The legal battle between water districts continues, with the San Juan Water Conservancy District (SJWCD) filing on Jan. 31 a response and counterclaims to the Pagosa Area Water and Sanitation District (PAWSD) lawsuit filed against them in December 2024 concerning the possible sale of the Running Iron Ranch.
The PAWSD lawsuit asks the court for a declaratory judgment stating that PAWSD is allowed to sell the ranch without the consent of the SJWCD under the terms of a 2015 agreement between PAWSD, the SJWCD and the Colorado Water Conservation Board (CWCB), which the SJWCD had previously claimed that PAWSD could not do.
The lawsuit also asks, if the declaratory judgment is not provided in PAWSD’s favor, that the ranch be partitioned and sold off at a public sale with the money earned divided according to the terms of the 2015 agreement.
The SJWCD response admits that there is a controversy concerning each party’s obligations under the 2015 agreement, but denies and contests PAWSD’s interpretation of the 2015 agreement and its arguments for why declaratory judgment should be made in PAWSD’s favor.
The response denies and contests that PAWSD has the right to request partition of the property and states that both parties agreed to not partition the property under the terms of the 2015 agreement.
The response also denies and contests claims by PAWSD that the CWCB is not a necessary party to the lawsuit that were included in the original filing.
The response then asserts a variety of defenses against PAWSD’s claims, including PAWSD failing to state a claim upon which relief can be granted, failure to join indispensable parties, applicable statutes of limitations, laches, waiver, estoppel, consent, unclean hands and waiver of partition.
The response closes by asking the court to rule in the SJWCD’s favor and to dismiss the claims which prejudice while awarding the SJWCD attorney’s fees and costs.
The SJWCD counterclaim against PAWSD begins by outlining the history of the purchase of Running Iron Ranch and highlighting that, at the time of the 2015 agreement, the president of the PAWSD Board of Directors characterized the agreement as a cost-saving measure that put the district’s taxpayer’s first.
The counterclaim continues, recounting the recent history of the reservoir project and PAWSD’s efforts to sell the ranch.
The first claim for relief in counterclaim accuses PAWSD of breach of contract concerning the 2015 agreement, stating that PAWSD has failed to cooperate with the SJWCD in planning for a reservoir at Running Iron Ranch and unilaterally sought to end reservoir planning and sell the ranch 10 years before the end of the planning period for the reservoir outlined in the agreement.
It adds that PAWSD’s efforts to sell the ranch occurred without the district making “every effort” to maintain ownership of the property as stated in the agreement and without “meaningful” consultation with the SJWCD and the CWCB, as outlined in the agreement.
The breach of contract claim also accuses PAWSD of impairing SJWCD’s efforts to build a reservoir by displaying “regular and public animosity” toward the district and of making decisions on technical issues without seeking information and advice from qualified professionals.
It also notes that PAWSD publicly endorsed a sale agreement that would have sold water rights for the reservoir that PAWSD does not own for “effectively no consideration.”
The claim adds that the SJWCD damages from these actions, including delays and impacts on the SJWCD’s reservoir project, added expenses for the project and legal expenses due to the ongoing litigation.
The second claim for relief asks for declaratory judgment from the court concerning PAWSD’s ability to sell the ranch under the 2015 agreement, requesting that the court find that PAWSD is prohibited from abandoning the reservoir project during the planning period, that it cannot sell the ranch unless it is has made every effort to retain it during the planning period and that it cannot sell the ranch without “meaningful consultation” with the SJWCD and the CWCB, among other findings.
The third claim for relief asks the court to issue an injunction enjoining PAWSD from taking actions to sell the ranch, acting in a manner that diminishes the SJWCD’s and the CWCB’s ability to use water rights and find partners for the reservoir project, and acting unilaterally concerning the party’s shared ownership of the Running Iron Ranch.
The claim also asks that PAWSD be required to defend the CWCB and the SJWCD from any third-party claims caused by PAWSD’s actions in breach of the agreement.
The counterclaim concludes with a prayer for relief summarizing the actions and items which the SJWCD requests that the court require, including damages for breach of contract in an amount to be determined at trial, an order clarifying the party’s rights and obligations under the 2015 agreement, an injunction concerning PAWSD’s efforts to sell the ranch and other items, and an award of attorney’s fees and costs to the SJWCD.
According to discussions at the Feb. 17 SJWCD board meeting, a PAWSD response to these counterclaims is expected by Feb. 21, after which the setting of timelines for discovery and other elements of the case can begin.
josh@pagosasun.com
