Rocky Ford concedes
as much. But it argues that it still has a viable common-law
interference claim for prospective relief.23
We agree that Rocky Ford has waived both any
impairment claim (by failing to protest during the change
application process) and any interference claim for damages (by
dismissing such a claim before trial). And we further find that any
interference claim for prospective relief has not been proven on this
record. So even though the district court erred in interpreting the
1953 Agreement to preclude any claim that might rebut the
presumption that Kents Lake’s direct storage changes retain their
original priority, see supra ¶¶ 12, 26–27, we conclude that on this
record there is no viable claim for injury. See supra ¶ 33 n.16 (noting
that we are not foreclosing the possibility of the district court
identifying a basis for the presentation of additional evidence on
remand).
i. Rocky Ford’s impairment claim is waived
We first determine whether Rocky Ford has a viable
impairment claim that could defeat the presumption that Kents
Lake’s direct storage changes retain their original priority over
Rocky Ford’s direct flow rights. We hold that Rocky Ford has
waived any claim for impairment from Kents Lake’s direct storage
changes by not protesting Kents Lake’s change application before
the State Engineer.
As contracted for in the Agreement, Kents Lake applied for
a changed use to convert part of its direct flow rights into a direct
storage right. And true to the Agreement, Rocky Ford did not
______________________________________________________________________________
23 Of course, Rocky Ford referred to both claims (whether
during the change application process or after) as “impairment”
claims. See supra ¶ 36. But in the interest of clarity, we use
“impairment” and “interference” as distinguished above in Part
II(A)(3)(a).
18
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protest the change. The change application was then approved by
the State Engineer.
Rocky Ford now contends that the direct storage changes
impair its rights. Of course, a changed use should not impair a
vested right. See UTAH CODE § 73-3-3 (1953). But that does not give
parties the right to claim impairment in perpetuity. An impairment
claim must be raised during the protest period before the State
Engineer, as explained above in Part II(A)(3)(a). And parties
aggrieved by a decision the State Engineer makes must bring an
action for plenary review within sixty days. Id. § 73-3-14 (1953); see
also supra ¶ 39. Rocky Ford did not do so. Whether it could not (by
virtue of the Agreement) or simply did not is irrelevant. Kents Lake
went through the required administrative processes in both filing
its application and in perfecting its right. And because Rocky Ford
did not challenge the change application through the appropriate
administrative mechanisms at the proper time, it is unable to claim
impairment now.
ii. Rocky Ford’s interference claims are waived
or not supported by the record
We next determine whether the presumption that Kents
Lake’s changes maintain their original priority is defeated by a
valid interference claim. Rocky Ford brought such a claim for
damages below. But this claim was dismissed with prejudice
shortly before trial. Rocky Ford asserts, however, that it still has a
viable interference claim for prospective relief. In fact, Rocky Ford
pursued such a claim at trial—it asserted that Kents Lake’s direct
storage changes combined with Kents Lake’s switch to sprinkler
irrigation reduced the amount of water available for its direct flow
rights, and that the changes should accordingly be given a reduced
priority date to the extent of the injury.
The district court rejected this interference claim for
prospective relief, finding that it failed to establish that any injury
to Rocky Ford’s direct flow rights was caused by Kents Lake’s direct
storage changes. Because Rocky Ford separately appealed this
ruling, we consider it below in Part II(B). As explained there, we
agree with the district court that Rocky Ford’s interference claim
for prospective relief is not supported by the record.
Rocky Ford thus has no viable claim for injury on the
record before us on this appeal. Its statutory impairment claim and
its interference claim for damages have both been waived. And its
19
ROCKY FORD v. KENTS LAKE
Opinion of the Court
interference claim for prospective relief is not supported by the
record.24
B. The District Court Did Not Err in Refusing to Declare
that Kents Lake Cannot Store Its Efficiency Gains
We next consider whether the district court erred in
refusing to declare in its final judgment that Kents Lake cannot use
its direct storage changes to store the water it saves from improved
irrigation efficiency. Rocky Ford sought this declaration based on
an interference theory. See supra Part II(A)(3). And in that sense, the
declaration it sought can be viewed as an application of the
declaration of law it sought on summary judgment—that Kents
Lake’s direct storage changes maintain their senior priority only as
long as they do not harm Rocky Ford’s direct flow rights.
The district court declined to enter this declaratory
judgment for Rocky Ford, concluding that Rocky Ford had failed
to establish that any injury to its direct flow rights was caused by
Kents Lake’s direct storage changes, rather than by intervening
causes. We agree that Rocky Ford has failed to establish causation
on this record. And we affirm on that basis.25
______________________________________________________________________________
Our analysis, of course, is based on the evidence in the record
24
on appeal. And as noted above, we are not foreclosing the
possibility that the district court may identify a basis for the
presentation of additional evidence on remand—evidence that
could sustain an interference claim in this case. See supra ¶ 33 n.16.
Nor are we concluding that Rocky Ford is foreclosed from bringing
an interference claim at any point in the future. We are simply
holding that for any such claim to be successful, Rocky Ford would
have to establish injury to its vested water rights caused by Kents
Lake’s direct storage changes.
25Kents Lake also asks us to affirm the district court’s ruling on
the ground that Rocky Ford has not alleged an actionable
interference claim. Kents Lake contends that (1) any alleged injury
to Rocky Ford’s direct flow rights is based not on the direct changes
themselves, but on the efficiency gains from its switch to sprinkler
irrigation; and (2) such efficiency gains are not actionable because
they are independent of the changes and the “the right to save
water inheres in every water right” under Utah law. We do not
reach these questions because we conclude that Rocky Ford has
(continued . . .)
20
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Rocky Ford’s direct flow rights are vested water rights it
acquired prior to Kents Lake’s direct storage changes. And now
Rocky Ford claims that these rights have been injured by the direct
storage changes. The interference alleged by Rocky Ford focuses on
Kents Lake’s direct storage changes combined with its switch to
sprinkler irrigation. Kents Lake switched to sprinklers in the 1970s
as a more efficient watering mechanism than flood irrigation—
sprinklers use less water. And as a result of the direct storage
changes, Kents Lake is able to store the excess water it had
previously used on less efficient irrigation. If Kents Lake had only
a direct flow right, as it did initially, the newly storable water (the
efficiency gains) would continue flowing down the Beaver River.
But the direct storage changes allow Kents Lake to store this excess
water without creating larger return flows that would benefit
downstream users like Rocky Ford.
Rocky Ford thus asserts that Kents Lake is no longer
entitled to the original priority date for its changed use to the extent
of this injury. It claims that Kents Lake’s direct storage changes
must receive a reduced priority—the date of the change
application—to the extent those changes have reduced Rocky
Ford’s water supply to less than what Rocky Ford would have
received without them. In Rocky Ford’s view, in order for Kents
Lake’s direct storage changes to maintain their original priority,
Kents Lake must forgo its storage of any efficiency gains.
______________________________________________________________________________
failed to establish a causal link between Kents Lake’s direct storage
changes and any harm to Rocky Ford’s direct flow rights.
For the same reason, we need not address a related question that
the parties ask us to resolve: whether an upper user with a junior
water right can use water more efficiently to the detriment of a
lower user with a senior right. This factual scenario is made
possible by the unique administration of the Beaver River Decree,
which allows upper junior users to take water prior to lower senior
users. Supra ¶ 4. And it is relevant here because some of Rocky
Ford’s direct flow rights have an 1870 priority that is senior even to
the unaltered 1890 priority of the Kents Lake’s direct storage right.
Supra ¶ 4. But again, because Rocky Ford has failed to produce
evidence establishing the threshold requirement of a causal link
between its alleged injury and Kents Lake’s direct storage changes,
there is no need to explore how the Beaver River Decree might
affect how a successful interference claim would play out in this
circumstance.
21
ROCKY FORD v. KENTS LAKE
Opinion of the Court
In support of this theory Rocky Ford introduced evidence
at trial suggesting that its return flows have been reduced. One of
its experts testified that there is “a very strong likelihood” that there
was “impact on the return flows” from “the conversion from flood
to sprinkler irrigation” which affected Rocky Ford. Despite this
evidence, the district court found that Rocky Ford had not
sufficiently distinguished or accounted for either the potential
impact of groundwater pumping or the conversion to sprinkler
irrigation by users other than Kents Lake on Rocky Ford’s return
flows.26
We agree with the district court that Rocky Ford has failed
to adequately establish causation. While Rocky Ford may be right
that its return flows have been reduced, we share the district court’s
concern that Rocky Ford didn’t sufficiently account for the
potential impact of groundwater pumping and efficiency gains by
users other than Kents Lake on its return flows. Because it is unclear
from the record whether Kents Lake’s direct storage changes
actually caused injury to Rocky Ford’s direct flow rights (through
reduced return flows), we lack a sufficient basis in the record to
conclude that Rocky Ford has carried its burden of showing
interference.
Rocky Ford has thus failed to show that the direct storage
changes “in natural and continuous sequence[] (unbroken by an
efficient intervening cause)[] produce[d] the injury,” and that
“without [them] the result would not have occurred.” Scott v.
Universal Sales, Inc., 2015 UT 64, ¶ 27 n.40, 356 P.3d 1172 (citation
omitted). We affirm on that basis. We conclude that Rocky Ford
failed to carry its burden of proof at trial, and thus conclude that
the district court did not err in refusing to declare that Kents Lake
cannot store its efficiency gains using the direct storage changes.
Without proof from Rocky Ford that Kents Lake’s storage
of efficiency gains caused Rocky Ford’s alleged injury (reduced
return flows), we have no occasion to render a ruling on a further
______________________________________________________________________________
26 The district court’s denial of Rocky Ford’s motion for
summary judgment precluded most evidence concerning the
priority of the direct storage changes, including evidence from
Rocky Ford’s expert about the impact of sprinklers on the historical
return flows to the Beaver River. But Rocky Ford may be in a
position to identify a basis for introducing the excluded evidence
either on remand or in an interference claim in a future proceeding.
22
Cite as: 2020 UT 47Opinion of the Court
point of dispute between the parties on this appeal—the effect of a
successful interference claim on the priority date for Kents Lake’s
direct storage changes.27 A successful interference claim is
prerequisite to any remedy for interference—including a change in
priority. See supra Parts II(A)(2)–(3). Unless and until Rocky Ford
carries its burden of establishing a factual basis for an interference
claim, we have no occasion to opine on the effect of any such claim
on the priority date of Kents Lake’s direct storage changes. So on
this record, we hold that Kents Lake’s direct storage changes retain
their original 1890 priority date.
C. The District Court Erred in Refusing to Declare
that Kents Lake Must Abide By its Measurement Obligations
Under the Beaver River Decree
The third question presented for our review pertains to
Kents Lake’s obligations to measure its water use in accordance
with the Beaver River Decree. In the proceedings below, Rocky
Ford sought both declaratory and injunctive relief, asking the court
to clarify Kents Lake’s measurement obligations. Rocky Ford
contended that Kents Lake does not have the measurement devices
necessary to satisfy its measurement obligation under the Beaver
River Decree. The district court denied Rocky Ford’s requests and
Rocky Ford now seeks reversal of those decisions. We affirm the
district court’s denial of Rocky Ford’s request for injunctive relief.
But we reverse and remand to the district court for further
determinations on the declaratory judgment.
Rocky Ford asks us to reverse the district court’s decision
denying its request for injunctive relief. But Rocky Ford’s briefing
does not adequately address the decision before us on appeal. The
district court held that Rocky Ford had failed to carry its heavy
______________________________________________________________________________
27Rocky Ford asks us to hold that a successful interference claim
would require a court to burden the changed right with the date of
the change application. Kents Lake offers a different view, insisting
that a reduced priority is simply one of many remedies available to
a district court when a successful interference claim is brought. We
do not resolve this dispute here. We reserve it for a case in which it
is squarely presented.
23
ROCKY FORD v. KENTS LAKE
Opinion of the Court
burden of proof.28 Specifically, the district court said that Rocky
Ford was unable to show that it had suffered irreparable harm
resulting from Kents Lake’s failure to fulfill its measurement
obligations under the Decree. On appeal, Rocky Ford has not
adequately addressed the standard for entry of injunctive relief or
sufficiently explained how the district court erred under that
standard. We thus affirm the lower court’s denial of injunctive
relief under our case law requiring an appellant to speak
specifically to the terms of an order challenged on appeal. See Utah
Physicians for a Healthy Env’t v. Exec. Dir. of the Utah Dep’t of Envtl.
Quality, 2016 UT 49, ¶ 16, 391 P.3d 148 (holding that an appellant’s
failure to address and brief arguments directed at the order under
review on appeal was fatal to the appeal).
This defect does not extend to Rocky Ford’s request for
declaratory relief, however. Under Utah Code section 78B-6-402, a
party seeking declaratory relief need show only by a
preponderance of the evidence that the requested relief will
terminate an alleged controversy or remove an uncertainty. Rocky
Ford alleges confusion amongst the parties as to the measurement
obligations under Utah Law and the Beaver River Decree. And
Rocky Ford sought a declaratory judgment clarifying these
responsibilities.
In denying Rocky Ford’s request for relief, the district court
stated that “Kent’s Lake asserts that it has consistently done
whatever the State Engineer or his agent has asked it to do.” And it
stated that “the State appears satisfied with Kent’s Lake.” But the
district court did not explain how this compliance with the State
Engineer’s orders excuses a lack of compliance with the terms of
the Beaver River Decree. And we see no reason to so conclude.
The State Engineer is tasked with the “general
administrative supervision of the waters of the state and the
measurement, appropriation, apportionment, and distribution of
those waters.” Id. § 73-2-1(3)(a). But our law mandates that “a
______________________________________________________________________________
28 “A court may grant a permanent injunction if it determines
that (1) the petitioner establishes standing by demonstrating special
damages, (2) the petitioner has a property right or protectable
interest, (3) legal remedies are inadequate, (4) irreparable harm
would result, (5) court enforcement is feasible, and (6) petitioner
merits the injunction after balancing the equities.” Johnson v. Hermes
Assocs., Ltd., 2005 UT 82, ¶ 13, 128 P.3d 1151 (footnote omitted).
24
Cite as: 2020 UT 47Opinion of the Court
person using water in this state . . . shall construct or install and
maintain controlling works and a measuring device at: (a) each
location where water is diverted from a source.” Id. § 73-5-4(1). This
obligation is independent from and in addition to the duty to install
and use measuring devices at “any other location required by the
state engineer.” Id. In this case, the party’s measurement
obligations are further clarified in the 1931 Beaver River Decree.
The Decree says, “the parties hereto and their successors in interest
shall promptly install and perpetually maintain suitable and
efficient headgates, control works and measuring devices at or near
as possible to their respective points of diversion.”
Kents Lake does not dispute that the Beaver River Decree
and Utah Code section 73-5-4 require installation of “measuring
devices at or near as possible to their respective points of
diversion.” Nor does Kents Lake dispute that there is no such
measuring device at multiple points of diversion into its reservoirs.
It instead argues that all measurement required under statute and
the Beaver River Decree is to benefit the State Engineer in
administering the river. So Kents Lake claims that by complying
with the State Engineer it has necessarily discharged any duties
required of it by statute or the Decree.
We disagree. Our law creates an independent obligation to
measure. See id. § 73-5-4(1)(a) (requiring parties to install and
maintain measurement devices at each location where water is
diverted); see also Gunnison Irr. Co. v. Peterson, 280 P. 715, 717 (Utah
1929) (“If the defendant violated the terms of the decree, he cannot
purge himself of the contempt by showing that no commissioner
was appointed.”). That obligation exists regardless of whether a
party complies with the requests of the State Engineer. This is
Rocky Ford’s point. It acknowledges that Kents Lake may have
complied with instructions from the State Engineer. But it disagrees
that this releases Kents Lake from any independent obligation to
measure water in accordance with statute or the Decree.
We agree with Rocky Ford. Parties have an independent
duty to fulfill measurement obligations. Rocky Ford does not seek
damages for past mismeasurement or wrongful storage, which
would require us to decide whether following the State Engineer’s
direction insulates a water user from claims of damages. Rocky
Ford instead asks for clarification moving forward. We find that the
clarification it seeks is warranted, and remand to the district court
to interpret the parties’ measurement obligations under Utah Code
25
ROCKY FORD v. KENTS LAKE
Opinion of the Court
section 73-5-4 and the Beaver River Decree, and enter a declaratory
judgment clarifying these obligations.
D. The District Court Did Not Err in
Refusing to Rescind the 1953 Agreement
Rocky Ford also appeals the district court’s decision not to
rescind the 1953 Agreement. This question implicates two
sub-issues. First, did the district court err in refusing to rescind the
1953 agreement on the basis of a material breach? And second, did
the district court abuse its discretion when it refused to admit
certain evidence Rocky Ford claims was relevant to the rescission
claim? We answer both questions in the negative, and affirm.
1. Material Breach
Rocky Ford alleges two material breaches of the 1953
Agreement. The Agreement provides that “Rocky Ford has
exclusive right to store all water during the non-irrigation season.”
But Kents Lake closed the gates of its South Fork Reservoirs in the
winter, capturing any inflows and preventing them from reaching
Rocky Ford. Kents Lake also failed to comply with the
measurement obligations outlined in the 1953 Agreement. Rocky
Ford argues that these are “uncured material failure[s] sufficient to
render the contract unenforceable.” Aquagen Int’l, Inc. v. Calrae Tr.,
972 P.2d 411, 414 (Utah 1998) (internal quotation marks omitted).
We disagree and affirm on the ground that the alleged
breaches were not material.
The materiality of a contract term is a “fact-like mixed
question[]” that is reviewed “deferentially.” Sawyer v. Dep’t of
Workforce Servs., 2015 UT 33, ¶ 11, 345 P.3d 1253. And “rescission is
not warranted” where a breach does not “defeat the object of the
parties in making the agreement.” Cross v. Olsen, 2013 UT App 135,
¶ 27, 303 P.3d 1030 (citation omitted). The district court permissibly
concluded that Rocky Ford’s claimed material breaches did not go
to the object of the Agreement. A principal object of the Agreement
was to protect new interests. Specifically, it was to ensure that
Rocky Ford would not protest Kents Lake’s proposed change
application and to ensure that Kents Lake would not oppose Rocky
Ford’s enlargement of its reservoir. While the Agreement restated
Kents Lake’s measurement obligations and Rocky Ford’s exclusive
winter storage rights, the district court could permissibly conclude
that the object was not to reaffirm prior obligations both parties
already had. Both parties acknowledge that these obligations
pre-date the Agreement.
26
Cite as: 2020 UT 47Opinion of the Court
The object of the Agreement was for Rocky Ford to enlarge
its reservoir and for Kents Lake to apply for the change application
free from Rocky Ford’s protest. Because Kents Lake’s alleged
breaches do not go to material terms of the Agreement, the district
court acted within the bounds of its discretion in determining that
the breaches were not material and declining to rescind the
Agreement on this ground.
2. Evidence
Rocky Ford also claims that the district court erred in
excluding evidence that allegedly supported Rocky Ford’s
rescission claim. We “afford district courts a great deal of discretion
in determining whether to admit or exclude evidence and will not
overturn an evidentiary ruling absent an abuse of discretion.” State
v. Cuttler, 2015 UT 95, ¶ 12, 367 P.3d 981 (citation and internal
quotation marks omitted). And we will not determine that the
district court abused its discretion unless its “decision exceeds the
limits of reasonability.” State v. Larsen, 865 P.2d 1355, 1361 (Utah
1993). We do not believe that the district court’s exclusion of
evidence here “exceeds the limits of reasonability.” See id. We
accordingly affirm the exclusion of the evidence in question.
The district court found that testimony about historical
return flows to the Beaver River was irrelevant. Rocky Ford
challenges that decision. It asserts that evidence of historical return
flows would have enabled it to prove impracticability, frustration
of purpose, or mutual mistake as a basis for rescission. And it
contends that the district court committed reversible error in
excluding evidence of historical return flows.
We disagree with Rocky Ford and affirm. The district
court’s ruling on the rescission claim was not based on Rocky
Ford’s lack of evidence regarding return flows. To the contrary, the
court found that the 1953 Agreement had “nothing to do with
return flows.” The court supported this conclusion by correctly
noting that the Agreement is silent as to runoff, return flows, and
Rocky Ford’s position as a downstream water user. Each of Rocky
Ford’s alleged rescission theories required a finding that return
flows were so fundamental to the Agreement that their reduction
would have made the Agreement unenforceable.29 And the district
______________________________________________________________________________
Rescission of a contract is an exceptional remedy that must be
29
supported by exceptional facts. Rocky Ford asserted three theories
(continued . . .)
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Opinion of the Court
court concluded that this was not the case, regardless of what any
evidence of return flows showed.
The district court did hold that Rocky Ford failed to
provide sufficient evidence on a number of other issues. But it
ultimately rejected Rocky Ford’s rescission claim on the ground
that Rocky Ford could not prove that return flows were relevant to
the Agreement. In so doing the district court acted within its
discretion. We thus affirm the district court’s exclusion of Rocky
Ford’s evidence and its decision to not rescind the 1953 Agreement.
E. The District Court Erred in Awarding Attorney Fees
The final issue on appeal concerns the district court’s
award of attorney fees. After trial, the court sua sponte awarded
attorney fees to Kents Lake and Beaver City under Utah Code
section 78B-5-825 based on the determination that Rocky Ford’s
claims were “without merit and not brought or asserted in good
faith.” Rocky Ford challenged the award of attorney fees in a rule
59 motion. That motion was denied. Rocky Ford now asks us to
reverse the court’s denial of that motion and its award of attorney
fees. It contends that the district court erred when it determined
that Rocky Ford’s claims lack merit and were brought in bad faith.
______________________________________________________________________________
in support of its claim for rescission: impracticability, frustration of
purpose, and mutual mistake. Impracticability requires “an
unforeseen event [that] occurs after formation of the contract . . .
which event makes performance of the obligation impossible or
highly impracticable.” Cent. Utah Water Conservancy Dist. v. Upper
E. Union Irr. Co., 2013 UT 67, ¶ 28, 321 P.3d 1113 (citation omitted).
“Frustration of purpose differs from the defense of
[impracticability] only in that performance of the promise, rather
than being impossible or impracticable, is instead pointless.” W.
Props. v. S. Utah Aviation, Inc., 776 P.2d 656, 659 (Utah Ct. App.
1989). And mutual mistake requires that “at the time the contract is
made, the parties make a mutual mistake about a material fact, the
existence of which is a basic assumption of the contract.” Workers
Comp. Fund v. Utah Bus. Ins. Co., 2013 UT 4, ¶ 27, 296 P.3d 734(citation omitted). Each of these theories is thus premised on the
notion that the fact giving rise to a claim for rescission goes to a
material contract term. Yet return flows and runoff were not
material to the Agreement. And the district court accordingly
concluded that none of Rocky Ford’s theories were legitimate
grounds for rescinding the contract.
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Utah Code section 78B-5-825(1) calls for an award of
attorney fees in civil actions when “the court determines that the
action or defense to the action was without merit and not brought
or asserted in good faith.” This provision requires proof on “two
distinct elements”—a determination that the losing party’s claim
was “(1) without merit, and (2) not brought or asserted in good
faith.” In re Discipline of Sonnenreich, 2004 UT 3, ¶ 46, 86 P.3d 712.
A determination under the first element will typically turn
on a conclusion of law—whether the losing party’s claim lacks a
“basis in law or fact.” Id. ¶ 47 (citation omitted). Such a
determination is reviewed for correctness. Id. ¶ 45. The second
element, by contrast, implicates fact-intensive questions about the
losing party’s “subjective intent.” Id. ¶ 49. A party’s good faith may
be established by proof of “[a]n honest belief in the propriety of the
activities in question;” a lack of “intent to take unconscionable
advantage of others;” and a lack of “intent to, or knowledge of the
fact that the activities in question will hinder, delay, or defraud
others.” Id. ¶ 48 (alteration in original) (citation omitted). A lower
court’s findings on this element typically will be afforded a
substantial measure of discretion. Id. ¶ 45.
The district court made sua sponte findings on the two
elements of the statute. Ordinarily we would yield substantial
deference to the court’s findings on the latter. But we decline to do
so here for two reasons. As an initial matter, the district court’s
findings are infected by legal error. Specifically, the court conflated
the two elements of the statute by suggesting that Rocky Ford’s
claims were not asserted in “good faith” because they were “without
merit.” Most of the district court’s “findings” on the lack of “good
faith” are premised on the court’s observations about the lack of
merit in Rocky Ford’s claims. But the two elements are distinct. It
is reversible error to “conflate” them. Id. ¶ 49 (explaining that “the
mere fact that an action is meritless does not necessarily mean that
the action is also brought in bad faith”). And a threshold legal error
is an abuse of discretion that undercuts the deference we would
otherwise afford to the district court. Goggin v. Goggin, 2011 UT 76,
¶ 26, 267 P.3d 885 (“An error of law by the district court . . . would
be an abuse of discretion.”).
The district court did make two “findings” in a way that
seems to treat the “good faith” inquiry as distinct. It faulted Rocky
Ford for dismissing a claim against the Division of Water Rights—
concluding that Rocky Ford allowed this claim to be dismissed for
“no apparent reason.” And it criticized Rocky Ford for not “suing
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Opinion of the Court
all well owners and upstream users, who might be switching from
flood irrigation to sprinkler irrigation.” These “findings,” however,
are too short on detail and too disconnected from the legal standard
of “good faith” to merit deference on appeal.
This is the second basis for our decision not to defer to the
district court’s findings. We acknowledge the difficult job our
district court judges have. We recognize that the many demands on
their time make it difficult for them to always enter detailed
findings on every fact-intensive decision they may make. Detailed
findings, moreover, are not always strictly required. But a lack of
detail in a lower court’s findings will make it more difficult for us
to afford deference. When detail is lacking, we may not be able to
understand the discretion that was exercised by the court below.
And for that reason we may not be in a position to afford the level
of deference we otherwise would. Gardner v. Gardner, 2019 UT 61,
¶ 63 n.58, 452 P.3d 1134 (explaining that without detailed findings
of fact “it will be difficult for an appellate court to determine
whether the district court’s ultimate . . . determination was within
its discretion”).
This is the position in which we find ourselves here. We see
no apparent basis in the record for attributing bad faith to Rocky
Ford for dismissing a claim against the Division of Water Rights or
for declining to pursue claims against “well owners” or “upstream
users” who “might be switching from flood irrigation to sprinkler
irrigation.” Maybe Rocky Ford did lack a good reason for those
decisions. But the district court never explained how those
decisions indicated that Rocky Ford’s claims against Kents Lake
were brought in bad faith. And without some explanation on the
face of the district court’s order, we find no basis for deferring to
that determination.
With no basis for deference, we reverse the award of
attorney fees. Some of Rocky Ford’s claims have admittedly failed
on their merits. But we find no basis for a determination that Rocky
Ford filed or pursued its claims in bad faith. For that reason, we
reverse the district court’s denial of Rocky Ford’s rule 59 motion
and its award of attorney fees to Kents Lake and Beaver City.
III. CONCLUSION
We reverse in part and affirm in part on the grounds set
forth above. And we remand for further proceedings consistent
with this opinion, including proceedings aimed at clarifying the
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measurement obligations of the parties under the Beaver River
Decree.
31