Recent Colorado Court of Appeals Decision Makes Waves for Water Utility, Landowners

A droplet of water causes waves to move outward.
A recent appeals court decision could have a major impact on the Ute Water Conservancy District and landowners. / Photo by David Becker on Unsplash.

The Colorado Court of Appeals issued a major victory for a water utility service in an opinion published Oct. 27.

At the center of the case is the Ute Water Conservancy District, which supplies water to about 80,000 customers in western Colorado. Ute Water’s main transmission pipeline delivers about two-thirds of its total volume to its customers. That pipeline goes across multiple properties including two parcels owned by the Fontanari family. One is a 121-acre parcel known as the road parcel while the other is 1.3 acres which is the residential parcel.

In 1980, the Fontanari’s predecessors-in-interest granted Ute Water perpetual easements and construction easements on the parcels, which gave Ute Water the right to construct and maintain the pipeline on the parcels. When Ute Water constructed the pipeline in 1981, a portion of the line was located about four feet under a private road on the road parcel. The Fontanari portion crossed the residential parcel at two points, covering 846 feet of pipeline.

Rudolph Fontanari, Jr. expanded the residence pad on the residential parcel adding fill, widening it by 35 feet and lengthening it by 120 feet. After the expansion, the pad encroached onto the road parcel, increasing the depth of the pipeline under the road by about 12 feet. This expansion also covered areas Ute Water needed for access to the pipeline. 

In 2014 Rudolph Fontanari, Jr. had begun developing a private road to accommodate transporting heavy equipment for a mine he owns. Rudolph Fontanari, Jr. then placed concrete culvert pipes on top of the road — about four feet above the pipeline — adding between 10.22 and 11.79 feet of fill, increasing the depth of, and to level, the road. That added fill covered about 300 feet of the pipeline. 

Before making the alterations, Rudolph Fontanari, Jr. didn’t contact Ute Water, according to court records, to determine the boundaries of the easements or location of the pipeline and didn’t seek a court’s permission to proceed with the alterations.

After learning of the alterations, Ute Water discovered they impacted its access to the pipeline while increasing the likelihood of damage to it and made it more difficult to find leaks. It also prevented Ute Water from quickly and safely accessing the pipeline for emergency repairs or routine maintenance. 

Ute Water filed a lawsuit against the Fontanaris and constructed a new section of pipeline bypassing the parcels and stopped using the Fontanari portion, plugging each end of the Fontanari portion with concrete. At trial, Ute Water requested an award of damages for expenses incurred in relocating the pipeline. After a bench trial, the court entered judgment in favor of Ute Water on its breach of contract claim. The court awarded Ute Water $557,790.31 and awarded Ute Water its relocation expenses. 

The Fontanaris appealed, but lost, with a division of the state appeals court holding under the circumstances, the utility company could recover the expenses because the property owners actions and refusal to compromise with the utility company made the relocation of the pipeline reasonable. 

Joe Dischinger, director at Fairfield and Woods P.C. and a water law attorney, said the appeals court applied standard easement law, meaning if you have an easement across somebody else’s property, you have the dominant estate while the land the easement runs through is the servient estate. The owner of the servient estate can’t do anything that unreasonably interferes with the easement.

“I don’t think there’s any doubt that what this landowner did unreasonably interfered with the easement,” Dischinger said.

As far as precedent goes, Dischinger said it could have that effect, but there’s precedent already from the Colorado Supreme Court’s 2001 ruling in Roaring Fork Club, L.P. v. St. Jude’s Co. 

“It’s already the law that you can’t interfere with somebody’s ditch easement or pipeline easement unless you either have an agreement with the owner of the easement or you go to court and get a declaratory judgment before you make the alterations that you want to make,” Dischinger said.

He added the Colorado Constitution provides for a private right of condemnation for water conveyance structures which is unusual because usually only governmental authorities can condemn someone else’s land. 

“The designers of our Constitution understood that, once you get that easement in place you can’t let people revoke it or change it in ways that defeat the purpose for which it was originally given,” Dischinger said. 

Kendra Beckwith, who serves as counsel for the defendants and is a partner at Lewis Roca, released the following statement regarding the case: “The opinion is unprecedented in Colorado law and has serious consequences for Colorado landowners. We are disappointed with the court of appeals’ ruling and are currently considering our options.”

The Ute Water Conservancy District was unable to provide comment at this time.

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