F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
SEP 15 2000
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT
SANPETE WATER CONSERVANCY DISTRICT,
Plaintiff-Appellant,
v. No. 99-4136
CARBON WATER CONSERVANCY DISTRICT;
PRICE RIVER WATER USERS ASSOCIATION;
UNITED STATES BUREAU OF RECLAMATION,
Defendants-Appellees.
Appeal from the United States District Court
for the District of Utah
(D.C. No. 96-CV-975)
Charles P. Sampson (Claudia F. Berry of Suitter Axland; John W. Anderson and
John S. Flitton of Pruitt, Gushee & Bachtell with him on the briefs) of Suitter
Axland, Salt Lake City, Utah, for Plaintiff-Appellant.
James B. Lee (James E. Karkut with him on the brief) of Parsons Behle &
Latimer, Salt Lake City, Utah, for Defendant-Appellee Carbon Water
Conservancy District.
Before BRORBY, HOLLOWAY and BRISCOE, Circuit Judges.
BRORBY, Circuit Judge.
This case flows from yet another skirmish in the never-ending war over
water in the American West. Sanpete Water Conservancy District (Sanpete) and
Carbon Water Conservancy District (Carbon) are the long-time combatants, and
frequent litigants, in this battle concerning the capture and use of water in the
Price River watershed in Utah. This most recent lawsuit is a contract
interpretation case. The district court granted partial summary judgment to
Carbon on Sanpete’s breach of contract claim and, after a four-day bench trial,
entered judgment against Sanpete on its claim of breach of the implied covenant
of good faith and fair dealing. Sanpete appeals. We exercise jurisdiction
pursuant to 28 U.S.C. § 1291 and affirm. 1
BACKGROUND
The basic, background facts are taken largely from the district court’s June
3, 1999 Findings of Fact and Conclusions of Law, because they are not in dispute.
We also consult previous court cases involving the parties for historical
perspective.
1
Sanpete filed an amended complaint in state court, naming the United
States Bureau of Reclamation (Reclamation) as a defendant. The district court
gained jurisdiction when Reclamation filed its notice of removal pursuant to 28
U.S.C. §§ 1442 and 1446.
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This case involves a disagreement over the scope of a contract involving
Sanpete, Carbon, and the Price River Water Users Association (Price). 2 The
parties entered the contract to resolve a decades-old conflict concerning “the
priority and use of water rights owned by Price and Sanpete for water from the
Price River.” “Utah is a prior appropriation state, where the appropriator first in
time is first in right.” Salt Lake City v. Silver Fork Pipeline Corp., 5 P.3d 1206,
2000 WL 10242, at *8 (Utah Jan. 7, 2000) (citing Utah Code Ann. § 73-3-1).
Therefore, as the district court pointed out, the priority of one’s water right
becomes very important in times of shortage because the “senior appropriator is
guaranteed the full measure of his or her appropriation before any claim by a
junior appropriator may be satisfied.” Id. The Utah Supreme Court has described
the origins of the current dispute:
In 1933, [Reclamation] prepared a water storage plan known as
the Gooseberry Project, which called for the creation of a reservoir
on Gooseberry Creek, a tributary of the Price River, and for diversion
of Gooseberry Creek water through a transmountain tunnel into the
Sanpete County area. At that time, Price River Water Conservancy
District ... held water rights in Gooseberry Creek,[ 3] storing this
water in the privately owned Scofield Reservoir several miles
downstream from the proposed diversion point.
2
The district court dismissed Price from the current lawsuit pursuant to a
stipulation of the parties, but Price agreed to be bound by the ultimate judgment.
3
Carbon does not own the water rights in question. Carbon owns shares of
stock in Price, which it leases to other parties.
-3-
As [Reclamation] prepared to carry out the Gooseberry Project,
it became aware that the Scofield Dam was deteriorating and
becoming dangerous and began to consider reconstructing the
Scofield Dam in connection with the Gooseberry Project. In 1943,
the Secretary of the Interior recommended that the Scofield Dam
reconstruction be given priority over the Gooseberry Project and
[Reclamation] entered into the [T]ripartite [Agreement] with [Price
and Carbon], conditionally promising to undertake such
reconstruction. As part of the consideration for this reconstruction
contract, [Price and Carbon] subordinated their water rights in
Gooseberry Creek to the right of [Reclamation] to divert water for
the Gooseberry Project at such time as the latter project might be
completed....[ 4]
Although [Reclamation] reconstructed the Scofield Dam
according to [the Tripartite Agreement], the Gooseberry Project
never materialized. In 1975, [Reclamation] assigned to [Sanpete]
three pending applications for water rights relating to the proposed
project. The purpose of the assignment, as stated in the parties’
assignment contract, was to allow [Sanpete] to keep the water
applications current and to pursue any litigation which might be
necessary in order to preserve the status of such applications. The
assignment contract further provided that the applications would
revert to [Reclamation] at such time as the Utah State Engineer might
grant the requested rights and that [Sanpete] would reassign the
applications to [Reclamation] before that time upon request.
Sanpete County Water Conservancy Dist. v. Price River Water Users Ass’n, 652
P.2d 1302, 1303 (Utah 1982).
4
The district court referred to these water rights as Application Numbers
1035, 8989a, and 13334. Sanpete explains the significance of the subordination
was the establishment of the primacy of the Gooseberry Plan over Price and
Carbon’s water rights in Scofield Reservoir. The reconstruction increased the
capacity of Scofield from 30,000 acre-feet to 73,000 acre-feet.
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After Reclamation assigned the three pending applications, Sanpete filed
change applications with the Utah State Engineer 5 in order “to obtain permission
to change the point of diversion, place of use, and nature of use of the three water
rights.” Carbon filed protests with the State Engineer objecting to the change
applications, and later joined others in filing a lawsuit in federal district court
claiming Reclamation’s assignment was defective. In the wake of Sanpete’s
desire to move forward with the Gooseberry Plan, and the pressure from Carbon
to reject the change applications, the State Engineer began to broker an agreement
between the parties. The parties eventually signed an agreement on June 8, 1984,
which is the subject of the current litigation.
The initial recitals in the agreement state:
WHEREAS, there has been a long standing controversy
concerning the building of storage and diversion works on the Price
River System for transmountain diversion of Gooseberry Creek water
to the San Pitch River System; and
WHEREAS, the parties hereto desire to compromise and settle
the controversy and their respective claims to such water.
The agreement then defines the approximate location of the proposed dam as the
“Narrows Site” and names the “Narrows Project” as the successor project to the
5
In Utah, the State Engineer controls the administration, allocation, and
distribution of water rights.
-5-
old Gooseberry Plan detailed in the Tripartite Agreement. Section II of the
agreement lists the water rights owned by Price and Sanpete, and in Section III,
Price subordinates its rights to Sanpete’s rights in order for Sanpete to divert,
store and convey 5,400 acre-feet of water from the Narrows Site to the San Pitch
River System. Section IV sets the storage capacity of the Narrows Project,
increases Carbon’s storage rights in Scofield Reservoir an additional 35,000 acre-
feet, and discusses the procedure to be followed in order to satisfy the prior water
rights held downstream from Scofield Reservoir.
Finally, we come to the portions of the agreement that are the source of the
current conflict. In addition to the sections we have just described, the agreement
provides the following: (1) Carbon would voluntarily dismiss the lawsuit
challenging Reclamation’s assignment of the three applications to Sanpete; (2)
Reclamation would withdraw an application seeking additional water from Fish
Creek, and the State Engineer would reject a competing application made by
Price; (3) the State Engineer would approve Reclamation’s application to increase
the storage capacity of Scofield Reservoir; (4) Sanpete would withdraw an
application seeking to appropriate 15,000 acre-feet of water from Gooseberry
Creek; and (5) pursuant to Section V.E., Carbon agreed to refrain from making
certain protests: “The parties agree that no protest shall be filed to any of the
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foregoing approvals, withdrawals, rejections, dismissals or assignments or to any
further change applications or permits from any state or federal agencies
necessary to carry out the purpose and intent of this Agreement.” (Emphasis
added.) This section of the agreement does not mention Sanpete’s three change
applications, the State Engineer’s disposition of the applications, or Carbon’s
filed petitions in opposition to the applications, although the parties did agree the
terms and conditions of the agreement could be incorporated as part of the State
Engineer’s decisions on the change applications.
The parties agree the specific, detailed actions listed in the agreement were
carried out. Carbon voluntarily dismissed its lawsuit, telling the judge “the issues
have been fully compromised and settled by a written Agreement” between
Sanpete and Carbon. The various applications were appropriately withdrawn,
approved, or denied. Carbon did not protest any of these actions. In addition,
while the agreement did not specifically require him to do so, the State Engineer
approved Sanpete’s three change applications on January 7, 1985. Again, Carbon
did not protest the approvals.
However, as Sanpete moved ahead with its efforts to fund the Narrows
Project and obtain the necessary permits to build the dam, Carbon began to
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coordinate an effort in opposition to the dam’s construction. In a 1991 letter to
Carbon from Barnett Intermountain Water Consulting, the consultants outlined
possible efforts to “help you further your cause to ultimately prevent the building
of the Gooseberry Narrows Project.” To this end, Carbon participated in a group
that submitted comments to various federal and state agencies opposing the
project. This group commented on Reclamation’s draft and final Environmental
Impact Statements, objected to an application to the Utah Department of
Community and Economic Development for a loan to help design the Project,
requested Reclamation deny an application for federal funds for the Project, met
with political leaders to share its concerns with the Project, submitted comments
to the Army Corps of Engineers opposing the § 404 permit needed to move ahead
with any project of this nature, ultimately joined with several environmental
groups in filing a lawsuit against the Secretary of the Interior and various other
federal actors claiming the final Environmental Impact Statement and Record of
Decision did not comply with the requirements of the National Environmental
Policy Act, and threatened to file a lawsuit alleging the project breached the
Endangered Species Act. Suffice it to say Carbon did nothing to help the
Narrows Project, and in fact encouraged every federal and state agency along the
way to deny Sanpete the permits, approvals, and financing needed to complete the
Project.
-8-
Sanpete filed the current lawsuit, arguing the aforementioned actions
constituted a breach of Section V.E., the “no protest” clause of the agreement, as
well as a breach of the implied covenant of good faith and fair dealing inherent in
the agreement. 6 The district court disagreed. On cross-motions for partial
summary judgment, the district court granted Carbon’s motion as to the breach of
contract claim, finding the agreement unambiguous and stating the no protest
provision “does not prohibit the parties from protesting any applications for
permits, it only prohibits the parties from protesting any permits already issued
from state and federal agencies.” While finding Carbon’s activities in opposition
to the Narrows Project did not result in a breach of the contract, the district court
determined issues of fact remained as to whether the actions breached the implied
covenant of good faith and fair dealing. After a week-long trial, and a thorough
examination of the intentions of the parties to the contract, the district court found
Carbon did not breach the implied covenant of good faith and fair dealing.
Sanpete now appeals these two decisions.
6
Sanpete’s amended complaint also alleged a breach of Section IV of the
agreement. However, Sanpete does not raise this issue on appeal and we do not
address it further.
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ANALYSIS
1. Summary Judgment
We begin with the district court’s grant of partial summary judgment
finding no breach of the contract. Sanpete argues the district court correctly held
the contract was clear and unambiguous, but nevertheless misinterpreted the
unambiguous terms of the contract by failing to account for the intent of the
parties. Before we dispose of this argument, we must first comment on the
inadequate nature of Sanpete’s appendix.
Normally, “[w]e review the district court's grant of summary judgment de
novo, applying the same legal standard used by the district court under Fed. R.
Civ. P. 56(c).” James Barlow Family Ltd. Partnership v. David M. Munson, Inc.,
132 F.3d 1316, 1319 (10th Cir. 1997) (citation omitted), cert. denied, 523 U.S.
1048 (1998). In order to conduct our de novo review, we must necessarily review
the materials before the district court. However, Sanpete’s appendix does not
include: Sanpete’s Memorandum of Points and Authorities filed with its Motion
for Partial Summary Judgment; Carbon’s competing motion and any memorandum
it filed in support thereof; an identification of the exhibits, affidavits, and other
evidence submitted to the trial court. These omissions amount to a violation of
the Federal Rules of Appellate Procedure, as well as our own court rules. See
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Fed. R. App. P. 10; Fed. R. App. P. 30; 10th Cir. R. 30.1(A)(1); 10th Cir. R.
10.3(D)(2) (when appeal is from an order disposing of a motion, supporting
documents filed with the motion must be included in the appendix). Normally,
“[a]n appellant who provides an inadequate record does so at his peril.” Dikeman
v. National Educators, Inc., 81 F.3d 949, 955 (10th Cir. 1996). However, we
exercise our discretion to reach the merits of this claim because Sanpete’s two
claims are so closely related, and the record we have from trial contains enough
evidence to allow us to review the summary judgment decision.
We do not reach our usual de novo review because we are faced with a
unique set of circumstances. We do not support the district court’s grant of
summary judgment and, under normal circumstances, would reverse and remand
for trial on the issue of whether Carbon’s activities amounted to a breach of the
contract. We would reach such a result because we disagree with the district
court’s ambiguity determination. If a court, after considering “credible evidence
offered to show the parties’ intention” in entering the contract, determines the
various interpretations put forth by the parties “are reasonably supported by the
language of the contract,” then the contract is ambiguous. Ward v. Intermountain
Farmers Ass’n, 907 P.2d 264, 268-69 (Utah 1995). Giving Sanpete every
reasonable inference, as we must do under our summary judgment standard, we
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find evidence in the record which reasonably supports Sanpete’s expansive
reading of the contract, and therefore hold the terms of the contract ambiguous.
However, under the circumstances presented here, we conclude any error at
the summary judgment stage was subsequently corrected at trial. The record
clearly shows the parties spent a good part of the trial presenting evidence on the
intent of the parties in entering the agreement and the scope of the “no protest”
provision at issue in Sanpete’s breach of contract claim. Despite its earlier ruling
on summary judgment, the district court reviewed the evidence and specifically
made a finding Carbon did not breach the contract. Were we to remand, we
would force the trial court to repeat that thorough evidence-gathering and
decision-making process, contrary to the doctrine of judicial economy. Given the
unique facts of this case, and the relationship between the breach of contract and
breach of implied covenant of good faith and fair dealing claims, remand would
fulfill no other purpose than further delay of a resolution of this dispute.
We reach this conclusion based on the evidence presented at trial, the
district court’s findings of facts and conclusions of law, and the nature of the
inquiry into a possible breach of the implied covenant of good faith and fair
dealing. On this last point, the Utah Supreme Court has held
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[a]n examination of express contract terms alone is insufficient to
determine whether there has been a breach of the implied covenant of
good faith and fair dealing. To comply with his obligation to
perform a contract in good faith, a party's actions must be consistent
with the agreed common purpose and the justified expectations of the
other party. The purpose, intentions, and expectations of the parties
should be determined by considering the contract language and the
course of dealings between and conduct of the parties.
St. Benedict’s Dev. Co. v. St. Benedict’s Hosp., 811 P.2d 194, 200 (Utah 1991)
(citations omitted). This examination bears a remarkable resemblance to the use
of extrinsic evidence to determine the meaning of ambiguous contract terms. See
Ward, 907 P.2d at 268; Willard Pease Oil & Gas Co. v. Pioneer Oil & Gas Co.,
899 P.2d 766, 770 (Utah 1995). A review of the record before us buttresses the
comparison.
During the trial, the district court heard testimony from individuals
involved in negotiating the agreement, viewed early drafts of the agreement, read
correspondence and documents, studied the historical evolution of the various
water rights in question, and listened to the parties present evidence on the
meaning of every sentence in the agreement. In addition, Sanpete presented
evidence on the various activities it claimed constituted a breach. Based on this
evidence, the district court entered one hundred findings of fact and twenty-one
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conclusions of law. 7 In holding Carbon did not breach the implied covenant of
good faith and fair dealing, the district court found: (1) the agreement “made it
possible for the State Engineer to approve Sanpete’s three change applications,
and for Sanpete to proceed with attempting to obtain funding for the Project”; (2)
“no language in the [agreement] requir[ed] the Carbon district to cooperate with
Sanpete in its attempts to obtain funding for the Narrows Project or move the
Project forward”; (3) no language in the agreement expressly or impliedly
restrict[ed] Carbon’s rights to contact federal, state, and local agencies to express
concerns about the Project, or to oppose construction of the Project; (4) no
language stated the purpose of the agreement was to “resolve all issues that the
parties had or may have in the future with respect to the proposed Narrows
Project,” or to “allow Sanpete to construct and operate the proposed Narrows
Project.” Applying these findings, the court concluded “[t]he purpose of the
[agreement] was to resolve a water rights dispute,” and therefore Carbon’s actions
opposing the construction of the Project “do not constitute a breach of Section
7
Sanpete accuses the district court of adopting Carbon’s proposed findings
of fact, conclusions of law, and order and judgment verbatim. Sanpete makes
nothing but conclusory statements in support of its claim. However, even if we
believed the district court improperly adopted Carbon’s proposed findings without
reasoned consideration, we would still review the district court’s decision under
the clearly erroneous standard. See Tosco Corp. v. Koch Indus., Inc., 216 F.3d
886, 892 n.1 (10th Cir. 2000).
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V.E. of the [agreement].” Given this specific finding after trial, despite the
earlier summary judgment decision, Sanpete cannot argue the district court did
not think about and address the breach of contract claim after summary judgment.
In order to prove its breach of contract claim at trial, Sanpete would need to
show the existence of a contract, Sanpete’s performance and Carbon’s
nonperformance under the contract terms, and damages. See Mackey v. Cannon,
996 P.2d 1081, 1085 (Utah Ct. App. 2000). We cannot imagine a piece of
evidence necessary for Sanpete to prove its breach of contract case that was not
ultimately presented at trial. Nor does Sanpete direct our attention to any such
evidence. In fact, Sanpete relies on the same conduct and the same contract
provisions to support both claims. Sanpete describes the district court’s error at
summary judgment as a failure “to take into account the intent of the parties.” If
the district court made such a blunder at the summary judgment stage, surely it
was more than corrected at trial, where the court examined a myriad of extrinsic
evidence, as if it was reviewing an ambiguous contract, studied the intent of the
parties, and concluded Carbon did not breach the explicit or implicit purposes of
the contract with Sanpete.
As will become apparent in our discussion of the implied covenant of good
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faith and fair dealing, the record supports the district court’s findings and
conclusions. Therefore, we affirm the grant of partial summary judgment because
the district court’s opinion issued at the close of trial conclusively dealt with the
very evidence and issues that would be presented at a future trial on the issue of
whether Carbon’s activities amounted to a breach of Section V.E. of the
agreement, 8 and the court explicitly found there was no breach.
2. Implied Covenant of Good Faith and Fair Dealing
Following a bench trial, “[w]e review the district court’s findings of fact
for clear error and its conclusions of law de novo.” Valley Improvement Ass’n v.
United States Fidelity & Guar. Corp., 129 F.3d 1108, 1115 (10th Cir. 1997).
Whether a contract is ambiguous is a question of law. See Bank of Oklahoma v.
Muscogee (Creek) Nation, 972 F.2d 1166, 1171 (10th Cir. 1992). Interpretation
of an unambiguous contract is also a question of law. See id. “However, when
the trial court’s interpretation is aided by extrinsic evidence,” we review the
interpretation under the clearly erroneous standard. Valley Improvement Ass’n,
8
Indeed, given the unity of issues, parties and evidence, one could argue
the current case is somewhat analogous to the doctrine of claim preclusion. See
Federated Dept. Stores, Inc. v. Moitie, 452 U.S. 394, 398 (1981) (“A final
judgment on the merits of an action precludes the parties or their privies from
relitigating issues that were ... raised in that action.”) (quoted in Rivet v. Regions
Bank, 522 U.S. 470, 476 (1998)).
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129 F.3d at 1115.
A finding of fact is clearly erroneous if it is without factual
support in the record or if the appellate court, after reviewing all the
evidence, is left with a definite and firm conviction that a mistake
has been made. On appeal, we view the evidence in the light most
favorable to the district court’s ruling and must uphold any district
court finding that is permissible in light of the evidence.
Manning v. United States, 146 F.3d 808, 812-13 (10th Cir. 1998) (quotation
marks and citations omitted). Similar to our rule in diversity cases, we will apply
the substantive law of Utah in this state contract action removed to federal court
pursuant to 28 U.S.C. § 1442. See Teague v. Grand River Dam Auth., 425 F.2d
130, 131-34 (10th Cir. 1970) (applying state law in wrongful death action
removed to federal district court via § 1442); cf. City of Aurora v. Erwin, 706
F.2d 295, 296-97 (10th Cir. 1983) (citing Arizona v. Manypenny, 451 U.S. 232,
241-42 (1981)) (criminal cases).
The Utah Supreme Court has stated an implied covenant of good faith and
fair dealing accompanies every contract. See Brown v. Moore, 973 P.2d 950, 954
(Utah 1998). Pursuant to the covenant, “each party impliedly promises that he
will not intentionally or purposely do anything which will destroy or injure the
other party’s right to receive the fruits of the contract.” Id. at 954 (quoting St.
Benedict’s, 811 P.2d at 199) (quotation marks omitted). As we stated earlier, we
must examine the express language of the contract, as well as the course of
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dealings between the parties, to determine whether a party has breached the
covenant. Id. “However, we will not interpret the implied covenant of good faith
and fair dealing to make a better contract for the parties than they made for
themselves.” Id. Therefore, this appeal boils down to a fundamental question:
What were the benefits, or fruits, of the contract for Sanpete?
The district court viewed the agreement as resolving a water rights dispute,
making “it possible for the State Engineer to approve Sanpete’s three change
applications, and for Sanpete to proceed with attempting to obtain funding for the
Project.” In addition, the court found one of the benefits flowing to Sanpete was
Carbon’s agreement “to not file any protests to any future change applications ...
[or] any state or federal permits that might be issued in connection with the
Project.” Sanpete argues the agreement was much broader in scope, designed by
the parties to end all the controversies existing at the time between Carbon and
Sanpete. In Sanpete’s view, any activity by Carbon designed to prevent the
building of the Narrows Project amounts to “intentional or purposeful” attempts
to “destroy or injure” Sanpete’s “right to receive the fruits of the contract.” See
St. Benedict’s, 811 P.2d at 199. A necessary predicate to this conclusion is the
contention, made by Sanpete in its brief on appeal, the main benefit due Sanpete
under the agreement was actual construction of the Narrows Project. We affirm
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the district court’s rejection of Sanpete’s interpretation for several reasons.
First, Sanpete puts too little emphasis on our standard of review. In its
reply brief, Sanpete states it “does not dispute that the district court’s findings are
supported by the evidence. They are. The problem is that the district court
ignored, without explanation, every piece of evidence that supported Sanpete’s
claims.” Sanpete reaches this conclusion because the district court did not
specifically articulate why it found some evidence more reliable or credible than
the evidence put forth by Sanpete. At its core, Sanpete’s argument is one best
made to a trier of fact. As stated earlier, our task on review is to examine the
evidence in the light most favorable to the district court’s decision, and we must
affirm the district court’s findings if at all supported by the factual record. 9 See
Manning, 146 F.3d at 812. Therefore, Sanpete’s concession that the district
court’s findings are supported by the evidence makes its ultimate argument on
appeal less tenable.
9
Sanpete argues on appeal the testimony of its lawyer and the State
Engineer at the time the agreement was signed, stating they thought the agreement
resolved all possible controversies between the parties concerning the Narrows
Project, proves the intent of the parties was to forever preclude Carbon from
protesting the construction of the Project. This argument is unavailing because
we must focus on the evidence supportive of the district court’s decision and
determine if it is sufficient to affirm its decision. We do not reverse simply
because some evidence supports an appellant’s position.
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Second, having conducted our own review, we find factual support in the
record for the district court’s findings. The disputes leading up to the negotiation
of the agreement were centered on water rights, not the actual construction of the
dam itself. For instance, the lawsuit Carbon agreed to dismiss challenged
Reclamation’s assignment of the three water rights applications to Sanpete:
“There are actual controversies between the plaintiffs and the defendants as to the
authority of a subordinate officer of the United States to dispose of the water
rights evidenced by the above-numbered applications, ... without following the
procedures set out by specific federal law.”
In addition, the language and context of the agreement, when read in its
entirety, supports the district court’s interpretation. A fundamental tenet of
contract interpretation is that provisions cannot be read in isolation. “Each
contract provision is to be considered in relation to all of the others, with a view
toward giving effect to all and ignoring none.” Plateau Mining Co. v. Utah Div.
of State Lands & Forestry, 802 P.2d 720, 725 (Utah 1990) (quotation marks and
citation omitted). The agreement focused on the amount of water each party was
entitled to store and use, and the priority of their respective rights. In Section II
of the agreement, each party “covenants and represents that it is the owner of the
following water applications on file in the office of the Utah State Engineer for
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the diversion, storage and use of Price River System water.” Section III deals
with subordination of water rights:
The Price River Water Users Association water rights ... shall be
subordinated ... to the Sanpete water rights ... to divert and store on a
first priority basis in each year all water of Gooseberry Creek and its
tributaries arising above the Narrows Site, ... and to convey by
transmountain diversion up to 5,400 acre-feet of water from storage
at the Narrows Site each year for use in the San Pitch River System
....
Section IV describes how water will be distributed among the parties should the
Narrows Project move forward, limiting the “active capacity of the reservoir for
the Narrows Project” at no more than 10,000 acre-feet, dictating the 5,400 acre-
feet diversion be measured at the outlet of the transmountain tunnel, increasing
Carbon’s storage rights in Scofield Reservoir by 35,000 acre-feet, ensuring
holders of prior water rights downstream from the Narrows Project continue to
have their rights satisfied, and limiting actual releases from Scofield Reservoir for
the benefit of Carbon to the existing 30,000 acre-feet. Section VI requires
Carbon to dismiss its lawsuit, as already discussed, and Section VII discusses the
responsibility of Sanpete to “install and maintain outlet structures and measuring
devices to measure and deliver water in accordance with this Agreement.”
Clearly, the agreement, while identifying and referring to the Narrows Project, 10 is
10
Mention of the Project in the agreement is limited to the definitions
section, where the “Narrows Project” is defined as “the project proposed by this
Agreement and contemplates the building of storage and diversion works at or
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almost exclusively concerned with the specifics of who gets what water once the
Project moves ahead, not with ensuring the construction of the Project.
In addition, the manner in which Section V itself is constructed can also be
read to support the district court’s conclusion. The section begins with specifics,
stating the “United States of America shall withdraw” a certain application, the
“State Engineer shall approve” one application and “may reject” another, and
“Sanpete shall ... withdraw” one of its applications. All these specific actions
relate directly to water rights applications. Section V.E. begins with a reference
to these specific actions: “The parties agree that no protest shall be filed to any
of the foregoing approvals, withdrawals, rejections, dismissals or assignments,”
and then ends in the general terms at issue here, “or to any further change
applications or permits from any state or federal agencies necessary to carry out
the purpose and intent of this Agreement.” In such a case, the rule of
construction ejusdem generis can operate to confine the meaning of the
above the location of the Narrows Site, to store Gooseberry Creek water for
transmountain diversion to the San Pitch River System.” The “Narrows Site” is
also defined in the agreement, and is described as “the approximate location for a
proposed dam to be constructed on Gooseberry Creek.” This general language is
insufficient to show that the parties’ purpose and intent in entering the agreement
was the construction of the Project when the specific language of the agreement
focuses on allocation of water.
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subsequent general language to the subject of the more specific language directly
preceding. See Swenson v. Erickson, 998 P.2d 807, 812 (Utah 2000); Black’s
Law Dictionary 535 (7th ed. 1999) (“[W]hen a general word or phrase follows a
list of specific persons or things, the general word or phrase will be interpreted to
include only persons or things of the same type as those listed.”). The fact
Carbon did not protest the State Engineer’s approval of Sanpete’s three change
applications, despite their absence from the specific enumerated actions in
Section V, lends further credence to an interpretation of the “no-protest”
provision as narrowly applying to permits related to the water rights dispute. 11
Just as telling as what was included in the agreement is the evidence
11
We also point out that the nature of Carbon’s comments to the various
agencies focuses on process. We are not convinced these comments violated the
“no-protest” provision as interpreted by Sanpete. For instance, in its comments to
Reclamation and the Army Corps of Engineers, Carbon objects to the
environmental impact statements and § 404 permit because the agency product did
not comply with the National Environmental Policy Act. A distinction can be
drawn between commenting on the process required under the National
Environmental Policy Act and protesting an actual permit. We have often noted
the National Environmental Policy Act does not mandate a particular result, but
instead focuses on the process employed to reach it. See Colorado Envtl.
Coalition v. Dombeck, 185 F.3d 1162, 1172 (10th Cir. 1999); Environmental
Defense Fund, Inc. v. Andrus, 619 F.2d 1368, 1374 (10th Cir. 1980). Therefore,
the selection of a preferred alternative in an environmental impact statement is
not the equivalent of actually issuing a permit. One is a prerequisite to the other,
but they are not synonymous. Even the lawsuit challenging Reclamation’s Record
of Decision, which can be characterized as a permit, focused on the technical
violations of the National Environmental Policy Act.
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presented as to what was left out in the final draft. An earlier draft of the
agreement had Carbon acknowledging the agreement was “intended to settle all
the rights and claims of the parties relative to the Gooseberry Plan,” and agreeing
not to protest the then-existing change applications “or challenge the construction
and development of the Gooseberry Plan.” The draft also included a mutual
cooperation clause which would have obligated Carbon to cooperate fully with
Sanpete in “obtaining ... the necessary permits and easements to locate and
operate the Narrows reservoir facility and diversion works.” That these
provisions were ultimately excised from the final agreement supports the district
court’s conclusion the agreement was narrowly-tailored. The final agreement is
also void of explicit language stating the intent of the parties was to complete the
Narrows Project. Sanpete cannot accomplish indirectly what it failed to
accomplish directly in negotiating the agreement.
Finally, Sanpete’s argument is flawed for the simple reason the parties to
the agreement had no ability to bestow the benefit it claims – construction of the
Project. Such a result lies in the hands of a variety of state and federal agencies.
The district court determined the agreement only resolved the controversy over
the priority and use of the parties’ water rights, which allowed Sanpete the
“opportunity to move forward with attempting to obtain the funding and permits
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to construct the proposed Narrows Project.” As the Utah Supreme Court pointed
out nearly twenty years ago, this two-step process of fixing the parties’ respective
water rights prior to actually seeking the permits to build the Project is necessary
because Sanpete’s ability to secure the financing for the project is dependent “on
resolution of the present uncertainty concerning water priorities.” Sanpete
County Water Conservancy Dist., 652 P.2d at 1307. We find sufficient support in
the record for the district court’s determination the agreement resolved that
uncertainty, but did not guarantee Sanpete the ability to construct the Narrows
Project. Nor did the agreement require Carbon to refrain from opposing agency
actions it deemed violative of the provisions of the National Environmental Policy
Act, nor give up its rights to participate in the political process in opposition to
the project. We are reluctant to so limit a party’s rights absent clear, unequivocal
language mandating such a result.
The district court determined Sanpete and Carbon, after years of acrimony,
entered into an agreement settling their dispute over the priority and use of their
respective water rights. As a result of this agreement, Sanpete was finally free to
fully pursue its efforts to construct the Narrows Project without facing questions
about the volume or validity of its water rights. The district court’s findings are
not clearly erroneous. Accordingly, we AFFIRM the district court for the
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reasons stated herein.
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