SUPERIOR COURT OF CALIFORNIA

COUNTY OF SAN FRANCISCO

Document Scanning Lead Sheet

Jan-29-2013 11:50 am

Case Number: CGC-13-528312

Filing Date: Jan-29-2013 11:49
Filed by: JOY GUANDIQUE
Juke Box: 001

Image: 03923777

REGISTER OF ACTIONS- TRANSFERRED FROM MONTEREY

COUNTY SUPERIOR COURT

CALIFORNIA-AMERICAN WATER COMPANY, A CALIFORNIA CO VS. MARINA

COAST WATER DISTRICT et al

001 C03923 777

Instructions:
Please place this sheet on top of the document to be scanned.

Monterey Superior Court

Register of Actions

CGC13 .. 52831?.

M120053: California-American Water Co vs. Marina Coast Water Dis etal

Case Type: Civil: Monterey - Civil Comp: Other (42)

Filing Date: 10/04/2012

Disposition:

Disposition Date:

Party

Attorney

Plaintiff: California-American Water Company

Defendant: Marina Coast Water
District-Responsive Pleading

Robert Moore
James Markman

Cross Complainant: Marina Coast Water District

Mark Fogelman
Mark Wasser
Susan Blitch
James Markman
Mark Fogelman

Cross Defendant: Monterey County Water-ServiceCross Claim

Documents
10/04/2012
10/04/2012
10/04/2012
11/19/2012
11/19/2012
11119/2012
11119/2012
12/04/2012
12/07/2012
12/10/2012
12/10/2012
12/13/2012
12/2112012
01/1112013

Complaint:
Civil Case Cover Sheet:
Summons: Filed:
Denial: General: of Marina Coast Water District
Complaint: Cross: of Marina Coast Water District
Summons: Filed: on X Comp of Marina Coast Water District
Notice: ofMotion to Transfer ofVenue **12-21-12
Summons/Proof of Service: as to Mtry Co Water Resources Agency to X 1
Answer: as to Monterey County Water Resources Agency
Response: of Cal AM to Marina Coast Water's Motion
Response: of Mo Co Water Resources to Motion to Xfer Venue
Document: Other: Reply Brief in Support of Motion for Transfer
Minute Order: -Motion Hearing on 12/2112012
Order: transfer venue

Filed by:
Filed by:
Filed by:
Filed by:
Filed by:
Filed by:
Filed by:
Filed by:
Filed by:
Filed by:
Filed by:
Filed by:
Filed by:
Filed by:

Plaintiff
Plaintiff
Plaintiff
Defendant
Cross Complainant
Cross Complainant
Cross Complainant
Cross Complainant
Defendant
Plaintiff
Defendant
Defendant
Clerk
Defendant

Scheduled Events
12/2112012
04/09/2013

Motion Hearing- Change ofVenue

Case Management Conference

Result: Motion Granted

Honorable Lydia Villarreal

Honorable Kay Kingsley

Fee/Payment Information
10/04/2012
10/10/2012

Complaint- Civil Unlimited

Copy Fees

$ 435.00
$4.00

One Legal LLC

Kelly

Fee Waivers
11119/2012

Page 1 of 1

Government Exemption, Total

Granted on 11119/2012

Marina Coast Water District,

Defendant

1/18/201

3:25pm

 FILED
NOV 19 2012

1 RICHARDS, WATSON & GERSHON

A Professional Corporation
2 JAMES L. MARKMAN (Bar No. 43536)
jmarkman(a1rwglaw.com
3 B. TILDEN KIM (BarNo. 143937)
tkim(a1rwglaw.com
4 TOUSSAINT S. BAILEY (Bar No. 245641)
tbailey(a1rwglaw.com
5 BYRON MILLER (Bar No. 279762)
bmiller@rwglaw.com
6 355 South Grand Avenue, 40th Floor
Los Angeles, California 90071-31 0 1
7 Telephone: 213.626.8484
Facsimile: 213.626.0078
8

RIOR COUR1

_,__ _-lr-_ _ _ _ DEPUTY

FILED

San Francisco County Superior Court

9 MARK FOGELMAN (Bar No. 5051 0)

RUTH STONER MUZZIN (BarNo. 276394)
10 FRIEDMAN & SPRINGWATER LLP
33 New Montgomery Street, Suite 290
11 San Francisco, California 94105
Telephone: 415.834.3800

Attorneys for Defendant and Cross-Complainant

13 MARINA COAST WATER DISTRICT
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF MONTEREY
16 CALIFORNIA-AMERICAN WATER
COMPANY, a California corporation,
17
Plaintiff,
18
v.
19 MARINA COAST WATER DISTRICT;
MONTEREY COUNTY WATER
20 RESOURCES AGENCY; and DOES 2
through 10, inclusive,
21
Defendant.
22
23 MARINA COAST WATER DISTRICT,
24
25

CGC-13528

Case No. M 120053

NOTICE OF MOTION AND MOTION
FOR TRANSFER OF VENUE
PURSUANT TO CODE OF CIVIL
PROCEDURE SECTION 394
[Exempt from filing fees pursuant to Govt. Code 61 03]

D.ate: December~012
Time: 9:00 a.m. Y
Dept: 14
Action Filed: October 4, 2012

Cross-Complainant,
v.

CALIFORNIA-AMERICAN WATER
26 COMPANY, a California Corporation;
MONTEREY COUNTY WATER
27 RESOURCES AGENCY; and ROES 1
through 50, inclusive,
28
Cross-Defendants.
-1NOTICE OF MOTION AND MOTION FOR TRANSFER OF VENUE PURSUANT TO CODE OF CIVIL
PROCEDURE SECTION 394

ll221-0004\150944lvl.doc

12

TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD:

2

PLEASE TAKE NOTICE that on December 21, 2012, at 9:00a.m., or as soon

3 thereafter as counsel may be heard in Courtroom 14 of the above-entitled court located at

4 1200 Aguajito Road, Monterey, California 93940, defendant and cross-complainant Marina
5 Coast Water District ("Marina Coast") will and hereby does move this Court, pursuant to
6 Code of Civil Procedure section 394, for an order transferring this action to a courthouse in
7 a county other than the County of Monterey.
8

This motion is made on the ground that, under Code of Civil Procedure section 394,

9 where one local governmental entity brings an action or cross-action against another local
10 governmental entity situated in the same county, a transfer of the action to a county other
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14 situated in the County of Monterey. Under Code of Civil Procedure section 394, transfer to

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13 County Water Resources Agency ("the County Agency"), a local governmental entity also

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12 entity situated in the County of Monterey, has filed a cross-complaint against the Monterey

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11 than that where the entities are situated is mandatory. Marina Coast, a local governmental

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15 a county other than the County of Monterey is mandatory upon this motion.
16

This motion is based on this notice, the attached memorandum of points and

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17 authorities, upon all pleadings and papers in the Court's file, and upon such further oral and
18 documentary evidence as may be presented at the time of the hearing.
19 Dated: November19,2012
20

JAMES L. MARKMAN
B. TILDEN KIM
TOUSSAINT S. BAILEY
BYRON MILLER

21

By:~/.~/'JAMES L. MA~MAN

22

23

Attorneys for Defendant and CrossComplainant

MARINA COAST WATER DISTRICT

24

25

26
27
28
-2NOTICE OF MOTION AND MOTION FOR TRANSFER OF VENUE PURSUANT TO CODE OF CIVIL
PROCEDURE SECTION 394

ll22l-0004\l509441vl.doc

MEMORANDUM OF POINTS AND AUTHORITIES

2 I.

Introduction And Summary Of Argument

California-American Water Company ("Cal-Am") filed its complaint ("Complaint")

4 in this action against public entities Marina Coast Water District ("Marina Coast") and
5 Monterey County Water Resources Agency ("the County Agency") seeking a declaration
6 concerning the validity and enforceability of a series of agreements between the parties and
7 others for a regional desalination project ("Regional Desalination Project") in the County of
8 Monterey. (See Complaint,~~ 2, 3, and p. 8 (Prayer).) The Regional Desalination Project
9 agreements include a "Water Purchase Agreement" between Cal-Am, the County Agency
10 and Marina Coast, along with a settlement agreement and related implementing agreements
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11 between Cal-Am, the County Agency, Marina Coast and additional parties (collectively, the
12 "RDP Agreements"). Marina Coast filed a cross-complaint ("Cross-Complaint")
13 concurrently with this motion against Cal-Am and the County Agency alleging causes of
14 action related to the RDP Agreements, but distinct from and additional to those alleged in

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15 Cal-Am's Complaint. A copy of that cross-complaint is attached as Exhibit "A."

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Thus, both the action and cross-action arose in the County of Monterey, which is

17 also the county where both Marina Coast and the County Agency are situated. (Complaint,

18 ~~~ 6, 7 .) Under Code of Civil Procedure 1 section 394, this lawsuit cannot be tried in the
19 County of Monterey if either Marina Coast or the County Agency moves to transfer venue
20 to a "neutral county." Marina Coast now makes that motion.
21

Under clause one of subsection (a) of Section 394, an action between two local

22 governmental entities cannot be tried in the county in which either is located, if there is an
23 objection by either entity. (County of San Bernardino v. Superior Court ( 1994) 30
24 Cal.App.4th 378, 387-88 (County of San Bernardino) (interpreting clause one of
25 subdivision (a) of Section 394 in the context of a lawsuit between a city and a county).) As
26
27
28

Unless otherwise indicated, all statutory references herein are to the Code of Civil
Procedure.
-1NOTICE OF MOTION AND MOTION FOR TRANSFER OF VENUE PURSUANT TO CODE OF CIVIL
PROCEDURE SECTION 394
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1 explained in County of San Bernardino, supra, the clause is a "'removal'' provision. (!d. at
2 p. 385.) When clause one applies, it requires the transfer of a case initially filed in a proper
3 county (such as, under Section 395, the county where a subject contract was entered into,
4 where subject contractual obligations were to be performed, or where a defendant is
5 situated) to a neutral county, if either party moves to transfer venue. (ld. at pp. 388-89.)
6

The moving party need not show prejudice to obtain the mandatory transfer of venue

7 under Section 394. As the Court of Appeal observed in City ofAlameda v. Superior Court
8 (1974) 42 Cal.App.3d 312 (City ofAlameda), the relevant provisions of Section 394 are
9 designed to "obviate the appearance of prejudice as well as actual prejudice or bias." (!d. at
10 p. 3 17.) In a contest between two public agencies in the same county, "no judge should be
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11 put in the position of appearing to choose between possibly conflicting loyalties or

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The mandatory transfer provision in Section 394, subdivision (a), is applicable under

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14 the following circumstances: (1) one local governmental entity files a lawsuit (or crossIS complaint) against another local governmental entity; (2) the action was originally filed in
16 the proper county; (3) one or both of the local governmental entities is situated in the

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17 county where the action was originally filed; and (4) a party to the action moves to transfer
18 the case to a neutral county. (See County of San Bernardino, supra, 30 Cal.App.4th at pp.
19 384-89 (discussing general circumstances to which Section 394 applies); see also
20 Metropolitan Transit System v. Superior Court (2007) 153 Cal.App.4th 293, 298-304
21 (Metropolitan Transit System) (specifically holding, the provisions of Section 394 extend
22 to cross-complaints).)
23

As shown below, the Cross-Complaint satisfies all requirements for a mandatory

24 transfer pursuant to Section 394. Marina Coast and the County Agency are both local
25 governmental entities situated in the County of Monterey and Marina Coast properly filed
26 its Cross-Complaint against the County Agency in the County of Monterey. Where, as
2 7 here, one local agency brings an action against another in the county where both are
28 situated, transfer of venue under Section 394 is mandatory upon motion of either party.
-2NOTICE OF MOTION AND MOTION FOR TRANSFER OF VENUF. PURSUANT TO CODE OF CIVIL
PROCEDURE SECTION 394
11221-0004\150944 h l.dllc

1 II.

Section 394 Requires Transfer Of Venue Here Because One Local Agency

(Marina Coast) Brought An Action Against Another (the County Agency) In

The County Where Both Agencies Are Situated (The County Of Monterey)

Section 394 governs venue in actions by or against cities, counties and local

5 governmental entities. Section 394, subsection (a), clause one, provides, in pertinent part:
6
7

"An action or proceeding against a ... local agency may be tried in ... the

county in which the ... local agency is situated, unless the action or proceeding

is brought by ... a ... local agency, in which case it may be tried in any
county ... in which the ... local agency is not situated."

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Where the above clause is satisfied, transfer to a neutral county is mandatory upon

13 motion of either local agency litigant. The courts have long rejected the argument that use

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14 of the word "may" in Section 394, subsection (a), clause one, means transfer is
15 discretionary, rather than mandatory. In City ofAlameda, supra, City of Oakland sued the

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16 City of Alameda in Alameda County, where both cities are situated. (42 Cal.App.3d 312.)
17 Defendant Alameda brought a motion for change ofvenue under Section 394, which

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18 Oakland opposed on the ground that transfer under the statute is discretionary rather than
19 mandatory. (ld. at p. 315.) The trial court agreed with Oakland, and denied the motion.
20 (Ibid.)
21

Alameda then filed a petition for a writ of mandate and the appellate court issued a

22 peremptory writ directing the trial court to set aside the order denying the motion for
23 transfer. (!d. at pp. 313-14.) The Court of Appeal held that when two cities in the same
24 county are adversaries, the case cannot be tried in that county over objection. (Ibid) ''In a
25 contest between two cities within the same county, no judge should be put in the position of
26 appearing to choose between possibly conflicting loyalties or interests .... " (!d. at p. 316.)
27

The City of Alameda court also rejected Oakland's argument that the case should be

28 transferred out ofthe county in which both cities were located only upon a showing by
-3NOTICE OF MOTION AND MOTION FOR TRANSFER OF VENUE PURSUANT TO CODE OF CIVIL
PROCEDURE SECTION 394
11221-0004\1509441 v !.doc

Alameda of prejudice. The court emphasized, "[Section 394] is designed to obviate the
2 appearance of prejudice as well as actual prejudice or bias. It would be redundant if it were
3 necessary to prove the same prejudice as is required under Section 397." (!d. at p. 317
4 (emphasis added).) Accordingly, when the requirements of Section 394 are satisfied, the
5 action must be transferred to a neutral county.
6

Here, it is undisputed (and, indeed, indisputable) that Marina Coast and the County

7 Agency are local agencies situated in the County of Monterey. (See

Complaint,~

6.)

8 Under Section 394, "'local agency' shall mean any governmental district, board, or agency,
9 or any other local governmental body or corporation, but shall not include the State of
IO California or its agencies, departments, commissions or boards." ( 394, subd. (b).)
II Marina Coast is a County Water District organized and operating under the County Water
12 District Law, situated in the County ofMonterey. (See

Complaint,~

2). The County

I3 Agency is a water resources agency created pursuant to the Monterey County Water
I4 Resources Agency Act and situated in the County of Monterey. (See !d.

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3; see also

15 Water Code Appendix, 52-4.)

16

Finally, this action was filed in the proper county in the first instance. The

I7 Complaint and Cross-Complaint. which are based on the RDP Agreements, were filed in
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18 the County of Monterey, where the agreements were entered into, where obligations under
I9 the agreements were to be performed, and where Marina Coast and the County Agency are
20 located. (See

Complaint,~~

6, 7, and p. 8 (Prayer).) Under Section 395, subsection (a), the

2I Complaint was properly filed in the county where the subject contractual obligations were
22 to be performed, \vhere the water supply project sought to be created by the agreements was
23 to be situated, and where both defendants are situated. (See also 394, subd. (a)
24 (authorizing a private plaintiff, such as Cal-Am, to file an action against local governmental
25 entity defendant in the county where the defendant is situated).) Marina Coast's Cross26 Complaint was properly filed in the County of Monterey under Section 428.10, et seq.
27 Thus, the action and cross-action were originally filed in the proper county and, therefore,
28 that prong of the mandatory transfer rule under Section 394 is also met.
-4NOTICE OF MOTION AND MOTION FOR TRANSFER OF VENUE PURSUANT TO CODE OF CIVIL
PROCEDURE SECTION 394
11221-0004\1509441 Y !.doc

III.
2

Section 394's Protections Extend To Cross-Complainants

Section 3 94 is construed liberally to promote its purpose of protecting litigants

3 against prejudice or the appearance of prejudice. As the California Supreme Court

4 explained in Westinghouse Electric Corp. v. Superior Court (1976) 17 Cal.3d 259:

5
6

"The purpose of section 394 'is to guard against local prejudices which

sometimes exist in favor of litigants within a county as against those from

8-

without and to secure to both parties to a suit a trial upon neutral grounds.'

[Citation.] As the statute is remedial in its purpose, it should receive a liberal

10

construction which will promote rather than frustrate the policy behind the

11

law. [Citation.]"

12
13 !d. at p. 266.
14

Consistent with the Supreme Court's instruction to construe Section 394 liberally,

15 recent Court of Appeal decisions have uniformly afforded its statutory protections to cross16 complainants and cross-defendants, in addition to plaintiffs and defendants. (Metropolitan
17 Transit System, supra, 153 Cal.App.4th 293, 302; Kennedy/Jenks Consultants, Inc. v.
18 Superior Court (2000) 80 Cal.App.4th 948, 956 (Kennedy/Jenks Consultants); Ohio Cas.
19 Ins. Group v. Superior Court ( 1994) 30 Cal.App.4th 444, 451 (Ohio Casualty); but see
20 City of Chico v. Superior Court (1979) 89 Cal. App. 3d 187, 191 (criticized in each ofthe
21 cases previously cited).)
22

Most recently. in Metropolitan Transit System, supra, the Court of Appeal

23 reasoned. "'in a \vide variety of contexts, including the related venue provisions of section
24 396. the cases have consistently treated the terms 'plaintiff and 'defendant' as
25 encompassing 'cross-complainants' and "cross-defendants.' [Citation.]'' (Id. at p. 302.)
26 The court went on to note, "[ o]f some additional significance is 'the general principle that a
27 cross-complaint is to be treated as if it were a complaint in an independent action.'
28 [Citation.]" (Ibid.) The court concluded, "[t]hese well-established principles, considered in
-5NOTICE OF MOTION AND MOTION FOR TRANSFER OF VENUE PURSUANT TO CODE OF CIVIL
PROCEDURE SECTION 394
I 1221-0004 I 509441 vI doc

the context of the requirement that the statute be liberally construed, persuade us, like the
2 courts in Ohio Casualty and Kennedy/Jenks Consultants, Inc. v. Superior Court, to adopt
3 an interpretation of the statute which affords its remedial provisions to cross-complainants
4 and cross-defendants as well as plaintiffs and defendants." (Ibid.)

Metropolitan Transit System, Ohio Casualty, Kennedy/Jenks Consultants, and the

6 well-established principles on which they rely, are clear that Section 394 protects cross7 complainants, such as Marina Coast, just as it protects plaintiffs or defendants.

8
9 IV.

This Case Should Be Transferred To A Neutral County Convenient To The

10

Parties And Their Counsel

11

As instructed by the Court of Appeal in City ofAlameda, supra, in a contest

12 between two local agencies within the same county, "no judge should be put in the position
13 of appearing to choose between possibly conflicting loyalties .... " (42 Cal.App.3d at p.
14 316.) For all the reasons set forth above, the mandatory transfer provision in Section 394
15 applies here, as it did in City ofAlameda.
16

This case should be transferred to the neutral county most convenient to the parties

I 7 and their counsel. In this regard, the County of San Francisco appears to be the best
~~
~~

18 alternative to the County of Monterey. Plaintiff and cross-defendant Cal-Am's counsel of

19 record is located in San Francisco (see Complaint, p. I); lead counsel for Marina Coast has

20 an office in San Francisco, and co-counsel for Marina Coast is located in San Francisco;
21 and, to the extent facts ofthe Complaint and Cross-Complaint relate to CPUC decisions,
22 San Francisco is a logical neutral county, as the CPUC is headquartered there.
23 Ill
24

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28 Ill
-6NOTICE OF MOTION AND MOTION FOR TRANSFER OF VENUE PURSUANT TO CODE OF CIVIL
PROCEDURE SECTION 394
11221-00U4\1509441vl.doc

V.
2

Conclusion
For all the foregoing reasons, Marina Coast respectfully requests that the Court

3 transfer this case to the neutral County of San Francisco.

4 Dated: November 19, 2012
5

JAMES L. MARKMAN
B. TILDEN KIM
TOUSSAINT S. BAILEY
BYRON MILLER

By~/.~..__
~SL.AN

7
8

Attorneys for Defendant and CrossComplainant

MARINA COAST WATER DISTRICT

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-7NOTICE OF MOTION AND MOTION FOR TRANSFER Of VENUE PURSUANT TO CODE OF CIVIL
PROCEDURE SECTION 394
1122!-0004\!509441vl.doc

EXHIBIT A

1 RICHARDS, WATSON & GERSHON

A Professional Corporation
2 JAMES L. MARKMAN (Bar No. 43536)
jmarkman@rwglaw.com
3 B. TILDE1'J' KIM (Bar No. 143937)
tkim@rwglaw.com
4 TOUSSAINT S. BAILEY (BarNo. 245641)
tbailey@rwglaw.com
5 BYRON MILLER (Bar No. 279762)
bmiller@rwglaw.com
6 355 South Grand Avenue, 40th Floor
Los Angeles, California 90071-3101
7 Telephone: 213.626.8484
Facsimile: 213.626.0078
8
9 MARK FOGELMAN (Bar No. 5051 0)
RUTH STONER MUZZIN (Bar No. 276394)
10 FRIEDMAN & SPRINGWATERLLP
33 New Montgomery Street, Suite 290
11 San Francisco, California 94105
Telephone: 415.834.3800
Attorneys for Defendant and Cross-Complainant
13 MARINA COAST WATER DISTRICT

SUPERIOR COURT OF THE STATE OF CALIFORNIA

COUNTY OF MONTEREY
Case No. M 120053

CROSS-COMPLAINT OF MARINA
COAST WATER DISTRICT FOR
DECLARATORY RELIEF
[Exempt from filing fees pursuant to Govt. Code 6 I 03]

CROSS-COMPLAINT OF MARINA COAST WATER DISTRICT FOR DECLARATORY RELIEF

11221-0004\1509478vl doc

THE PARTIES

1
l.

Defendant and Cross-Complainant Marina Coast Water District ("MCWD")

3 is a public entity, and at all relevant times was, a special district formed in 1960 under the
4 County Water District Law, found at Division 12 of the California Water Code, for the
5 purpose of installing and operating a water supply, water distribution system and
6 wastewater collection system for the City of Marina and neighboring communities within
7 Monterey County.
2.

Plaintiff and Cross-Defendant California-American Water Company

9 C'CA W") is, and at all relevant times was, a California corporation regulated by the
10 California Public Utilities Commission ("CPUC").

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11

Defendant and Cross-Defendant Monterey County Water Resources Agency

12 ("Agency") is a public entity, and at all relevant times was, a Water Resources Agency

< 13 created pursuant to the Monterey County Water Resources Agency Act, found at Chapter

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MCWD does not know the true names and capacities of cross-defendants

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16 sued herein as ROES 1 through 50, inclusive, and therefore sues these cross-defendants by
17 such fictitious names. MCWD is informed and believes, and based thereon alleges, that
18 each of the cross-defendants designated herein as ROES 1 through 50, inclusive, is in some
19 manner necessary to be bound by the judicial declarations sought herein. MCWD will

20 amend this cross-complaint to allege their true names and capacities when ascertained.
21

5.

MCWD is informed and believes, and based thereon alleges, that at all

22 relevant times, each of the cross-defendants was the agent of each of the other cross23 defendants and, in doing the things herein alleged, each cross-defendant was acting within
24 the course and scope of such agency, with the consent, ratification and permission of each
25 of the cross-defendants.
26 Ill

27 Ill
28 Ill

-2CROSS-COMPLAINT OF MARlNA COAST WATER DISTRICT FOR DECLARATORY RELIEF

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GENERAL ALLEGATIONS
2

6.

In 1995, the State Water Resources Control Board ("State Water Board")

3 issued its order No. WR 95-10, requiring CAW to adopt conservation measures and find
4 replacement sources sufficient to allow CAW to cease and desist diverting 70% of the water
5 it had been appropriating illegally annually from the Carmel River.

7.

On October 20, 2009, the State Water Board issued a Cease-and-Desist Order

7 requiring CAW to undertake additional measures to reduce the above-mentioned illegal

8 diversions of water from the Carmel River by no later than December 31, 2016. On
9 December 17,2009, in Decision No. 09-12-017, the CPUC certified the Final
10 Environmental Impact Report for a project that would provide a long-term water supply for
11 CAW's Monterey District and generate CAW's compliance with the above-referenced
12 orders of the State Water Board.
13

8.

In December 2010, the CPUC, in Decision 10-12-016, approved

14 implementation of the regional desalination project ("RDP"). CAW, Agency and MCWD
15 had previously negotiated and ultimately entered into a series of agreements for
16 construction and implementation of the RDP, conditioned on ultimate CPUC approval,
17 consisting of brackish water production wells to be owned and operated by Agency, a
18 desalination plant to be owned and operated by MCWD and conveyance facilities to move
19 the desalinated water to the CAW service area so that that water could supplant Carmel
20 River water. The agreements included a "Water Purchase Agreement," a "Settlement
21 Agreement" and related agreements, all of which were approved by the CPUC on
22 December 3, 2010 in Decision 10-12-016 (modified by Decision 11-04-035). MCWD is
23 informed and believes and thereon alleges that no court challenges were timely made to
24 those CPUC decisions approving the Settlement Agreement and the Water Purchase
25 Agreement. Agency was the last of the three parties to finally approve the above-described
26 agreements, which it did on January 11, 2011.
27

9.

As noted in paragraph 8 hereof, in general, the Water Purchase Agreement

28 required (1) Agency to construct, own, and operate brackish wells; (2) MCWD to construct,
-3CROSS-COMPLAINT OF MARIN A COAST WATER DISTRICT FOR DECLARATORY RELIEF
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own, and operate the desalination plant to treat the water pumped from Agency's wells; and
2 (3) CAW to construct, own, and operate facilities to distribute the treated water to CAW's
3 customers on the Monterey Peninsula. Before the CPUC approved the Water Purchase
4 Agreement in December 2010, CAW, Agency, and MCWD entered into the February 26,
5 2010 Reimbursement Agreement, approved on August 12, 2010 in CPUC Decision No. 106 08-008. MCWD is informed and believes and thereon alleges that no court challenges were
7 timely made to the CPUC decisions approving the Reimbursement Agreement. The Water
8 Purchase Agreement, the Settlement Agreement and the Reimbursement Agreement are
9 collectively referred to herein as the "Agreements."
10

10.

Prior to the execution of the Agreements, Stephen P. Collins served both as a

11 sub-consultant for RMC, an engineering/planning firm engaged by MCWD to implement

12 the RDP, and as a member of Agency's Board of Directors. Mr. Collins had been on
13 Agency's Board of Directors for 16 years as of 2010, and various members of Agency's
14 Board of Supervisors, which consists of the Monterey County Board of Supervisors sitting
15 as Agency's governing body, believed that Mr. Collins' role was essential towards
16 finalization and execution of the Agreements.
11.
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~~

At the request of Agency officials, RMC retained and paid Mr. Collins as a

18 sub-consultant from January 2010 to approximately November 30, 2010. Mr. Collins'
19 duties for RMC included attending meetings to promote the RDP.
20

12.

During Mr. Collins' participation in obtaining approval of the RDP, MCWD

21 had expressed serious concerns about Mr. Collins having a conflict of interest resulting
22 from his role as a sub-consultant to RMC. while serving on Agency's Board of Directors.
23 Various representatives of Agency assured MCWD that Agency had consulted with its legal
24 counsel, and Agency had obtained a written legal opinion that Mr. Collins' dual role did not
25 raise any conflict of interest problems. MCWD repeatedly requested that Agency provide a
26 copy of that written legal opinion, but none was provided to MCWD.

27

13.

During August 20 I 0, MCWD took steps to ensure that its payments to RMC

28 in relation to the RDP did not include any amounts for any of Mr. Collins' sub-consulting
-4CROSS-COMPLAINT OF MARINA COAST WATER DISTRICT FOR DECLARATORY RELIEF

1 services.
2

14.

In or about September 2010, MCWD informed CAW of its actions in August

3 2010 to ensure that its payments to RMC did not include any amounts for Mr. Collins' sub4 consulting services on account of MCWD's ongoing concerns about Mr. Collins' potential
5 conflict of interest.

15.

On or about September 27, 2010, at a regular public meeting of Agency's

7 Board of Directors, Mr. Collins publicly recused himself from a vote due to his "ongoing"
8 relationship with RMC.

16.

Prior to December 2010, both Agency and CAW, including the General

10 Manager of Agency and the President of CAW, were aware of Mr. Collins' simultaneous
11 dual role as a member of Agency's Board of Directors and a sub-consultant to RMC.
17.

In or about April 2011, conflict of interest allegations became wide-spread

13 and highly publicized concerning Mr. Collins' dual role in the RDP, and Mr. Collins then
14 resigned from Agency's Board of Directors.
15

18.

In reasonable reliance on the various promises, requirements and

16 representations incorporated in the Agreements, MCWD expended substantial sums to

17 implement the RDP including project management costs, legal costs and funding costs.
~!!!

~~

18 Further, due to CAW and Agency questioning the continued validity of the Agreements
19 only after allegations that Mr. Collins' actions constituted a conflict of interest became
20 wide-spread and highly publicized, and refusing to implement the RDP based thereon,
21 MCWD has experienced lost funding opportunities and has been and continues to be
22 rendered incapable of discharging its obligations specified in the Agreements.

23

19.

MCWD is informed and believes and thereon alleges that since July 2011

24 Agency has stated and maintains the position that the Agreements are void pursuant to
25 California Government Code section 1090, et seq. MCWD has consistently disputed
26 Agency's position and has instead taken the position that any claims that the Agreements
27 are invalid are time-barred and precluded by a variety of statutory provisions, including
28 those in the Public Utilities Code. MCWD is also informed and believes and thereon
-5CROSS-COMPLAINT OF MARINA COAST WATER DISTRICT FOR DECLARATORY RELIEF

1 alleges that CAW has determined that Agency's action to consider and state that the Water
2 Purchase Agreement is void constituted an anticipatory repudiation of the Agreements
3 which CAW contends permitted it to terminate the Agreements.
4

FIRST CAUSE OF ACTION

(Declaratory Relief)

(Against CAW, Agency, and ROES 1 through 50)

20.

MCWD hereby incorporates by reference the allegations set forth in

9 paragraphs 1 through 19, inclusive.

10

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21.

A real and actual controversy has arisen and now exists between the parties

11 concerning whether challenges to the validity of the Agreements are time-barred. MCWD

12 contends that regardless of any alleged invalidity due to violations of Government Code
13 section 1090, et seq. during the making of the Agreements, any challenges have been and
14 are time-barred by operation of Agency's own governing act.
15

22.

Specifically, the Monterey County Water Resources Agency Act, West's

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16 Annotated California Water Code-Appendix, section 52-39 provides, "[a]ny judicial action

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17 or proceeding to attack, review, set aside, void, annul, or challenge the validity or legality

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18 of the formation of a zone, any contract entered into by the agency or a zone, any bond or

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19 evidence of indebtedness of the agency or a zone, or any assessment, rate, or charge of the
20 agency or a zone shall be commenced within 60 days of the effective date thereof..... The
21 action or proceeding shall be brought pursuant to Chapter 9 (commencing with Section
22 860) of Title I 0 of Part 2 of the Code of Civil Procedure."
23

23.

California Code of Civil Procedure Section 863 requires that any party

24 seeking to assert the invalidity of a contract must commence a legal proceeding within sixty
25 (60) days of the public entity's approval of such a contract. Such actions are referred to as
26 "reverse validation" actions. This short 60-day limitations period on "reverse validation"
27 actions is necessary to provide certainty to all parties entering into contracts with public
28 entities.
-6CROSS-COMPLAINT OF MARINA COAST WATER DISTRICT FOR DECLARATORY RELIEF
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24.

The Agreements were fully executed, approved and effective on January 11,

2 2011. Thus, any challenge to "attack, review, set aside, void, annul, or challenge the
3 validity or legality" of the Agreements has been time barred since March 13, 2011.
4 MCWD is informed and believes that no challenge asserting the invalidity of any of the
5 Agreements was timely made, and thus, the Agreements are valid and enforceable, despite
6 any claims of invalidity on grounds of conflicts of interests under Government Code section

7 1090 based upon Mr. Collins' involvement in the RDP or the Agreements. MCWD is
8 informed and believes and thereon alleges that CAW, Agency and ROES 1 through 50
9 dispute MCWD's contentions. Thus, a judicial declaration thereon is necessary and proper.
10

SECOND CAUSE OF ACTION

11

(Declaratory Relief)

12

(Against CAW, Agency, and ROES 1 through 50)

13

25.

MCWD hereby incorporates by reference the allegations set forth in

14 paragraphs 1 through 19, inclusive.

26.

A real and actual controversy has arisen and now exists between the parties

16 concerning whether any validity challenges to the Agreements are time-barred. MCWD
17 contends that regardless of any alleged invalidity due to violations of Government Code
~~:a~

18 section1090 et seq. during the making of the Agreements, any such challenges have been
19 and are time-barred by operation of MCWD's enabling act. Specifically, California Water
20 Code section 30066, provides, "[a]n action to determine the validity of an assessment, or of
21 warrants, contracts, obligations, or evidences of indebtedness pursuant to this division may
22 be brought pursuant to Chapter 9 (commencing with Section 860) of Title 10 of Part 2 of
23 the Code of Civil Procedure."
24

27.

Specifically, California Code of Civil Procedure Section 863 requires that any

25 party seeking to assert the invalidity of a contract must commence a legal proceeding within
26 sixty (60) days of the public entity's approval of such a contract. Such actions are referred
27 to as "reverse validation" actions. This short 60-day limitations period on reverse
28 validation actions is necessary to provide certainty to all parties entering into contracts with
-7CROSS-COMPLAINT OF MARINA COAST WATER DISTRICT FOR DECLARATORY RELIEF

1 public entities, such as the Agreements.

2

28.

The Agreements were fully executed, approved and effective on January 11,

3 2011. Thus, any challenges to "attack, review, set aside, void, annul, or challenge the
4 validity or legality" of the Agreements have been time barred since March 13, 2011.
5 MCWD is informed and believes that no challenge asserting the invalidity of any of the

6 Agreements was timely made, and thus, the Agreements are valid and enforceable, despite
7 any claimed conflict of interests under Government Code section 1090, et seq. based upon

8 Mr. Collins' involvement in the RDP or the Agreements. MCWD is informed and believes
9 and thereon alleges that CAW, Agency, and ROES 1 through 50 dispute MCWD's
10 contentions. Thus, a judicial declaration thereon is necessary and proper.
11

THIRD CAUSE OF ACTION

12

(Declaratory Relief)

13

(Against CAW, Agency, and ORES 1 through 50)

14

29.

MCWD hereby incorporates by reference the allegations set forth in

15 paragraphs 1 through 19, inclusive.

16

30.

A real and actual controversy has arisen and now exists between the parties

17 concerning whether any validity challenges to the Agreements are time-barred. MCWD
~~
~~

18 contends that regardless of any alleged invalidity due to violations of Government Code
19 section 1090 et seq. during the making of the Agreements, any such challenges have been
20 and are time-barred by operation of California Government Code Section 53511, and
21 specifically subsection 53511 (a) which provides that "(a) [a] local agency may bring an
22 action to determine the validity of its ... contracts, ... pursuant to Chapter 9 (commencing
23 with section 860) of Title 10 of Part 2 of the Code of Civil Procedure."
24

31.

Specifically, California Code of Civil Procedure Section 863 requires that any

25 party seeking to assert the invalidity of a contract must commence a legal proceeding within
26 sixty (60) days of the public entity's approval of such a contract. Such actions are referred
27 to as ''reverse validation" actions. This short 60-day limitations period on reverse
28 validation actions is necessary to provide certainty to all parties entering into contracts with
-8CROSS-COMPLAINT OF MARINA COAST WATER DISTRICT FOR DECLARATORY RELIEF