Opinion
No. 2 CA-CV 2018-0102 No. 2 CA-CV 2019-0012 (Consolidated)
02-05-2020
SWEETIE K, LLC, A WYOMING LIMITED LIABILITY COMPANY, Plaintiff/Appellant, v. DAVID OWENS; DAVID J. WEST; EAST VERDE RIVER MCLACHLAN DITCH USERS LLC, AN ARIZONA LIMITED LIABILITY COMPANY; ROBERT K. MITCHELL AND ANGELA J. MITCHELL, HUSBAND AND WIFE, Defendants/Appellees. EAST VERDE RIVER MCLACHLAN DITCH USERS LLC, AN ARIZONA LIMITED LIABILITY COMPANY; DAVID J. WEST; RIVERS EDGE PAYSON LLC, AN ARIZONA LIMITED LIABILITY COMPANY; DAVID J. WEST, AS TRUSTEE OF THE WEST REVOCABLE TRUST ESTABLISHED JULY 10, 1998, Plaintiffs/Appellees v. SWEETIE K, LLC, A WYOMING LIMITED LIABILITY COMPANY, Defendant/Appellant.
COUNSEL Moyes Sellers & Hendricks, Phoenix By Steve L. Wene and Joshua T. Greer Counsel for Plaintiff/Appellant Harper Law Offices PC, Payson By Michael J. Harper Counsel for Defendants/Appellees
THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED BY APPLICABLE RULES.
NOT FOR PUBLICATION
See Ariz. R. Sup. Ct. 111(c)(1); Ariz. R. Civ. App. P. 28(a)(1), (f). Appeal from the Superior Court in Gila County
Nos. CV201500121 and CV201700102
The Honorable Timothy M. Wright, Judge
AFFIRMED
COUNSEL Moyes Sellers & Hendricks, Phoenix
By Steve L. Wene and Joshua T. Greer
Counsel for Plaintiff/Appellant Harper Law Offices PC, Payson
By Michael J. Harper
Counsel for Defendants/Appellees
MEMORANDUM DECISION
Judge Brearcliffe authored the decision of the Court, in which Presiding Judge Staring and Chief Judge Vásquez concurred. BREARCLIFFE, Judge:
¶1 Sweetie K LLC appeals from the trial court's grants of summary judgment for David Owens and David J. West, and for Robert K. and Angela J. Mitchell, and East Verde River McLachlan Ditch Users EVRMDU LLC (EVRMDU). This dispute is, essentially, over the relative rights of the parties to water from the East Verde River conveyed through a ditch that carries the water across several parcels of land owned by various persons and entities.
¶2 Sweetie K filed suit against users and potential users of the water from the ditch, including the appellees here, asserting its exclusive property right to both the ditch and water. The trial court granted summary judgment for the appellees because Sweetie K failed to raise a genuine issue of material fact as to its exclusive right either to the ditch or to the water within it. Sweetie K contends that it presented sufficient evidence of its right to the ditch and the water as against the appellees to defeat summary judgment. We affirm.
Factual and Procedural Background
¶3 We view the evidence and all reasonable inferences therefrom in the light most favorable to the party opposing the motion for summary judgment. Andrews v. Blake, 205 Ariz. 236, ¶ 12 (2003). In the early twentieth century, William McLachlan acquired a homestead patent for 160 acres of land in Gila County, which was later divided, creating the Verde Glen 3 subdivision. From the East Verde River, which borders the east side of Verde Glen 3, a head gate diverts water into an irrigation ditch. The ditch runs south, crossing over federal land controlled by the United States Forest Service, and then through several privately-owned parcels, the first of which is owned by West. It then continues south through property owned by EVRMDU, turns west through Verde Glen Home Owner's Association (VGHOA) property, continues south and southeast through a non-party property, enters Sweetie K's property for the first time, and then finally exits through another non-party property spilling its water back into the East Verde River.
¶4 In 2000, John and Betty Kerr, from whom Sweetie K acquired its land, obtained an easement from the Forest Service "for occupancy with water conveyance system facilities of land . . . enclos[ed] [within] 0.2820 acres of National Forest System Land." The easement "authorizes only the right-of-way and water conveyance system facilities," and did not "authorize extensions or enlargements of the water conveyance system." The easement is fully transferable, requiring the holder to notify the Forest Service within sixty days of any change in ownership. Additionally, the easement is non-exclusive, giving the Forest Service the right to permit others to use the easement "provided such use does not unreasonably interfere with the rights and privileges hereby authorized."
There is no evidence in the record that the Kerrs ever transferred the easement to Sweetie K or notified the Forest Service of the change of ownership.
2006 Litigation
¶5 In 2006, the Kerrs and Verde Glen Property Owners Association (VGPOA) filed a lawsuit in the Gila County Superior Court against David West (and others who are not parties to this appeal) alleging trespass and wrongful taking of water and seeking declaratory relief. In its ruling issued in 2008, granting a cross-motion for summary judgment in favor of the plaintiffs ("the 2008 Ruling"), the trial court found, based on the undisputed facts before it, that:
Sweetie K, in its opening brief, repeatedly cites to its Statement of Facts regarding a motion for summary judgment made by a party who is not a party to this appeal and which is not the subject of this appeal. As such, Sweetie K has not properly supported its brief with citations to the record before the trial court. Ariz. R. Civ. App. P. 13(a)(7)(A) (requiring appellants to provide "citations . . . to the portions of the record on which the appellant relies"). While facts drawn from the record as a whole will be presented in this decision for a better understanding of the matter, our disposition will not be based on facts that were not presented to the trial court by the motions for summary judgment challenged in the instant appeal. Tilley v. Delci, 220 Ariz. 233, ¶ 10 (App. 2009).
The Kerrs operate and maintain the ditch under a watering system easement granted by the government for use of Forest Service land. This permit authorizes only the Kerrs to operate and maintain the Kerr Ditch as it existed on October 21, 1976; extensions or enlargements of the ditch are not authorized. Defendants do not have permission from the Forest Service to use forest land to divert and carry water through the Kerr ditch.And that:
Defendants entered upon Plaintiff[']s property, constructed facilities to alter the Kerr Ditch, and were prepared to take water from the ditch even though Plaintiffs denied them permission to do so. Plaintiffs asked Defendants to remove their irrigation works and to restore the Kerr Ditch and Association property to its original condition. Defendants refuse to do so.
¶6 As the trial court noted, the defendants argued that they had the right "to appropriate water from the East Verde [River] even if they need to cross Plaintiffs' property to access and transport the water" because a common predecessor in interest held water rights that benefitted their property. They also asserted that case law gave "them the right to enter and use property of others without consent in order to get water." The court acknowledged case law barring interference by landowners with the extraction of water by those with priority beneficial water rights. Nonetheless, it concluded that the case law did "not give anyone the right to use someone else's ditch . . . . Defendants just do not have any right to use . . . Plaintiffs' property, the Kerr Ditch."
Current Litigation
¶7 In 2013, the Kerrs sold their Verde Glen property to Sweetie K. In June 2015, Sweetie K filed a complaint against Richard and Judith Caron, Owens, and West, alleging trespass, conversion, and intentional interference with contract, and seeking declaratory and injunctive relief. In December 2015, Sweetie K amended that complaint adding the Mitchells as defendants, and did so again in April 2017, adding EVRMDU as a defendant. In March 2017, the trial court granted the Carons' motion for summary judgment, dismissing them from the action, which ruling we upheld in a separate appeal. Sweetie K LLC v. Caron, No. 2 CA-CV 2017-0108 (Ariz. App. Feb. 14, 2018) (mem. decision).
¶8 At that time, the subject irrigation ditch carried water to several property owners, some of whom have their own easements from the Forest Service, including West and the Mitchells. Between 2013 and 2014, West and Owens built a pipeline to retrieve water from the ditch on EVRMDU land, in order to distribute water to other properties in Verde Glen 3 by pipeline. The pipeline crosses the Mitchells' parcel, with Robert Mitchell's express permission.
We do not find in the record any showing that EVRMDU holds a Forest Service easement; however, the parties do not dispute that it holds one.
Mitchells' and Owens' Motion for Partial Summary Judgment
¶9 In October 2016, the Mitchells and Owens filed a motion for partial summary judgment on Sweetie K's claims. In that motion, the Mitchells and Owens sought a ruling that they were not bound by the findings in the 2008 Ruling under the doctrine of collateral estoppel given that they were not parties to that litigation and that the facts and legal issues in that action were different. In its response to the motion, Sweetie K stated that it was not contending that the Mitchells and Owens were bound by the 2008 Ruling but only that it bound the Carons and West. To that end, Sweetie K stated that it did "not object to the Court entering an order to confirm its rulings in the [2006 litigation] do not bind" the Mitchells and Owens. Consequently, the trial court entered such a ruling, granting the motion, determining that, "because the moving Defendants [including the Mitchells and Owens] were not parties to [the 2006 litigation], any orders in that case are not binding upon them." This ruling was not appealed.
Appellees' Motions for Summary Judgment
¶10 Thereafter, in May 2017, West and Owens filed a motion for summary judgment asserting, in salient part, that Sweetie K had not and could not present evidence of its exclusive ownership of the ditch or its authority to bar others from extracting East Verde River water from the ditch. Absent that authority, they asserted, Sweetie K could not sustain and prevail on its claims.
¶11 In the motion, supported by the unsworn declaration of David West, West and Owens asserted that the diversion of water from the ditch complained of occurs from a tap located "on property then owned by Lone R. Builders, 401k PSP." They further claimed that Sweetie K "holds no interest in the Lone R. Builders parcel, has never held any rights under an easement or other recorded instrument in the land, and has no right—established or otherwise—to control the use of that land." West and Owens also relied on correspondence between Sweetie K's counsel and National Forest Service personnel. In an e-mail to the Forest Service, Sweetie K's counsel objected to the Forest Service issuing a permit for the use of the irrigation ditch on Forest Service land to the EVRMDU. Sweetie K's counsel claimed, "This is not the Forest Service's ditch. This is our ditch. We will seek to enjoin any such action."
¶12 Sweetie K's counsel explained to a Forest Service official that:
The Kerrs were the original owners and the only owners until the property was purchased by Sweetie K. This has been established by a court of law. . . .[]
. . . [The] Arizona Superior Court has ruled as a matter of law that many of these same defendants have no legal right to use Kerr Ditch. . . .In a letter responding to that e-mail, Forest Supervisor Neil Bosworth, on behalf of the Forest Service, stated:
. . . Please cite me the authority that you believe gives the [F]orest [Service] the right to allow private parties to use our ditch in direct contravention of the court's order.
We do not read the . . . Conclusions of Law to support your assertion that your client has exclusive ownership of, or right to use, the Ditch. Indeed, with respect to NFS lands, said Conclusions of Law are predicated on the court finding that the defendants in that case did not have an authorization from the Forest Service to utilize the ditch. Here, the [McLachlan] Ditch User's Association (the "Association") has applied for just this authorization.
. . . .
Therefore, the intent of the Tonto National Forest is to continue with the issuance of a non-exclusive authorization to the Association to use the Ditch for conveyance of allocated water.
For purposes of this decision, we presume the correspondents, as to cited prior legal determinations, are referring to the 2008 Ruling.
¶13 In its response to West and Owens' motion, Sweetie K asserted that it was undisputed that it was the "successor in interest to the Kerrs." It argued that, despite West and Owens' assertions that Sweetie K was not the owner of the Kerr Ditch "the Defendants have not put forth any evidence that" it "is not the owner of the Kerr Ditch." In support of its ownership right, Sweetie K asserted that the court in the 2008 Ruling "concluded that the Kerrs were the owners of the Kerr Ditch." It further argued that West and Owens "cannot dispute this unless they can show some superior title to the irrigation ditch" and that they "are unable to do so." Sweetie K relied on a 2006 letter from a Forest Service official, stating that:
[t]he easement is issued to the Kerr[]s. They are the only authorized user of the ditch.This, Sweetie K argued, at a minimum, created a triable issue of fact as to whether it was the owner of the ditch.
. . . The easement can be transferred to new owners of the property where the water is used. If the owner relinquishes the easement or fails to operate it in accordance with the terms and conditions of the easement it will be terminated.
The easement is issued solely to the Kerrs. They are the only authorized operators of the ditch.
¶14 In reply, West and Owens asserted that Sweetie K had neither presented nor pointed to any admissible evidence of its ownership of the ditch. And that, while it was true that Sweetie K was the successor to the Kerrs' interest in its real property, the deed conveying that property conveyed no interest in the entirety of the ditch, nor had Sweetie K shown any assignment or transfer to Sweetie K of the Forest Service easement the Kerrs once held.
¶15 In October 2017, the trial court granted West and Owens' motion for summary judgment. As the court explained, Sweetie K's "first four claims require [it] to be the exclusive owner of the Ditch with the power to exclude others from the entire Ditch." Count 1 of the complaint sought a declaration that Sweetie K had the right to exclude West, Owens, and the other parties from using the ditch and accessing the water it conveyed. Count 2 sought an order enjoining others from using the ditch, stating, "Defendants are wrongfully trespassing and infringing on Sweetie's property rights." Count 3 sought damages for trespass on the "Ditch Easement, Kerr Ditch, and Federal Easement." Count 4 sought damages for conversion for the defendants' wrongful exercise of dominion and control over the ditch and the water within it in "derogation of Sweetie's rights therein." And Count 5 sought damages due to the defendants' interference with Sweetie K's "contract and/or business expectancy" "with the United States related to the Federal Easement." As to that final claim, the court concluded that it required Sweetie K to prove that it (whether directly or as the result of an assignment or other transfer) had a contract with the Forest Service.
¶16 The trial court noted the defendants had "set forth evidence that [Sweetie K] is not the exclusive owner of the entire ditch with authority to exclude all others." In their respective motions, each appellee had relied on the undisputed fact that the irrigation ditch passed through a number of parcels after leaving Forest Service land before reaching Sweetie K's parcel, and then passed through yet another parcel before emptying into the river. They further relied on the undisputed fact that the defendants were only accused of drawing water from the ditch as it crossed—not Sweetie K's property—but the property of another with permission.
¶17 As the trial court found, to counter these two facts, and to support its claim of exclusive ownership or control of the ditch, Sweetie K solely relied on the 2008 Ruling and the Kerrs' easement from the Forest Service. Neither, the court concluded, established Sweetie K's exclusive rights to the ditch or its water. As to the 2008 Ruling, the court concluded, citing to its ruling on the Carons' motion for summary judgment, that the 2008 Ruling was "limited to the facts" in the Kerr litigation. And that it only addressed the claims of the plaintiffs in that litigation "as they apply to the installation of a takeout and/or diversion of water" from the ditch on the plaintiffs' land. The court also determined, as to the Forest Service easement:
(1) the easement is by its very language non[-]exclusive; (2) the easement is in the Kerrs['] name and is not transferrable without Forest Service consent which Plaintiff has not obtained; and (3) Defendants (or an entity controlling the take out at issue) has obtained its own non[-]exclusive easement from the Forest Service to use the portion of the Ditch that is on the Forest Service Land.
¶18 The trial court also noted that Sweetie K had acknowledged in oral argument that each of its claims would fail as a matter of law unless it were shown that Sweetie K was the "owner of the entire ditch with the authority to exclude all others." At oral argument, Sweetie K had affirmatively agreed, "If we are not the owners of the Ditch . . . they win." Ultimately, the court found that "Defendants have shown 'that no evidence exist[s] to support an essential element of [Plaintiff's] claim,' i.e., that Plaintiff is the exclusive owner of the entire Ditch." (Alterations in original). Thus, Sweetie K had failed to present any evidence raising a genuine, triable issue of material fact as to its lack of exclusive control.
¶19 In April 2018, the Mitchells and EVRMDU filed a summary judgment motion making nearly identical legal arguments. And, similarly, because Sweetie K had failed to present such evidence or raise a triable issue of fact as to its claims against the Mitchells and EVRMDU, in August 2018, the trial court granted their motion as well.
¶20 Sweetie K timely appealed the grants of summary judgment for both West and Owens and the Mitchells and EVRMDU. We have jurisdiction under A.R.S. § 12-2101(A)(1).
Analysis
¶21 "We review a superior court's 'grant of summary judgment on the basis of the record made in [that] court, but we determine de novo whether the entry of [summary] judgment was proper.'" Modular Mining Sys., Inc. v. Jigsaw Techs., Inc., 221 Ariz. 515, ¶ 9 (App. 2009) (alteration in original) (quoting Nat'l Bank of Ariz. v. Thruston, 218 Ariz. 112, n.3 (App. 2008)). A trial court must "grant summary judgment if the moving party shows that there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law." Ariz. R. Civ. P. 56(a); accord Orme School v. Reeves, 166 Ariz. 301, 305 (1990). When the moving party meets this burden, the burden "shifts to the non-moving party to present sufficient evidence demonstrating the existence of a genuine factual dispute as to a material fact." Thruston, 218 Ariz. 112, ¶ 26. A party opposing a motion for summary judgment that makes such a showing cannot rest on his pleadings, but "must . . . set forth specific facts showing a genuine issue for trial." Ariz. R. Civ. P. 56(e). Entry of summary judgment is proper, even if the opposing party has raised a "scintilla" of evidence or a slight doubt, if, at trial, no reasonable juror could find for the non-moving party and the court would be required to enter a directed verdict. Orme School, 166 Ariz. at 311; see also State ex rel. Corbin v. Sabel, 138 Ariz. 253, 256 (App. 1983) ("[T]he party opposing a motion for summary judgment must in some form present proof by admissible evidence to establish a genuine dispute as to a material fact.").
¶22 Sweetie K contends that the trial court erred in its interpretation of the 2008 Ruling and that it had indeed presented a genuine issue of material fact as to its exclusive right to the river water so as to preclude summary judgment. We disagree. As to the latter point, as correctly noted by the trial court and as discussed below, Sweetie K's first four claims necessarily require a showing by Sweetie K of its ownership of or exclusive right to the ditch and the water flowing through it and its fifth claim requires it to show the existence of a particular contract. It made no such showings.
¶23 Sweetie K's claims for trespass require a prima facie showing that its right to prevent another's use of land, here, the ditch, is superior. See S. W. Sand & Gravel, Inc. v. Cent. Ariz. Water Conservation Dist., 221 Ariz. 309, ¶ 17 (App. 2008) (claim for trespass cannot succeed if no right to exclude others from property). Specifically, as applied to the facts here, it was required to show that it had a superior legal right to prevent the appellees from accessing the ditch at any location, including from land of another owner with that owner's consent. Its conversion claim similarly required Sweetie K to show a superior right to the property converted, namely the water, such that it could prevent others from drawing it out. Cf. Miller v. Hehlen, 209 Ariz. 462, ¶ 34 (App. 2005) ("Conversion is an intentional exercise of dominion or control over a chattel which so seriously interferes with the right of another to control it that the actor may justly be required to pay the other the full value of the chattel." (quoting Restatement (Second) of Torts § 222A(1) (1965))). Its two other claims—for declaratory judgment and injunctive relief—were derivative and required similar showings. As to Sweetie K's final claim, for tortious interference with contract, such a claim requires a plaintiff to show that a contract exists in the first instance. ABCDW LLC v. Banning, 241 Ariz. 427, ¶ 37 (App. 2016) ("A prima facie case of intentional interference with contract requires alleging . . . the existence of a valid contractual relationship . . . ."). Notwithstanding that the Forest Service easement was by its terms "non-exclusive," as the trial court noted, Sweetie K failed to show, either below or here, that it was the beneficiary of the easement, whether by its deed to the land, as a transferee, or in any other way.
As we noted in the Caron appeal, water rights may not be the subject of a conversion claim, but water, once "reduced to actual possession and control," such as once captured in a reservoir, may be. Sweetie K LLC v. Caron, No. 2 CA-CV 2017-0108, ¶ 19 (Ariz. App. Feb. 14, 2018) (mem. decision) (quoting Strawberry Water Co. v. Paulsen, 220 Ariz. 401, ¶¶ 12-14 (App. 2008)). But as in Caron, we need not address the question as to whether the water here was properly the subject of a conversion claim given the other infirmities in Sweetie K's claim. --------
¶24 Sweetie K did not present or point to any evidence in the record demonstrating that it has either an exclusive ownership interest in the ditch and its water or any other legal right to exclude others from drawing water from the ditch. On this basis, the trial court correctly determined that Sweetie K had failed to demonstrate the existence of any dispute as to a material fact sufficient to prevent entry of judgment on its claims as a matter of law.
Attorney Fees and Costs
¶25 Appellees seek fees incurred on appeal under A.R.S. § 12-341.01(A). Section 12-341.01(A) allows the court, in its discretion, to award the successful party "reasonable attorney fees" incurred in "any contested action arising out of a contract." See Munger Chadwick, P.L.C. v. Farwest Dev. & Constr. of the Sw., LLC, 235 Ariz. 125, ¶ 14 (App. 2014) ("[A]n award of fees under A.R.S. § 12-341.01 is discretionary; it is not an entitlement.").
¶26 The appellees assert that Sweetie K's claims were grounded upon rights it claimed to hold under a contract, namely the Forest Service easement. And, because their successful defense challenged the claim of such contract rights, that the action arose from a contract.
¶27 Claims relating to the determination of rights and alleged violations of easements "arise from contract." See Mountain States Tel. & Tel. Co. v. Kennedy, 147 Ariz. 514, 517 (App. 1985). An action arises from contract even where it is proven no contract exists. ML Servicing Co. v. Coles, 235 Ariz. 562, ¶ 30 (App. 2014). Here, because appellees' successful defense was, principally, that Sweetie K did not hold the exclusive contractual easement right asserted, they were successful parties in an action arising out of contract, and may be awarded reasonable attorney fees under Rule 21, Ariz. R. Civ. App. P. and § 12-341.01(A). Therefore, in our discretion, we award appellees their reasonable attorney fees incurred on appeal.
Disposition
¶28 We affirm the judgments in each of the consolidated appeals and award appellees their costs and reasonable attorney fees incurred on appeal upon their compliance with Rule 21, Ariz. R. Civ. App. P.