Thyhorn Mutual Water System v. Cruz

Filed 8/21/06 Thyhorn Mutual Water System v. Cruz CA6

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SIXTH APPELLATE DISTRICT

This action was brought by the Tryhorn Mutual Water System and six of the seven property owners served by the water system against the seventh property owner. Plaintiffs sought to establish an equitable easement to maintain the well and water system, and also sought injunctive relief and other relief under Water Code sections 7000-7010,[1] including contribution of costs to maintain the water system (§ 7002), a declaration of rights (§ 7005), and attorney's fees (§ 7003). Following a four-day court trial, the trial court found in favor of plaintiffs on their claims, with the exception of injunctive relief, which the court determined was not warranted under the present circumstances. The court found that plaintiffs were prevailing parties and were therefore entitled to attorney's fees under section 7003 and the case of Rogers v. Riverside Land etc. Co. (1901) 132 Cal. 9 (Rogers). Plaintiffs filed a motion for attorney's fees and a memorandum of costs. The court awarded them $100,000 in fees and $4,431.65 in costs.

In this appeal, defendants Samuel Cruz and Debra Ramirez (collectively, appellants) challenge only the award of attorney's fees. The basis of their challenge is that Rogers does not authorize an award of fees in the circumstances of this case and that the statute providing for attorney's fees, section 7003, authorizes fees only in connection with an action under section 7002 for contribution of expenses of a jointly used well. The claim for contribution in this case, they argue, was an insignificant part of plaintiffs' lawsuit. They contend, therefore, that the trial court erred as a matter of law in awarding fees, or at the very least should have apportioned fees between the cause of action for which fees were authorized and those for which fees were not authorized.

These particular arguments were not raised before the trial court, which was never asked to allocate fees. We requested further briefing from the parties as to whether appellants can raise these arguments for the first time on appeal. Having received and considered the supplemental briefing, we have decided to exercise our discretion to address appellants' arguments challenging the legal basis for the attorney's fees award, since this presents an issue of law on undisputed facts. (See, e.g., UFITEC, S.A. v. Carter (1977) 20 Cal.3d 238, 249, fn. 2.) On the merits, for reasons we explain below, we find that the Rogers case does not apply and that under section 7003, which post-dated Rogers, attorney's fees are authorized only for plaintiffs' cause of action for contribution. This was therefore a proper case for the court to exercise its discretion regarding apportionment of fees. However, since the record shows that the court was not asked to apportion fees and therefore did not exercise its discretion in this regard, we will remand the matter so that the court may do so.

BACKGROUND

Appellants do not challenge the underlying judgment, and we will therefore take the factual background from the trial court's statement of decision. The Tryhorn Mutual Water System (Tryhorn) is a private unincorporated association established in 1955 to provide water to seven properties along Middlefield Road in Monterey County. The water system includes a well, water tanks, pipes and equipment to deliver the water to all seven properties. Costs of maintaining and operating the system are shared equally among the members through periodic assessments. The well is the sole source of water for the seven property owners living along Middlefield Road.

Until 1997, the well for the Tryhorn system was located on property at 732 Middlefield Road. In 1997, because the well water contained an excessive amount of nitrates, a new well was constructed on property at 736 Middlefield Road, after consideration of other locations and sources of water. The new location was approved by the Monterey County Health Department. The owner of the property at the time signed the application for the well and authorized its construction.

In locating and constructing the new well, the property owners were acting in accordance with the recorded Tryhorn Bylaws. However, the bylaws also required the members to provide easements for pipelines on their properties. Tryhorn did not record an easement for the well and water lines on the property at 736 Middlefield Road.

The wellhead and pump are set within a concrete slab approximately four inches thick and four feet square, with a pipe and electrical connection extending approximately two feet above the ground nearby. This apparatus is located on the property at 736 Middlefield Road approximately four feet in from a fence that marks the boundary between that property and the neighboring property at 738 Middlefield Road. Underground service lines run from the well to 738 Middlefield Road and to pressure tanks located on property at 732 Middlefield Road, where the well was formerly located.

Appellants Cruz and Ramirez bought the property at 736 Middlefield Road in April of 1999. They inspected the property before they bought it. The wellhead was clearly visible. Appellant Cruz testified that he saw the wellhead prior to purchasing the property, but he did not know it was a wellhead. Appellants were represented by a real estate agent. They signed a disclosure statement explicitly informing them that the property contained a new seven-party well. Appellants also received a copy of the Tryhorn Bylaws in the preliminary title report prepared for the property. John Plant, the neighboring property owner at 738 Middlefield, gave notice to appellants' real estate agent that there was a well on the property serving a mutual water system.

Appellants paid all assessments associated with the well until late 2002. Disagreements developed after a malfunctioning pump had to be replaced on the well in August of 2002. Appellants researched records at the Monterey County Health Department and could not find permits or other documentation for the well, pipes and wiring on their property. Appellants refused to pay their share of the cost of the new pump and did not pay any assessments for 2003.

On March 7, 2003, appellant Cruz wrote to all of the members of Tryhorn. He stated that there was no record for the installation of the well on his property and he asserted that it was â€