Wolfe v. Jim Hutton Education Foundation

Wolfe v. Jim Hutton Educ. Found., 344 P.3d 855 (Colo. 2015) (reversing the water court’s abandonment determination, remanding the case back to the water court, and holding that: (i) evidence of over ten years of nonuse of a decreed point of diversion is sufficient to trigger a rebuttable presumption of the water right holder’s intent to abandon the water right, and (ii) the burden then shifts to the water right holder to rebut the presumption of abandonment).

In 1893, the Tip Jack water right was originally decreed to service the Tip Jack Ditch. Jim Hutton Educational Foundation (“Foundation”) now owns and operates a 4,000-acre ranch encompassing the Tip Jack Ditch. In 2010, the State and Division One Engineers (“Engineers”) determined that the Foundation abandoned the Tip Jack water right and placed the water right on the decennial abandonment list. The Foundation challenged the listing in District Court, Weld County, Water Division 1 (“water court”).

The Engineers argued the Foundation abandoned the Tip Jack water right because Roscoe Hutton, the Foundation’s predecessor in interest, failed to use the water right. Hutton acquired the Tip Jack water right in 1948. In 1978, the water court entered a decree changing the point of diversion (“1978 diversion point”). The water court simultaneously decreed two additional water rights, Hutton Ditches 1 and 2. The Engineers argued that Hutton’s failure to use the 1978 diversion point proved the Foundation abandoned the Tip Jack water right. Conversely, the Foundation contended that notwithstanding Hutton’s failure to use the 1978 diversion point, the Foundation did not abandon the Tip Jack water right. Specifically, the Foundation argued that it used the Tip Jack water right, but diverted it from the Hutton 2 diversion point instead of the 1978 diversion point.

The water court ruled in favor of the Foundation because it determined the Engineers failed to prove nonuse by a preponderance of the evidence, and even if they had proven nonuse, there was ample evidence to rebut the presumption of abandonment. The Engineers appealed to the Colorado Supreme Court (“Court”). The Republican River Water Conservation District (“RRWCD”) joined in the appeal.

On appeal, the Court reviewed the water court’s abandonment determination regarding the Tip Jack water right. Specifically, the Court analyzed how the presumption of abandonment applies when the water right holder used the amount of water decreed, but not from the decreed point of diversion. A water right holder has abandoned the water right when there is no beneficial use for over ten years and there is intent to abandon. The Court applied a two-step analysis to determine whether the Foundation abandoned the Tip Jack water right when Hutton failed to use the 1978 point of diversion. In the first step, the Court considered whether Engineers met their initial burden of demonstrating nonuse for ten years or more to trigger the presumption of intent to abandon. If the Engineers met their initial burden, then the burden shifted to the water right holder. In the second step, the Court considered whether the Foundation presented sufficient evidence to prove lack of intent to abandon, or excuse nonuse, to rebut the presumption of abandonment.

In step one of the analysis, the Court evaluated whether the Engineers’ evidence was sufficient to trigger the presumption of intent to abandon. The water court held that the Engineers proved water was never diverted into the Tip Jack Ditch from the 1978 diversion point. Nonetheless, the water court deemed the nonuse at the 1978 diversion point insufficient to trigger the presumption. The Court disagreed with the water court regarding this finding. The Court reasoned that nonuse referred to the water right, not just the water. Further, the decreed point of diversion was a key element of use of the water right. Therefore, the Court found that evidence of nonuse at the decreed diversion point for ten years or more was enough to effectively trigger the presumption. Accordingly, the Court held the Engineers proved prolonged nonuse at the 1978 diversion point, and thereby triggered the statutory presumption of intent to abandon.

In step two of the analysis, the Court considered whether the Foundation rebutted the presumption of abandonment. The Foundation alleged it rebutted the presumption with evidence that Hutton used the Tip Jack water right through a different, undecreed diversion point. Specifically, the Foundation produced aerial photographs that indicated Jim Hutton pumped water into the Tip Jack Ditch by diverting the Tip Jack water right and the Hutton 2 water right from the Hutton 2 diversion point. Conversely, the Engineers maintained that the use of an undecreed point of diversion is insufficient to rebut the presumption of abandonment.

The Court noted that Colorado law disfavors abandonment. The Court accepted the Foundation’s contention that use of a water right at an undecreed point of diversion evidences a lack of intent to abandon the water right. However, the Court found the water court’s order did not specify which water rights the Foundation used. The Court reasoned that the use of the Tip Jack Ditch did not necessarily constitute use of the Tip Jack water right. Therefore, the water court needed to analyze each of the three water rights in order to determine whether the evidence was sufficient to rebut the presumption of intent to abandon.

Accordingly, the Court reversed the water court’s abandonment determination, held that the Engineers’ evidence triggered the rebuttable presumption of abandonment, and remanded for reconsideration of whether the Foundation met its burden of rebutting the presumption.

Photo is of a beaver dam on the Mcgregor Ranch near the Rocky Mountain National Park.  The photo is part of the public domain.