ELR Citation: ELR 20130
No(s). 99-4136 (10th Cir. Sep 15, 2000)

The court affirms a district court decision that a river water users association neither breached a "no protest" clause in a contract with a second river water users association nor breached the implied covenant of good faith and fair dealing when it entered the contract. The contract resolved a decades-old water use conflict. Under the contract, the first association would not protest any further applications or permits necessary to carry out the agreement. The second association subsequently began to organize a dam construction project, and the first association opposed the dam's construction. The second association filed suit alleging breach of contract and breach of the implied covenant of good faith. The district court granted summary judgment to the first association as to the breach of contract claim, and at trial the district court found that the first association did not breach the implied covenant of good faith.

The court first holds that although the district court incorrectly decided that the contract was unambiguous and, thus, improperly granted summary judgment, any error at the summary judgment stage was subsequently corrected at trial. The record clearly shows that the associations spent a good deal of the trial presenting evidence of their intent in entering the agreement and the scope of the "no protest" provision at issue. Despite its earlier ruling on summary judgment, the district court reviewed the evidence and specifically made a finding that the first association did not breach the contract. Were the court to remand, it would force the trial court to repeat the thorough evidence-gathering and decisionmaking process, contrary to the doctrine of judicial economy. The court next holds that the first association did not breach the implied covenant of good faith. The second association conceded that the district court's findings were supported by the evidence, which makes its ultimate argument on appeal less tenable. Further, having conducted its own review, the court finds factual support in the record for the district court's findings. The disputes leading up to the negotiation of the agreement were centered on water rights, not the actual construction of the dam itself. In addition, the language and context of the agreement, when read in its entirety, supports the district court's interpretation. Moreover, the associations lacked the ability to enter an agreement guaranteeing dam construction, but they did have the ability to resolve water rights.

Counsel for Plaintiff
Charles P. Sampson
Suitter Axland
175 SW Temple St., Ste. 700, Salt Lake City UT 84101
(801) 532-7300

Counsel for Defendants
James B. Lee
Parsons, Behle & Latimer
One Utah Center
201 S. Main St., Ste. 1800, Salt Lake City UT 84145
(801) 532-1234

Before Holloway and Briscoe, JJ.