30,824•October 24, 2012 – State of New Mexico ex rel. Office of the State Engineer, Thomas C. Turney v. United States of America, Elephant Butte Irrigation District, City of El Paso, New Mexico State University, Stahman Farms, other claimants to be determined, and unknown claimants, No. 30,824
October 24, 2012 – State of New Mexico ex rel. Office of the State Engineer, Thomas C. Turney v. United States of America, Elephant Butte Irrigation District, City of El Paso, New Mexico State University, Stahman Farms, other claimants to be determined, and unknown claimants, No. 30,824
30,824Nmctapp
Texte intégral
IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO Opinion Number: Filing Date: OCTOBER 24, 2012 NO. 30,824 STATE OF NEW MEXICO ex rel. OFFICE OF THE STATE ENGINEER, THOMAS C. TURNEY, Plaintiffs-Appellees, v. UNITED STATES OF AMERICA, ELEPHANT BUTTE IRRIGATION DISTRICT, CITY OF EL PASO, NEW MEXICO STATE UNIVERSITY, STAHMAN FARMS, OTHER CLAIMANTS TO BE DETERMINED, and UNKNOWN CLAIMANTS, Defendants, and JOHN D. BACA, Subfile Defendant-Appellant. APPEAL FROM THE DISTRICT COURT OF DOÑA ANA COUNTY Jerald A. Valentine, District Judge
DL Sanders, Special Assistant Attorney General Richard A. Allen, Special Assistant Attorney General Martha C. Franks, Special Assistant Attorney General Santa Fe, NM for Appellees Peters Law Firm, LLC Lee E. Peters Las Cruces, NM for Appellant
OPINION
FRY, Judge.
{1} This case involves a dispute over ownership of a ground water right on
approximately twenty-eight acres of elevated bench lands on Appellant John D.
Baca’s farm property in Salem, New Mexico. In the course of a subfile proceeding
initiated by the Office of the State Engineer (OSE) in order to determine ownership
of water rights on Baca’s farm, the district court appointed a special master to try the
matter. The special master filed a report recommending that the district court grant
ownership of the disputed water right to Baca. Upon the OSE’s written objections to
the report, the district court rejected the special master’s report in part and then
entered an order declaring that Baca did not have a water right on the disputed bench
lands.
{2} Baca appeals, arguing that the district court was bound by the factual findings
and legal conclusions entered by the special master and that the court improperly re-
weighed the evidence and applied an erroneous standard of review in rejecting the
special master’s report. We agree and conclude that the district court’s actions were
improper under the standard of review established by our case law. We therefore
reverse the district court’s order and remand for the district court to consider the
OSE’s remaining objection on the issue of abandonment of the water right.1Adjudications are generally “lawsuits in state or federal court to resolve all
claims to water use in the state of New Mexico including those of pueblos, tribes and
the federal government.” Denise D. Fort, The Utton Center, Water Matters!,
Adjudications 4-1 (2012), available at http://uttoncenter.unm.edu/pdfs/Water-Matters
-2012/2012_water_matters_final_full-publication.pdf. During the subfile phase of
an adjudication, the Office of the Attorney General (through the use of OSE-specific
adjudication teams) determines the elements of individual water rights for each
claimant. Fort, supra, 4-2 to 4-3. Each “subfile” corresponds to an individual
claimant, such as Baca in this case, or a city or Native American tribe. See Fort,
supra, 4-3.
2
I. BACKGROUND
{3} The present case arose as a subfile proceeding in the course of a general
adjudication of water rights in the lower Rio Grande stream system.1 At issue in this
particular subfile proceeding is a disputed water right on Baca’s farm in Salem, New
Mexico. Baca purchased the 132-acre farm in 1981. For purposes of the subfile
proceeding, Baca’s property was divided into two distinct areas: (1) the “valley
lands,” consisting of forty-two acres; and (2) the “bench lands,” consisting of
approximately twenty-eight acres that were terraced into eighteen benches that took
the shape of a chevron when viewed from the air. The subfile for Baca’s property
consists of five water rights, only one of which is at issue in this appeal. This disputed
water right is associated with the bench lands and, more specifically, it is the right to
ground water produced from a well for the upper sixteen benches (the disputed
benches) on Baca’s property.3
{4} Over the span of four years beginning in 2001, the OSE sent a series of offers
of judgment to Baca during the subfile phase of the adjudication in order to reach an
agreement on this disputed water right. When the parties were unable to come to an
agreement on this water right, the district court referred the matter to a special master
pursuant to its authority under Rule 1-053 NMRA.
{5} Rule 1-053 governs the appointment and use of special masters in district court
proceedings. In non-jury cases, a district court is permitted to refer a matter to a
special master upon a showing of an exceptional condition or “in matters of account
and of difficult computation of damages.” Rule 1-053(B). In this case, the district
court appointed attorney Stephen Snyder as special master after determining that
exceptional conditions warranted the referral. The district court’s order of reference
directed the special master to “hear and determine all claims and contentions of the
parties” and to “make findings of fact and conclusions of law and prepare and file a
report” with the court at the conclusion of the proceedings. See Rule 1-053(E)(1)
(requiring the special master to prepare a report on the matter submitted to him and
file the report with the court).
{6} The parties tried two issues before the special master: (1) whether a predecessor
in interest to Baca established a ground water right on the disputed benches and, if so,
(2) whether Baca abandoned this water right. In the proceedings before the special4
master, the OSE took the position that a water right was never established for the
disputed benches because water from the well was not put to beneficial use on these
benches. See Hydro Res. Corp. v. Gray, 2007-NMSC-061, ¶ 21, 143 N.M. 142, 173
P.3d 749 (stating the general principle that “[g]round water, like surface water, must
be appropriated and applied to beneficial use before a vested water right will result”).
Alternatively, the OSE claimed that Baca had abandoned any water right that may
have once existed on the disputed benches. Over the course of a three-day trial before
the special master, the parties presented testimony from lay and expert witnesses as
well as documentary evidence in the form of aerial photographs and affidavits in
support of their positions.
{7} Following the hearing, the special master filed a report with the district court
in which he found that irrigation ground water rights were established on the disputed
benches and that Baca had not abandoned this water right. The OSE objected to the
special master’s report and, following a hearing, the district court entered an order
rejecting in part the special master’s report.
{8} The district court disagreed with a majority of the special master’s findings of
fact concerning the testimony and documentary evidence presented at trial. In
particular, the district court found that “the record d[id] not support [t]he [s]pecial
[m]aster’s [f]indings that irrigation water has ever been used to grow a crop on the5
disputed bench lands.” The district court also rejected the special master’s reliance
on a declaration of water rights filed by Baca shortly after the farm purchase. In
addition, the court rejected the special master’s conclusion that water was put to
beneficial use on the disputed benches. The district court held that Baca did not have
a water right on the disputed bench lands. Because the court determined that a ground
water right had not been established on the disputed bench lands, the court did not
address the OSE’s objections to the special master’s findings on abandonmennt. This
appeal followed.
II. DISCUSSION
{9} On appeal, Baca’s overarching argument is that the district court improperly
disregarded the special master’s report. Specifically, Baca argues that the district
court was bound by the factual findings entered by the special master because the
findings were supported by substantial evidence and that the court improperly re-
weighed the evidence and applied an erroneous standard of review in rejecting the
special master’s report. After delineating the proper standard of review in this case,
we examine whether the district court’s specific reasons for rejecting the special
master’s report withstand scrutiny.6
A. Standard of Review
{10} Because this case involves proceedings before a special master and a district
court’s subsequent review of the special master’s report, two standards of review are
relevant in this case: the standard the district court applies to review of the special
master’s report and the standard that our Court applies to review of the district court’s
order.
1. District Court’s Review of Special Master’s Report
{11} Rule 1-053(E)(2) provides that in non-jury actions, “the [district] court shall
accept the [special] master’s findings of fact unless clearly erroneous.” Our case
law—with one exception—has equated the term “clearly erroneous” with the familiar
substantial evidence standard of review.
{12} We begin with Lopez v. Singh, in which our Supreme Court interpreted the
rule’s language as directing that “the findings of the [special] master, if supported by
substantial evidence, are binding upon the trial court.” 53 N.M. 245, 247, 205 P.2d
492, 493 (1949). The Court went on to state that “findings will not be set aside
merely because the record tends to show that they are not supported by the weight of
the evidence.” Id. The Court observed that the New Mexico rule applicable to a
special master’s findings was, at the time Lopez was decided, identical to its federal
counterpart and cited with approval federal case law defining the standard of review.2Rule 1-053(A) defines the word “master” as including “a referee.”
7
Id. at 247-48, 205 P.2d at 493. “[S]o far as the finding of the [special] master . . . who
saw the witnesses depends upon conflicting testimony or upon the credibility of
witnesses, or so far as there is any testimony consistent with the finding, it must be
treated as unassailable.” Id. at 247, 205 P.2d at 493 (internal quotation marks and
citation omitted). Applying this standard to the case before it, the Court in Lopez
concluded that the district court, which had modified some of the special master’s
findings and rejected others, had improperly weighed the evidence. Id. at 248-49, 205
P.2d at 493-94. Because the special master’s findings were supported by substantial
evidence, the Supreme Court reversed the district court’s order and remanded with
instructions to reinstate the special master’s findings. Id. at 249, 205 P.2d at 494.
{13} Our Supreme Court continued to apply the standard of review stated in Lopez
in three subsequent cases. In Purdy v. Tucker, the Court affirmed the district court’s
confirmation of the referee’s report, stating that “[i]f . . . the testimony before the
referee was conflicting, or if it depended upon the credibility of the witnesses, and the
referee found the facts from that testimony, his findings in this particular are not
subject to attack, and are binding upon the trial court unless, after an examination of
the record, it can discover there was no substantial testimony to sustain them.”2 54
N.M. 86, 90, 214 P.2d 766, 768 (1950). In Witt v. Skelly Oil Co., the Supreme Court8
applied the Lopez standard and reversed the district court’s rejection of some of the
special master’s findings of fact. Witt, 71 N.M. 411, 416, 418, 379 P.2d 61, 64-66
(1963). And in State ex rel. Reynolds v. Lewis, a water law case, the Supreme Court
affirmed the district court’s adoption of the special master’s findings and conclusions
“under the well-established rule” that findings supported by substantial evidence will
not be disturbed. 74 N.M. 442, 443, 394 P.2d 593, 593 (1964). The Court further
stated that “[t]he fact that there may have been contrary evidence which would have
supported a different finding does not permit us to weigh the evidence.” Id.
{14} Six years after it decided Lewis, the Supreme Court in Martin v. Foster, 81
N.M. 583, 470 P.2d 304 (1970), applied a standard of review different from that
applied in prior cases. The case involved a dispute over a construction contract, and
the parties submitted the dispute to three special masters to resolve. Id. at 583, 470
P.2d at 304. The special masters submitted a report that the district court adopted, and
the Supreme Court reversed. Id. at 584-85, 470 P.2d at 305-06. In stating the
standard of review to be applied by the district court, the Supreme Court did not cite
any of the cases that we have discussed above. Instead, the Court noted that New
Mexico’s Rule 53(e)(2) (cited as NMSA 1953, § 21-1-1(53)(e)(2) (Vol 4, Repl.),
which in relevant part is identical to current Rule 1-053(E)(2)) was identical to its
federal counterpart and cited a Tenth Circuit Court of Appeals case for the proposition9
that “findings are clearly erroneous if the reviewing court on the entire evidence has
the definite and firm conviction that a mistake has been committed.” Martin, 81 N.M.
at 584-85, 470 P.2d at 305-06 (citing United States v. Waymire, 202 F.2d 550, 553
(10th Cir. 1953) (internal quotation marks omitted)). The Court concluded that the
special masters had decided the dispute on the basis of standards different from the
standards required by the construction contract and, therefore, “the findings based on
those standards were clearly erroneous.” Id. (internal quotation marks omittted).
{15} The standard of review applied in Martin appears to permit rejection of a
special master’s findings even if they are supported by substantial evidence. The
standard stated in Martin is the same as the pre-2003 federal definition of “clearly
erroneous.” In 2003, Fed. R. Civ. P. 53 was substantially revised to permit de novo
review of a special master’s findings and conclusion. Under the pre-2003 federal
standard, “the reviewing court may [disregard] a finding even if supported by
substantial evidence when the clear weight of the evidence suggests that the finding
is incorrect.” 9 James Wm. Moore, et al., Moore’s Federal Practice, § 52.31[4], 52-
65 (3d ed. 2012). It is this pre-2003 federal standard that the OSE asks us to apply in
the present case.
{16} In our view, the standard stated in Martin is an anomaly in New Mexico’s
jurisprudence related to Rule 1-053. The standard permitting rejection of a special10 master’s findings upon “the definite and firm conviction that a mistake has been committed” does not appear in any other New Mexico case addressing Rule 1-053. Martin, 81 N.M. at 585, 470 P.2d at 305 (internal quotation marks and citation omitted). Furthermore, all of the relevant cases preceding and following Martin apply the substantial evidence standard of review to a special master’s findings of fact. For example, in State ex rel. Reynolds v. Niccum, 102 N.M. 330, 695 P.2d 480 (1985), another water law case, our Supreme Court ignored Martin and again relied on Lopez and Witt, stating, “Only when there is total lack of substantial evidence to support the special master’s findings, is the court warranted in rejecting the [special] master’s report.” Niccum, 102 N.M. at 332, 695 P.2d at 482. The Court went on to state that “[w]hen there is substantial evidence[,] the special master’s findings are binding upon the trial court.” Id. And, following Niccum, this Court applied the substantial evidence standard in Lozano v. GTE Lenkurt, Inc., 1996-NMCA-074, ¶ 15, 122 N.M. 103, 920 P.2d 1057, stating that “an order or judgment by a district court adopting a special master’s report will be upheld on appeal if the special master’s findings are supported by substantial evidence.” We therefore conclude that the district court could reject the special master’s findings of fact only if they were not supported by substantial evidence.
11
{17} Although Rule 1-053 does not specify the standard of review that should be
applied to a special master’s conclusions of law, our case law has established that a
special master’s conclusions of law are to be reviewed de novo by district courts. Lee
v. Martinez, 2004-NMSC-027, ¶ 12, 136 N.M. 166, 96 P.3d 291; see Lozano, 1996-
NMCA-074, ¶¶ 17-18. In examining the special master’s conclusions of law, a
reviewing court exercises independent judgment without assigning special weight to
the special master’s conclusions of law. Lee, 2004-NMSC-027, ¶ 12.
2. Appellate Review of the District Court’s Order
{18} The standard of review that an appellate court employs in cases involving Rule
1-053 has not been clearly expressed in New Mexico appellate decisions. However,
our case law leads us to conclude that our review is the same as the review conducted
by the district court; that is, we consider whether the special master’s findings of fact
are supported by substantial evidence. This is the standard of review employed by
our Supreme Court in Lopez, Witt, Lewis, and Niccum, and by this Court in Lozano.
This standard is applied regardless of whether the district court had adopted or
rejected the special master’s findings. See Niccum, 102 N.M. at 332-33, 695 P.2d at
482-83 (“Once findings of a special master are adopted and approved by the trial
court, th[e appellate] court will not disturb those findings when they are supported by
substantial evidence.”); Lewis, 74 N.M. at 442-43, 394 P.2d at 593 (explaining that12 “an appellate court must first review the sufficiency of the evidence to support [the findings] made by the [special] master” and affirming district court’s adoption of the special master’s findings because they were supported by substantial evidence); Witt, 71 N.M. at 413, 417, 379 P.2d at 63, 65 (reversing the district court’s rejection of some of the special master’s findings because the Supreme Court’s review of the record established that the special master’s findings were supported by substantial evidence); Lopez, 53 N.M. at 247-48, 205 P.2d at 493-94 (reversing district court’s rejection of certain of the special master’s findings because the Supreme Court’s review of the evidence failed to reveal that the findings were erroneous, i.e., not supported by substantial evidence); Lozano, 1996-NMCA-074, ¶ 15 (explaining that “an order or judgment by a district court adopting a special master’s report will be upheld on appeal if the special master’s findings are supported by substantial evidence”). Thus, we give no deference to the district court’s findings but instead consider only whether the special master’s findings of fact were supported by substantial evidence. Nonetheless, we examine the district court’s rationale for rejecting the special master’s report in this case in order to provide context for our analysis. B. The District Court’s Grounds for Rejecting the Special Master’s Report
13
{19} The district court rejected the special master’s report after concluding that the
special master’s findings concerning beneficial use were “clearly erroneous and not
supported by substantial evidence.” In its order, the district court relied on this
Court’s decision in State ex. rel. Martinez v. McDermett, 120 N.M. 327, 901 P.2d 745
(Ct. App. 1995).
{20} In New Mexico, “water rights are both established and exercised by beneficial
use, which forms the basis, the measure and the limit of the right to use of the water.”
Walker v. United States, 2007-NMSC-038, ¶¶ 21-22, 142 N.M. 45, 162 P.3d 882
(internal quotation marks and citation omitted); see NMSA 1978, § 72-1-2 (1907)
(stating the beneficial use provision of the state water code). Beneficial use has been
defined in our case law as “the use of such water as may be necessary for some useful
and beneficial purpose in connection with the land from which it is taken.”
McDermett, 120 N.M. at 330, 901 P.2d at 748 (internal quotation marks and citation
omitted). “The concept requires actual use for some purpose that is socially accepted
as beneficial.” Id. An evaluation for beneficial use generally requires an assessment
of “the quantity, place of use, and purpose to which water has actually been applied.”
Tri-State Generation & Transmission Ass’n, Inc. v. D’Antonio, 2011-NMCA-015,
¶ 13, 149 N.M. 394, 249 P.3d 932, cert. granted, 2011-NMCERT-002, 150 N.M. 617,
264 P.3d 129.14
{21} In this case, the special master concluded that water was “put to beneficial use
on all of the [b]ench [l]ands by the end of 1955.” As grounds for the beneficial use
determination, the special master relied on evidence of crop growth on the disputed
bench lands. Specifically, the special master found credible Baca’s testimony that in
1981, he observed alfalfa crops growing on all of the bench lands during negotiations
for the purchase of the property as well as testimony from other witnesses that they
had observed crop growth on the bench lands prior to Baca’s purchase of the farm.
The special master also found persuasive the testimony of Baca’s expert, who opined
that aerial photographs predating Baca’s purchase of the property showed evidence
of cultivation, and that an aerial photograph from 1955, in particular, showed the most
signs of cultivation on the bench lands. The special master also noted that the OSE’s
experts acknowledged that aerial photographs from 1955 and 1974 showed signs of
irrigation and that “crops were being grown on some benches.”
{22} In addition to the foregoing, the special master’s report indicated that he relied
on two additional items to support beneficial use of the water: (1) evidence that “the
[b]ench [l]ands had been constructed for the express purpose of growing crops” and,
(2) “an irrigation system [that] had been installed for delivery of water from the . . .
[w]ell to all of the [b]enches.” The special master stated that he believed it to be
“highly unlikely, if not inconceivable, that someone would go to the trouble of15
constructing the [b]ench [l]ands and installing an irrigation system for those lands
without taking the next step of applying irrigation water to the benches.”
{23} In rejecting the special master’s finding of beneficial use, the district court
disagreed with the special master that the record supported any finding that “irrigation
water has ever been used to grow a crop on the disputed bench lands.” The district
court also appears to have relied on McDermett to reject the special master’s reliance
on the preparatory steps taken toward cultivation as being indicative of beneficial use.
On appeal, the OSE maintains that the special master erred as a matter of law based
on our holding in McDermett. As we explain below, although we agree with the
OSE’s position that the special master’s reliance on the evidence of preparatory steps
was improper under McDermett, we nevertheless conclude that the district court erred
in disregarding the evidence supporting the special master’s findings concerning crop
growth. See McDermett, 120 N.M. at 332, 901 P.2d at 750 (observing that “growing
crops constitutes a beneficial use of water”).
{24} Of relevance here, McDermett concerned the issue of whether a predecessor in
interest to the defendant property owners had established proof of beneficial use of
water over an eighty-four acre tract for which water rights were in dispute. Id. at 329-
30, 901 P.2d at 747-48. At trial, the defendants presented documentary evidence that
a predecessor in interest had drilled a well on the land in question, “put a pump in it,16
. . . dug two main ditches and approximately six miles of laterals on the property, . .
. [and ran] water apparently . . . through all the ditches and laterals” as far back as the
year 1907. Id. at 330, 901 P.2d at 748. Additional documentary evidence was
presented showing that crops were grown on approximately twenty acres during that
year and that some forty years later, crops were grown on the remainder of the land.
120 N.M. at 329, 901 P.2d at 747. The district court determined that the diversion of
water onto the entire water tract was sufficient to constitute beneficial use. Id. at 330-
31, 901 P.2d at 748-49. This Court reversed, holding that “[a] diversion alone is not
beneficial use” and that “[t]here must be an ultimate, actual beneficial use of the water
resulting from the diversion.” Id. at 331, 901 P.2d at 749. We stated that “[f]or a
diversion of water for the purpose of irrigation to constitute beneficial use, the water
must be used to irrigate crops within a reasonable time.” Id. Under the facts presented
in that case, there was evidence of actual crop growth—and thus, beneficial
use—solely on twenty acres in 1907 and, by contrast, no evidence that water was
applied to beneficial use on the remaining sixty-four acres in that year. Id. Thus, we
concluded that the district court erred in determining that water had been applied to
beneficial use on the entire eighty-four acre tract. Id.
{25} In the present case, we agree with the OSE that the special master’s reliance on
the evidence of preparatory steps taken toward irrigation and/or cultivation to17
establish beneficial use was improper under McDermett. Although the special master
appeared to understand the holding of McDermett that a diversion alone is not
beneficial use, the special master nevertheless drew an impermissible inference that
construction of the bench lands and installation of an irrigation system was evidence
of beneficial use because the special master considered it to be “highly unlikely” that
a property owner would take these actions without taking future steps indicative of
beneficial use. We are convinced by the OSE’s argument that neither of these actions
are enough under McDermett to establish beneficial use because neither of these
reflects an “an ultimate, actual beneficial use of the water.” See id. (emphasis added)
(stating that a “diversion of water into irrigation ditches or flooding the land with the
diverted water does not, by itself, constitute irrigation for the purpose of establishing
beneficial use”).
{26} However, unlike the factual scenario presented in McDermett, the special
master’s report in this case included findings of actual crop growth on the disputed
bench lands. These findings relied in part on Baca’s testimony regarding growth of
alfalfa crops on all of the bench lands and the testimony from both Baca’s and the
OSE’s experts acknowledging that certain aerial photographs showed signs of
cultivation on the bench lands. Even if we set aside the special master’s findings
regarding the steps taken preparatory to cultivation, these factual findings of crop18
growth were sufficient, by themselves, to establish beneficial use of water on the
disputed bench lands. See id. at 332, 901 P.2d at 750 (observing that “growing crops
constitutes a beneficial use of water”).
{27} In rejecting the special master’s finding of beneficial use, the district court had
to disregard all of this evidence, which is not permissible under the applicable
standard of review. As stated in Witt, “[T]he master’s findings are presumed to be
correct and . . . so far as they depend upon conflicting evidence, or upon the credibility
of witnesses, or so far as there is any testimony consistent with the findings, they must
be treated as unassailable.” 71 N.M. at 416, 379 P.2d at 65. The findings were
therefore binding on the district court, and we conclude that the district court erred in
setting aside the special master’s finding of beneficial use.
{28} At oral argument, the OSE argued that as a matter of law, beneficial use cannot
occur until crops have been grown and harvested. The OSE has cited no authority
establishing that evidence of actual harvest is required, and McDermett states clearly
that “growing crops constitutes a beneficial use of water.” 120 N.M. at 332, 901 P.2d
at 750. We are not persuaded that Baca had to prove that crops were harvested in
order to establish that the water right had been put to beneficial use by the time he
purchased the property in question.19
{29} The OSE raises two arguments on appeal challenging the special master’s
reliance on a declaration of beneficial use filed by Baca’s realtor in April as support
for the special master’s finding that Baca’s predecessors in interest applied the water
right to beneficial use on the disputed bench lands. We decline to address these
arguments because even without the evidence of the declaration, other substantial
evidence supports the special master’s finding of beneficial use.
CONCLUSION
{30} Based on the foregoing, we reverse the district court’s order and remand with
instructions that the district court consider the OSE’s remaining objection to the
special master’s report on the issue of abandonment of the water right.
{31} IT IS SO ORDERED.
CYNTHIA A. FRY, Judge20 WE CONCUR: MICHAEL D. BUSTAMANTE, Judge JONATHAN B. SUTIN, Judge
1 printed pages contain little extracted OCR body text; searchable legal-body completeness has not been established for those pages.
OCR transcription for search; preserved printed pages are authoritative
IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
Opinion Number:
Filing Date: OCTOBER 24, 2012
NO. 30,824
STATE OF NEW MEXICO ex rel.
OFFICE OF THE STATE ENGINEER,
THOMAS C. TURNEY,
Plaintiffs-A ppellees,
V.
UNITED STATES OF AMERICA,
ELEPHANT BUTTE IRRIGATION
DISTRICT, CITY OF EL PASO,
NEW MEXICO STATE UNIVERSITY,
STAHMAN FARMS, OTHER CLAIMANTS
TO BE DETERMINED, and UNKNOWN
CLAIMANTS,
Defendants,
and
JOHN D. BACA,
Subfile Defendant- Appellant.
APPEAL FROM THE DISTRICT COURT OF DONA ANA COUNTY
Jerald A. Valentine, District J udge
DL Sanders, Special Assistant Attorney General
Richard A. Allen, Special Assistant Attorney General
Martha C. Franks, Special Assistant Attorney General
Santa Fe, NM
for Appellees
Peters Law Firm, LLC
Lee E. Peters
Las Cruces, NM
for Appellant
OPINION
FRY, Judge.
{1} This case involves a dispute over ownership of a ground water right on
approximately twenty-eight acres of elevated bench lands on Appellant John D.
Baca’s farm property in Salem, New Mexico. In the course of a subfile proceeding
initiated by the Office of the State Engineer (OSE) in order to determine ownership
of water rights on Baca’s farm, the district court appointed a special master to try the
matter. The special master filed a report recommending that the district court grant
ownership of the disputed water right to Baca. Upon the OSE’s written objections to
the report, the district court rejected the special master’s report in part and then
entered an order declaring that Baca did not have a water right on the disputed bench
lands.
{2} Baca appeals, arguing that the district court was bound by the factual findings
and legal conclusions entered by the special master and that the court improperly re-
weighed the evidence and applied an erroneous standard of review in rejecting the
special master’s report. We agree and conclude that the district court’s actions were
improper under the standard of review established by our case law. We therefore
reverse the district court’s order and remand for the district court to consider the
OSE’s remaining objection on the issue of abandonment of the water right.
1Adjudications are generally “lawsuits in state or federal court to resolve all
claims to water use in the state of New Mexico including those of pueblos, tribes and
the federal government.” Denise D. Fort, The Utton Center, Water Matters!,
Adjudications 4-1 (2012), available at http://uttoncenter.unm.edu/pdfs/Water-Matters
-2012/2012_water_matters_final_full-publication.pdf. During the subfile phase of
an adjudication, the Office of the Attorney General (through the use of OSE-specific
adjudication teams) determines the elements of individual water rights for each
claimant. Fort, supra, 4-2 to 4-3. Each “subfile” corresponds to an individual
claimant, such as Baca in this case, or a city or Native American tribe. See Fort,
supra, 4-3.
2
I. BACKGROUND
{3} The present case arose as a subfile proceeding in the course of a general
adjudication of water rights in the lower Rio Grande stream system.1 At issue in this
particular subfile proceeding is a disputed water right on Baca’s farm in Salem, New
Mexico. Baca purchased the 132-acre farm in 1981. For purposes of the subfile
proceeding, Baca’s property was divided into two distinct areas: (1) the “valley
lands,” consisting of forty-two acres; and (2) the “bench lands,” consisting of
approximately twenty-eight acres that were terraced into eighteen benches that took
the shape of a chevron when viewed from the air. The subfile for Baca’s property
consists of five water rights, only one of which is at issue in this appeal. This disputed
water right is associated with the bench lands and, more specifically, it is the right to
ground water produced from a well for the upper sixteen benches (the disputed
benches) on Baca’s property.
3
{4} Over the span of four years beginning in 2001, the OSE sent a series of offers
of judgment to Baca during the subfile phase of the adjudication in order to reach an
agreement on this disputed water right. When the parties were unable to come to an
agreement on this water right, the district court referred the matter to a special master
pursuant to its authority under Rule 1-053 NMRA.
{5} Rule 1-053 governs the appointment and use of special masters in district court
proceedings. In non-jury cases, a district court is permitted to refer a matter to a
special master upon a showing of an exceptional condition or “in matters of account
and of difficult computation of damages.” Rule 1-053(B). In this case, the district
court appointed attorney Stephen Snyder as special master after determining that
exceptional conditions warranted the referral. The district court’s order of reference
directed the special master to “hear and determine all claims and contentions of the
parties” and to “make findings of fact and conclusions of law and prepare and file a
report” with the court at the conclusion of the proceedings. See Rule 1-053(E)(1)
(requiring the special master to prepare a report on the matter submitted to him and
file the report with the court).
{6} The parties tried two issues before the special master: (1) whether a predecessor
in interest to Baca established a ground water right on the disputed benches and, if so,
(2) whether Baca abandoned this water right. In the proceedings before the special
4
master, the OSE took the position that a water right was never established for the
disputed benches because water from the well was not put to beneficial use on these
benches. See Hydro Res. Corp. v. Gray, 2007-NMSC-061, ¶ 21, 143 N.M. 142, 173
P.3d 749 (stating the general principle that “[g]round water, like surface water, must
be appropriated and applied to beneficial use before a vested water right will result”).
Alternatively, the OSE claimed that Baca had abandoned any water right that may
have once existed on the disputed benches. Over the course of a three-day trial before
the special master, the parties presented testimony from lay and expert witnesses as
well as documentary evidence in the form of aerial photographs and affidavits in
support of their positions.
{7} Following the hearing, the special master filed a report with the district court
in which he found that irrigation ground water rights were established on the disputed
benches and that Baca had not abandoned this water right. The OSE objected to the
special master’s report and, following a hearing, the district court entered an order
rejecting in part the special master’s report.
{8} The district court disagreed with a majority of the special master’s findings of
fact concerning the testimony and documentary evidence presented at trial. In
particular, the district court found that “the record d[id] not support [t]he [s]pecial
[m]aster’s [f]indings that irrigation water has ever been used to grow a crop on the
5
disputed bench lands.” The district court also rejected the special master’s reliance
on a declaration of water rights filed by Baca shortly after the farm purchase. In
addition, the court rejected the special master’s conclusion that water was put to
beneficial use on the disputed benches. The district court held that Baca did not have
a water right on the disputed bench lands. Because the court determined that a ground
water right had not been established on the disputed bench lands, the court did not
address the OSE’s objections to the special master’s findings on abandonmennt. This
appeal followed.
II. DISCUSSION
{9} On appeal, Baca’s overarching argument is that the district court improperly
disregarded the special master’s report. Specifically, Baca argues that the district
court was bound by the factual findings entered by the special master because the
findings were supported by substantial evidence and that the court improperly re-
weighed the evidence and applied an erroneous standard of review in rejecting the
special master’s report. After delineating the proper standard of review in this case,
we examine whether the district court’s specific reasons for rejecting the special
master’s report withstand scrutiny.
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A. Standard of Review
{10} Because this case involves proceedings before a special master and a district
court’s subsequent review of the special master’s report, two standards of review are
relevant in this case: the standard the district court applies to review of the special
master’s report and the standard that our Court applies to review of the district court’s
order.
1. District Court’s Review of Special Master’s Report
{11} Rule 1-053(E)(2) provides that in non-jury actions, “the [district] court shall
accept the [special] master’s findings of fact unless clearly erroneous.” Our case
law—with one exception—has equated the term “clearly erroneous” with the familiar
substantial evidence standard of review.
{12} We begin with Lopez v. Singh, in which our Supreme Court interpreted the
rule’s language as directing that “the findings of the [special] master, if supported by
substantial evidence, are binding upon the trial court.” 53 N.M. 245, 247, 205 P.2d
492, 493 (1949). The Court went on to state that “findings will not be set aside
merely because the record tends to show that they are not supported by the weight of
the evidence.” Id. The Court observed that the New Mexico rule applicable to a
special master’s findings was, at the time Lopez was decided, identical to its federal
counterpart and cited with approval federal case law defining the standard of review.
2Rule 1-053(A) defines the word “master” as including “a referee.”
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Id. at 247-48, 205 P.2d at 493. “[S]o far as the finding of the [special] master . . . who
saw the witnesses depends upon conflicting testimony or upon the credibility of
witnesses, or so far as there is any testimony consistent with the finding, it must be
treated as unassailable.” Id. at 247, 205 P.2d at 493 (internal quotation marks and
citation omitted). Applying this standard to the case before it, the Court in Lopez
concluded that the district court, which had modified some of the special master’s
findings and rejected others, had improperly weighed the evidence. Id. at 248-49, 205
P.2d at 493-94. Because the special master’s findings were supported by substantial
evidence, the Supreme Court reversed the district court’s order and remanded with
instructions to reinstate the special master’s findings. Id. at 249, 205 P.2d at 494.
{13} Our Supreme Court continued to apply the standard of review stated in Lopez
in three subsequent cases. In Purdy v. Tucker, the Court affirmed the district court’s
confirmation of the referee’s report, stating that “[i]f . . . the testimony before the
referee was conflicting, or if it depended upon the credibility of the witnesses, and the
referee found the facts from that testimony, his findings in this particular are not
subject to attack, and are binding upon the trial court unless, after an examination of
the record, it can discover there was no substantial testimony to sustain them.”2 54
N.M. 86, 90, 214 P.2d 766, 768 (1950). In Witt v. Skelly Oil Co., the Supreme Court
8
applied the Lopez standard and reversed the district court’s rejection of some of the
special master’s findings of fact. Witt, 71 N.M. 411, 416, 418, 379 P.2d 61, 64-66
(1963). And in State ex rel. Reynolds v. Lewis, a water law case, the Supreme Court
affirmed the district court’s adoption of the special master’s findings and conclusions
“under the well-established rule” that findings supported by substantial evidence will
not be disturbed. 74 N.M. 442, 443, 394 P.2d 593, 593 (1964). The Court further
stated that “[t]he fact that there may have been contrary evidence which would have
supported a different finding does not permit us to weigh the evidence.” Id.
{14} Six years after it decided Lewis, the Supreme Court in Martin v. Foster, 81
N.M. 583, 470 P.2d 304 (1970), applied a standard of review different from that
applied in prior cases. The case involved a dispute over a construction contract, and
the parties submitted the dispute to three special masters to resolve. Id. at 583, 470
P.2d at 304. The special masters submitted a report that the district court adopted, and
the Supreme Court reversed. Id. at 584-85, 470 P.2d at 305-06. In stating the
standard of review to be applied by the district court, the Supreme Court did not cite
any of the cases that we have discussed above. Instead, the Court noted that New
Mexico’s Rule 53(e)(2) (cited as NMSA 1953, § 21-1-1(53)(e)(2) (Vol 4, Repl.),
which in relevant part is identical to current Rule 1-053(E)(2)) was identical to its
federal counterpart and cited a Tenth Circuit Court of Appeals case for the proposition
9
that “findings are clearly erroneous if the reviewing court on the entire evidence has
the definite and firm conviction that a mistake has been committed.” Martin, 81 N.M.
at 584-85, 470 P.2d at 305-06 (citing United States v. Waymire, 202 F.2d 550, 553
(10th Cir. 1953) (internal quotation marks omitted)). The Court concluded that the
special masters had decided the dispute on the basis of standards different from the
standards required by the construction contract and, therefore, “the findings based on
those standards were clearly erroneous.” Id. (internal quotation marks omittted).
{15} The standard of review applied in Martin appears to permit rejection of a
special master’s findings even if they are supported by substantial evidence. The
standard stated in Martin is the same as the pre-2003 federal definition of “clearly
erroneous.” In 2003, Fed. R. Civ. P. 53 was substantially revised to permit de novo
review of a special master’s findings and conclusion. Under the pre-2003 federal
standard, “the reviewing court may [disregard] a finding even if supported by
substantial evidence when the clear weight of the evidence suggests that the finding
is incorrect.” 9 James Wm. Moore, et al., Moore’s Federal Practice, § 52.31[4], 52-
65 (3d ed. 2012). It is this pre-2003 federal standard that the OSE asks us to apply in
the present case.
{16} In our view, the standard stated in Martin is an anomaly in New Mexico’s
jurisprudence related to Rule 1-053. The standard permitting rejection of a special
10
master’s findings upon “the definite and firm conviction that a mistake has been
committed” does not appear in any other New Mexico case addressing Rule 1-053.
Martin, 81 N.M. at 585, 470 P.2d at 305 (internal quotation marks and citation
omitted). Furthermore, all of the relevant cases preceding and following Martin apply
the substantial evidence standard of review to a special master’s findings of fact. For
example, in State ex rel. Reynolds v. Niccum, 102 N.M. 330, 695 P.2d 480 (1985),
another water law case, our Supreme Court ignored Martin and again relied on Lopez
and Witt, stating, “Only when there is total lack of substantial evidence to support the
special master’s findings, is the court warranted in rejecting the [special] master’s
report.” Niccum, 102 N.M. at 332, 695 P.2d at 482. The Court went on to state that
“[w]hen there is substantial evidence[,] the special master’s findings are binding upon
the trial court.” Id. And, following Niccum, this Court applied the substantial
evidence standard in Lozano v. GTE Lenkurt, Inc., 1996-NMCA-074, ¶ 15, 122 N.M.
103, 920 P.2d 1057, stating that “an order or judgment by a district court adopting a
special master’s report will be upheld on appeal if the special master’s findings are
supported by substantial evidence.” We therefore conclude that the district court
could reject the special master’s findings of fact only if they were not supported by
substantial evidence.
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{17} Although Rule 1-053 does not specify the standard of review that should be
applied to a special master’s conclusions of law, our case law has established that a
special master’s conclusions of law are to be reviewed de novo by district courts. Lee
v. Martinez, 2004-NMSC-027, ¶ 12, 136 N.M. 166, 96 P.3d 291; see Lozano, 1996-
NMCA-074, ¶¶ 17-18. In examining the special master’s conclusions of law, a
reviewing court exercises independent judgment without assigning special weight to
the special master’s conclusions of law. Lee, 2004-NMSC-027, ¶ 12.
2. Appellate Review of the District Court’s Order
{18} The standard of review that an appellate court employs in cases involving Rule
1-053 has not been clearly expressed in New Mexico appellate decisions. However,
our case law leads us to conclude that our review is the same as the review conducted
by the district court; that is, we consider whether the special master’s findings of fact
are supported by substantial evidence. This is the standard of review employed by
our Supreme Court in Lopez, Witt, Lewis, and Niccum, and by this Court in Lozano.
This standard is applied regardless of whether the district court had adopted or
rejected the special master’s findings. See Niccum, 102 N.M. at 332-33, 695 P.2d at
482-83 (“Once findings of a special master are adopted and approved by the trial
court, th[e appellate] court will not disturb those findings when they are supported by
substantial evidence.”); Lewis, 74 N.M. at 442-43, 394 P.2d at 593 (explaining that
12
“an appellate court must first review the sufficiency of the evidence to support [the
findings] made by the [special] master” and affirming district court’s adoption of the
special master’s findings because they were supported by substantial evidence); Witt,
71 N.M. at 413, 417, 379 P.2d at 63, 65 (reversing the district court’s rejection of
some of the special master’s findings because the Supreme Court’s review of the
record established that the special master’s findings were supported by substantial
evidence); Lopez, 53 N.M. at 247-48, 205 P.2d at 493-94 (reversing district court’s
rejection of certain of the special master’s findings because the Supreme Court’s
review of the evidence failed to reveal that the findings were erroneous, i.e., not
supported by substantial evidence); Lozano, 1996-NMCA-074, ¶ 15 (explaining that
“an order or judgment by a district court adopting a special master’s report will be
upheld on appeal if the special master’s findings are supported by substantial
evidence”). Thus, we give no deference to the district court’s findings but instead
consider only whether the special master’s findings of fact were supported by
substantial evidence. Nonetheless, we examine the district court’s rationale for
rejecting the special master’s report in this case in order to provide context for our
analysis.
B. The District Court’s Grounds for Rejecting the Special Master’s Report
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{19} The district court rejected the special master’s report after concluding that the
special master’s findings concerning beneficial use were “clearly erroneous and not
supported by substantial evidence.” In its order, the district court relied on this
Court’s decision in State ex. rel. Martinez v. McDermett, 120 N.M. 327, 901 P.2d 745
(Ct. App. 1995).
{20} In New Mexico, “water rights are both established and exercised by beneficial
use, which forms the basis, the measure and the limit of the right to use of the water.”
Walker v. United States, 2007-NMSC-038, ¶¶ 21-22, 142 N.M. 45, 162 P.3d 882
(internal quotation marks and citation omitted); see NMSA 1978, § 72-1-2 (1907)
(stating the beneficial use provision of the state water code). Beneficial use has been
defined in our case law as “the use of such water as may be necessary for some useful
and beneficial purpose in connection with the land from which it is taken.”
McDermett, 120 N.M. at 330, 901 P.2d at 748 (internal quotation marks and citation
omitted). “The concept requires actual use for some purpose that is socially accepted
as beneficial.” Id. An evaluation for beneficial use generally requires an assessment
of “the quantity, place of use, and purpose to which water has actually been applied.”
Tri-State Generation & Transmission Ass’n, Inc. v. D’Antonio, 2011-NMCA-015,
¶ 13, 149 N.M. 394, 249 P.3d 932, cert. granted, 2011-NMCERT-002, 150 N.M. 617,
264 P.3d 129.
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{21} In this case, the special master concluded that water was “put to beneficial use
on all of the [b]ench [l]ands by the end of 1955.” As grounds for the beneficial use
determination, the special master relied on evidence of crop growth on the disputed
bench lands. Specifically, the special master found credible Baca’s testimony that in
1981, he observed alfalfa crops growing on all of the bench lands during negotiations
for the purchase of the property as well as testimony from other witnesses that they
had observed crop growth on the bench lands prior to Baca’s purchase of the farm.
The special master also found persuasive the testimony of Baca’s expert, who opined
that aerial photographs predating Baca’s purchase of the property showed evidence
of cultivation, and that an aerial photograph from 1955, in particular, showed the most
signs of cultivation on the bench lands. The special master also noted that the OSE’s
experts acknowledged that aerial photographs from 1955 and 1974 showed signs of
irrigation and that “crops were being grown on some benches.”
{22} In addition to the foregoing, the special master’s report indicated that he relied
on two additional items to support beneficial use of the water: (1) evidence that “the
[b]ench [l]ands had been constructed for the express purpose of growing crops” and,
(2) “an irrigation system [that] had been installed for delivery of water from the . . .
[w]ell to all of the [b]enches.” The special master stated that he believed it to be
“highly unlikely, if not inconceivable, that someone would go to the trouble of
15
constructing the [b]ench [l]ands and installing an irrigation system for those lands
without taking the next step of applying irrigation water to the benches.”
{23} In rejecting the special master’s finding of beneficial use, the district court
disagreed with the special master that the record supported any finding that “irrigation
water has ever been used to grow a crop on the disputed bench lands.” The district
court also appears to have relied on McDermett to reject the special master’s reliance
on the preparatory steps taken toward cultivation as being indicative of beneficial use.
On appeal, the OSE maintains that the special master erred as a matter of law based
on our holding in McDermett. As we explain below, although we agree with the
OSE’s position that the special master’s reliance on the evidence of preparatory steps
was improper under McDermett, we nevertheless conclude that the district court erred
in disregarding the evidence supporting the special master’s findings concerning crop
growth. See McDermett, 120 N.M. at 332, 901 P.2d at 750 (observing that “growing
crops constitutes a beneficial use of water”).
{24} Of relevance here, McDermett concerned the issue of whether a predecessor in
interest to the defendant property owners had established proof of beneficial use of
water over an eighty-four acre tract for which water rights were in dispute. Id. at 329-
30, 901 P.2d at 747-48. At trial, the defendants presented documentary evidence that
a predecessor in interest had drilled a well on the land in question, “put a pump in it,
16
. . . dug two main ditches and approximately six miles of laterals on the property, . .
. [and ran] water apparently . . . through all the ditches and laterals” as far back as the
year 1907. Id. at 330, 901 P.2d at 748. Additional documentary evidence was
presented showing that crops were grown on approximately twenty acres during that
year and that some forty years later, crops were grown on the remainder of the land.
120 N.M. at 329, 901 P.2d at 747. The district court determined that the diversion of
water onto the entire water tract was sufficient to constitute beneficial use. Id. at 330-
31, 901 P.2d at 748-49. This Court reversed, holding that “[a] diversion alone is not
beneficial use” and that “[t]here must be an ultimate, actual beneficial use of the water
resulting from the diversion.” Id. at 331, 901 P.2d at 749. We stated that “[f]or a
diversion of water for the purpose of irrigation to constitute beneficial use, the water
must be used to irrigate crops within a reasonable time.” Id. Under the facts presented
in that case, there was evidence of actual crop growth—and thus, beneficial
use—solely on twenty acres in 1907 and, by contrast, no evidence that water was
applied to beneficial use on the remaining sixty-four acres in that year. Id. Thus, we
concluded that the district court erred in determining that water had been applied to
beneficial use on the entire eighty-four acre tract. Id.
{25} In the present case, we agree with the OSE that the special master’s reliance on
the evidence of preparatory steps taken toward irrigation and/or cultivation to
17
establish beneficial use was improper under McDermett. Although the special master
appeared to understand the holding of McDermett that a diversion alone is not
beneficial use, the special master nevertheless drew an impermissible inference that
construction of the bench lands and installation of an irrigation system was evidence
of beneficial use because the special master considered it to be “highly unlikely” that
a property owner would take these actions without taking future steps indicative of
beneficial use. We are convinced by the OSE’s argument that neither of these actions
are enough under McDermett to establish beneficial use because neither of these
reflects an “an ultimate, actual beneficial use of the water.” See id. (emphasis added)
(stating that a “diversion of water into irrigation ditches or flooding the land with the
diverted water does not, by itself, constitute irrigation for the purpose of establishing
beneficial use”).
{26} However, unlike the factual scenario presented in McDermett, the special
master’s report in this case included findings of actual crop growth on the disputed
bench lands. These findings relied in part on Baca’s testimony regarding growth of
alfalfa crops on all of the bench lands and the testimony from both Baca’s and the
OSE’s experts acknowledging that certain aerial photographs showed signs of
cultivation on the bench lands. Even if we set aside the special master’s findings
regarding the steps taken preparatory to cultivation, these factual findings of crop
18
growth were sufficient, by themselves, to establish beneficial use of water on the
disputed bench lands. See id. at 332, 901 P.2d at 750 (observing that “growing crops
constitutes a beneficial use of water”).
{27} In rejecting the special master’s finding of beneficial use, the district court had
to disregard all of this evidence, which is not permissible under the applicable
standard of review. As stated in Witt, “[T]he master’s findings are presumed to be
correct and . . . so far as they depend upon conflicting evidence, or upon the credibility
of witnesses, or so far as there is any testimony consistent with the findings, they must
be treated as unassailable.” 71 N.M. at 416, 379 P.2d at 65. The findings were
therefore binding on the district court, and we conclude that the district court erred in
setting aside the special master’s finding of beneficial use.
{28} At oral argument, the OSE argued that as a matter of law, beneficial use cannot
occur until crops have been grown and harvested. The OSE has cited no authority
establishing that evidence of actual harvest is required, and McDermett states clearly
that “growing crops constitutes a beneficial use of water.” 120 N.M. at 332, 901 P.2d
at 750. We are not persuaded that Baca had to prove that crops were harvested in
order to establish that the water right had been put to beneficial use by the time he
purchased the property in question.
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{29} The OSE raises two arguments on appeal challenging the special master’s
reliance on a declaration of beneficial use filed by Baca’s realtor in April as support
for the special master’s finding that Baca’s predecessors in interest applied the water
right to beneficial use on the disputed bench lands. We decline to address these
arguments because even without the evidence of the declaration, other substantial
evidence supports the special master’s finding of beneficial use.
CONCLUSION
{30} Based on the foregoing, we reverse the district court’s order and remand with
instructions that the district court consider the OSE’s remaining objection to the
special master’s report on the issue of abandonment of the water right.
{31} IT IS SO ORDERED.
CYNTHIA A. FRY, Judge
WE CONCUR:
MICHAEL D. BUSTAMANTE, Judge
JONATHANB. SUTIN, Judge
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