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Rancho Pauma Mutual Water Co. v. Yuima Municipal Water District

California Court of Appeals, Fourth District, First Division

July 31, 2015


APPEAL from an order of the Superior Court of San Diego County, No. 162650 Robert P. Dahlquist, Judge.

Page 110

[Copyrighted Material Omitted]

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California Appellate Law Group, William N. Hancock, Audra Ibarra, Benjamin S. Feuer; Kidman Law, Arthur G. Kidman, Andrew B. Gagen; Law Offices of Scott & Jackson, Jeffrey G. Scott and James R. Dodson for Defendant and Appellant.

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Rutan & Tucker, Jeremy N. Jungreis, Karen E. Scott and Michelle D. Molko for Plaintiff and Respondent.



Rancho Pauma Mutual Water Company (Rancho Pauma) filed a petition to enforce a water rights judgment against the Yuima Municipal Water District (the District) entered about 60 years earlier. The District appeals the trial court's order, contending the trial court misunderstood subsequent amendments to the judgment and improperly limited the amount of water the District could withdraw. Rancho Pauma contends the appeal should be dismissed as the order is not appealable. We reject Rancho Pauma's argument regarding appealability of the order. We also reject the District's arguments and affirm the order.


In 1950, six plaintiffs (the Strub Plaintiffs) who owned parcels of land in Pauma Valley sued the owner of a nearby parcel of land, known as the Rincon Ranch, as well as the water company, Palomar Mutual Water Company (Palomar), that held and controlled all of the water rights to the Rincon Ranch. The Strub Plaintiffs sought to limit the defendants' right to draw groundwater from a defined portion of a groundwater basin beneath Pauma Valley, which the parties refer to as the Strub zone. The Strub Plaintiffs alleged that the Rincon Ranch defendants had gone outside the boundaries of the Rincon Ranch, purchased a 50-foot-by-50-foot plot of land overlying the Strub zone, drilled a well on that small lot, and were appropriating water from that well via a pipeline to the Rincon Ranch.

In 1953, the parties settled the action with a stipulated judgment (the Judgment). The Judgment stated that Palomar controlled the water rights to the Rincon Ranch subject to the limitations set forth in the Judgment, which limitations were "imposed for the purpose of limiting [Palomar's] use of said waters as against the [Strub] Plaintiffs in this action, which limitations shall inure solely to the benefit of [the Strub] Plaintiffs and their respective heirs, successors and assigns." The Judgment provided that none of the waters derived from the Rincon Ranch shall be used by Palomar on more than 900 acres of the Rincon Ranch. Paragraph XI of the Judgment provided that Palomar was enjoined from withdrawing more than 1,350 acre-feet of water in any one calendar year (AFY), from the Strub zone. The Judgment stated that the court "retain[ed] jurisdiction of th[e] action to effectuate and enforce the terms of this [Judgment]" and "any of the parties hereto, or the successors in interest of any such party, may invoke the jurisdiction" of the court.

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In 1963, Palomar sponsored the creation of the District, a public entity under the Municipal Water District Law of 1911, to import water into the Pauma Valley area. (Wat. Code, § 71000 et seq.) That year, a special election approved the creation of the District. In 1964, after Palomar petitioned, the trial court amended the Judgment to permit Palomar to change its stock structure so it could purchase imported water from the District. In 1967, in conformity with the Municipal Water District Law of 1911, the District formed a special improvement district, Improvement District A.

In 1968, the District entered into an agreement with Palomar to acquire substantially all of Palomar's assets and properties, including all of its water rights. That same year, Palomar filed an application to modify the Judgment and authorize transferring its facilities and water rights to the District. The application recited that Improvement District A "constitutes the service area of [Palomar]" and is generally known as the Rincon Ranch. The District created Improvement District A to allow it to enter into a contract with Palomar to acquire land and a water distribution system and to operate the system. Palomar asked the court for relief from the provision in the Judgment that limited it to using Strub zone water on only 900 acres of the Rincon Ranch. Palomar alleged that the provisions of the Judgment enjoining it "from withdrawing more than 1, 350" AFY and "restricting the use of that water on no more than 900 acres merely duplicate the basic limitations as to the total amount of local water tha[t] can be developed and, since imported water is now available and is being used on lands within [Palomar's] service area comprising a total of more than 900 acres, render the said 900 acre limitation meaningless, confusing and ineffective." (Improvement District A is substantially the same land as that described in paragraph VIII of the Judgment and commonly known as the Rincon Ranch. Accordingly, depending on the context, this opinion may refer to the lands known as Improvement District A as the "Rincon Ranch.")

The trial court amended the Judgment (the 1968 Amendment) to allow Palomar to transfer to the District all of its lands, water systems and water rights, subject to the terms of the Judgment. Thereafter, the court substituted the District in place of Palomar in the Judgment, ordered the District "to comply with the terms and conditions of [the Judgment]" and dismissed Palomar. At some point in time, the District created two water operation systems, one to serve Improvement District A and another "General District" to serve the rest of the District. In 1979, the Strub Plaintiffs and the District stipulated to amend the Judgment to allow the District to develop two new wells in the Rincon Basin because its existing wells were insufficient to allow the District "to utilize its allotted 1350 acre feet" during peak service demand periods.

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V/O Pauma Development, L.P. (V/O) is a successor in interest to one of the original Strub Plaintiffs. In 2010, V/O, in cooperation with the District, established a well on its own property within the Strub zone and began to sell water from that well to the District for use in the General District, but not Improvement District A. The District entered into an agreement with V/O wherein the District agreed to provide water service to V/O's property in exchange for the right to pump up to 797 AFY of water from a high-yield well that the District leased and controlled. In 2011, the District increased its production of groundwater from the Rincon Basin to 2, 139 AFY, and 2, 641 AFY during fiscal year 2012-2013.

In May 2013, Rancho Pauma, as the successor in interest to the Strub Plaintiffs, filed a "Petition Under Continuing Jurisdiction of Court to Enforce Water Rights Judgment, " (the Petition) naming the District and V/O as parties. The Petition requested the court make a number of findings, including a finding that the District has violated the Judgment by pumping more than 1, 350 AFY from the Rincon Basin. After a two-day hearing, the trial court decided the matter based on the various exhibits and declarations presented by the parties. After considering Rancho Pauma's proposed statement of decision and the objections of the District and V/O, the trial court issued its final order.

The trial court noted the main dispute involved the interpretation of paragraph XI of the Judgment. Rancho Pauma argued that paragraph XI created a "hard cap" of 1, 350 AFY that the District could receive from the Strub zone. The District argued that paragraph XI allowed it to receive 1,350 AFY for use in Improvement District A, but imposed no limit on the amount of water it may extract from the Strub zone for distribution in locations other than Improvement District A. The trial court rejected the District's argument and concluded that paragraph XI of the Judgment was correctly interpreted to impose a hard cap ...

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