Saturday, October 22, 2016

Little Cottonwood Tanner Ditch Co. v. Sandy City

The Utah Supreme Court recently issued its opinion in the case of Little Cottonwood Tanner Ditch Co. v. Sandy City. The opinion addresses the important issue of when and under what circumstances a water decree can be modified by a court.

The facts of this case go back almost 140 years. In 1878, the several railroad companies entered into an agreement with five ditch companies to acquire water from Little Cottonwood Creek. Under the agreement, the railroads were given the right to use one-tenth of the water in the Creek in exchange for a payment of $25 per month. The railroads' interest in the agreement were later assigned to Salt Lake County Water Company (SLCWC). In 1902, a general adjudication of Little Cottonwood Creek was initiated in court. In 1910, the court issued its final decree adjudicating the water rights, which is commonly referred to as Little Cottonwood Morse Decree. As part of the Decree, the court terminated the 1878 agreement and replaced it with a provision that required SLCWC to pay $75 per month to the five ditch companies in exchange for the right to use one-tenth of the ditch companies' water from the Creek.

In later years, SLCWC's interest was conveyed to Sandy City and Sandy Irrigation Company (Sandy). Because the Decree did not include any provisions for the payment to increase based on inflation or increased water value, Sandy continued to pay $75 per month for the water for more than 100 years. In 2013, three of the ditch companies (Little Cottonwood Tanner Ditch Company, Richards Irrigation Company, and Walker Ditch Company) sought to increase the payment amount. These ditch companies filed a motion with the district court to modify the payment provision contained in the Decree. The district court concluded that it did not have the authority to re-open the Decree, and therefore denied the motion. The ditch companies then appealed the decision to the Utah Supreme Court.

The canal companies asserted that prior Utah Supreme Court decisions had created a common-law rule that permitted the Decree to be re-opened and the payment provision to be modified. The Court reviewed these prior decisions, beginning with Orderville Irrigation Co. v. Glendale Irrigation Co. This case acknowledged that a water decree is not "the usual type of judgment" and that a court "has continuing jurisdiction, when properly invoked, to see its provisions are being complied with" and when "there are uncertainties in the decree which give genuine dispute as to the rights of the parties concerning the use of such waters." The Court determined that these principles enunciated in Orderville are limited to asking a court to enforce a water decree, and do not include or permit a party to ask a court to modify or change any term of a water decree.

The Court also looked at the Salt Lake City v. Salt Lake City Water & Electric Power Co. case. In this case, the parties sought court action to resolve disputes that had arisen regarding how the parties paid of operation of pumps pursuant to a prior water decree. The decision noted that if "conditions requiring it have arisen that can be established by proper evidence, the lower court has ample power to modify the decree so as to reflect equity and justice under all circumstances to all the water users." The Court again distinguished this language and determined that it only applied to water infrastructure and not to water rights and water use.

After distinguishing these two cases, the Court then reviewed the language of the Decree and determined that the Decree language did not specifically provide for the district court's continuing jurisdiction over the Decree, such that the court could re-open the Decree and modify the payment provision. Accordingly, the Court concluded that the district court had properly dismissed the ditch companies' motion to amend the Decree. The Court did note, however, that there may be other procedural paths that the ditch companies could pursue to invoke the district court's jurisdiction, such as initiating a separate legal action for contract reformation.

To read the full text of the opinion, click here.

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