What amounts to an obstruction of water rights in Utah?

What amounts to an obstruction of water rights in Utah?

What amounts to an obstruction of water rights in Utah?

In a recent case before the Utah Court of Appeals, neighboring landowners went to battle over the purported obstruction and interference of an existing water right.  In Clearwater Farms, LLC v. Giles, The appellant (“Clearwater”) contended that the lower district court erred when it rejected the appellant’s claims for damages “on the basis that [the appellee (“Gileses”)] did not cause and interference or obstruction of [the appellant’s] water rights.”  However, the court of appeals disagreed, agreeing with the district court that the appellee’s actions, including failing to cooperate with the appellant, calling the Sheriff, and posting no trespassing signs, did not constitute an obstruction under Utah law.

Clearwater and Gileses as Adjacent Landowners

Clearwater and the Gileses are adjacent landowners in an unincorporated part of Utah County near Lake Shore.  In 1996, the Gileses purchased their parcel of farmland adjacent to the Clearwater property.  Two years later, an individual named Morley, Clearwater’s predecessor, purchased a twenty-one acre parcel of farmland directly to the north of the Gileses’ property.  The next year, the Gileses subdivided their property into two separate building lots, which the Giles built a house on each of the subdivided lots.  As a condition of the subdivision approval, the Gileses were required to improve a segment of a farm lane road that cut across the Gileses land and dead-ended on Clearwater’s property.

Gileses Agree to Allow Morley to Build Pump House to Irrigate his Property

At one time, an irrigation ditch, referred to as the Morley ditch, ran along the west side of the farm lane.  Before the Gileses purchased their property, the ditch provided irrigation to the Morley property.  However, due to flooding of the Spanish Fork river and a subsequent rise in the farmland’s elevation on account of growing silt deposits, it became impossible to properly irrigate the Morley property from the ditch.  As a result of the rising elevation on the Morley property, the Gileses agreed to allow Morley to construct a pump house along-side the farm lane.  The pump house was to house an electric pump, which was attached to a six-inch pipe that would allow Morley to adequately irrigate his property.

Morley Uses Pump House Until 2003, Then Cuts Pipe and Leaves in Ditch

After agreeing to the pump house, Morley buried a six-inch pipe in the irrigation ditch, leaving only a swale to identify the pipe’s location.  Morley used the pump house to irrigate his property until 2003 when he decided that the cost of running the pump made its continued use impracticable.  In 2009, Morley cut the six-inch pipe and left it lying in the ditch, and then built an entirely new pump house on his property, complete with a diesel pump to transport water from a diversion point further north on the Spanish Fork River at a cheaper cost.  The following year, Clearwater purchased the property from Morley, as well as several other parcels of land adjacent to the Gileses’ property in order to construct a few homes.

Clearwater Seeks to Install Larger Pipe, Gileses Unwilling to Cooperate

In 2011, the neighboring landowners ran into trouble when Clearwater sought to remove the six-inch pipe from the Morley ditch and replace it with a fort-two-inch pipe.  According to the facts recounted by the court of appeals, the Gileses were not cooperative in Clearwater’s efforts to replace the six-inch pipe.  In fact, when Clearwater took the initial steps to install the larger pipe, the Gileses called local law enforcement to their property to stop any efforts to install the larger pipe.

Ultimately, the parties came to an agreement in April 2012, which agreement provided Clearwater with an easement across the Gileses’ property for utilities and water.  Even still, Clearwater claimed that, because of the delay in reaching the agreement, Clearwater was unable to irrigate its property for the 2011 growing season.  Eventually, Clearwater filed the instant suit to, among other things, recover “damages for lost crop revenue that allegedly resulted from the Gileses’ interference with, and obstruction of, Clearwater’s rights to transport water through the Morley ditch during the 2011 growing season.”

Clearwater’s Damages Claim Rejected

Following a bench trial, the lower district court rejected Clearwater’s damage claim, “conclude[ing] that Clearwater was not entitled to damages for lost crop revenue, because the Gileses had not obstructed Clearwater’s water rights.”  Clearwater subsequently appealed.

Clearwater Argues That District court Erred in Rejecting Its Damages Claim

On appeal, Clearwater claimed that “the district erred in not awarding damages against the Gileses ‘for obstructing and restricting Clearwater’s ability to improve [its] existing water easement.’”  Clearwater argued to the court of appeals that “it lost crop revenue because of the Gileses’ obstruction and interference.”  Clearwater premised its claim for damages on two Utah statutes, Utah Code Ann. §§ 73-1-15 (prohibition against obstructing a watercourse) and 73-1-7 (allows for expansion of existing canals and ditches).  Clearwater asserted that § 73-1-7 “creat[ed] its own cause of action,” which Clearwater said is “independent” of § 73-1-15.

Clearwater’s Three Theories of Obstruction

Before delving into whether the district court erred, the court of appeals recounted the facts surrounding the dispute over the ditch.  The court of appeals explained that, when Clearwater first approached the Gileses about installing the larger pipe in the ditch, the Gileses objected, stating that there “would [be] no cooperation.”  Even over the Gileses’ objection, Clearwater decided to move forward with their plans to install the larger pipe in the ditch.  At some point, the contractor hired by Clearwater to perform a gas line probe parked a track hoe in front of the abandoned pump house.  Upon a mistaken belief that the track hoe belonged to Clearwater, the Gileses called the sheriff.

After arriving at the abandoned pump house, the sheriff stated that, in his opinion, the larger pipe should not be installed until after the dispute had been resolved.  As a result, upon the sheriff’s suggestion, the Gileses placed several no trespassing signs on the pump house and “told Clearwater not to enter the pump house or make any improvements to the water delivery system.”  In response, Clearwater sought to obtain a TRO, which would allow Clearwater to proceed with the pipe installation.  But Clearwater never followed through with the “restraining order petition, because, according to Clearwater, the assigned judge was unavailable at the time.”  Clearwater never gave an explanation why they did not seek to have their petition for a TRO heard by a different judge.

Gileses’ Conduct Not an Obstruction

As it relates to § 73-1-15, Clearwater “argue[d] that the district court erred in rejecting its claim for damages under Utah Code section 73-1-15 on the basis that the Gileses did not cause an interference or obstruction of Clearwater’s water rights.”  Section 73-1-15 reads in pertinent part:

Whenever any person has a right-of-way of any established type or title for any canal or other watercourse it shall be unlawful for any person to place or maintain in place any obstruction, or change of the water flow by fence or otherwise, along or across or in such canal or watercourse, except as where said watercourse inflicts damage to private property, without first receiving written permission for the change and providing gates sufficient for the passage of the owner or owners of such canal or watercourse. That the vested rights in the established canals and watercourse shall be protected against all encroachments. That indemnifying agreements may be entered as may be just and proper by governmental agencies.

Under the language of the statute, Clearwater argued that § 73-1-15 “provides that ‘watercourse[s] shall be protected against all encroachments,’ and that ‘maintain[ing] in place any obstruction’ is a violation of the statute.”  Furthermore, Clearwater, in quoting the section liability provision, set forth that “a person who violated this section ‘is liable for damages or other relief and costs in a civil action to any person injured by that act.’”  Clearwater asserted that the Gileses’ lack of cooperation, call to the sheriff, and posting of no trespassing signs constituted an obstruction under the statute.

Clearwater Admits Gileses “Never Physically Prevented” Them from Digging Ditch or Installing Larger Pipe

At the outset of its discussion over the alleged obstruction, the court of appeals noted that Clearwater had acknowledged that the Gileses “never physically prevented Clearwater from digging a ditch or installing a pipe, and that the Gileses only verbally told Clearwater they would resist, would not allow the installation and would not cooperate.”  The district court found that the Gileses’ resistance was made up of a call to the Sheriff, and that, at no time, did the Gileses take the law into their own hands.  The district court concluded, “Simply put, [the Gileses] never placed any physical obstruction or changed the water flow along any ditch. There was no water flowing in a ditch to be interfered with.”

Trujillo v. Jenkins Explains What Constitutes an Obstruction Under the Statute

Relying in part on the Utah Supreme Court’s decision in Trujillo v. Jenkins, the court of appeals agreed with the lower district court that the Gileses’ actions did not amount to an obstruction under the statute.  In Trujillo, the supreme court was faced with the question of whether the owners of an irrigation ditch would be subject to criminal liability for constructing a fence alongside the ditch.  In explaining the meaning of § 73-1-15, the supreme court stated:

Section 73-1-15 prohibits changing the water flow or placing an obstruction along a ditch. Fencing a ditch would not necessarily violate either prohibition. First, placing a fence along a ditch would not change the ditch’s water flow. Second, fencing a ditch would not necessarily obstruct the ditch. To obstruct means to block or close up by an obstacle . . . to hinder from passage, action, or operation.

Thus, according to the supreme court, obstruction under the statute meant either a change in the ditch’s water flow or to block or close off the ditch, hindering the water’s passage through the ditch.  According to the court of appeals, “Both of [the supreme court’s] meanings imply the use of some type of a physical barrier that is actually placed in the ditch and that is in contact with the water thereby changing its flow.”

Lack of Cooperation, Calling the Sheriff, and Posting No Trespassing Signs Not an Obstruction

In the instant case, the court of appeals could not conclude that the Gileses’ actions in any way constituted an obstruction as explained in Trujillo.  As explained by the court of appeals:

Regarding the phone call to the sheriff, we cannot see how this action alone would “place or maintain in place any obstruction, or change of the water flow . . . along or across” the ditch.  Further, the Gileses’ phone call to the sheriff and his subsequent arrival did not “change the ditch’s water flow” or “block or close up by an obstacle . . . to hinder from passage.”  The Gileses merely asserted their belief that Clearwater had no right to expand the size of the pipe in the Morley ditch from six inches to forty-two inches.  And although this position was contrary to Clearwater’s assertion that it could freely exercise its water rights by expanding the circumference of the pipe, the Gileses’ recourse to the sheriff (who simply voiced his opinion that the larger pipe should not be installed until the parties’ dispute was resolved), and their installation of no-trespassing signs, may have raised a legal quandary for Clearwater, but those actions do not amount to an obstruction under the statute.  In effect, the Gileses’ actions seem more like the mere assertion of a contrary legal position.  And neither the sheriff’s opinion nor the signs “block or stop up” or “close up or close off” the waterway.  Nor did they change the waterway’s course or impede Clearwater’s access to it.”

Clearwater’s Section 73-1-7 Arguments Suffer From the Same Defects

Turning to Clearwater’s damages theory under § 73-1-7, the court of appeals determined that Clearwater’s claim under that section of the Utah Code “suffer[ed] from similar defects and our prior reasoning is equally applicable.  Clearwater argued that § 73-1-7, which allows for expansion of existing canals and ditches, “gave it the affirmative right to replace the six-inch pipe with a forty-two-inch pipe.”  However, in the view of the court of appeals:

But what Clearwater has not done on appeal is demonstrate how the Gileses’ actions—refusing to cooperate, calling law enforcement, or posting a “no trespassing” sign on the pump house—impeded it in some way from exercising “the right to use or enlarge [a] canal or ditch already constructed.”  As previously discussed, the Gileses merely asserted their belief that Clearwater had no right to expand the existing pipe in the Morley ditch to forty-two inches.  Although the Gileses’ position was contrary to Clearwater’s, the simple assertion of a position that is at odds with Clearwater’s did not stop Clearwater from asserting and exercising its rights.  Certainly Clearwater could have moved forward and exercised what it believed it had the right to do, i.e., enlarge the six-inch pipe to forty-two inches.  But as previously discussed, Clearwater was faced with a risk-benefit calculation.  And Clearwater has not persuaded us that the actions taken by the Gileses impeded it from exercising what it claims to be its right to enlarge the six-inch pipe in the Morley ditch.  Therefore, we affirm the district court’s ruling.

Only Actual Obstructions Count Under the Statute

The major takeaway from the Clearwater decision is that, in order to amount to an obstruction under the statute, there must be an actual obstruction, i.e. one which restricts the flow of water or changes its flow in some way, and not just a perceived obstruction.  Or, in other words, mere lack of cooperation, contacting law enforcement, and/or posting no trespassing signs, that does nothing to change the flow of the water, or in some way impedes the water’ flow, will not amount to an obstruction.  As the court of appeals aptly pointed, if Clearwater truly wanted to install the larger pipe, then they should have followed through on their attempt to obtain a TRO.  Because they did not, they were left in the unenviable position of arguing to the court of appeals that words and/or veiled threats amounted to an obstruction.  That they could not do.

Photo Cred.: 310sign.ca

Copyright 2016

UEP and TCWW in Fight over Short Creek Water Rights

TCWW in UEP crosshairs over Short Creek water rights

In January 2015, United Effort Plan trust (“UEP”) filed suit against Twin City Water Works (“TCWW”), alleging that for a number of years TCWW has unlawfully pumped water from UEP land without compensating UEP.  Additionally, UEP claimed that the utility was funneling revenues generated from Hildale and Colorado City residents to FLDS leaders and TCWW employees, while at the same time charging residents unreasonably high rates (i.e., $12,000 impact fee for a water meter) and providing little or no benefit to residents in return.

UEP Taken Over by State Amid Concerns About FLDS Trying to Bankrupt UEP

The UEP was formed decades ago by FLDS church leaders seeking to manage residents’ “consecrated” properties under a communal system, but Utah’s court system took over the management of the UEP a decade ago amid concerns that FLDS leaders were defaulting on their responsibility to defend trust members’ holdings and driving the trust toward insolvency.  The state’s management of the UEP trust created a situation where FLDS members have been pitted against the trust they had established in an ongoing adversarial relationship.

UEP’s Lawsuit Seeks Control of Water Distributed From UEP Land

UEP’s lawsuit seeks control of the water distributed from UEP owned land, as well as back payment for water taken from the land without compensation to UEP.  It has been alleged that TCWW earned and disbursed more than $4.3 million between 2002 and 2009, none of which was paid to UEP, and that $1.7 million of that was diverted for purposes wholly unrelated to TCWW.  UEP also seeks to have the court put in place a new system of water distribution management to ensure that TCWW is not allowed to take water from UEP land without providing compensation in the future.

Judge Westfall Takes Question of Who Should Control Short Creek Water Rights Under Advisement

The question of who will control the water rights in the Short Creek area is now in the hands of Fifth District Judge G. Michael Westfall.  Late last month, after accepting an agreement between TCWW and UEP, which resolved a number of the issues regarding water rights in the border towns of Hildale and Colorado City, Judge Westfall took under advisement arguments over who has the right to control the water in the neighboring municipalities.

Over the objection of TCWW, Judge Westfall agreed with UEP, ruling that the Fifth District had jurisdictional authority to decide who has control over the water on the Arizona side of the border.  TCWW had argued to Judge Westfall that a Mohave County (Arizona) court should decide the issue, but Judge Westfall disagreed.  As a result, for now, the fate of the water on the Arizona side of the border lies in the hands of a Utah judge.

UEP Argues Its Ownership of the Land Gives it Right to Control Water

In support of its argument that it is entitled to control the water between Hildale and Colorado City, UEP attorney, William Walker, argued that, on account of the fact that UEP owns the land, the law gives UEP sole control over collecting underground water through a “right of fiduciary” and to control surface water via existing property rights.

TCWW Compares Easement to Hunting Permits

In response, James Spendlove, the attorney for the TCWW utility, compared access to underground water to a hunting permit, arguing that, so long as an individual has a permit to hunt animals and is allowed to be on the land, then that person has the right to kill and take the animal and benefit from the meat without having to give the meat back.  Spendlove told the court that UEP granted TCWW an easement some forty years ago to allow TCWW to place its well equipment on UEP’s land and draw water from the ground under the land.  Spendlove also noted that TCWW has an Arizona permit for it well operations.

UEP Says Easement Granted Access Only

UEP replied that the easement granted to TCWW gave the utility access to the water, but it did not vest any control over the water rights in TCWW.  According to UEP, such rights would have to be conveyed in a separate document, and that TCWW rejected the idea of easement rights to the water, alleging that TCWW had the right to take the water by way of “unrecorded leases.”  TCWW has been unable to produce these alleged “unrecorded leases,” UEP told the court.

UEP’s Suit One of Many Legal Woes for TCWW

Judge Westfall has not given a timetable for his decision.  Even still, the battle over the water rights in Hildale and Colorado City is not the only legal trouble the TCWW has had to face over the last year or so.

Utah AG’s Office Sues TCWW Over Illicit Funding of FLDS Church

In March 2015, the Utah Attorney General’s Office filed a lawsuit against TCWW, which asked Washington County, Utah’s Fifth District Court to close down the utility.  The lawsuit was filed as part of the efforts to disrupt the allegedly illicit funding of the FLDS church.  According to the complaint: “The officers of (Twin City Water Works) are not properly discharging their duties, have no knowledge of the operations of the nonprofit corporation, and appear incapable of ensuring that the nonprofit properly uses its revenue to improve, maintain, and expand the TCWW water system.”

“The TCWW water system is in very poor condition, and it appears that little revenue, if any, has been used for the maintenance, expansion, or development of the TCWW water delivery system,” the attorney general’s complaint summarizes.

Willie Jessop Sues TCWW Seeking to Tie Utility to FLDS Church

Just one month later, Hildale businessman and former security representative for the FLDS church, Willie Jessop, filed his own suit against TCWW, seeking to tie the utility to the FLDS church, which owes Jessop approximately $30 million dollars by way of a default judgment entered against the church in 2012.

TCWW Pleads Guilty to Tax Evasion

The TCWW utility also pleaded guilty to tax evasion last year, acknowledging it had failed to pay corporate tax on income of $112,634 per year between 1996 and 2013.  The plea agreement stated the company owed $147,624.61 in back taxes, plus another $223,000 in interest and penalties.

No Water Without Compensation

While it remains to be seen what Judge Westfall will decide as it relates to water rights in the Short Creek Area, it is clear that the UEP wants a new system put in place to ensure TCWW cannot remove water from UEP land without compensating UEP.  Like others suing the utility, UEP appears increasingly concerned that revenues generated by TCWW are neither being paid to UEP nor are being used to maintain the TCWW water system.  Instead, those funds appear to be lining the pockets of FLDS leaders and TCWW employees.

Hildale/Colorado City Residents Real Losers in Water Rights Dispute

Beyond UEP, the big losers in the battle over water rights in the Short Creek area are the residents in Hildale and Colorado City that are being victimized via unreasonably high rates charged by TCWW.  Hildale instituted a steep hike in impact fees for water services in March 2015.  UEP employees said the hike in impact fees frustrated efforts to sell some vacant lots without water and sewer at an auction earlier in the month.

Another issue affecting the auction was the cost of constructing an 8-inch water main to some of the properties.  “The city is telling them these lots will not be served until we get an 8-inch main to serve the entire area because we can’t just take 1-inch, 2-inch lines off of a 1-inch, 2-inch line,” UEP employee Jethro Barlow said.  UEP attorney Jeff Barlow said a problem with the requirement is Hildale is asking each resident to pay for the entire stretch of pipe to their property, so at $25,000 per block, a resident four blocks from the access point would pay $100,000. So would any other residents within the 4-block area, he said.

* Photo Cred.: sltrib.com

Copyright 2016