Little Big Warm Ranch, LLC v. Doll

541 P.3d 104

LITTLE BIG WARM RANCH, LLC and Mark French, Plaintiffs, Appellants, and Cross-Appellees,

v.Wilfred L. DOLL, Defendant, Appellee, and Cross-Appellant,Brian Robinson, Defendant.

DA 22-0742

Supreme Court of Montana.

Argued and Submitted: October 18, 2023

Decided: January 9, 2024

For Appellants: Hertha L. Lund (argued), Peter B. Taylor, Lund Law, PLLC, Bozeman, Montana

For Appellee: Monica J. Tranel (argued), Ross D. Miller, Tranel Law Firm, P.C., Missoula, Montana

Chief Justice Mike McGrath delivered the Opinion of the Court.

¶1 Little Big Warm Ranch, LLC (LBWR) appeals an adverse District Court order enforcing a Water Court decree for Big Warm Creek in Phillips County. Wilfred Doll (Doll) cross-appeals an adverse ruling denying attorney fees. We affirmed the Water Court's decree, Final Order 40M-400, in Little Big Warm Ranch, LLC v. Doll , 2020 MT 198, 400 Mont. 536, 469 P.3d 689 ( Doll I ). We now affirm the District Court's enforcement order and denial of attorney fees.

¶2 We restate the issues on appeal as follows:

Issue One: Did the District Court erroneously enforce pro rata shares of Water Court-decreed water rights on a percent, rather than flow rate, basis?

Issue Two: Did the District Court erroneously deny Doll attorney fees?

FACTUAL AND PROCEDURAL BACKGROUND

¶3 This case involves four of the six water rights that were at issue in Doll I. The contentious history between LBWR and Doll stems from a series of land sales that resulted in unique water rights that are co-equal in seniority because they share a priority date. The full history and background of the water rights are detailed in Doll I , thus we recount only the relevant details here.

¶4 In the late 1800s, B.D. Phillips comingled two decreed water rights from Big Warm Creek (the Creek), conveying them through a complex irrigation network on his large ranch east of the Little Rocky Mountains and Lodge Pole, Montana. Between the mid and late 1900s, the ranch was divided into three properties. As the Water Court determined in Final Order 40M-400 and we affirmed in Doll I , the water rights appurtenant to each property transferred with their corresponding deeds. Doll I , ¶¶ 17-19, 28-37. The three properties are now owned by Doll, LBWR, and the Gilmore family (Gilmores). The Gilmores are not a party to this appeal. The water rights at issue are Doll's rights: 40M 168765 and 40M 30122575; and LBWR's rights: 40M 186463 and 40M 186464.

¶5 When Phillips comingled the two original water rights to irrigate his ranch, he created unique points of diversion, one of which has considerable bearing on this dispute. The Creek flows northeast through a headgate (Ester Headgate) that, oddly, completely crosses the stream in Section 20, T27N, R27E.¹ During certain times of year, the Ester Headgate may be partially or fully closed so that water pools behind it and flows into the Ester Ditch a short distance upstream. When water is abundant, flow in the Creek is sufficient to fill Ester Ditch without closing the Ester Headgate.

¶6 Ester Ditch conveys Big Warm Creek water into Ester Reservoir in Section 16, T27N, R27E, from which LBWR draws its full share of both water rights, and from which Doll may draw both of his irrigation rights if he chooses. Except for November through January, when the Ester Headgate is closed and Ester Reservoir is filled, some water generally remains instream. The Creek first passes LBWR's property and places of use in Sections 11, 13, 14, and 18, T27N, R27E. Northeast of LBWR's property, the Creek eventually passes by Doll's property in Sections 8, 9, and 10, T27N, R27E. Doll has a headgate in each of those three Sections that he may use for irrigation.

¶7 Significantly, water can trace two different paths to get to Doll's headgates in Sections 8, 9, and 10. The most direct route, as mentioned, is to pass beneath the Ester Headgate and remain instream. The more circuitous route is via Ester Ditch and Ester Reservoir. When Ester Reservoir overflows, it drains water into Spring Coulee to fill Wild Horse Reservoir, which in turn releases back into Spring Coulee and continues downstream to rejoin the Creek and pass through Sections 8, 9, and 10.

¶8 Normally, there is sufficient water in the Creek year-round to satisfy both LBWR's and Doll's rights. During periods of drought and low flow, Doll prefers to leave his share instream until it reaches his downstream points of diversion. When there is a water shortage, however, leaving water instream can have the collateral effect of draining Ester Ditch, thereby depleting Ester Reservoir and LBWR's total appropriation.

¶9 Contrary to a typical water-rights dispute, where a senior appropriator could "call" on a junior to decrease or curtail his use during periods of low flow, LBWR and Doll may not call on each other because their rights are coequal in priority.² LBWR maintains that, rather than leaving water instream to pass through the Ester Headgate, the headgate should remain closed, and Doll should be forced to use the non-preferred route to carry water to his downstream points of diversion.

¶10 This case thus arose when LBWR filed a September 2018 complaint before the District Court, Cause No. DV-18-30, alleging Doll interfered with its water rights by opening and locking the Ester Headgate. Following a September 19, 2018 hearing, the District Court reinstated Brian Robinson as Water Commissioner and certified the case to the Water Court to adjudicate the rights. Doll subsequently counterclaimed based on a 2014 Settlement Agreement, and the counterclaims were dismissed on summary judgment. The Water Court issued Final Order 40M-400 on September 17, 2019.

¶11 In Final Order 40M-400, the Water Court "used the most appropriate method available to allocate the flow rate of the [ ] rights, based on the amount of irrigated acreage occurring on each claimant's property." Doll I , ¶ 41. The Water Court established that, based on historical use and irrigated acreage, Doll, LBWR, and the Gilmores were entitled to pro rata shares of 62.17%, 22.46%, and 15.36% of the water in the Creek, respectively. The Water Court extrapolated the percent shares, finding the Dolls were entitled to a total of 12.43 cubic feet per second (CFS) for irrigation under rights 40M 168765 and 40M 30122575; and that LBWR was entitled to a total of 4.49 CFS for irrigation under rights 40M 186463 and 40M 186464. LBWR appealed Final Order 40M-400, arguing a 1975 Agreement (1975 Agreement or Agreement) between their predecessors-in-interest governed the water rights at issue in that case. We affirmed the Water Court's adjudication on August 11, 2020. Doll I , ¶ 1.

¶12 On July 16, 2021, LBWR filed a dissatisfied water user complaint under a new cause number, DV-21-34. LBWR again asked for declaratory judgment that Doll was bound by the 1975 Agreement, and accordingly, that Ester Reservoir must be filled before satisfying any other water rights. Although the complaint added Robinson as a party and requested additional relief, the claim involving the 1975 Agreement was essentially the same as the claim filed under DV-18-30, which had been dismissed with prejudice as a result of our decision in Doll I .³ Doll counterclaimed based on a 2014 settlement agreement entered into between Doll and a third party. The District Court dismissed Doll's counterclaims with prejudice as well.

¶13 Commissioner Robinson closed the headgate on July 23, 2021. In response, on July 28, 2021, Doll filed a motion in DV-18-30 requesting a District Court order directing Robinson to open the headgate. The District Court issued its Emergency Order to Open Headgate the following day, which Robinson carried out. LBWR filed a motion to quash in response.

¶14 Cases DV-18-30 and DV-21-34 were consolidated on October 14, 2021, and the District Court entered its Order Directing Administration of Water Rights on Big Warm Creek the same day, enforcing the decreed rights in Final Order 40M-400. On September 15, 2022, Doll filed a motion for attorney fees, which was subsequently denied. LBWR and Doll stipulated to dismiss the case on all but two remaining claims: LBWR reserved the right to appeal the District Court enforcement order, and Doll reserved the right to appeal the District Court's denial of attorney fees.

¶15 LBWR appeals the enforcement order here, arguing the District Court exceeded the scope of its authority when it decided to pro rate LBWR's and Doll's shares on a percent rather than flow rate basis. Doll appeals the District Court's refusal to award attorney fees, arguing the District Court abused its discretion when it determined Doll was not entitled to fees because he was not a "prevailing party" under Montana law.

STANDARD OF REVIEW

¶16 A district court's conclusions of law regarding a dissatisfied water user's complaint are reviewed for correctness. Eldorado Coop Canal Co. v. Hoge , 2016 MT 145, ¶ 9, 383 Mont. 523, 373 P.3d 836 ( Eldorado I ) (citation omitted).

¶17 Likewise, we review a district court's determination about whether legal authority exists to award attorney fees for correctness. Havre Daily News, LLC v. City of Havre , 2006 MT 215, ¶ 11, 333 Mont. 331, 142 P.3d 864 (citations omitted). When legal authority to award fees exists, we review a district court decision denying them for an abuse of discretion. Heringer v. Barnegat Dev. Grp., LLC , 2021 MT 100, ¶ 14, 404 Mont. 89, 485 P.3d 731 (citation omitted).

DISCUSSION

¶18 Issue One: Did the District Court erroneously enforce pro rata shares of Water Court-decreed water rights on a percent, rather than flow rate, basis?

¶19 The District Court did not err in ordering the administration of Big Warm Creek water rights on a percent basis. The District Court correctly interpreted the Water Court Decree and patterns of historical use in ruling that a percent allocation is best suited for the rights in Big Warm Creek.

¶20 Article IX, Section 3(4), of the Montana Constitution directs the Legislature to "provide...