This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.
Facts
Twin Forks Ranch, Inc. sold a 15-acre parcel of land to the Defendants without reserving water rights in the deed. The land included access to Slough Spring, which supplies water to a community water system serving over 200 families. The Defendants later claimed ownership of the water rights appurtenant to the land, leading to disputes with the Plaintiffs, who argued that the water rights were not intended to be transferred with the sale (paras 1, 5-7).
Procedural History
- District Court of Otero County: Granted summary judgment in favor of the Defendants, ruling that the water rights appurtenant to the land passed with the deed and that no factual issues required a trial (para 1).
Parties' Submissions
- Plaintiffs-Appellants: Argued that the deeds should be reformed or rescinded due to unilateral or mutual mistake, as the water rights were not intended to be transferred. They also raised equitable claims, asserting that the Defendants' actions interfered with the community water system (paras 1, 4, 8, 20).
- Defendants-Appellees: Contended that the water rights passed with the land as a matter of law and that there was no evidence of mutual mistake or grounds for equitable relief. They also argued that the Plaintiffs bore the risk of any mistake (paras 1, 9, 14, 20).
Legal Issues
- Did the water rights appurtenant to the land pass to the Defendants with the deed?
- Can the deeds be reformed or rescinded based on unilateral or mutual mistake?
- Are the Plaintiffs entitled to equitable remedies such as a negative easement, estoppel, or constructive trust?
Disposition
- The Court of Appeals affirmed the summary judgment in favor of the Defendants on all issues except mutual mistake.
- The case was remanded for trial on the issue of reformation of the deeds based on mutual mistake (para 22).
Reasons
Per Pickard J. (Wechsler and Bustamante JJ. concurring):
Water Rights and Summary Judgment: The trial court correctly ruled that water rights appurtenant to the land passed with the deed as a matter of law, given the absence of a reservation in the deed. The Plaintiffs bore the risk of any unilateral mistake, as they failed to provide a reason for allocating the risk to the Defendants (paras 1, 9-10).
Mutual Mistake: The Court found evidence suggesting that neither party intended to transfer water rights with the sale. The parties' negotiations focused on water taps, not water rights, and both parties were unaware of the appurtenant water rights at the time of sale. These facts raised a genuine issue of material fact regarding mutual mistake, warranting a trial on the issue of reformation (paras 11-19).
Equitable Remedies: The Plaintiffs failed to demonstrate detrimental reliance or compromised expectation interests at the time of sale, as the Water Association had not yet been formed. Thus, the trial court properly granted summary judgment on the Plaintiffs' equitable claims (para 21).
The Court concluded that the trial court erred in granting summary judgment on the issue of mutual mistake but affirmed its decision on all other issues (para 22).