Court Opinion

ID: 5153942
Source: CourtListenerOpinion
Date Created: 2022-01-02 02:09:02.714052+00
Date Added: 2024-06-11T08:25:13.048962
License: Public Domain

Justice COATS,
dissenting.
I agree that the stipulated decree must be construed according to accepted principles of contract interpretation, but I disagree with the majority’s understanding and application of those principles. Because of its predisposition to limit the exportation of water from the designated groundwater basin, I believe the majority fails to consider objectively the language of the stipulation or the extrinsic evidence of its development. While public policy considerations may have been appropriate justification for not accepting the stipulation of the parties in the first place, or even for nullifying it now, I do not believe they can justify interpreting it for the benefit of the management district and engineer.
*153On its face, the disputed provision permits the Cherokee Wells 1-8 to be pumped for in-basin beneficial uses and equally for emergency and backup purposes, to include the inability of Cherokee to get sufficient supply from its Sweetwater wells. Nevertheless, the majority finds it clear from the provision’s plain language that its primary purpose is to restrict the use of wells 1-8 to supplying those portions of the district that are within the designated basin. With this bent of mind, the majority predictably finds that the word “backup” operates merely as an exception to a predominant anti-export ban and is limited to temporary or short-term situations; and furthermore, that the stipulation’s provision for the contingency that Cherokee might be unable to get sufficient supply from its Sweetwater wells was intended by the parties only as a reference to the current, rather than projected, commitments of these wells. In my view, neither finding is supported by accepted principles of contract interpretation or the record.
While there is nothing in even the common understanding of the term “backup” to imply a short-term or temporary situation, I object to the majority’s attempt to restrict the terms “emergency” and “backup” to their common meaning. In the stipulation itself the parties have provided their own understanding of these terms, which, as a matter of contract construction, they certainly may do. See Pepcol Mfg. Co. v. Denver Union Corp., 687 P.2d 1310, 1313-14 (Colo.1984) (“In the absence of contrary manifestation of the intent in the contract itself, contractual terms that have a generally prevailing meaning will be interpreted according to that meaning.” (emphasis added)); see, e.g., Mass. Mun. Wholesale Elec. Co. v. Town of Danvers, 411 Mass. 39, 577 N.E.2d 283 (1991) (common meaning of “default” altered by parties to include nonpayment for any reason rather than merely for failure to perform a legal or contractual duty); see generally 9 Margaret N. Kniffin, Corbin on Contracts § 24.8 (rev. ed. 1998) (“Ordinary English words can be deprived of their ordinary meanings and supplied with others — even with meanings that are the exact opposite of their ordinary ones.”). Nothing in the parties’ specific provision for backup of the Sweetwater wells remotely suggests a limitation to short-term emergencies, like outages of service.
To the extent the stipulation of the parties remains ambiguous, however, it does so only with regard to assessing the ability of the Sweetwater wells to perform as anticipated. Generally, when ability to perform is made a condition of a contract, courts must give reasonable meaning to the word “ability,” having reference to all the other calls upon the promisor’s resources. Id. § 31.3 (“Promise to Perform When Able, or Out of Earnings”). A party’s ability to perform clearly cannot be discretionary on its part, see generally, Western Hills, Or., Ltd. v. Pfau, 265 Or. 137, 508 P.2d 201, 203 (1973), but must involve considerations of good faith and reasonableness. Cf. Colo. Woman’s Coll. v. Bradford-Robinson Printing Co., 114 Colo. 237, 242, 157 P.2d 612, 614 (Colo.1945) (where no time of performance is specified, performance within a reasonable time is required).
In addition to limiting the backup function of Cherokee’s wells 1-8 to short-term, emergency situations, the water court also interpreted the stipulation to permit the backup of Cherokee’s Sweetwater wells only in meeting those commitments already existing at the time of the stipulation. Despite clear evidence that Cherokee anticipated its Sweetwater wells would produce enough for (and had conditional rights to) between two and three times their existing out-of-basin commitments, and that it was attempting through these negotiations to hedge against over-projection of their capacity, the water court concluded, virtually without explanation or support, that both parties were equally concerned about exportation of water from the basin. While the majority prefers to view this as a resolution of disputed fact in favor of the management district and engineer, nothing in the water court’s order suggests that it recognized or intended to resolve any such conflict. Instead, both the majority and water court ignore Cherokee’s clear interests and motivation, and simply presume that the management district and engineer would not have agreed to any such open-ended, out-of-basin use.
*154While I agree with the majority that the stipulated decree in this case was bargained for to avoid the costs and uncertainties of litigation, it is abundantly clear that the parties did not have, and could not possibly have had, the same interest in banning the exportation of water from the designated groundwater basin. The provision for backup usage outside the basin, which was expressly bargained for by Cherokee, contains none of the limitations found by the water court; and unlike the majority, I can discern no principle of contract construction that would impose on Cherokee, rather than the management district, a burden to define with greater specificity the terms of the stipulation. I believe any objective reading of the stipulation demonstrates that it is Cherokee, rather than the management district, which is being denied the benefit of its bargain.
I would therefore reverse the order of the water court and remand for reconsideration of the reasonableness of Cherokee’s development of its Sweetwater well capacity.
I respectfully dissent.