Little Big Warm Ranch, LLC v. Doll

400 Mont. 536

469 P.3d 689

2020 MT 198

LITTLE BIG WARM RANCH, LLC, Claimant and Appellant,

v.Cheri L. DOLL; Wilfred L. Doll, Richard E. Gilmore; Richard E. Gilmore, Jr.; and Julie M. Gilmore, Claimants and Appellees.

DA 19-0661

Supreme Court of Montana.

Submitted on Briefs: June 3, 2020

Decided: August 11, 2020

For Appellant: Hertha L. Lund, Christopher T. Scoones, Lund Law, PLLC, Bozeman, Montana

For Appellees: Monica J. Tranel, Tranel Law Firm, P.C., Missoula, Montana, Ross D. Miller, Miller Law, PLLC, Missoula, Montana

Justice Laurie McKinnon delivered the Opinion of the Court.

¶1 Little Big Warm Ranch, LLC (LBWR) appeals from the Water Court's Final Order issued September 17, 2019. We affirm.

¶2 We restate the issues presented on appeal as follows:

1. Did the Water Court err by finding no ambiguity in the deed language conveying portions of the Phillips Ranch from Drum to Knudsen, Norman, and Springdale Colony?

2. Did the Water Court err by allocating the Sieben/Ester and Marshall/Mercer decreed rights on a pro-rata basis to account for the parties’ historic use?

3. Did the Water Court err in its determination of the amount of water allocated to the Dolls, thereby warranting a grant of relief to LBWR under M. R. Civ. P. 60(b)(2) and (6) ?

FACTUAL BACKGROUND

¶3 This case involves six water right claims on Big Warm Creek,¹ located south of Malta, Montana, in Phillips County. Phillips County takes its namesake from B.D. Phillips (Phillips), who arrived on Big Warm Creek in the late 1800s and thereafter assembled a large ranch south of Malta. The six water rights at issue were claimed on three ranches presently owned by LBWR, Willie and Cheri Doll (Dolls), and the Gilmore family (Gilmores), which were all once part of the larger Phillips Ranch. Big Warm Creek rises on the north side of the Little Rocky Mountains east of Lodge Pole, Montana, and from its headwaters winds northeast to land owned by the Gilmores. From there, Big Warm Creek flows east through land owned by LBWR. After crossing Highway 191, it flows north through land owned by the Dolls.

¶4 The basis for the six claims at issue originates from two historical water rights, named for predecessors of Phillips who filed notices of appropriation (NOAs) in the late 1800s. Those two original water rights were decreed in District Court by an order issued November 11, 1898, in Ben D. Phillips et al. v. R.J. Coburn et al. , Case No. 1298 (Tenth Judicial District Court, Choteau County, Nov. 11, 1898) [hereinafter, Phillips v. Coburn decree]. The Phillips v. Coburn decree awarded Henry Sieben and Henry Ester a right for 500 miner's inches (MI), diverted from Big Warm Creek through the Sieben-Ester Ditch, with a priority date of September 25, 1889 (known as the Sieben/Ester right).² Henry Marshall and John Mercer were awarded a right for 300 MI, diverted from Big Warm Creek through the Marshall-Mercer Ditch, with a priority date of October 1, 1889 (known as the Marshall/Mercer right).³

Historical Use of the Sieben/Ester and Marshall/Mercer Rights

¶5 At the time of the Phillips v. Coburn decree, Sieben owned 640 acres in Sections 11, 13, and 14, Township 27 North (T27N), Range 27 East (R27E). The location of Sieben's land corresponds roughly with the place of use for LBWR's claimed water rights. Sieben conveyed his land and water rights to Phillips on November 26, 1900. Prior to Sieben's conveyance to Phillips, Sieben used his share of the Sieben/Ester right on lands now belonging to LBWR. Ester owned lands in Sections 14, 15, and 16, T27N, R27E, which corresponds roughly with the western portion of LBWR's place of use and with the Gilmores’ place of use. Ester conveyed his land and his half of the Sieben/Ester right to Phillips on May 5, 1897, prior to the Phillips v. Coburn decree issuance. Ester used his share of water on lands now belonging to the Gilmores and LBWR. Marshall owned 160 acres in the E2NE of Section 8 and the W2NW of Section 9, T27N, Range 28 East (R28E). Marshall conveyed this property to Phillips on June 5, 1895. The Dolls now own the property sold by Marshall to Phillips. Marshall used his share of water on land now belonging to the Dolls.

¶6 Phillips used a complex and impressive network of ditches and reservoirs to divert, impound, and use water from Big Warm Creek. He diverted the Sieben/Ester and Marshall/Mercer decreed rights through the Sieben-Ester Ditch and impounded them in both Ester and Wild Horse Reservoirs. He also diverted the rights further downstream out of Big Warm Creek using the system of ditches on land presently held by the Dolls in Sections 8, 9, and 10. Documents submitted and made part of the claim files for the six claims at issue indicate that Phillips commingled the water from the Sieben/Ester and Marshall/Mercer decreed rights and used them to irrigate large swaths of his ranch, including lands now owned by the Gilmores, LBWR, and the Dolls.⁴

Statewide Adjudication and the Status of Claims 40M 37015-00, 40M 37027-00, 40M 186463-00, 40M 186464-00, 40M 168752-00, and 40M 168765-00

¶7 In 1944, the Phillips family sold the home ranch, later renamed the KRM Ranch. David Drum (Drum) eventually acquired KRM Ranch and sold portions of it to Lloyd Knudsen (Knudsen) (predecessor to LBWR), Wayne Norman (Norman) (predecessor to the Gilmores), and William French (French) in 1975.⁵ Drum also sold an additional portion to Springdale Colony, Inc. (Springdale Colony) (predecessor to the Dolls), in 1976. The Dolls own what was originally the Phillips family's home ranch and later became the headquarters for KRM Ranch.

¶8 Under the statewide adjudication, the predecessors of the Gilmores, LBWR, and the Dolls filed claims for water from Big Warm Creek. Those claims include: 37015-00 and 37027-00, each filed by Norman, now held by the Gilmores; 186463-00 and 186464-00, each filed by Knudsen, now held by LBWR; and 168752-00 and 168765-00, each filed by the Dolls’ immediate predecessors, the Schafers, now held by the Dolls.⁶ The background information for these claims, including their historical bases, is discussed below.

¶9 Claim 37015-00 was for stockwater, and claim 37027-00 was for irrigation. Both claims were based on the Sieben/Ester NOA and claimed priority dates of June 10, 1897.⁷ Claim 37027-00 did not specify a flow rate and was based on runoff. In the initial claim filing, both claims listed points of diversion in Section 16, where the majority of Ester Reservoir is located, rather than the Sieben-Ester Ditch which is used to fill Ester Reservoir. Norman filed an amendment to claim 37027-00 on July 12, 1983, to change the point of diversion from Ester Reservoir in Section 16 to the Sieben-Ester Ditch in Section 20. The record indicates that Norman intended the Phillips v. Coburn decree to act as the basis for claim 37027-00, as Norman attached the decree to his amended claim, changed the claim's flow rate from runoff to 800 MI (the combined flow rate of the Sieben/Ester right (500 MI) and the Marshall/Mercer right (300 MI)), and changed the priority date to September 25, 1889 (the priority date assigned to the Sieben/Ester right in the Phillips v. Coburn decree).

¶10 Claims 186463-00 and 186464-00 are irrigation claims originally filed by Knudsen, now owned by LBWR. Claim 186463-00 was listed as a filed right for 1,000 MI from Big Warm Creek with the Sieben-Ester Ditch in the SE of Section 20 as the point of diversion and a priority date of August 2, 1889. Knudsen attached a copy of the Sieben/Ester NOA to claim 186463-00. Although the amount claimed in the Sieben/Ester NOA matched the flow rate of claim 186463-00 (1,000 MI), the priority date of claim 186463-00 did not match the July 14, 1889 priority date listed in the Sieben/Ester NOA. As to claim 186464-00, the record shows that Knudsen was unsure of its basis. Knudsen attached multiple documents with conflicting information and did not rely on any one specific document to support the elements in claim 186464-00, which listed Big Warm Creek as its source and the Sieben-Ester Ditch in the SE of Section 20 as its point of diversion. Knudsen attached a copy of the Sieben/Ester NOA; described the claim as a filed right rather than a decreed right; listed the priority date as August 2, 1889 (in contradiction to the Sieben/Ester NOA priority date of July 14, 1889); and claimed 800 MI (the combined flow rates of the Sieben/Ester and Marshall/Mercer decreed rights), the same flow rate listed in Norman claim 37027-00. In 1994, Knudsen amended claims 186463-00 and 186464-00 by reducing the acreage irrigated to 560 acres each.

¶11 Claims 168752-00 and 168765-00 were filed by the Schafers and are presently held by the Dolls. Claim 168752-00 was originally for stockwater, with an October 5, 1900 priority date. The Dolls amended this priority date to August 5, 1889, based on the Marshall/Mercer NOA. Claim 168765-00 is an irrigation right, originally filed for 600 MI with a June 29, 1973 priority date. It was based on an NOA filed by Drum, predecessor-in-interest to the Schafers. Like Knudsen's claims, there was inconsistency between the elements claimed and the documents attached in support of claim 168765-00. Those contradictory documents included: an affidavit by Iven Blatter, who worked on the Phillips/KRM Ranch; a 1975 Water Rights Agreement between Drum, Knudsen, and Norman; and the Marshall/Mercer NOA. In 1995, the Dolls amended claim 168765-00 to reflect the Marshall/Mercer right as awarded in the Phillips v. Coburn decree, reducing the flow rate to 300 MI.

¶12 The Preliminary Decree for Basin 40M was issued on March 20, 2009, incorporating the amendments made by the parties prior to its issuance, reflecting: (1) the Gilmores’ claims for a stockwater right (claim 37015-00) and both the Sieben/Ester and Marshall/Mercer decreed rights (represented by claim 37027-00); (2) LBWR's claims for 1,000 MI based on the Sieben/Ester NOA (claim 186463-00) and both the Sieben/Ester and Marshall/Mercer...