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EnerVest, Ltd. v. Utah State Engineer

Supreme Court of Utah

January 11, 2019

EnerVest, Ltd., Appellant,
v.
Utah State Engineer and Michael Carlson, Appellee.

          On Direct Appeal, Eighth District, Duchesne The Honorable Samuel P. Chiara No. 560800056

          John H. Mabey Jr., David C. Wright, Jonathan R. Schutz, Salt Lake City, for appellant.

          Justin P. Matkin, Matthew E. Jensen, Salt Lake City, for appellee Michael Carlson.

          Sean D. Reyes, Att'y Gen., Stanford E. Purser, Dep. Solic. Gen., Norman K. Johnson, Benjamin J. Jensen, Sarah M. Shechter, Melissa Reynolds, Asst. Att'y Gens., Salt Lake City, for appellee Utah State Engineer.

          Justice Himonas authored the opinion of the Court, in which Chief Justice Durrant, Associate Chief Justice Lee, Justice Pearce, and Judge Kate Toomey joined.

         Due to her retirement, Justice Durham did not participate herein; Court of Appeals Judge Kate Toomey sat.

         Justice Petersen became a member of the Court on November 17, 2017, after oral argument on this matter and accordingly did not participate.

          AMENDED [*]

          HIMONAS, JUSTICE.

         INTRODUCTION

         ¶1 "Water rights in the State of Utah are of utmost public concern. Water, in an arid state like Utah, is its life-blood, measured in currency represented by survival itself . . . . This court has likened a drop of water [to] a drop of gold." Longley v. Leucadia Fin. Corp., 2000 UT 69, ¶ 15, 9 P.3d 762 (second alteration in original) (citations omitted) (internal quotation marks omitted). Therefore, it is no surprise that, in Utah, water rights have been preserved in our state constitution, codified by our legislature, and oft-contested in our state and federal courts.

         ¶2 This appeal stems from just such a contest over the state water engineer's resolution of who owns the water rights to Minnie Maud Creek, a tributary of the Green River. EnerVest, Ltd. (EnerVest)[1] asks us to review the district court's grant of summary judgment, which upheld the state engineer's proposed determination that The Minnie Maud Reservoir and Irrigation Company (Minnie Maud) is the owner of disputed water rights on Minnie Maud Creek and rejected the objections to the proposed determination made on those grounds. Before reaching this issue, however, we must first decide whether we have jurisdiction over the case.

         ¶3 We conclude that we do not. The district court's certification of its summary judgment ruling as final under Utah Rule of Civil Procedure 54(b) was improper and thus we do not have a final judgment before us for review. And we do not consider whether we should treat the appeal as a petition for interlocutory appeal under Utah Rule of Appellate Procedure 5 because we conclude that EnerVest was not aggrieved by the district court's decision and so lacks appellate standing. Therefore, we dismiss the appeal for lack of appellate jurisdiction.

         BACKGROUND

         I. GENERAL ADJUDICATION PROCESS

         ¶4 A general understanding of Utah's process for adjudicating water rights in cases like this one is helpful for grasping the issues in this appeal. When a justified petition of "five or more or a majority of water users" for a determination of water rights is given to the state engineer, the engineer files an action in the district court to determine the water rights (similar to a quiet title action). Utah Code § 73-4-1 (1953). The district court may then order a general adjudication, which will provide it guidance in establishing water rights.

         ¶5 "[T]he purpose of the general adjudication process is to prevent piecemeal litigation regarding water rights and to provide a permanent record of all such rights by decree." Jensen v. Morgan, 844 P.2d 287, 289 (Utah 1992).

When a general adjudication is initiated, the state engineer notifies all known water rights holders and provides public notice of the adjudication by publication. After the state engineer provides notice, all individuals and entities are required to submit any water rights claims within the area in question to the state engineer. Following the submission of water rights claims, the state engineer conducts a hydrographic survey of the water system and evaluates the submitted claims.

In re Gen. Determination of Rights to the Use of Water, 2004 UT 106, ¶ 6, 110 P.3d 666 (citations omitted). A party who fails to timely file a claim "shall be forever barred and estopped from subsequently asserting any rights, and shall be held to have forfeited all rights to the use of the water theretofore claimed by him." Utah State Eng'r v. Johnson, 2018 UT App 109, ¶ 19 (citation omitted) (internal quotation marks omitted).

         ¶6 "When the survey is complete and all of the submitted claims have been evaluated, the state engineer then prepares a proposed determination of water rights for the area." In re Gen. Determination of Rights to the Use of Water, 2004 UT 106, ¶ 6. "A copy of the proposed determination is mailed to each claimant, along with a notice that any claimant dissatisfied with the proposal may file a written objection within ninety days." Johnson, 2018 UT App 109, ¶ 20. "[A] claimant who . . . fail[s] to timely object . . . takes on the role of a defaulting party and is bound by its failure . . . unless and until the claimant seeks leave from the court overseeing the general adjudication to file an untimely objection . . . ." Id. ¶ 21. "If no objection has been filed to a proposed determination, or if all objections have been resolved, the district court must enter judgment rendering the proposed determination the final adjudication of water rights for the given area." In re Gen. Determination of Rights to the Use of Water, 2004 UT 106, ¶ 7.

         II. PROCEEDINGS BELOW

         ¶7 In the early 1900s, several owners of water rights on Minnie Maud Creek filed articles of incorporation for Minnie Maud and transferred their water rights to the newly formed corporation. The relevant parties in this case transferred their rights to Minnie Maud in exchange for shares in Minnie Maud.

         ¶8 In 1956, this general adjudication, which includes Minnie Maud Creek, was initiated. The state engineer issued a proposed determination in 1964, allocating twelve water rights to Minnie Maud. In the following months, four different objections were filed, challenging a total of eight of the water rights provided to Minnie Maud. Each of the four objections raise several different challenges, but all of the objections argue that Minnie Maud could not be the owner of the water rights, either because Minnie Maud never legally existed or because it was a defunct corporation. EnerVest did not file an objection, and the water rights it now claims are not directly challenged by the objections.[2]

         ¶9 In 2012, EnerVest filed a petition under Utah Code section 73-4-24(1) to expedite a hearing on the objections. The district court granted the petition but limited the scope of the section 24 hearing to whether the proposed determination correctly lists Minnie Maud as the owner of the water rights.

         ¶10 Several parties participated in the section 24 hearing, including non-objectors, EnerVest and Michael Carlson, and objectors, the Willis A. and Wilma Hammerschmid Trust (the Hammerschmid Trust) and Gary and Nancy Motte. Eventually the parties filed cross-motions for summary judgment, with EnerVest and the Hammerschmid Trust arguing that Minnie Maud could not own the water rights and Carlson arguing that the state engineer correctly deemed Minnie Maud the owner of the water rights. The district court granted Carlson's motion for summary judgment and denied EnerVest's and the Hammerschmid Trust's motions for summary judgment. At the parties' request, the district court certified its decision as final under Utah Rule of Civil Procedure 54(b). EnerVest and the Hammerschmid Trust appealed.

         ¶11 During the pendency of the appeal, before the briefing schedule was even set, the Hammerschmid Trust's appeal was voluntarily dismissed with prejudice. As a result, Carlson challenges EnerVest's standing to appeal.

         STANDARD ...


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