Friday, April 17, 2009

Otter Creek Reservoir Co. v. New Escalante Irrigation Co.

On March 3, 2009, the Utah Supreme Court issued its opinion in the case of Otter Creek Reservoir Company v. New Escalante Irrigation Company. The case involves adverse use of water. Prior to 1939, water rights in Utah could be obtained by seven years of adverse use. In 1939, the Utah legislature passed a statute which abolished adverse use of water. However, an important question remained: Could a water right be obtained by adverse use if the seven years of adverse use began before 1939 but were not complete before 1939? This case presented the opportunity for the Utah Supreme Court to finally address the question.

The case began when Otter Creek brought suit against New Escalante, claiming that New Escalante was diverting and using water to which Otter Creek was entitled. New Escalante counterclaimed that it had a diligence claim or, in the alternative, that it had obtained right to use the water through adverse use. The district court held that New Escalante had lost its diligence right because it failed to participate in the general adjudication that resulted in the Cox Decree, which was issued in 1936. However, the district court determined that New Escalante began adversely using the water the day after the Cox Decree was issued. The court then determined that because New Escalante began its adverse use prior to 1939, its adverse use could ripen into a water right based on adverse use.

Otter Creek filed an interlocutory appeal on the limited issue on whether the district court correctly determined that if adverse use began prior to 1939, the adverse user could complete the seven years of adverse use after 1939. The Supreme Court began its analysis by discussing past dicta contained in prior opinions. The Court noted that the issue had never been squarely before the Court, resulting in dicta that appeared to support both positions. Ultimately, the Court elected to reject its previous dicta and to construe the 1939 statute based on its plain language. The Court noted that the statute provides that "no right to the use of water . . . can be acquired by adverse use or adverse possesion." The Court also noted that adverse use rights can only be acquired after the seven years of adverse use are completed. Until that time, the adverse user only has an expectation or hope of acquiring the right by adverse use. Thus, the Court determined that the seven years of adverse use must be completed before 1939. The district court's decision was reversed and the case was remanded for further proceedings.

To read the full opinion, click here.

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