Court Opinion

ID: 3196896
Source: CourtListenerOpinion
Date Created: 2016-04-22 15:05:52.125287+00
Date Added: 2024-06-11T14:37:00.374953
License: Public Domain

IN THE SUPREME COURT OF THE STATE OF NEVADA

RAND PROPERTIES, LLC; JOHN                            No. 66933
CARRINGTON; TAMI CARRINGTON;
AND JOHN E. CARRINGTON AND
VIRGINIA G. CARRINGTON
DECLARATION OF TRUST DATED                             FILED
FEBRUARY 19, 2003,
Appellants,
                                                       APR 2 1 2016
vs.
DANIEL FILIPPINI; EDDYANN
FILIPPINI; AND JULIAN TOMERA
RANCHES, INC., BATTLE MOUNTAIN
DIVISION,
ResDondents.

                 ORDER OF REVERSAL AND REMAND

            This is an appeal from a district court decree, an order
regarding administration of the decree, and an order granting attorney
fees and costs in a water rights action. Sixth Judicial District Court,
Lander County; Richard Wagner, Judge.
                             BACKGROUND
            Respondents Daniel and Eddyann Filippini (collectively
Filippini) filed a complaint against Julian Tomera Ranches, Inc., Battle
Mountain Division (Tomera), and Rand Properties, LLC (Rand) on June 7,
2011 to adjudicate conflicting claims to stock and irrigation water rights
near Trout Creek. On March 6, 2012, Filippini's counsel mailed to
property owners near Trout Creek notice that water rights were subject to
final adjudication. After receiving notice, John Carrington; Tami
Carrington; and John E. Carrington and Virginia G. Carrington
Declaration of Trust joined the action. All parties stipulated to the
                 Carrington parties' dismissal after determining that the Carrington
                 parties' water rights were not in dispute. The action proceeded to
                 adjudication on April 8, 2013, wherein the district court established
                 priority dates for each of the remaining parties' stock and irrigation water
                 rights. The district court later issued an order awarding attorney fees
                 pursuant to NRS 533.190(1) and NRS 533.240(3), which required all
                 parties, including the previously dismissed Carrington parties, to share
                 the expense. Rand and the Carrington parties now appeal.
                                                 DISCUSSION
                             On appeal, this court reviews de novo a district court's legal
                 conclusions. Keife v. Logan, 119 Nev. 372, 374, 75 P.3d 357, 359 (2003).
                 However, we "will not disturb a district court's findings of fact if they are
                 supported by substantial evidence." Id. "[E]vidence that a reasonable
                 mind might accept as adequate to support a conclusion" is substantial
                 evidence. Winchell v. Schiff, 124 Nev. 938, 944, 193 P.3d 946, 950 (2008)
                 (internal quotation omitted).
                 Irrigation water rights
                             Rand's priority date (claim V02678)
                             The district court rejected Rand's claim of a vested irrigation
                 water right beginning in 1869, after concluding that the first diversion of
                 water to Rand's Trout Creek Ranch was in 1901 by Walter Dobbs:
                             The credible evidence shows that the first
                             diversion of water onto the Trout Creek Ranch
                             was in 1901 by Dobbs. This court finds that Rand
                             has only established a vested water right for 52.5
                             acres of irrigation; there was no actual diversion
                             and application of Trout Creek water at Rand's
                             Trout Creek Ranch until 1901. Rand has not
                             established an earlier right by a preponderance of
                             evidence. Rand claims that Dobbs' use at Trout
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                             Creek Ranch in 1901 relates back to an earlier
                             appropriation by Roth, Pankey, Blossom or
                             Hoffman; however, there is no evidence that the
                             use at Rand's Trout Creek Ranch was pursued
                             with reasonable diligence from 1869 (Roth) or
                             1871 (McBeth).

                             While there is statutory authority that may allow
                             one to change the place or manner of use of a
                             water right, there is no authority that would allow
                             one, prior to the enactment of statutory water law,
                             to change the place of use without creating a new
                             appropriation, and in turn, a new priority date.
                             Claim V02678 has been established for irrigation
                             of 52.5 acres on Trout Creek Ranch with a priority
                             date of 1901.
                             On appeal, Rand argues that the district court erred as a
                matter of law in determining its priority date because a change in the
                place of use of a water right does not disrupt the chain of title. Filippini
                argues that the dispositive question on appeal is whether Rand is able to
                establish a chain of title from 1869; Filippini claims that Rand cannot.
                             We conclude that the district court erred by relying on an
                erroneous conclusion of law to establish Rand's priority date. In
                particular, the district court concluded that changing the place of use of
                water creates a new appropriation, and in turn a new priority date. As
                Rand argues, "[t]he right to water acquired by prior appropriation is not
                dependent upon the place where the water is used. A party having
                obtained the prior right to the use of a given quantity of water, is not
                restricted . . . to the use or place to which it was first applied."   Union Mill
                & Mining Co. v. Dangberg, 81 F. 73, 115 (C.C.D. Nev. 1897). So long as
                the rights of others are not affected, a person entitled to a given quantity
                of water from a stream may take it at any point of the stream, and may
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                change the character of its use at will. Id. (citing Hobart v. Wicks, 15 Nev.
418, 421 (1880)). Thus, so long as Rand has not appropriated more than
                the quantity of water to which he is entitled, his priority date need not be
                reset.
                            Despite the district court's erroneous legal conclusion,
                Filippini argues that there is substantial evidence in the record
                demonstrating that Rand cannot link itself by chain of title to 1869.
                Filippini references expert testimony to support its argument. However,
                we conclude, notwithstanding the expert evidence presented, that the
                district court did not make findings as to ownership links in the chain of
                title; rather, it concluded that it could not establish a chain of title due to
                the change in the place or manner of use.' We further conclude that the
                district court's findings as to ownership in the chain of title are
                insufficient for this court to properly review the matter.    See Dickinson v.
                Am. Med. Response,       124 Nev. 460, 471, 186 P.3d 878, 885 (2008)
                (concluding that failure to make explicit factual findings prevented this
                court's review). Accordingly, we vacate and remand this issue for further
                proceedings regarding Rand's connection to the chain of title.
                            Filippini's priority date (claim V01563)
                            The district court determined that "Filippini is entitled,
                through [James] Hughes, to 100 acres of irrigation on the Badger Ranch
                with an 1871 priority." On appeal, Rand argues that the district court's
                decree did not explain how Hughes was connected by title to Filippini, and

                       'The extent to which the district court relied on its limited finding
                that there was no proof of beneficial use to reach its ultimate finding of a
                1901 priority date is unclear.

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                that there is no evidence showing any conveyance between 1891 and 1897.
                Filippini contends that his expert testified to the existence of tax records
                that establish the chain of title from 1891 through 1897. We conclude that
                the district court's ruling, which specifies neither the intermediate
                ownership linking Hughes and Filippini, nor the evidence relied upon to
                reach its determination, is insufficient for this court to review the matter.
                See id. Thus, we also vacate and remand for further proceedings on this
                issue.
                Stock water rights
                            The district court found "that cattle of the J.R. Bradley outfit
                drank and diverted water from Trout Creek as early as 1862, thereby
                setting a domestic stock water priority date of 1862 for all three parties."
                On appeal, Rand contends there is no evidence supporting the district
                court's finding of an 1862 stock water priority date for any party because
                vested stock water rights, like all water rights, require an appropriator to
                prove a valid chain of title. Conversely, Filippini argues that proof of a
                chain of title is not required when seeking stock water rights in public
                land owned by the United States, as each of the parties to this case holds
                federal permits to graze on allotments within the Battle Mountain
                District. We disagree.
                            In Nevada, stock water rights on public domains are passed by
                chain of title. See Steptoe Live Stock Co. v. Gulley,   53 Nev. 163, 169-176,
                295 P. 772, 773-776 (1931) (determining that plaintiff and its predecessors
                in interest for the past forty years had the exclusive right to stock water
                for 500 livestock on a public range). But Filippini and Tomera argue that,
                under the Taylor Grazing Act, 43 U.S.C. § 315, which granted grazing
                allotments on the same federal land where J.R. Bradley grazed cattle,

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                each of the parties owns permits to graze cattle and horses, settling the
                parties' rights. Where there is a conflict between federal and state law,
                federal law prevails under the Supremacy Clause of the United States
                Constitution. U.S. Const. art. VI, cl. 2. Thus, the instant question is
                whether a conflict exists between federal grazing law and Nevada's water
                law, providing that stock water rights pass by chain of title on public land.
                            We conclude that Nevada law and federal law do not conflict.
                First, the Act, implemented in 1934, specifies that it does not invalidate
                any existing rights. 43 U.S.C. § 315. Second, the federal law concerns
                grazing rights, and although closely related to water rights, they are, even
                within the Act, considered separate issues. See 43 U.S.C. § 315b.
                            Because state and federal law do not conflict, the stock water
                rights passed by chain of title properly reflect the party's current rights to
                the disputed stock water. However, as stated, the district court's findings
                as to chain of title preclude this court's review.   Dickinson, 124 Nev. at
                471, 186 P.3d at 885. Therefore, we also vacate and remand this issue.
                Certificate 12160 (permit 39377) and easement

                            In 1979, Leroy Horn possessed grazing preferences for 600
                cattle on the Argenta Grazing Allotment. He secured certificate 12160
                (permit 39377), and built the Trout Creek pipeline to water his cattle. In
                1989, Horn, Tomera, and Filippini entered into a three-way contract of
                sale wherein Horn agreed to sell his grazing preferences to Tomera, but
                sold the Badger Ranch to Filippini. The contract specified that it included
                federal grazing privileges and "all waters, water rights, rights to the use of
                water, dams, ditches, canals, pipelines, reservoirs and all other means for
                the diversion or use of waters appurtenant to the said property or any part
                thereof, or used or enjoyed in connection therewith, and together with all

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                stockwatering rights used or enjoyed in connection with the use of any of
                said lands." Tomera does not dispute Rand's assertion that Tomera did
                not record its rights under the contract.
                              In 2009, Rand purchased Trout Creek Ranch from Jack and
                Loretta Broughton. Among other conveyances, the deed purported to
                convey certificate 12160. In 2010, Rand cut off the flow of water to the
                Trout Creek pipeline, and prohibited Tomera's access to the diversion
                structure.
                              Consequently, Tomera filed a cross claim in the district court
                arguing that it owned stock water certificate 12160, and an easement or
                irrevocable license on Rand's property to access the pipeline. The district
                court concluded that Rand could not own certificate 12160 because it did
                not possess a grazing preference for 600 cattle at the place of use, and
                therefore could not put the water to beneficial use. The district court
                explained that the purpose of NRS 533.503 "is to ensure that stockwater
                rights follow the livestock that are lawfully permitted to use stockwater on
                the public range." With regard to the easement, the district court
                concluded that "Tomera is entitled to an easement by necessity for the
                access, operation, maintenance, repair, and use of the Trout Creek
                pipeline and its point of diversion that lie across Rand's private
                property. . . ."

                             On appeal, Rand argues that pursuant to NRS 533.382's
                requirement that water rights be conveyed by deed, Tomera cannot be the
                proper owner of certificate 12160, and that it is a bona fide purchaser
                nonetheless. Tomera argues that it is the rightful owner of certificate
                12160, that NRS 533.503 prohibits Rand from holding the certificate
                because he does not own livestock, and that Rand's bona fide purchaser

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                defense is not properly before this court because Rand did not assert it in
                the district court.
                               We conclude that the district court erred in determining that
                NRS 533.503 prohibited conveyance of certificate 12160 to Rand. NRS
                533.503(2)(b) provides that the State Engineer shall not issue a stock
                water appropriation certificate unless: "The forage serving the beneficial
                use of the water that has been beneficially used is not encumbered by an
                adjudicated grazing preference recognized pursuant to law for the benefit
                of a person other than the holder of the permit." Although the statute
                prevents issuance of a certificate from the State Engineer, it does not
                prohibit conveyance of a certificate by a private party. Here, the
                Broughtons purported to convey certificate 12160 to Rand. Thus, NRS
                533.503 does not apply.
                               Further, Rand's argument that Tomera does not properly hold
                certificate 12160 pursuant to NRS 533.382's requirement that water
                rights be conveyed by deed lacks merit. Tomera purchased certificate
                12160 from Horn in 1989. The requirement that conveyances of water
                rights be made by deed was not added to NRS Chapter 533 until 1995.
                1995 Nev. Stat., ch. 265, §§ 1,3, at 434. Thus, at the time of Tomera's
                purchase, Tomera was not required by statute to obtain title by deed.
                            However, Rand also argues that it is a bona fide purchaser. 2
                "In order to be entitled to the status of a bona fide purchaser without

                      2 Rand raised its bona fide purchaser defense at a hearing on May
                30, 2013. Thus, the bona fide purchaser issue is properly before this court.
                See Arnold v. Kip, 123 Nev. 410, 416, 168 P.3d 1050, 1054 (2007) (noting
                that even arguments not raised in the district court until a motion for
                reconsideration may be properly before this court).

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                notice . . . [Rand] was required to show that legal title had been
                transferred to [him] before [he] had notice of the prior conveyance to
                [Tomera]." See Berge v. Fredericks, 95 Nev. 183, 188, 591 P.2d 246, 248
                (1979). Unfortunately, this court cannot properly review Rand's bona fide
                purchaser defense because the district court did not make findings
                regarding whether Rand had notice.         See Dickinson, 124 Nev. at 471, 186
                P.3d at 885. Thus, we vacate and remand the district court's rulings
                concluding that Tomera owns certificate 12160 and an easement for
                further proceedings on whether Rand had notice of the conveyance to
                Tom era.
                Attorney fees
                                The district court ruled that pursuant to NRS 533.190(1) and
                NRS 533.240(3), each party to the adjudication must share in the: 1) costs
                and fees associated with notice and service; 2) costs and fees associated
                with preparation of the general and administrative provisions; and 3) costs
                associated with preparation of the hydrographic survey. For the costs
                associated with service, the district court ordered that Tomera, Rand,
                Filippini, and the Carrington parties split the cost equally. As to
                preparation of the general and administrative provisions, the district court
                ordered Rand and Tomera to share the cost. With regard to the cost of the
                hydrographic survey, the district court ordered that they be shared
                equally among the parties. The district court explained that the claim
                adjudicated relative rights, and that each of the parties benefited from the
                action.
                            The Carrington parties and Rand argue that the district court
                abused its discretion by awarding attorney fees pursuant to NRS
                533.190(1) and NRS 533.240(3) because neither statute provides for an

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                award of attorney fees. Filippini argues that, pursuant to NRCP 71, an
                order may be enforced against the Carrington parties although they were
                dismissed from the adjudication.
                            We generally review a district court's decision regarding "costs
                and attorney fees for an abuse of discretion."    Gunderson v. D.R. Horton,
                Inc., 130 Nev., Adv. Op. 9, 319 P.3d 606, 615 (2014). Under Nevada law,
                "the district court may not award attorney fees absent authority under a
                statute, rule, or contract."   Albios v. Horizon Cmtys., Inc., 122 Nev. 409,
                417, 132 P.3d 1022, 1028 (2006). Here, the district court concluded that
                NRS 533.190(1) and NRS 533.240(3) permitted an award of attorney fees
                to Filippini's counsel for service of Trout Creek property owners and
                preparation of the general and administrative provisions.
                            NRS 533.190(1) provides:
                            At any time in the course of the hearings, the
                            court may, in its discretion, by order assess and
                             adjudge against any party such costs as it deems
                            just and equitable or may so assess the costs in
                            proportion to the amount of water right standing
                            allotted at that time, or the court may assess and
                            adjudge such costs and expenses in its final
                            judgment upon the signing, entry and filing of its
                            formal findings of fact, conclusions of law and
                            decree adjudicating the water rights against any
                            party as it deems just and equitable, or may so
                            assess the costs in proportion to the amount of
                            water right allotted and decreed in the final
                            judgment.
                NRS 533.240(3) provides:
                           The cost of the suit, including the costs on behalf
                           of the State and of the surveys, shall be charged
                        • against each of the private parties thereto based
                           on a determination by the court of the relative
                           merits of the claims made by each of the private
                           parties. The court may assess and charge against
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                            any party at any time during the suit an equitable
                            amount to pay the costs of the survey upon its
                            approval of an itemized statement therefor
                            submitted by the State Engineer.
                            These statutes specifically provide for an award of costs, but
                under Nevada law, attorney fees are not considered costs.     See Smith v.
                Crown Fin. Services of Am., 111 Nev. 277, 287, 890 P.2d 769, 776 (1995)
                ("Although we affirm the award of costs, we must remand the case because
                the district court did not segregate the amount awarded as costs from the
                amount awarded as attorney fees."). Moreover, attorney fees are not
                mentioned anywhere in the statute. Therefore, the district court's award
                to Filippini's counsel of attorney fees, intermingled with costs, cannot be
                sustained under NRS 533.190(1) or NRS 533.240(3). Accordingly, we
                reverse the award of attorney fees.

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              Based on the foregoing, we
              ORDER the judgment of the district court REVERSED AND
REMAND this matter to the district court for proceedings consistent with
this order.

cc: Hon. Richard Wagner, District Judge
     Marvel & Kump, Ltd.
     Parsons Behle & Latimer/Reno
     Fallon City Attorney's Office
     Schroeder Law Offices, P.C.
     Gerber Law Offices, LLP
     Lander County Clerk

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