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Superior Court of Californi:
ounty of San Francisco”
SEP 14 2022
CLERK OF THE COURT
BY:
Deputy Clerk
SUPERIOR COURT OF CALIFORNIA
COUNTY OF SAN FRANCISCO
DEPARTMENT 306
Lead Case No. CPF-14-514004
Consolidated with Case Nos. CPF-16-515282
and CPF-18-516389
IN RE:
ORDER GRANTING IN PART AND
SAN DIEGO COUNTY WATER AUTHORITY DENYING IN PART SAN DIEGO COUNTY
WATER AUTHORITY’S MOTION FOR
PARTIAL JUDGMENT
On June 24, 2022, San Diego County Water Authority (“San Diego”) filed the instant motion. On
July 15, 2022, Metropolitan Water District of Southern California (“Metropolitan”) filed an opposition to
the motion. The matter was deemed submitted on July 20, 2022.
Having considered the opening and opposition briefs, supporting declarations, and evidence, San
Diego’s Motion for Partial Judgment is granted in part and denied in part. San Diego’s motion is granted
as to: (1) Metropolitan’s fifth affirmative defense under the dispute resolution provision in the 2014 and
2016 actions; (2) Metropolitan’s eleventh affirmative defense of waiver; and (3) Metropolitan’s
seventeenth affirmative defense of consent. San Diego’s motion is denied as to: (1) Metropolitan’s ninth
and eleventh cross-claims for reformation in the 2014 and 2016 actions; (2) Metropolitan’s eleventh and
thirteenth cross-claims for reformation in the 2018 action; (3) Metropolitan’s twenty-seventh affirmative
defense for mistake of fact; and (4) Metropolitan’s twenty-eighth affirmative defense for mistake of law.
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In Re: San Diego County Water Authority CPF-14-514004
Order Granting in Part and Denying in Part San Diego County Water Authority’s Motion for Partial Judgment
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The Court defers ruling on Metropolitan’s fifth cross-claim in the 2014 and 2016 actions and the
seventh cross-claim in the 2018 action for declaratory relief regarding cost causation. The Court will hear
oral argument on the declaratory relief issue on September 27, 2022 during closing arguments. The issues
that should be addressed at oral argument are set forth below.
BACKGROUND
Respondent and Defendant Metropolitan is a public agency that imports, stores, and transports
water throughout southern California. (2014 First Amended Complaint (“FAC”), { 2.)' Metropolitan has
twenty-six member agencies, including Petitioner and Plaintiff San Diego. (ld. J 16.) In addition to
selling water to its member agencies, Metropolitan provides wheeling service to transport Non-
Metropolitan Water to third parties. (Jd. | 21.) “Wheeling” is the industry term of art for the “use of a
water conveyance facility by someone other than the owner or operator to transport water.” (/d., quoting
SDCWA v, MWD (2017) 12 Cal.App.Sth 1124, 1135 (“SDCWA ?’).) Because Metropolitan owns the only
water distribution facilities linking the Colorado River to San Diego’s service area, San Diego and
Metropolitan negotiated the 2003 Exchange Agreement (‘Exchange Agreement”) for delivery of San
Diego’s Non-Metropolitan Water to San Diego’s own distribution and water storage facilities. (2014
FAC, { 18.) ‘Under the Exchange Agreement, the parties agreed the price for transporting San Diego’s
Non-Metropolitan Water “shall be equal to the charge or charges set by Metropolitan’s Board of Directors
pursuant to applicable law and regulation and generally applicable to the conveyance of water by
Metropolitan on behalf of its member agencies.” (Jd. J 20, Ex. A [the Exchange Agreement], § 5.2.)
Metropolitan also “imposes a Water Stewardship Rate on ‘all water sales and wheeling transactions,
including the transportation of [San Diego’s] Non-Metropolitan Water under the Exchange Agreement,
and uses these funds to pay for its demand management and water conservation programs.” (Id. { 16.)
Non-Metropolitan Water is independent conserved water from the Colorado River and lining of the All-
American and Coachella Canals procured by San Diego. (Jd. 4 17.)
The complaints in all three actions raise two theories of illegality and breach. First, San Diego
asserts Metropolitan unlawfully included in its wheeling and transportation rates the Water Stewardship
' The Court cites the FAC in the 2014 action for background as the allegations are the same or similar
across all three actions.
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‘ In Re: San Diego County Water Authority CPF-14-514004
Order Granting in Part and Denying in Part San Diego County Water Authority’s Motion for Partial Judgment© me YN DAW Rw BY
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Rate—a charge unrelated to transportation, and used instead to pay the costs of demand management
projects—and thus breached the parties’ Exchange Agreement. Second, San Diego asserts that
Metropolitan’s failure to provide the statutorily-and contractually mandated credit for offsetting benefits
was also unlawful and breached the Exchange Agreement.
San Diego now moves for partial judgment pursuant to Code of Civil Procedure section 631.8.
(Opening Brief, 1.) In particular, San Diego argues Metropolitan failed to carry its burden of proof on
four discrete issues: (1) Metropolitan’s affirmative defense under the Exchange Agreement’s dispute
resolution provision (Paragraph 11.1 Defense); (b) Metropolitan’s affirmative defenses of waiver and
consent; (c) Metropolitan’s cross-claims for reformation and related affirmative defenses of mistake; and
(d) Metropolitan’s cross-claim for a declaration on cost-causation, (id.) Metropolitan opposes the
motion.
LEGAL STANDARD
“After a party has completed his presentation of evidence in a trial by the court, the other party,
without waiving his right to offer evidence in support of his defense or in rebuttal in the event the motion
is not granted, may move for a judgment. The court as trier of the facts shall weigh the evidence and may
render a judgment in favor of the moving party.” (Code Civ. Proc., § 631.8(a).) “If it appears that the
evidence presented supports the granting of the motion as to some but not all the issues involved in the
action, the court shall grant the motion as to those issues and the action shall proceed as to the issues
remaining.” (Code Civ. Proc., § 631.8(b).)
DISCUSSION
L Dispute Resolution Provision
7 San Diego argues the Court should grant partial judgment as to Metropolitan’s fifth affirmative
defense under the dispute resolution provision in the 2014 and 2016 actions. (Opening Brief, 2.) San
Diego asserts Metropolitan’s General Manager, Jeffrey Kightlinger, and San Diego’s former General
Manager, Maureen Stapleton, testified that San Diego complied with Paragraph 11.1 as confirmed by
documentary evidence. (Id.) Metropolitan opposes on the ground that San Diego’s dispute resolution
letters do not address offsetting benefits or constitute reasonable best efforts to resolve a dispute.
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In Re: San Diego County Water Authority CPF-14-514004
Order Granting in Part and Denying in Part San Diego County Water Authority’s Motion for Partial Judgment0 Oo ND HW BF WB YE
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(Opposition, 3.) Metropolitan argues San Diego’s motion is devoid of any argument regarding reasonable
best efforts or how San Diego met that standard under the Exchange Agreement for 2014 and 2016. (id.
at 2.) Metropolitan contends “{t]he only evidence that San Diego raised offsetting benefits to
Metropolitan is in the negotiations leading up to the 2018 litigation.” (id. at 3.)
Paragraph 11.1 of the Exchange Agreement states in pertinent part: “The Parties shall exercise
reasonable best efforts to resolve all disputes, including Price Disputes, arising under this Agreement
through negotiation . . . In the event negotiation is unsuccessful, then the Parties reserve their respective
rights to all legal and equitable remedies.” (PTX65, § 11.1.)
Mr. Kightlinger’s testimony reveals that the parties did not discuss the dispute regarding offsetting
benefits until 2018. (See May 26, 2022 TR, 1489-1490.) In particular, Mr. Kightlinger testified that there
were no discussions raised by San Diego about offsetting benefits in May of 2014. (id. at 1489-1490
[“the first time I saw it in writing was in that 2018 letter.”], 1491.) Mr. Kightlinger further testified that
during the “11.1 discussions, offsetting benefits was not raised.” (Id. at 1490:13-14.)
However, Mr. Kightlinger confirmed that any discussion about offsetting benefits was futile
because Metropolitan’s position is, and has always been, that this was not a wheeling transaction, and is
instead an exchange agreement. (Jd. at 1373-1374, 1376-1377, 1379-1381 -) Therefore, whatever year
was involved, the response from Metropolitan would be the same—the wheeling statutes do not apply.
Mr. Kightlinger’s testimony at trial that he believed San Diego complied with Paragraph 11.1 to “these
lawsuits at issue in this case” is binding. (Id. at 1489:15-19; see also id. at 1485-1487, 1489.)
Moreover, Maureen Stapleton, San Diego’s former General Manager, testified that San Diego
attempted to resolve its disputes with Metropolitan regarding offsetting benefits by presenting to
Metropolitan’s Board of Directors, participating in the rate-setting processes, providing written
documentation, and hiring a rates analyst to offer an opinion on appropriate cost allocations. (May 19,
2022 TR, 766-767.) Although the dispute letters did not expressly reference offsetting benefits, Ms.
Stapleton testified that the reference to the price to be charged in violation of the Exchange Agreement
was based on San Diego’s belief “that the rates that were being proposed violated all applicable laws and
regulations regarding the setting of the wheeling rate.” (Jd. at 769:19-770:1.)
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In Re: San Diego County Water Authority CPF-14-514004
Order Granting in Part and Denying in Part San Diego County Water Authority’s Motion for Partial JudgmentCoe NAH B® wD BD we
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Furthermore, as to the 2014 letter, San Diego proposed two specific dates for negotiation to ensure
“there was adequate time between when [San Diego] negotiated with Met[ropolitan] and when
[Metropolitan’s] board of directors was being asked to approve the rates.” (Jd. at 771; see PTX892.)
Metropolitan did not respond to the 2014 letter, (May 19, 2022 TR 772:11-15.) As to the 2016 letter, San
Diego received a response from Metropolitan and the parties participated in negotiations. (Id. at 772-777,
see PTX915, PTX 918.) Ms. Stapleton testified that San Diego raised the offsetting benefits issue during
negotiations and Metropolitan would not agree to provide any offsetting benefit credit to San Diego. (id.)
Accordingly, San Diego’s motion is granted as Metropolitan’s fifth affirmative defense under the
dispute resolution provision in the 2014 and 2016 actions.
I. Affirmative Defenses of Waiver and Consent
San Diego seeks judgment in its favor as to Metropolitan’s eleventh affirmative defense of waiver
and seventeenth affirmative defense of consent. (Opening Brief, 3.) San Diego asserts “Metropolitan’s
witnesses have admitted, and San Diego’s witnesses have confirmed, that there is no signed waiver—
much less a signed continuing waiver—by San Diego, as required for any alleged waiver or consent to be
effective under the Exchange Agreement.” (Id.) Metropolitan does not oppose. (Opposition, 1 fn. 1.)
Accordingly, San Diego’s motion is granted as to Metropolitan’s eleventh affirmative defense of waiver
and seventeenth affirmative defense of consent.
If. Reformation and Related Affirmative Defenses of Mistake
San Diego seeks judgment in its favor as to Metropolitan’s ninth and eleventh cross-claims in the
2014 and 2016 actions, and eleventh and thirteenth cross-claims in the 2018 action, for reformation.
(Opening Brief, 3-4.) San Diego also seeks judgment in its favor as to Metropolitan’s twenty-seventh and
twenty-eighth affirmative defenses for mistake of fact and law. (Id. at 4.)
“Civil Code section 3699 provides the authority upon which a contract may be reformed: ‘When,
through fraud or a mutual mistake of the parties, or a mistake of one party, which the other at the time
knew or suspected, a written contract does not truly express the intention of the parties, it may be revised,
on the application of a party aggrieved, so as to express that intention, so far as it can be done without
prejudice to rights acquired by third persons, in good faith and for good value.”” (Volley v. Chase Home
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In Re: San Diego County Water Authority CPF-14-514004
Order Granting in Part and Denying in Part San Diego County Water Authority’s Motion for Partial Judgment“—
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Finance, LLC (2013) 213 Cal.App.4th 872, 908, quoting Civil Code, § 3699.) “The ‘intention of the
parties,’ as stated in Civil Code section 3699, refers to a ‘single intention which is entertained by both
parties.” (Jolley, 213 Cal.App.4th at 908, quoting Shupe v. Nelson (1967) 254 Cal.App.2d 693, 700.)
“The essential purpose of reformation is to reflect the intent of the parties.’” (Jolley, 213 Cal.App.4th at
908, quoting Jones v. First American Title Ins. Co. (2003) 107 Cal.App.4th 381, 389.)
San Diego relies on the deposition testimony of Bill Hasencamp, trial testimony of Mr.
Kightlinger, and Metropolitan’s response to Form Interrogatory 50.6. (See PTX1148; PTX 1177; May
18, 2022 TR; May 26, 2022 TR.) First, Mr. Hasencamp testified that Metropolitan does not believe that
there was a mistake in drafting the Exchange Agreement. (PTX 1148, 119:25-120:15.) Second,
Metropolitan’s response to Form Interrogatory 50.6 states that any agreement alleged in the pleadings is
not ambiguous. (PTX 1177, 24-25; see May 26, 2022 TR 1407:15-17 [Mr. Kightlinger testified that the
Exchange Agreement is not ambiguous].) Third, Mr. Kightlinger testified that the Quantification
Settlement Agreements, which included the Exchange Agreement, were all tied together. (May 26, 2022
TR, 1420:14-23; see also May 18, 2022 TR, 575:15-576:3.)
However, San Diego’s interpretation of Metropolitan’s cross-claims and affirmative defenses is
misplaced. Metropolitan seeks reformation ifthe Court finds that the Exchange Agreement is subject to
the Wheeling Statutes. (See Opposition, 6-7 (emphasis added).) Similarly, Metropolitan’s mistake of fact
and law defenses are conditioned on a finding that the Exchange Agreement is subject to the Wheeling
Statutes. (See id.) Therefore, San Diego’s reliance on testimony regarding any ambiguity in the
Exchange Agreement is not relevant to the issue at bar. As a result, San Diego’s evidence does not
support granting partial judgment on the issue of reformation and mistake.
Moreover, Metropolitan’s evidence cited in opposition to San Diego’s motion supports
Metropolitan’s position. Deven Upadhyay, Metropolitan’s Executive Officer and Assistant General
Manager, testified that Metropolitan did not believe the Exchange Agreement was a wheeling agreement,
(May 25, 2022 TR, 1310:19-21; see also id. at 1311:25-1312:1 [I’ve had many, many conversations with
[San Diego] management about the administration of this agreement; and, quite frankly, in those
| discussions, we don’t treat it as a wheeling agreement. It’s an exchange agreement.”].) Additionally, Mr.
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In Re: San Diego County Water Authority CPF-14-514004
Order Granting in Part and Denying in Part San Diego County Water Authority’s Motion for Partial Judgmentco CO ND HW BRB WwW DB Ye
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Kightlinger testified that during the rate years in question in this litigation, Metropolitan did not make any
offsetting determinations or calculations “[b]ecause it didn’t apply. This was not a wheeling transaction.”
(May 26, 2022 TR, 1376:24-1377: 10; see also id. at 1378-1380.) Brian Thomas, former Metropolitan
Chief Financial Officer, also testified that during negotiations for the 2003 Exchange Agreement, he did
not recall himself or anyone else at Metropolitan telling San Diego that the agreement would be subject to
the Wheeling Statutes. (May 26, 2022 TR, 1525 :27-1526:8; see also id. at 1533-1 534; May 19, 2022 TR,
675-676.)
Accordingly, San Diego’s motion is denied as to this issue.
IV. Cost Causation ,
San Diego seeks judgment in its favor as to Metropolitan’s fifth cross-claim in the 2014 and 2016
actions and Metropolitan’s seventh cross-claim in the 2018 action for declaratory relief regarding cost
causation. (Opening Brief, 5-6.) San Diego argues Metropolitan failed to demonstrate that cost causation
is a proper subject of declaratory relief and that an actual controversy exists. (Jd. at 6.) In opposition,
Metropolitan asserts the cross-complaints allege the parties interpret the term “cost causation” differently
and seeks a declaration as to the meaning of the term “cost causation.” (Opposition, 8-9.)
The Court defers ruling on this issue and will hear oral argument on this issue on September 27,
2022 during closing arguments. In particular, the parties should address: (1) the relief Metropolitan is
seeking regarding cost causation; (2) whether cost causation applies to all of Metropolitan’s rates; (3)
whether cost causation applies specifically to the Water Stewardship Rate; and (4) whether cost causation
applies to offsetting benefits.
CONCLUSION AND ORDER
Based on the foregoing reasons, San Diego’s motion is granted as to Metropolitan’s fifth
affirmative defense under the dispute resolution provision in the 2014 and 2016 actions, Metropolitan’s
eleventh affirmative defense of waiver, and Metropolitan’s seventeenth affirmative defense of consent.
San Diego’s motion is denied as to Metropolitan’s ninth and eleventh cross-claims for reformation in the
2014 and 2016 actions, Metropolitan’s eleventh and thirteenth cross-claims for reformation in the 2018
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In Re: San Diego County Water Authority CPF-14-514004
Order Granting in Part and Denying in Part San Diego County Water Authority’s Motion for Partial Judgmentoem YN DW BF WN
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Jul 09, 2024 |
CGC22600572
Matter on the Law & Motion Calendar for Tuesday, July 9, 2024, Line 4. PLAINTIFF MARY LEMASTERS' MOTION FOR WITHDRAWAL OF ATTORNEY OF RECORD. Hearing required. For the 9:30 a.m. Law & Motion calendar, all attorneys and parties may appear in Department 302 remotely. Remote hearings will be conducted by videoconference using Zoom. To appear remotely at the hearing, go to the court's website at sfsuperiorcourt.org under "Online Services," navigate to "Tentative Rulings," and click on the appropriate link, or dial the corresponding phone number. Any party who contests a tentative ruling must send an email to contestdept302tr@sftc.org with a copy to all other parties by 4pm stating, without argument, the portion(s) of the tentative ruling that the party contests. The subject line of the email shall include the line number, case name and case number. The text of the email shall include the name and contact information, including email address, of the attorney or party who will appear at the hearing. The court no longer provides a court reporter in the Law & Motion Department. Parties may retain their own reporter, who may appear in the courtroom or remotely. A retained reporter must be a California certified court reporter (CSR), for only a CSR's transcript may be used in California courts. If a CSR is being retained, include in your email all of the following: their name, CSR and telephone numbers, and their individual work email address. =(302/RBU)
Ruling
JOHN P BERNARD VS. BMW OF NORTH AMERICA, LLC ET AL
Jul 10, 2024 |
CGC23608339
Matter on the Law & Motion calendar for Wednesday, July 10, 2024, Line 8. PLAINTIFF JOHN BERNARD's Motion For Award Of Attorneys Fees, Costs, And Expenses. Off calendar for noncompliance with Local Rule 2.7(B) (courtesy copies). The motion may be re-set for a Mon.-Thurs. after July 24, with papers to bear new hearing date. In meantime, counsel shall meet and confer to resolve their differences. For the 9:30 a.m. Law & Motion calendar, all attorneys and parties may appear in Department 302 remotely. Remote hearings will be conducted by videoconference using Zoom. To appear remotely at the hearing, go to the court's website at sfsuperiorcourt.org under "Online Services," navigate to "Tentative Rulings," and click on the appropriate link, or dial the corresponding phone number. Any party who contests a tentative ruling must send an email to contestdept302tr@sftc.org with a copy to all other parties by 4pm stating, without argument, the portion(s) of the tentative ruling that the party contests. The subject line of the email shall include the line number, case name and case number. The text of the email shall include the name and contact information, including email address, of the attorney or party who will appear at the hearing. The court no longer provides a court reporter in the Law & Motion Department. Parties may retain their own reporter, who may appear in the courtroom or remotely. A retained reporter must be a California certified court reporter (CSR), for only a CSR's transcript may be used in California courts. If a CSR is being retained, include in your email all of the following: their name, CSR and telephone numbers, and their individual work email address. =(302/RBU)
Preview
CoC eo Tt DA BF BW YY Boe Re eB ee ee on DA HB WN FSF SD 19 Superior Court of Californi: ounty of San Francisco” SEP 14 2022 CLERK OF THE COURT BY: Deputy Clerk SUPERIOR COURT OF CALIFORNIA COUNTY OF SAN FRANCISCO DEPARTMENT 306 Lead Case No. CPF-14-514004 Consolidated with Case Nos. CPF-16-515282 and CPF-18-516389 IN RE: ORDER GRANTING IN PART AND SAN DIEGO COUNTY WATER AUTHORITY DENYING IN PART SAN DIEGO COUNTY WATER AUTHORITY’S MOTION FOR PARTIAL JUDGMENT On June 24, 2022, San Diego County Water Authority (“San Diego”) filed the instant motion. On July 15, 2022, Metropolitan Water District of Southern California (“Metropolitan”) filed an opposition to the motion. The matter was deemed submitted on July 20, 2022. Having considered the opening and opposition briefs, supporting declarations, and evidence, San Diego’s Motion for Partial Judgment is granted in part and denied in part. San Diego’s motion is granted as to: (1) Metropolitan’s fifth affirmative defense under the dispute resolution provision in the 2014 and 2016 actions; (2) Metropolitan’s eleventh affirmative defense of waiver; and (3) Metropolitan’s seventeenth affirmative defense of consent. San Diego’s motion is denied as to: (1) Metropolitan’s ninth and eleventh cross-claims for reformation in the 2014 and 2016 actions; (2) Metropolitan’s eleventh and thirteenth cross-claims for reformation in the 2018 action; (3) Metropolitan’s twenty-seventh affirmative defense for mistake of fact; and (4) Metropolitan’s twenty-eighth affirmative defense for mistake of law. -1- In Re: San Diego County Water Authority CPF-14-514004 Order Granting in Part and Denying in Part San Diego County Water Authority’s Motion for Partial Judgment ‘Come ND HW Bw HY Ee N N NN NY es ee aa e BXRRFRREBRNRBRSERSRREEBDHE OB The Court defers ruling on Metropolitan’s fifth cross-claim in the 2014 and 2016 actions and the seventh cross-claim in the 2018 action for declaratory relief regarding cost causation. The Court will hear oral argument on the declaratory relief issue on September 27, 2022 during closing arguments. The issues that should be addressed at oral argument are set forth below. BACKGROUND Respondent and Defendant Metropolitan is a public agency that imports, stores, and transports water throughout southern California. (2014 First Amended Complaint (“FAC”), { 2.)' Metropolitan has twenty-six member agencies, including Petitioner and Plaintiff San Diego. (ld. J 16.) In addition to selling water to its member agencies, Metropolitan provides wheeling service to transport Non- Metropolitan Water to third parties. (Jd. | 21.) “Wheeling” is the industry term of art for the “use of a water conveyance facility by someone other than the owner or operator to transport water.” (/d., quoting SDCWA v, MWD (2017) 12 Cal.App.Sth 1124, 1135 (“SDCWA ?’).) Because Metropolitan owns the only water distribution facilities linking the Colorado River to San Diego’s service area, San Diego and Metropolitan negotiated the 2003 Exchange Agreement (‘Exchange Agreement”) for delivery of San Diego’s Non-Metropolitan Water to San Diego’s own distribution and water storage facilities. (2014 FAC, { 18.) ‘Under the Exchange Agreement, the parties agreed the price for transporting San Diego’s Non-Metropolitan Water “shall be equal to the charge or charges set by Metropolitan’s Board of Directors pursuant to applicable law and regulation and generally applicable to the conveyance of water by Metropolitan on behalf of its member agencies.” (Jd. J 20, Ex. A [the Exchange Agreement], § 5.2.) Metropolitan also “imposes a Water Stewardship Rate on ‘all water sales and wheeling transactions, including the transportation of [San Diego’s] Non-Metropolitan Water under the Exchange Agreement, and uses these funds to pay for its demand management and water conservation programs.” (Id. { 16.) Non-Metropolitan Water is independent conserved water from the Colorado River and lining of the All- American and Coachella Canals procured by San Diego. (Jd. 4 17.) The complaints in all three actions raise two theories of illegality and breach. First, San Diego asserts Metropolitan unlawfully included in its wheeling and transportation rates the Water Stewardship ' The Court cites the FAC in the 2014 action for background as the allegations are the same or similar across all three actions. -2- ‘ In Re: San Diego County Water Authority CPF-14-514004 Order Granting in Part and Denying in Part San Diego County Water Authority’s Motion for Partial Judgment© me YN DAW Rw BY Nu RN NN No ee a ea a ek BNSRERRRBRSSERRAEBHE AS Rate—a charge unrelated to transportation, and used instead to pay the costs of demand management projects—and thus breached the parties’ Exchange Agreement. Second, San Diego asserts that Metropolitan’s failure to provide the statutorily-and contractually mandated credit for offsetting benefits was also unlawful and breached the Exchange Agreement. San Diego now moves for partial judgment pursuant to Code of Civil Procedure section 631.8. (Opening Brief, 1.) In particular, San Diego argues Metropolitan failed to carry its burden of proof on four discrete issues: (1) Metropolitan’s affirmative defense under the Exchange Agreement’s dispute resolution provision (Paragraph 11.1 Defense); (b) Metropolitan’s affirmative defenses of waiver and consent; (c) Metropolitan’s cross-claims for reformation and related affirmative defenses of mistake; and (d) Metropolitan’s cross-claim for a declaration on cost-causation, (id.) Metropolitan opposes the motion. LEGAL STANDARD “After a party has completed his presentation of evidence in a trial by the court, the other party, without waiving his right to offer evidence in support of his defense or in rebuttal in the event the motion is not granted, may move for a judgment. The court as trier of the facts shall weigh the evidence and may render a judgment in favor of the moving party.” (Code Civ. Proc., § 631.8(a).) “If it appears that the evidence presented supports the granting of the motion as to some but not all the issues involved in the action, the court shall grant the motion as to those issues and the action shall proceed as to the issues remaining.” (Code Civ. Proc., § 631.8(b).) DISCUSSION L Dispute Resolution Provision 7 San Diego argues the Court should grant partial judgment as to Metropolitan’s fifth affirmative defense under the dispute resolution provision in the 2014 and 2016 actions. (Opening Brief, 2.) San Diego asserts Metropolitan’s General Manager, Jeffrey Kightlinger, and San Diego’s former General Manager, Maureen Stapleton, testified that San Diego complied with Paragraph 11.1 as confirmed by documentary evidence. (Id.) Metropolitan opposes on the ground that San Diego’s dispute resolution letters do not address offsetting benefits or constitute reasonable best efforts to resolve a dispute. -3- In Re: San Diego County Water Authority CPF-14-514004 Order Granting in Part and Denying in Part San Diego County Water Authority’s Motion for Partial Judgment0 Oo ND HW BF WB YE YP YN YN NN NY NY Be Be eB Be we ewe ee ew oe e 8 RdRRRRBCSEIRARESER TS (Opposition, 3.) Metropolitan argues San Diego’s motion is devoid of any argument regarding reasonable best efforts or how San Diego met that standard under the Exchange Agreement for 2014 and 2016. (id. at 2.) Metropolitan contends “{t]he only evidence that San Diego raised offsetting benefits to Metropolitan is in the negotiations leading up to the 2018 litigation.” (id. at 3.) Paragraph 11.1 of the Exchange Agreement states in pertinent part: “The Parties shall exercise reasonable best efforts to resolve all disputes, including Price Disputes, arising under this Agreement through negotiation . . . In the event negotiation is unsuccessful, then the Parties reserve their respective rights to all legal and equitable remedies.” (PTX65, § 11.1.) Mr. Kightlinger’s testimony reveals that the parties did not discuss the dispute regarding offsetting benefits until 2018. (See May 26, 2022 TR, 1489-1490.) In particular, Mr. Kightlinger testified that there were no discussions raised by San Diego about offsetting benefits in May of 2014. (id. at 1489-1490 [“the first time I saw it in writing was in that 2018 letter.”], 1491.) Mr. Kightlinger further testified that during the “11.1 discussions, offsetting benefits was not raised.” (Id. at 1490:13-14.) However, Mr. Kightlinger confirmed that any discussion about offsetting benefits was futile because Metropolitan’s position is, and has always been, that this was not a wheeling transaction, and is instead an exchange agreement. (Jd. at 1373-1374, 1376-1377, 1379-1381 -) Therefore, whatever year was involved, the response from Metropolitan would be the same—the wheeling statutes do not apply. Mr. Kightlinger’s testimony at trial that he believed San Diego complied with Paragraph 11.1 to “these lawsuits at issue in this case” is binding. (Id. at 1489:15-19; see also id. at 1485-1487, 1489.) Moreover, Maureen Stapleton, San Diego’s former General Manager, testified that San Diego attempted to resolve its disputes with Metropolitan regarding offsetting benefits by presenting to Metropolitan’s Board of Directors, participating in the rate-setting processes, providing written documentation, and hiring a rates analyst to offer an opinion on appropriate cost allocations. (May 19, 2022 TR, 766-767.) Although the dispute letters did not expressly reference offsetting benefits, Ms. Stapleton testified that the reference to the price to be charged in violation of the Exchange Agreement was based on San Diego’s belief “that the rates that were being proposed violated all applicable laws and regulations regarding the setting of the wheeling rate.” (Jd. at 769:19-770:1.) -4- In Re: San Diego County Water Authority CPF-14-514004 Order Granting in Part and Denying in Part San Diego County Water Authority’s Motion for Partial JudgmentCoe NAH B® wD BD we N nN NON Re a a ea ea ik BRUFARBRRBRSRSERBRSEESH TE Furthermore, as to the 2014 letter, San Diego proposed two specific dates for negotiation to ensure “there was adequate time between when [San Diego] negotiated with Met[ropolitan] and when [Metropolitan’s] board of directors was being asked to approve the rates.” (Jd. at 771; see PTX892.) Metropolitan did not respond to the 2014 letter, (May 19, 2022 TR 772:11-15.) As to the 2016 letter, San Diego received a response from Metropolitan and the parties participated in negotiations. (Id. at 772-777, see PTX915, PTX 918.) Ms. Stapleton testified that San Diego raised the offsetting benefits issue during negotiations and Metropolitan would not agree to provide any offsetting benefit credit to San Diego. (id.) Accordingly, San Diego’s motion is granted as Metropolitan’s fifth affirmative defense under the dispute resolution provision in the 2014 and 2016 actions. I. Affirmative Defenses of Waiver and Consent San Diego seeks judgment in its favor as to Metropolitan’s eleventh affirmative defense of waiver and seventeenth affirmative defense of consent. (Opening Brief, 3.) San Diego asserts “Metropolitan’s witnesses have admitted, and San Diego’s witnesses have confirmed, that there is no signed waiver— much less a signed continuing waiver—by San Diego, as required for any alleged waiver or consent to be effective under the Exchange Agreement.” (Id.) Metropolitan does not oppose. (Opposition, 1 fn. 1.) Accordingly, San Diego’s motion is granted as to Metropolitan’s eleventh affirmative defense of waiver and seventeenth affirmative defense of consent. If. Reformation and Related Affirmative Defenses of Mistake San Diego seeks judgment in its favor as to Metropolitan’s ninth and eleventh cross-claims in the 2014 and 2016 actions, and eleventh and thirteenth cross-claims in the 2018 action, for reformation. (Opening Brief, 3-4.) San Diego also seeks judgment in its favor as to Metropolitan’s twenty-seventh and twenty-eighth affirmative defenses for mistake of fact and law. (Id. at 4.) “Civil Code section 3699 provides the authority upon which a contract may be reformed: ‘When, through fraud or a mutual mistake of the parties, or a mistake of one party, which the other at the time knew or suspected, a written contract does not truly express the intention of the parties, it may be revised, on the application of a party aggrieved, so as to express that intention, so far as it can be done without prejudice to rights acquired by third persons, in good faith and for good value.”” (Volley v. Chase Home -5- In Re: San Diego County Water Authority CPF-14-514004 Order Granting in Part and Denying in Part San Diego County Water Authority’s Motion for Partial Judgment“— oOo eo ND HW FF HB bw 10 Finance, LLC (2013) 213 Cal.App.4th 872, 908, quoting Civil Code, § 3699.) “The ‘intention of the parties,’ as stated in Civil Code section 3699, refers to a ‘single intention which is entertained by both parties.” (Jolley, 213 Cal.App.4th at 908, quoting Shupe v. Nelson (1967) 254 Cal.App.2d 693, 700.) “The essential purpose of reformation is to reflect the intent of the parties.’” (Jolley, 213 Cal.App.4th at 908, quoting Jones v. First American Title Ins. Co. (2003) 107 Cal.App.4th 381, 389.) San Diego relies on the deposition testimony of Bill Hasencamp, trial testimony of Mr. Kightlinger, and Metropolitan’s response to Form Interrogatory 50.6. (See PTX1148; PTX 1177; May 18, 2022 TR; May 26, 2022 TR.) First, Mr. Hasencamp testified that Metropolitan does not believe that there was a mistake in drafting the Exchange Agreement. (PTX 1148, 119:25-120:15.) Second, Metropolitan’s response to Form Interrogatory 50.6 states that any agreement alleged in the pleadings is not ambiguous. (PTX 1177, 24-25; see May 26, 2022 TR 1407:15-17 [Mr. Kightlinger testified that the Exchange Agreement is not ambiguous].) Third, Mr. Kightlinger testified that the Quantification Settlement Agreements, which included the Exchange Agreement, were all tied together. (May 26, 2022 TR, 1420:14-23; see also May 18, 2022 TR, 575:15-576:3.) However, San Diego’s interpretation of Metropolitan’s cross-claims and affirmative defenses is misplaced. Metropolitan seeks reformation ifthe Court finds that the Exchange Agreement is subject to the Wheeling Statutes. (See Opposition, 6-7 (emphasis added).) Similarly, Metropolitan’s mistake of fact and law defenses are conditioned on a finding that the Exchange Agreement is subject to the Wheeling Statutes. (See id.) Therefore, San Diego’s reliance on testimony regarding any ambiguity in the Exchange Agreement is not relevant to the issue at bar. As a result, San Diego’s evidence does not support granting partial judgment on the issue of reformation and mistake. Moreover, Metropolitan’s evidence cited in opposition to San Diego’s motion supports Metropolitan’s position. Deven Upadhyay, Metropolitan’s Executive Officer and Assistant General Manager, testified that Metropolitan did not believe the Exchange Agreement was a wheeling agreement, (May 25, 2022 TR, 1310:19-21; see also id. at 1311:25-1312:1 [I’ve had many, many conversations with [San Diego] management about the administration of this agreement; and, quite frankly, in those | discussions, we don’t treat it as a wheeling agreement. It’s an exchange agreement.”].) Additionally, Mr. -6- In Re: San Diego County Water Authority CPF-14-514004 Order Granting in Part and Denying in Part San Diego County Water Authority’s Motion for Partial Judgmentco CO ND HW BRB WwW DB Ye ny NON Dee Be Be i a ea i BNUSRRERBREBSERERIRAETBS AE Kightlinger testified that during the rate years in question in this litigation, Metropolitan did not make any offsetting determinations or calculations “[b]ecause it didn’t apply. This was not a wheeling transaction.” (May 26, 2022 TR, 1376:24-1377: 10; see also id. at 1378-1380.) Brian Thomas, former Metropolitan Chief Financial Officer, also testified that during negotiations for the 2003 Exchange Agreement, he did not recall himself or anyone else at Metropolitan telling San Diego that the agreement would be subject to the Wheeling Statutes. (May 26, 2022 TR, 1525 :27-1526:8; see also id. at 1533-1 534; May 19, 2022 TR, 675-676.) Accordingly, San Diego’s motion is denied as to this issue. IV. Cost Causation , San Diego seeks judgment in its favor as to Metropolitan’s fifth cross-claim in the 2014 and 2016 actions and Metropolitan’s seventh cross-claim in the 2018 action for declaratory relief regarding cost causation. (Opening Brief, 5-6.) San Diego argues Metropolitan failed to demonstrate that cost causation is a proper subject of declaratory relief and that an actual controversy exists. (Jd. at 6.) In opposition, Metropolitan asserts the cross-complaints allege the parties interpret the term “cost causation” differently and seeks a declaration as to the meaning of the term “cost causation.” (Opposition, 8-9.) The Court defers ruling on this issue and will hear oral argument on this issue on September 27, 2022 during closing arguments. In particular, the parties should address: (1) the relief Metropolitan is seeking regarding cost causation; (2) whether cost causation applies to all of Metropolitan’s rates; (3) whether cost causation applies specifically to the Water Stewardship Rate; and (4) whether cost causation applies to offsetting benefits. CONCLUSION AND ORDER Based on the foregoing reasons, San Diego’s motion is granted as to Metropolitan’s fifth affirmative defense under the dispute resolution provision in the 2014 and 2016 actions, Metropolitan’s eleventh affirmative defense of waiver, and Metropolitan’s seventeenth affirmative defense of consent. San Diego’s motion is denied as to Metropolitan’s ninth and eleventh cross-claims for reformation in the 2014 and 2016 actions, Metropolitan’s eleventh and thirteenth cross-claims for reformation in the 2018 -7- In Re: San Diego County Water Authority CPF-14-514004 Order Granting in Part and Denying in Part San Diego County Water Authority’s Motion for Partial Judgmentoem YN DW BF WN Yb NNR NY KY BS Be Be eB Be we Be Be es RBSeR