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1 MANATT, PHELPS & PHILLIPS, LLP Exempt from filing fee pursuant to
Barry W. Lee (SBN 88685) Government Code § 6103
2 Justin Jones Rodriguez (SBN 279080)
One Embarcadero Center, 30th Floor ELECTRONICALLY
3 San Francisco, California 94111 F I L E D
Telephone: (415) 291-7450 Superior Court of California,
4 Facsimile: (415) 291-7474 County of San Francisco
Email: bwlee@manatt.com 07/15/2022
5 Email: jjrodriguez@manatt.com Clerk of the Court
BY: ERNALYN BURA
6 THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA
Deputy Clerk
Marcia Scully (SBN 80648)
7 Heather C. Beatty (SBN 161907)
Patricia J. Quilizapa (SBN 233745)
8 700 North Alameda Street
Los Angeles, CA 90012-2944
9 Telephone: (213) 217-6834
Facsimile: (213) 217-6890
10 Email: hbeatty@METROPOLITANh2o.com
11 Attorneys for Respondent, Defendant, and Cross-Complainant
THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA
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Additional counsel listed on following page
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14 SUPERIOR COURT OF THE STATE OF CALIFORNIA
15 FOR THE COUNTY OF SAN FRANCISCO
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17 SAN DIEGO COUNTY WATER Case No. CPF-14-514004, consolidated with
AUTHORITY, Case Nos. CPF-16-515282 & CPF-18-
18 516389
Petitioner and Plaintiff,
19 Assigned for all purposes to the
v. Hon. Anne-Christine Massullo, Dept. 304
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THE METROPOLITAN WATER DISTRICT METROPOLITAN WATER DISTRICT
21 OF SOUTHERN CALIFORNIA, ALL OF SOUTHERN CALIFORNIA’S
PERSONS INTERESTED IN THE OPPOSITION TO SAN DIEGO
22 VALIDITY OF THE RATES ADOPTED BY COUNTY WATER AUTHORITY’S
THE METROPOLITAN WATER DISTRICT MOTION FOR PARTIAL JUDGMENT
23 OF SOUTHERN CALIFORNIA ON APRIL 8, (CODE CIV. PROC. § 631.8);
2014 TO BE EFFECTIVE JANUARY 1, 2015 DECLARATION OF BARRY W. LEE
24 AND JANUARY 1, 2016; and DOES 1-10,
25 Respondents and
Defendants.
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MANATT, PHELPS &
PHILLIPS, LLP METROPOLITAN’S OPPOSITION TO SAN DIEGO’S MOTION FOR PARTIAL JUDGMENT
ATTORNEYS AT LAW
SAN FRANCISCO
(CASE NO. CPF-14-514004)
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2 THE METROPOLITAN WATER DISTRICT OF
SOUTHERN CALIFORNIA,
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Respondent, Defendant and Cross-
4 Complainant,
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6 SAN DIEGO COUNTY WATER
AUTHORITY,
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Petitioner, Plaintiff and Cross-
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PHILLIPS, LLP METROPOLITAN’S OPPOSITION TO SAN DIEGO’S MOTION FOR PARTIAL JUDGMENT
ATTORNEYS AT LAW
SAN FRANCISCO
(CASE NO. CPF-14-514004)
1 MILLER BARONDESS LLP
Mira Hashmall (SBN 216842)
2 1999 Avenue of the Stars, Suite 1000
Los Angeles, California 90067
3 Telephone: 310-552-4400
Facsimile: 310-552-8400
4 Email: mhashmall@millerbarondess.com
5 MORGAN, LEWIS & BOCKIUS LLP
Colin C. West (SBN 184095)
6 One Market, Spear Street Tower
San Francisco, California 94105-1596
7 Telephone: (415) 422-1000
Facsimile: (415) 422-1101
8 Email: colin.west@morganlewis.com
9 Attorneys for Respondent, Defendant, and Cross-Complainant
THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA
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PHILLIPS, LLP METROPOLITAN’S OPPOSITION TO SAN DIEGO’S MOTION FOR PARTIAL JUDGMENT
ATTORNEYS AT LAW
SAN FRANCISCO
(CASE NO. CPF-14-514004)
1 TABLE OF CONTENTS
2 Page
3 I. INTRODUCTION .............................................................................................................. 1
4 II. THE MOTION SHOULD BE DENIED ............................................................................. 1
A. Metropolitan’s dispute resolution defense under paragraph 11.1 ........................... 1
5
B. Metropolitan’s reformation cross-claims and mistake defenses ............................. 5
6 C. Metropolitan’s cost-causation declaratory relief cross-claim ................................. 8
7 III. CONCLUSION ................................................................................................................. 10
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MANATT, PHELPS & -i-
PHILLIPS, LLP METROPOLITAN’S OPPOSITION TO SAN DIEGO’S MOTION FOR PARTIAL JUDGMENT
ATTORNEYS AT LAW
SAN FRANCISCO
(CASE NO. CPF-14-514004)
1 TABLE OF AUTHORITIES
2 Page
3 CASES
4 Baines v. Zuieback,
84 Cal. App. 2d 483 (1948)....................................................................................................... 8
5
Cal. Pines Property Owners Ass’n v. Pedotti,
6 206 Cal. App. 4th 384 (2012).................................................................................................... 5
Casetta v. United States Rubber Co.,
7
260 Cal. App. 2d 792 (1968)..................................................................................................... 9
8 County of Contra Costa v. Humore, Inc.,
45 Cal. App. 4th 1335 (1996).................................................................................................... 1
9
In re Marriage of Hublou,
10 231 Cal. App.3d 956 (1991)...................................................................................................... 5
11 San Diego Cnty. Water Auth. v. Metro. Water Dist. of S. California,
12 Cal. App. 5th 1124 (2017), as modified on denial of reh’g (July 18, 2017) ........................ 9
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STATUTES
13 Civ. Code § 3399 .................................................................................................................... 6, 8, 9
14 Gov’t. Code § 54999.7 .................................................................................................................... 9
15 Metropolitan Water District Act ..................................................................................................... 9
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MANATT, PHELPS & - ii -
PHILLIPS, LLP METROPOLITAN’S OPPOSITION TO SAN DIEGO’S MOTION FOR PARTIAL JUDGMENT
ATTORNEYS AT LAW
SAN FRANCISCO
(CASE NO. CPF-14-514004)
1 I. INTRODUCTION
2 San Diego’s motion for partial judgment is an unnecessary waste of the parties’ and this
3 Court’s time and resources. The motion seeks judgment on four issues before post-trial briefing
4 and closing argument. Three of those issues—(1) Metropolitan’s dispute resolution defense, (2)
5 Metropolitan’s reformation cross-claims and mistake defenses, and (3) Metropolitan’s cost
6 causation cross-claim—should be decided in Metropolitan’s favor based on the weight of all
7 evidence presented at trial and in the administrative records. San Diego’s arguments otherwise
8 rely on selective and incomplete citations to evidence and strawman interpretations of
9 Metropolitan’s cross-claims and defenses that are inconsistent with the operative pleadings. No
10 reason exists to shortcut the parties’ final presentation of evidence and the Court’s consideration
11 of that evidence with a section 631.8 motion for partial judgment. The evidence is in, closing
12 briefs and argument have been scheduled, and the Court should weigh all the evidence together at
13 the conclusion of trial before deciding any cross-claim or defense. See County of Contra Costa v.
14 Humore, Inc., 45 Cal. App. 4th 1335, 1344 (1996) (the court must weigh all the pertinent
15 evidence, not just the evidence that the parties selectively brought to the court’s attention when
16 arguing the motion). The motion should be denied as to all three issues. 1
17 II. THE MOTION SHOULD BE DENIED
18 A. Metropolitan’s dispute resolution defense under paragraph 11.1 2
19 Metropolitan’s dispute resolution defense correctly alleges that San Diego failed to satisfy
20 the 2003 Amended and Restated Exchange Agreement’s (“Exchange Agreement”) dispute
21 resolution provision, paragraph 11.1, which is a contractually agreed to condition precedent for
22 litigation. Paragraph 11.1 of the Exchange Agreement has the heading: “Reasonable Best Efforts
23 to Resolve by Negotiation.” (PTX65.) The provision expressly requires San Diego to use its best
24 efforts prior to initiating litigation. The provision states in full:
25
1
26 San Diego’s motion identifies a fourth issue: Metropolitan’s 11th affirmative defense of waiver
and 17th affirmative defense of consent. Metropolitan does not oppose the motion as to those two
27 affirmative defenses. San Diego could have met and conferred with Metropolitan on those
defenses before filing its motion, but did not.
28 2
Metropolitan’s 5th affirmative defense in the 2014 and 2016 actions.
MANATT, PHELPS &
PHILLIPS, LLP METROPOLITAN’S OPPOSITION TO SAN DIEGO’S MOTION FOR PARTIAL JUDGMENT
ATTORNEYS AT LAW
SAN FRANCISCO
(CASE NO. CPF-14-514004)
1 The Parties shall exercise reasonable best efforts to resolve all
disputes, including Price Disputes, arising under this Agreement
2 through negotiation; provided, however, that SDCWA shall not
3 dispute whether the Price determined pursuant to Paragraph 5.2 for
the first five (5) Years of this Agreement was determined in
4 accordance with applicable law or regulation (a “Price Dispute”). In
the event negotiation is unsuccessful, then the Parties reserve their
5 respective rights to all legal and equitable remedies.
6 (PTX65.)
7 San Diego’s motion includes no argument whatsoever on what constitutes “reasonable
8 best efforts” or why San Diego’s efforts in 2014 and 2016 met that standard under the Exchange
9 Agreement. The Court previously denied San Diego’s motion for summary adjudication of the
10 same defense in the 2014 and 2016 actions for exactly the same reason:
11 Metropolitan asserts San Diego’s letter[s] did not encompass the
issues raised in the 2014 and 2016 actions, specifically, offsetting
12
benefits. (Opposition, 16.) The letters in the 2014 and 2016 actions
13 do not describe the specificities of the dispute. (Jackson Decl., Ex.
19.) Whether the failure to specify the nature of the dispute complies
14 with the “reasonable best efforts” standard of the dispute resolution
provision is a triable issue of material fact. Moreover, San Diego’s
15 single attempt to negotiate with Metropolitan in the 2014 action
16 raises a triable issue of material fact about whether a single attempt
constitutes “reasonable best efforts to resolve” the dispute.
17 Accordingly, San Diego’s Motion is denied as to the 2014 and 2016
Actions.
18
19 (5/11/2022 Order Granting in Part and Denying in Part San Diego County Water Authority’s
20 Motion for Summary Adjudication in the 2014, 2016, and 2018 Actions [“MSA Order”], at 21:4-
21 11.) San Diego has provided no reason for the Court to reconsider its prior ruling.
22 As detailed further below, San Diego failed at trial to demonstrate that the 2014 and 2016
23 letters addressed offsetting benefits; and they presented no evidence at all on reasonable best
24 efforts. Instead of addressing the issues identified in the Court’s MSA Order, San Diego now
25 relies on the testimony of two witnesses (Jeff Kightlinger and Maureen Stapleton) regarding
26 form dispute resolution letters that San Diego sent to Metropolitan prior to filing the 2014 and
27 2016 actions. San Diego argues that Mr. Kightlinger “admitted that [Metropolitan’s] Paragraph
28 11.1 Defense must fail.” Not so. San Diego asked Mr. Kightlinger a different question. Counsel
MANATT, PHELPS & -2-
PHILLIPS, LLP METROPOLITAN’S OPPOSITION TO SAN DIEGO’S MOTION FOR PARTIAL JUDGMENT
ATTORNEYS AT LAW
SAN FRANCISCO
(CASE NO. CPF-14-514004)
1 showed Mr. Kightlinger the dispute resolution letters that Ms. Stapleton sent him before San
2 Diego filed the 2014 and 2016 actions. (See PTX892 [2014 letter], PTX915 [2016 letter].) In that
3 context, counsel then asked Mr. Kightlinger if he agreed that San Diego had complied with the
4 dispute resolution provision for each year. (See 5/26 Tr. at 1485:15-18 [2014 letter], 1487:17-21
5 [2016 letter].) Mr. Kightlinger agreed. But Metropolitan does not dispute that San Diego sent
6 Metropolitan dispute resolution letters that complied with paragraph 11.1 of the Exchange
7 Agreement for disputes contained in the letters. Metropolitan disputes that those letters address
8 offsetting benefits or constitute “reasonable best efforts” to resolve an offsetting benefits dispute
9 as paragraph 11.1 requires. None of the cited testimony explains how the letters could satisfy
10 paragraph 11.1 for the offsetting benefits dispute at issue.
11 San Diego’s citation to Mr. Kightlinger’s testimony is selective. None of the questions
12 that San Diego asked Mr. Kightlinger about the 2014 and 2016 letters and none of his responses
13 demonstrate that San Diego raised offsetting benefits or the fair compensation standard during
14 dispute resolution proceedings for the 2014 and 2016 actions. (See 5/26 Tr. 1483:20-1487-21.)
15 Exactly the opposite is true. In response to the Court’s questioning, Mr. Kightlinger testified that
16 San Diego never raised offsetting benefits or fair compensation in any of the paragraph 11.1
17 negotiations for the 2014 and 2016 cases (i.e., for Metropolitan’s rates in 2015-2018). (5/26 Tr.
18 1490:7-28.) The only evidence that San Diego raised offsetting benefits to Metropolitan is in the
19 negotiations leading up to the 2018 litigation. (See 5/26 Tr. 1487:22-1489:19.) But as San Diego
20 acknowledges in its motion, the Court has already summarily adjudicated Metropolitan’s 5th
21 affirmative defense in that case. (Mtn. at 2:2-4; see also MSA Order at 2:13, 21:12-13.) The
22 present motion concerns only Metropolitan’s 5th affirmative defense under paragraph 11.1 in the
23 2014 and 2016 actions.
24 San Diego’s reliance on Ms. Stapleton’s testimony is also selective. Ms. Stapleton did not
25 unequivocally testify that San Diego satisfied paragraph 11.1 before it filed its lawsuits in 2014
26 and 2016. The letters speak for themselves and make no mention of offsetting benefits. (See
27 PTX892, PTX915.) On cross-examination, Ms. Stapleton conceded that the letters are silent on
28 offsetting benefits. (5/19 Tr. at 793:8-794:5 [Ms. Stapleton’s admission that the 2014 letter is
MANATT, PHELPS & -3-
PHILLIPS, LLP METROPOLITAN’S OPPOSITION TO SAN DIEGO’S MOTION FOR PARTIAL JUDGMENT
ATTORNEYS AT LAW
SAN FRANCISCO
(CASE NO. CPF-14-514004)
1 silent on offsetting benefits], 794:6-15 [Ms. Stapleton’s admission that the 2016 letter does not
2 mention offsetting benefits].) Ms. Stapleton also testified that she could not recall if the
3 presentations that San Diego made to Metropolitan in connection with the letters included any
4 mention of offsetting benefits. (5/19 Tr. at 792:10-793:3 [2014 presentations], 5/20 Tr. at 852:17-
5 853:24 [2016 presentations].) The weight of testimony by the witnesses San Diego relies on thus
6 demonstrates that San Diego did not raise offsetting benefits during dispute resolution
7 negotiations for the 2014 and 2016 actions, let alone use reasonable best efforts to resolve an
8 offsetting benefits dispute as required under paragraph 11.1.
9 The documentary evidence San Diego cites—PTX886, 892, 915, 918, 925, 926, 1097—
10 fares no better. Most of the exhibits have nothing to do with the 2014 or 2016 actions or
11 Metropolitan’s rates for 2015-2018. (See PTX886 [San Diego’s post-trial brief for the 2010 and
12 2012 actions], PTX925 [San Diego’s 3/11/2018 letter about rates to be set for 2019-2020, and
13 raising offsetting benefits for the first time in any correspondence between the parties], PTX926
14 [Metropolitan’s response to the 3/11/2018 letter], PTX1097 [San Diego’s paragraph 11.1 letter
15 for the 2018 action].) The only exhibits relevant to the motion are PTX892 (San Diego’s 2014
16 letter), PTX915 (San Diego’s 2016 letter), and PTX918 (Metropolitan’s response to the 2016
17 letter). It remains undisputed that none of those letters mention offsetting benefits.
18 Metropolitan also presented significant additional evidence that San Diego never raised
19 offsetting benefits before it filed the 2014 or 2016 lawsuits against Metropolitan. (See, e.g., 5/25
20 Tr. at 1184:13-21 [testimony by Assistant General Manager Deven Upadhyay that San Diego
21 never raised offsetting benefits in any conversations with him from 2010-2018]; 5/26 Tr. at
22 1369:1-14 [Mr. Kightlinger’s testimony that offsetting benefits were never raised during
23 negotiations of the 2003 Exchange Agreement], 1371:25-1372:15 [same], 1383:24-1384:21 [Mr.
24 Kightlinger’s testimony that Ms. Stapleton did not raise fair compensation during their 2010
25 dispute resolution call], 1393:27-1394:6 [San Diego first raised offsetting benefits in the spring of
26 2018]; 6/3 Tr. at 1878:1-18 [John Scott’s testimony that San Diego did not request an offsetting
27 benefits determination or credit until its March 11, 2018 letter, PTX925].) San Diego’s absolute
28 silence on “offsetting benefits” demonstrates that San Diego made no effort whatsoever to
MANATT, PHELPS & -4-
PHILLIPS, LLP METROPOLITAN’S OPPOSITION TO SAN DIEGO’S MOTION FOR PARTIAL JUDGMENT
ATTORNEYS AT LAW
SAN FRANCISCO
(CASE NO. CPF-14-514004)
1 announce, let alone resolve, an offsetting benefits dispute.
2 San Diego’s conduct cannot satisfy the reasonable best efforts standard in Paragraph 11.1.
3 “[B]est efforts are construed in the context of the circumstances in a particular case. Cal. Pines
4 Property Owners Ass’n v. Pedotti, 206 Cal. App. 4th 384, 393 (2012). Here, the parties negotiated
5 a contract with a 110-year term and performed under that contract for decades without so much as
6 mentioning offsetting benefits. San Diego now contends the price should be $334 million less—in
7 six years alone. In the circumstances of these cases, sending one letter before each of the 2014
8 and 2016 lawsuits that fails to even mention “offsetting benefits” does not constitute best efforts.
9 See In re Marriage of Hublou, 231 Cal. App.3d 956, 960 (1991) (“good efforts” do not constitute
10 “best efforts”).
11 B. Metropolitan’s reformation cross-claims and mistake defenses 3
12 San Diego argues that the court should adjudicate Metropolitan’s reformation cross-claims
13 and mistake defenses in its favor because Metropolitan has not demonstrated a mistake. San
14 Diego’s motion hinges on a single sentence of testimony from Bill Hasencamp, Metropolitan’s
15 witness on Colorado River supplies and one of several witnesses on the Exchange Agreement:
16 “I’m not aware of any mistake made by any party.” (Mtn. at 4:19-25.) San Diego’s argument is
17 wrong for several reasons.
18 First, San Diego fundamentally misunderstands Mr. Hasencamp’s testimony and
19 Metropolitan’s cross-claims and defenses. Metropolitan does not contend that it made a mistake
20 when it negotiated the 2003 Exchange Agreement. To the contrary, the evidence demonstrates
21 that Metropolitan intended to enter an Exchange Agreement instead of a wheeling transaction; it
22 thus believed that the Exchange Agreement was not subject to the Wheeling Statutes. (5/25 Tr. at
23 1179:9-1181:4 [Upadhyay direct]; id. at 1310:13-22, 1311:20-1312:3 [Upadhyay cross]; 5/26 Tr.
24 1376:24-1377:10, 1378:18-1380:18 [Kightlinger direct]; id. at 1525:17-1526:8, 1533:6-11,
25 1534:3-10 [former Metropolitan Chief Financial Officer Brian Thomas direct].) That is still
26 Metropolitan’s belief. And nothing in the Exchange Agreement contradicts Metropolitan’s belief.
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Metropolitan’s 9th and 11th cross-claims in the 2014 and 2016 actions, 11th and 13th cross-
28 claims in the 2018 action, and 27th and 28th affirmative defenses in all three cases.
MANATT, PHELPS & -5-
PHILLIPS, LLP METROPOLITAN’S OPPOSITION TO SAN DIEGO’S MOTION FOR PARTIAL JUDGMENT
ATTORNEYS AT LAW
SAN FRANCISCO
(CASE NO. CPF-14-514004)
1 So when asked, any Metropolitan witness would say the same thing: Metropolitan did not make a
2 mistake.
3 It is nevertheless possible that the Court will disagree with Metropolitan’s belief and hold
4 that the price term requires an offsetting benefits determination. If that happens, then
5 Metropolitan’s execution of the Exchange Agreement (and Mr. Hasencamp’s testimony) was
6 based on the mistaken belief that no such determination was required because the Exchange
7 Agreement is not a wheeling transaction and there also was no contractual agreement for such a
8 determination (or it would have been stated in the Exchange Agreement and would have started in
9 2003). Put another way, if the Court holds that the price term requires an offsetting benefits
10 determination, then Metropolitan’s contrary view at the time it executed the contract will be
11 deemed a mistake as a matter of fact and law.
12 Accordingly, and as detailed below, Metropolitan pleaded its reformation cross-claims
13 and mistake defenses as conditional.
14 • Metropolitan’s cross-claim for reformation of the Exchange Agreement price term:
15 “Metropolitan is entitled to reformation under Civil Code section 3399, if the
16 Court finds that the Exchange Agreement is subject to, based on, or incorporates
17 the ‘offsetting benefits’ provision of the Wheeling Statutes, and the Court has
18 jurisdiction over the matter.” 2014 Cross-Compl. ¶ 119; 2016 Cross-Compl. ¶ 119;
19 2018 Cross-Compl. ¶ 141 (emphasis added as to all).
20 • Metropolitan’s cross-claim for reformation as to rights and duties under the
21 Wheeling Statutes: “Under Civil Code § 3399, Metropolitan is entitled to
22 reformation of the Exchange Agreement to reflect its rights and duties under the
23 Wheeling Statutes, if the Court finds that the Exchange Agreement transaction is
24 subject to the Wheeling Statutes.” 2014 Cross-Compl. ¶ 131; 2016 Cross-Compl. ¶
25 131; 2018 Cross-Compl. ¶ 153 (emphasis added as to all).
26 • Metropolitan’s mistake of fact defense: “San Diego’s claims are barred by the
27 doctrine of mistake of fact. Among other reasons, if San Diego’s new position that
28 the Exchange Agreement is a wheeling transaction and subject to the Wheeling
MANATT, PHELPS & -6-
PHILLIPS, LLP METROPOLITAN’S OPPOSITION TO SAN DIEGO’S MOTION FOR PARTIAL JUDGMENT
ATTORNEYS AT LAW
SAN FRANCISCO
(CASE NO. CPF-14-514004)
1 Statutes is correct, then Metropolitan was under the mistaken belief that San
2 Diego’s prior position that the transaction was not wheeling and was not subject to
3 the Wheeling Statutes was the correct one, as San Diego knew.” (2014 Answer at
4 31:20-27; 2016 Answer at 31:26-32:5; 2018 Answer at 37:4-11 [emphasis added
5 as to all].)
6 • Metropolitan’s mistake of law defense: “San Diego’s claims are barred by the
7 doctrine of mistake of law. Among other reasons, if San Diego’s new position that
8 the Exchange Agreement is a wheeling transaction and subject to the Wheeling
9 Statutes is correct, then Metropolitan was under the mistaken belief that San
10 Diego’s prior position that the transaction was not wheeling and was not subject to
11 the Wheeling Statutes was the correct one, as San Diego knew.” (2014 Answer at
12 32:1-8; 2016 Answer at 32:6-13; 2018 Answer at 37:12-19 [emphasis added as to
13 all].)
14 San Diego fails to account for the conditional nature of Metropolitan’s cross-claims and
15 defenses in which a mistake exists only if the Court agrees with San Diego’s new offsetting
16 benefits position.
17 Second, San Diego errs by treating Metropolitan’s reformation cross-claims as the same.
18 Metropolitan does not only seek conditional reformation of the price term of the Exchange
19 Agreement. Metropolitan also seeks conditional reformation as to the parties’ rights and duties
20 under the Wheeling Statutes. Even if the court does not reform the price term, if the Wheeling
21 Statutes apply to the contract, the Court should reform it to give effect to that application. The
22 Wheeling Statutes cannot be reduced to a single clause about offsetting benefits in a single
23 sentence. They include numerous requirements that must be met in order for the Wheeling
24 Statutes to apply to a transaction and prior to any offsetting benefits determination. If the
25 Wheeling Statutes apply, the contract must account for all requirements. For example, as
26 Metropolitan pleads in its 11th cross-claim in the 2014 and 2016 actions and its 13th cross-claim
27 in the 2018 action, “as to Metropolitan’s potential duties, should there be a need for third party
28
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(CASE NO. CPF-14-514004)
1 approvals, Metropolitan does not wish to violate the law by continuing to deliver water under the
2 Exchange Agreement without those approvals.”
3 Third, reformation is expressly permitted where through “a mistake of one party, which
4 the other at the time knew or suspected, a written contract does not truly express the intention of
5 the parties.” Cal. Code Civ. Proc. § 3399. Metropolitan did not believe that the Wheeling Statutes
6 would apply to the Exchange Agreement and San Diego knew that belief. San Diego’s lead
7 negotiator, Scott Slater, testified that he knew that Metropolitan would “not [embrace] the
8 concept of wheeling” in the Exchange Agreement. (5/19 Tr. at 675:19-676:9 [reading from
9 9/6/2013 deposition transcript].) San Diego failed to inform Metropolitan that it was mistaken,
10 and instead represented that the Exchange Agreement was not a wheeling agreement subject to
11 the Wheeling Statutes. (DTX-1143 [San Diego and Metropolitan joint appellate brief in the QSA
12 Cases], pp. 147-153.) See Baines v. Zuieback, 84 Cal. App. 2d 483, 490 (1948) (the only fraud
13 necessary to sustain a judgment of reformation ‘“is such as may be inferred from the failure of the
14 defendant to correct the mistake of the plaintiff, known to or suspected by the former at the time
15 of the execution of the [contract]. This is all that is required by section 3339 of the Civil Code.’”
16 (citation omitted)).
17 The Court should permit the parties to complete post-trial briefing and present closing
18 arguments before weighing all the evidence and entering judgment.
19 C. Metropolitan’s cost-causation declaratory relief cross-claim 4
20 San Diego seeks judgment on Metropolitan’s cost causation cross-claim based on two
21 strawmen. San Diego first argues that it is entitled to judgment if Metropolitan seeks a declaration
22 that cost causation applies. (Mtn. at 6:9-17.) Metropolitan does not seek such a declaration. San
23 Diego second argues that it is entitled to judgment if Metropolitan seeks a declaration that it
24 complied with cost causation. (Mtn. at 6:18-27.) Metropolitan does not seek either declaration
25 that San Diego imagines in its motion. The motion should be denied on that basis alone.
26 The declaration Metropolitan seeks is alleged in its cross-complaints. The cross-claim
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4
Metropolitan’s 5th cross-claim in the 2014 and 2016 actions and 7th cross-claim in the 2018
28 action.
MANATT, PHELPS & -8-
PHILLIPS, LLP METROPOLITAN’S OPPOSITION TO SAN DIEGO’S MOTION FOR PARTIAL JUDGMENT
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(CASE NO. CPF-14-514004)
1 explains: “The parties agree that a ‘cost causation’ concept applies to Metropolitan’s rates;
2 however, the parties interpret that term differently.” (2014 Cross-Compl. ¶ 87; 2016 Cross-
3 Compl. ¶ 87; 2018 Cross-Compl. ¶ 109.) The disagreement is the reason for the requested
4 declaration. (Id.) “Metropolitan contends that ‘cost causation’ is consistent with Metropolitan’s
5 legal requirements under the common law and the Metropolitan Water District Act; and as to the
6 pre-set wheeling rate, the Wheeling Statutes”—i.e., that cost causation means “reasonableness” in
7 that Metropolitan’s rates should “result[] in revenue which will pay the costs of the district” and
8 be “uniform for like classes of service.” (2014 Cross-Compl. ¶¶ 88, 90; 2016 Cross-Compl. ¶¶ 88,
9 90; 2018 Cross-Compl. ¶¶ 110, 112.) San Diego, on the other hand, contends that “Metropolitan
10 should determine which member agency caused each cost, and then charge only that member
11 agency for that cost.” (2014 Cross-Compl. ¶ 88; 2016 Cross-Compl. ¶ 88; 2018 Cross-Compl. ¶
12 110.) The controversy that requires declaratory relief is the parties’ disagreement over the
13 meaning of the term cost causation. The motion is silent on the controversy at issue and it should
14 be denied on that basis as well.
15 Metropolitan has presented evidence on the definition of cost causation as used in the
16 water industry. (See, e.g., 5/27 Tr. 1648:15-1649:4 [as to industry principles and guidance, Rick
17 Giardina’s testimony that cost causation is the methodology to develop reasonable and equitable
18 rates based on cost of service as outlined in the definitive American Water Works Association’s
19 M1 Principles of Water Rates, Fees and Charges manual, and that there is no definition of cost
20 causation other than the M1’s definition], 1672:18-1673:5 [same].) That industry definition
21 amounts to reasonableness. That is the same standard that underpins Metropolitan’s legal
22 requirements. See San Diego Cnty. Water Auth. v. Metro. Water Dist. of S. California, 12 Cal.
23 App. 5th 1124, 1129, 1144 (2017), as modified on denial of reh’g (July 18, 2017) (Wheeling
24 Statutes do not prohibit “reasonable wheeling charges”); id. at 1151 (the common law standard is
25 reasonableness), 1152 (under Proposition 26, a fee, charge, or rate is not a “tax” if it does not
26 exceed “reasonable costs” and the allocation bears a “fair or reasonable relationship” to the
27 payors), 1154 (same for Government Code section 54999.7). San Diego has presented no contrary
28 evidence on Metropolitan’s cost causation claim. See Casetta v. United States Rubber Co., 260
MANATT, PHELPS & -9-
PHILLIPS, LLP METROPOLITAN’S OPPOSITION TO SAN DIEGO’S MOTION FOR PARTIAL JUDGMENT
ATTORNEYS AT LAW
SAN FRANCISCO
(CASE NO. CPF-14-514004)
1 Cal. App. 2d 792, 815-16 (1968) (uncontradicted testimony of a witness to a particular fact
2 should be accepted as proof of that fact).
3 III. CONCLUSION
4 San Diego’s motion should be denied and judgment should be entered in Metropolitan’s
5 favor on each of the issues discussed above.
6
Dated: July 15, 2022 MANATT, PHELPS & PHILLIPS, LLP
7
8 By:
Barry W. Lee
9
Attorneys for Respondent, Defendant, and
10 Cross-Complainant
METROPOLITAN WATER DISTRICT
11 OF SOUTHERN CALIFORNIA
12
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MANATT, PHELPS & - 10 -
PHILLIPS, LLP METROPOLITAN’S OPPOSITION TO SAN DIEGO’S MOTION FOR PARTIAL JUDGMENT
ATTORNEYS AT LAW
SAN FRANCISCO
(CASE NO. CPF-14-514004)
1 PROOF OF SERVICE
2 I, Michelle L. Cooper, declare as follows:
3 I am employed in San Francisco County, San Francisco, California. I am over the age of
eighteen years and not a party to this action. My business address is MANATT, PHELPS &
4 PHILLIPS, LLP, One Embarcadero Center, 30th Floor, San Francisco, California 94111. On July
15, 2022, I served the within:
5
METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA’S
6 OPPOSITION TO SAN DIEGO COUNTY WATER AUTHORITY’S MOTION FOR
PARTIAL JUDGMENT (CODE CIV. PROC. § 631.8); DECLARATION OF BARRY
7 W. LEE IN SUPPORT THEREOF
8 on the interested parties in this action addressed as follows:
9 (BY ELECTRONIC SERVICE) By transmitting the above documents to a vendor, First
10
Legal, to serve them by File & ServeXpress™ to the parties listed on the Court’s service
list and to the persons at the electronic mail addresses listed below.
11
Dan Jackson
12 Warren A. Braunig
Nicholas Goldberg
13 Max Alderman
Julia Greenberg
14 KEKER, VAN NEST & PETERS LLP
633 Battery Street
15 San Francisco, CA 94111-1809
415.391.5400/Fax: 415.397.7188
16 djackson@keker.com; wbraunig@keker.com;
ngoldberg@keker.com; malderman@keker.com;
17 jgreenberg@keker.com
Attorneys for Petitioner and Plaintiff
18 SAN DIEGO COUNTY WATER
AUTHORITY
Related Content
in San Francisco County
Ruling
PEOPLE CENTER, INC. D/B/A RIPPLING, A DELAWARE VS. ASURE PAYROLL TAX MANAGEMENT LLC, A DELAWARE LLC ET AL
Jul 11, 2024 |
CGC24615613
Matter on the Law & Motion calendar for Thursday, July 11, 2024, Line 15. PLAINTIFF PEOPLE CENTER, INC. D/B/A RIPPLING's Motion For Preliminary Injunction. Plaintiff People Center, Inc. d/b/a Rippling's motion for a preliminary injunction is denied. (The Court's complete tentative ruling has been emailed to the parties.) For the 1:30 p.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. Counsel for the prevailing party is required to prepare a proposed order which repeats verbatim the substantive portion of the tentative ruling and must email it to contestdept302tr@sftc.org prior to the hearing even if the tentative ruling is not contested. 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
A & A GENERAL BUILDING CONSTRUCTION INC., A VS. ARLENE S. TASIM ET AL
Jul 12, 2024 |
CGC23609755
Matter on the Law & Motion calendar for Friday, July 12, 2024, Line 12. DEFENDANT ARLENE TASIM AND ALI TASIM'S Motion For Sanctions Against A A General Building Construction Inc. Pursuant To Code Of Civil Procedure Section 1281.99. Defendants and Cross-Complainants' unopposed Motion for Sanctions in the amount of $8350.00 is granted (CCP section 1281.99), payment to be made within 30 days of the filing of this order. Friday's Law & Motion Calendar will be called out of Dept. 301. Anyone intending to appear in person should report to Dept. 301. However, anyone intending to appear remotely should use the regular Zoom information for Dept. 302's Law & Motion Calendar for 9:30 a.m. 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. Counsel for the prevailing party is required to prepare a proposed order which repeats verbatim the substantive portion of the tentative ruling and must email it to contestdept302tr@sftc.org prior to the hearing even if the tentative ruling is not contested. 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/RCE)
Ruling
YOLANDA JONES ET AL VS. GENERAL MOTORS, LLC ET AL
Jul 10, 2024 |
CGC23609805
Matter on the Law & Motion calendar for Wednesday, July 10, 2024, Line 10. 2 - DEFENDANT GENERAL MOTORS, LLC's MOTION TO STRIKE 1ST Amended COMPLAINT. Off calendar. The Quezada declaration fails to show that the parties met and conferred "in person, by telephone, or by video conference" in compliance with CCP 435.5. The parties are ordered to comply with the code. The response to the complaint is now due August 7, 2024. 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
EDWARD WESTERMAN VS. FTI CONSULTING, INC. ET AL
Jul 09, 2024 |
CGC24615152
Matter on the Law & Motion Calendar for Tuesday, July 9, 2024, Line 12. PLAINTIFF EDWARD WESTERMAN's Motion To Seal. Plaintiff's unopposed motion to seal is granted. 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. Counsel for the prevailing party is required to prepare a proposed order which repeats verbatim the substantive portion of the tentative ruling and must email it to contestdept302tr@sftc.org prior to the hearing even if the tentative ruling is not contested. 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
CLEAR HOMES LLC, A NEW MEXICO LIMITED LIABILITY VS. BRENDAN MICHAEL WEE ET AL
Jul 11, 2024 |
CGC23607972
Real Property/Housing Court Law and Motion Calendar for July 11, 2024 line 2. DEFENDANT BRENDAN WEE, ERIKA HILTON MOTION FOR JUDGMENT ON THE PLEADINGS is Off Calendar - Per request of moving party. =(501/HEK) Parties may appear in-person, telephonically or via Zoom (Video - Webinar ID: 160 560 5023; Password: 172849; or Phone Dial in: (669) 254-5252; Webinar ID: 160 560 5023; Password: 172849). Parties who intend to appear at the hearing must give notice to opposing parties and the court promptly, but no later than 4:00 p.m. the court day before the hearing unless the tentative ruling has specified that a hearing is required. Notice of contesting a tentative ruling shall be provided by sending an email to the court to Department501ContestTR@sftc.org with a copy to all other parties stating, without argument, the portion(s) of the tentative ruling that the party contests. A party may not argue at the hearing if the opposing party is not so notified and the opposing party does not appear.
Ruling
ELIANE DOS SANTOS VITAL, AN INDIVIDUAL ET AL VS. AMERICAN HONDA MOTOR CO., INC., A CALIFORNIA ET AL
Jul 12, 2024 |
CGC22601133
Matter on the Discovery Calendar for Friday, Jul-12-2024, Line 2, PLAINTIFFS ELIANE DOS SANTOS VITAL, AN INDIVIDUAL, and WIDES VITAL DA SILVA'S, AN INDIVIDUAL, Motion To Compel Further Responses To Plaintiffs Request For Production Of Documents, Set Two. Pro Tem Judge William Lynn, a member of the California State Bar who meets all the requirements set forth in CRC 2.812 to serve as a temporary judge, has been assigned to hear this motion. Prior to the hearing all parties to the motion will be asked to sign a stipulation agreeing that the motion may be heard by the Pro Tem Judge. If all parties to the motion sign the stipulation, the hearing will proceed before the Judge Pro Tem who will decide the motion with the same authority as a Superior Court Judge. If a party appears by telephone, the stipulation may be signed via fax or consent to sign given by email. If not all parties to the motion sign the stipulation, the Pro Tem Judge will hold a hearing on the motion and, based on the papers submitted by the parties and the hearing, issue a report in the nature of a recommendation to the Dept. 302 Judge, who will then decide the motion. If a party does not appear at the hearing, the party will be deemed to have stipulated that the motion will be decided by the Pro Tem Judge with the same authority as a Superior Court Judge. The Pro Tem Judge has issued the following tentative ruling: Parties to appear if the motion remains unresolved. For the 9:00 a.m. Discovery calendar, all attorneys and parties are required to appear remotely. Hearings will be conducted by videoconference using Zoom. To appear 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 (DISCOVERY, DEPARTMENT 302 DAILY AT 9:00 A.M.), or dial the corresponding number and use the meeting ID, and password for Discovery Department 302. Any party who contests a tentative ruling must send an email to williamclynn@gmail.com 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. If the tentative ruling is not contested, the parties are deemed to have stipulated to the Pro Tem hearing the motion and the Pro Tem will sign an order confirming the tentative ruling. The prevailing party is required to prepare a proposed order repeating verbatim the substantive portion of the tentative ruling and must e-mail it to the Judge Pro Tem. The court no longer provides a court reporter in the Discovery Department. Parties may retain their own reporter, who may appear 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/JPT)
Ruling
Y.P. VS. WELLS FARGO & COMPANY, ET AL
Jul 10, 2024 |
CGC24613065
Matter on the Law & Motion calendar for Wednesday, July 10, 2024, Line 12. DEFENDANT EARL IGNACIO AND WELLS FARGO BANK, N.A.'s Motion To Compel Arbitration. Defendants Wells Fargo Bank, N.A. and Earl Ignacio's motion to compel arbitration and stay is denied. (The Court's complete tentative ruling has been emailed to the parties.) 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. Counsel for the prevailing party is required to prepare a proposed order which repeats verbatim the substantive portion of the tentative ruling and must email it to contestdept302tr@sftc.org prior to the hearing even if the tentative ruling is not contested. 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
MARY ELIZABETH LEMASTERS VS. SCHOENBERG FAMILY LAW GROUP P.C. ET AL
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
1 MANATT, PHELPS & PHILLIPS, LLP Exempt from filing fee pursuant to Barry W. Lee (SBN 88685) Government Code § 6103 2 Justin Jones Rodriguez (SBN 279080) One Embarcadero Center, 30th Floor ELECTRONICALLY 3 San Francisco, California 94111 F I L E D Telephone: (415) 291-7450 Superior Court of California, 4 Facsimile: (415) 291-7474 County of San Francisco Email: bwlee@manatt.com 07/15/2022 5 Email: jjrodriguez@manatt.com Clerk of the Court BY: ERNALYN BURA 6 THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA Deputy Clerk Marcia Scully (SBN 80648) 7 Heather C. Beatty (SBN 161907) Patricia J. Quilizapa (SBN 233745) 8 700 North Alameda Street Los Angeles, CA 90012-2944 9 Telephone: (213) 217-6834 Facsimile: (213) 217-6890 10 Email: hbeatty@METROPOLITANh2o.com 11 Attorneys for Respondent, Defendant, and Cross-Complainant THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA 12 Additional counsel listed on following page 13 14 SUPERIOR COURT OF THE STATE OF CALIFORNIA 15 FOR THE COUNTY OF SAN FRANCISCO 16 17 SAN DIEGO COUNTY WATER Case No. CPF-14-514004, consolidated with AUTHORITY, Case Nos. CPF-16-515282 & CPF-18- 18 516389 Petitioner and Plaintiff, 19 Assigned for all purposes to the v. Hon. Anne-Christine Massullo, Dept. 304 20 THE METROPOLITAN WATER DISTRICT METROPOLITAN WATER DISTRICT 21 OF SOUTHERN CALIFORNIA, ALL OF SOUTHERN CALIFORNIA’S PERSONS INTERESTED IN THE OPPOSITION TO SAN DIEGO 22 VALIDITY OF THE RATES ADOPTED BY COUNTY WATER AUTHORITY’S THE METROPOLITAN WATER DISTRICT MOTION FOR PARTIAL JUDGMENT 23 OF SOUTHERN CALIFORNIA ON APRIL 8, (CODE CIV. PROC. § 631.8); 2014 TO BE EFFECTIVE JANUARY 1, 2015 DECLARATION OF BARRY W. LEE 24 AND JANUARY 1, 2016; and DOES 1-10, 25 Respondents and Defendants. 26 27 28 MANATT, PHELPS & PHILLIPS, LLP METROPOLITAN’S OPPOSITION TO SAN DIEGO’S MOTION FOR PARTIAL JUDGMENT ATTORNEYS AT LAW SAN FRANCISCO (CASE NO. CPF-14-514004) 1 2 THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA, 3 Respondent, Defendant and Cross- 4 Complainant, 5 vs. 6 SAN DIEGO COUNTY WATER AUTHORITY, 7 Petitioner, Plaintiff and Cross- 8 Defendant. 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MANATT, PHELPS & -2- PHILLIPS, LLP METROPOLITAN’S OPPOSITION TO SAN DIEGO’S MOTION FOR PARTIAL JUDGMENT ATTORNEYS AT LAW SAN FRANCISCO (CASE NO. CPF-14-514004) 1 MILLER BARONDESS LLP Mira Hashmall (SBN 216842) 2 1999 Avenue of the Stars, Suite 1000 Los Angeles, California 90067 3 Telephone: 310-552-4400 Facsimile: 310-552-8400 4 Email: mhashmall@millerbarondess.com 5 MORGAN, LEWIS & BOCKIUS LLP Colin C. West (SBN 184095) 6 One Market, Spear Street Tower San Francisco, California 94105-1596 7 Telephone: (415) 422-1000 Facsimile: (415) 422-1101 8 Email: colin.west@morganlewis.com 9 Attorneys for Respondent, Defendant, and Cross-Complainant THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MANATT, PHELPS & -3- PHILLIPS, LLP METROPOLITAN’S OPPOSITION TO SAN DIEGO’S MOTION FOR PARTIAL JUDGMENT ATTORNEYS AT LAW SAN FRANCISCO (CASE NO. CPF-14-514004) 1 TABLE OF CONTENTS 2 Page 3 I. INTRODUCTION .............................................................................................................. 1 4 II. THE MOTION SHOULD BE DENIED ............................................................................. 1 A. Metropolitan’s dispute resolution defense under paragraph 11.1 ........................... 1 5 B. Metropolitan’s reformation cross-claims and mistake defenses ............................. 5 6 C. Metropolitan’s cost-causation declaratory relief cross-claim ................................. 8 7 III. CONCLUSION ................................................................................................................. 10 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MANATT, PHELPS & -i- PHILLIPS, LLP METROPOLITAN’S OPPOSITION TO SAN DIEGO’S MOTION FOR PARTIAL JUDGMENT ATTORNEYS AT LAW SAN FRANCISCO (CASE NO. CPF-14-514004) 1 TABLE OF AUTHORITIES 2 Page 3 CASES 4 Baines v. Zuieback, 84 Cal. App. 2d 483 (1948)....................................................................................................... 8 5 Cal. Pines Property Owners Ass’n v. Pedotti, 6 206 Cal. App. 4th 384 (2012).................................................................................................... 5 Casetta v. United States Rubber Co., 7 260 Cal. App. 2d 792 (1968)..................................................................................................... 9 8 County of Contra Costa v. Humore, Inc., 45 Cal. App. 4th 1335 (1996).................................................................................................... 1 9 In re Marriage of Hublou, 10 231 Cal. App.3d 956 (1991)...................................................................................................... 5 11 San Diego Cnty. Water Auth. v. Metro. Water Dist. of S. California, 12 Cal. App. 5th 1124 (2017), as modified on denial of reh’g (July 18, 2017) ........................ 9 12 STATUTES 13 Civ. Code § 3399 .................................................................................................................... 6, 8, 9 14 Gov’t. Code § 54999.7 .................................................................................................................... 9 15 Metropolitan Water District Act ..................................................................................................... 9 16 17 18 19 20 21 22 23 24 25 26 27 28 MANATT, PHELPS & - ii - PHILLIPS, LLP METROPOLITAN’S OPPOSITION TO SAN DIEGO’S MOTION FOR PARTIAL JUDGMENT ATTORNEYS AT LAW SAN FRANCISCO (CASE NO. CPF-14-514004) 1 I. INTRODUCTION 2 San Diego’s motion for partial judgment is an unnecessary waste of the parties’ and this 3 Court’s time and resources. The motion seeks judgment on four issues before post-trial briefing 4 and closing argument. Three of those issues—(1) Metropolitan’s dispute resolution defense, (2) 5 Metropolitan’s reformation cross-claims and mistake defenses, and (3) Metropolitan’s cost 6 causation cross-claim—should be decided in Metropolitan’s favor based on the weight of all 7 evidence presented at trial and in the administrative records. San Diego’s arguments otherwise 8 rely on selective and incomplete citations to evidence and strawman interpretations of 9 Metropolitan’s cross-claims and defenses that are inconsistent with the operative pleadings. No 10 reason exists to shortcut the parties’ final presentation of evidence and the Court’s consideration 11 of that evidence with a section 631.8 motion for partial judgment. The evidence is in, closing 12 briefs and argument have been scheduled, and the Court should weigh all the evidence together at 13 the conclusion of trial before deciding any cross-claim or defense. See County of Contra Costa v. 14 Humore, Inc., 45 Cal. App. 4th 1335, 1344 (1996) (the court must weigh all the pertinent 15 evidence, not just the evidence that the parties selectively brought to the court’s attention when 16 arguing the motion). The motion should be denied as to all three issues. 1 17 II. THE MOTION SHOULD BE DENIED 18 A. Metropolitan’s dispute resolution defense under paragraph 11.1 2 19 Metropolitan’s dispute resolution defense correctly alleges that San Diego failed to satisfy 20 the 2003 Amended and Restated Exchange Agreement’s (“Exchange Agreement”) dispute 21 resolution provision, paragraph 11.1, which is a contractually agreed to condition precedent for 22 litigation. Paragraph 11.1 of the Exchange Agreement has the heading: “Reasonable Best Efforts 23 to Resolve by Negotiation.” (PTX65.) The provision expressly requires San Diego to use its best 24 efforts prior to initiating litigation. The provision states in full: 25 1 26 San Diego’s motion identifies a fourth issue: Metropolitan’s 11th affirmative defense of waiver and 17th affirmative defense of consent. Metropolitan does not oppose the motion as to those two 27 affirmative defenses. San Diego could have met and conferred with Metropolitan on those defenses before filing its motion, but did not. 28 2 Metropolitan’s 5th affirmative defense in the 2014 and 2016 actions. MANATT, PHELPS & PHILLIPS, LLP METROPOLITAN’S OPPOSITION TO SAN DIEGO’S MOTION FOR PARTIAL JUDGMENT ATTORNEYS AT LAW SAN FRANCISCO (CASE NO. CPF-14-514004) 1 The Parties shall exercise reasonable best efforts to resolve all disputes, including Price Disputes, arising under this Agreement 2 through negotiation; provided, however, that SDCWA shall not 3 dispute whether the Price determined pursuant to Paragraph 5.2 for the first five (5) Years of this Agreement was determined in 4 accordance with applicable law or regulation (a “Price Dispute”). In the event negotiation is unsuccessful, then the Parties reserve their 5 respective rights to all legal and equitable remedies. 6 (PTX65.) 7 San Diego’s motion includes no argument whatsoever on what constitutes “reasonable 8 best efforts” or why San Diego’s efforts in 2014 and 2016 met that standard under the Exchange 9 Agreement. The Court previously denied San Diego’s motion for summary adjudication of the 10 same defense in the 2014 and 2016 actions for exactly the same reason: 11 Metropolitan asserts San Diego’s letter[s] did not encompass the issues raised in the 2014 and 2016 actions, specifically, offsetting 12 benefits. (Opposition, 16.) The letters in the 2014 and 2016 actions 13 do not describe the specificities of the dispute. (Jackson Decl., Ex. 19.) Whether the failure to specify the nature of the dispute complies 14 with the “reasonable best efforts” standard of the dispute resolution provision is a triable issue of material fact. Moreover, San Diego’s 15 single attempt to negotiate with Metropolitan in the 2014 action 16 raises a triable issue of material fact about whether a single attempt constitutes “reasonable best efforts to resolve” the dispute. 17 Accordingly, San Diego’s Motion is denied as to the 2014 and 2016 Actions. 18 19 (5/11/2022 Order Granting in Part and Denying in Part San Diego County Water Authority’s 20 Motion for Summary Adjudication in the 2014, 2016, and 2018 Actions [“MSA Order”], at 21:4- 21 11.) San Diego has provided no reason for the Court to reconsider its prior ruling. 22 As detailed further below, San Diego failed at trial to demonstrate that the 2014 and 2016 23 letters addressed offsetting benefits; and they presented no evidence at all on reasonable best 24 efforts. Instead of addressing the issues identified in the Court’s MSA Order, San Diego now 25 relies on the testimony of two witnesses (Jeff Kightlinger and Maureen Stapleton) regarding 26 form dispute resolution letters that San Diego sent to Metropolitan prior to filing the 2014 and 27 2016 actions. San Diego argues that Mr. Kightlinger “admitted that [Metropolitan’s] Paragraph 28 11.1 Defense must fail.” Not so. San Diego asked Mr. Kightlinger a different question. Counsel MANATT, PHELPS & -2- PHILLIPS, LLP METROPOLITAN’S OPPOSITION TO SAN DIEGO’S MOTION FOR PARTIAL JUDGMENT ATTORNEYS AT LAW SAN FRANCISCO (CASE NO. CPF-14-514004) 1 showed Mr. Kightlinger the dispute resolution letters that Ms. Stapleton sent him before San 2 Diego filed the 2014 and 2016 actions. (See PTX892 [2014 letter], PTX915 [2016 letter].) In that 3 context, counsel then asked Mr. Kightlinger if he agreed that San Diego had complied with the 4 dispute resolution provision for each year. (See 5/26 Tr. at 1485:15-18 [2014 letter], 1487:17-21 5 [2016 letter].) Mr. Kightlinger agreed. But Metropolitan does not dispute that San Diego sent 6 Metropolitan dispute resolution letters that complied with paragraph 11.1 of the Exchange 7 Agreement for disputes contained in the letters. Metropolitan disputes that those letters address 8 offsetting benefits or constitute “reasonable best efforts” to resolve an offsetting benefits dispute 9 as paragraph 11.1 requires. None of the cited testimony explains how the letters could satisfy 10 paragraph 11.1 for the offsetting benefits dispute at issue. 11 San Diego’s citation to Mr. Kightlinger’s testimony is selective. None of the questions 12 that San Diego asked Mr. Kightlinger about the 2014 and 2016 letters and none of his responses 13 demonstrate that San Diego raised offsetting benefits or the fair compensation standard during 14 dispute resolution proceedings for the 2014 and 2016 actions. (See 5/26 Tr. 1483:20-1487-21.) 15 Exactly the opposite is true. In response to the Court’s questioning, Mr. Kightlinger testified that 16 San Diego never raised offsetting benefits or fair compensation in any of the paragraph 11.1 17 negotiations for the 2014 and 2016 cases (i.e., for Metropolitan’s rates in 2015-2018). (5/26 Tr. 18 1490:7-28.) The only evidence that San Diego raised offsetting benefits to Metropolitan is in the 19 negotiations leading up to the 2018 litigation. (See 5/26 Tr. 1487:22-1489:19.) But as San Diego 20 acknowledges in its motion, the Court has already summarily adjudicated Metropolitan’s 5th 21 affirmative defense in that case. (Mtn. at 2:2-4; see also MSA Order at 2:13, 21:12-13.) The 22 present motion concerns only Metropolitan’s 5th affirmative defense under paragraph 11.1 in the 23 2014 and 2016 actions. 24 San Diego’s reliance on Ms. Stapleton’s testimony is also selective. Ms. Stapleton did not 25 unequivocally testify that San Diego satisfied paragraph 11.1 before it filed its lawsuits in 2014 26 and 2016. The letters speak for themselves and make no mention of offsetting benefits. (See 27 PTX892, PTX915.) On cross-examination, Ms. Stapleton conceded that the letters are silent on 28 offsetting benefits. (5/19 Tr. at 793:8-794:5 [Ms. Stapleton’s admission that the 2014 letter is MANATT, PHELPS & -3- PHILLIPS, LLP METROPOLITAN’S OPPOSITION TO SAN DIEGO’S MOTION FOR PARTIAL JUDGMENT ATTORNEYS AT LAW SAN FRANCISCO (CASE NO. CPF-14-514004) 1 silent on offsetting benefits], 794:6-15 [Ms. Stapleton’s admission that the 2016 letter does not 2 mention offsetting benefits].) Ms. Stapleton also testified that she could not recall if the 3 presentations that San Diego made to Metropolitan in connection with the letters included any 4 mention of offsetting benefits. (5/19 Tr. at 792:10-793:3 [2014 presentations], 5/20 Tr. at 852:17- 5 853:24 [2016 presentations].) The weight of testimony by the witnesses San Diego relies on thus 6 demonstrates that San Diego did not raise offsetting benefits during dispute resolution 7 negotiations for the 2014 and 2016 actions, let alone use reasonable best efforts to resolve an 8 offsetting benefits dispute as required under paragraph 11.1. 9 The documentary evidence San Diego cites—PTX886, 892, 915, 918, 925, 926, 1097— 10 fares no better. Most of the exhibits have nothing to do with the 2014 or 2016 actions or 11 Metropolitan’s rates for 2015-2018. (See PTX886 [San Diego’s post-trial brief for the 2010 and 12 2012 actions], PTX925 [San Diego’s 3/11/2018 letter about rates to be set for 2019-2020, and 13 raising offsetting benefits for the first time in any correspondence between the parties], PTX926 14 [Metropolitan’s response to the 3/11/2018 letter], PTX1097 [San Diego’s paragraph 11.1 letter 15 for the 2018 action].) The only exhibits relevant to the motion are PTX892 (San Diego’s 2014 16 letter), PTX915 (San Diego’s 2016 letter), and PTX918 (Metropolitan’s response to the 2016 17 letter). It remains undisputed that none of those letters mention offsetting benefits. 18 Metropolitan also presented significant additional evidence that San Diego never raised 19 offsetting benefits before it filed the 2014 or 2016 lawsuits against Metropolitan. (See, e.g., 5/25 20 Tr. at 1184:13-21 [testimony by Assistant General Manager Deven Upadhyay that San Diego 21 never raised offsetting benefits in any conversations with him from 2010-2018]; 5/26 Tr. at 22 1369:1-14 [Mr. Kightlinger’s testimony that offsetting benefits were never raised during 23 negotiations of the 2003 Exchange Agreement], 1371:25-1372:15 [same], 1383:24-1384:21 [Mr. 24 Kightlinger’s testimony that Ms. Stapleton did not raise fair compensation during their 2010 25 dispute resolution call], 1393:27-1394:6 [San Diego first raised offsetting benefits in the spring of 26 2018]; 6/3 Tr. at 1878:1-18 [John Scott’s testimony that San Diego did not request an offsetting 27 benefits determination or credit until its March 11, 2018 letter, PTX925].) San Diego’s absolute 28 silence on “offsetting benefits” demonstrates that San Diego made no effort whatsoever to MANATT, PHELPS & -4- PHILLIPS, LLP METROPOLITAN’S OPPOSITION TO SAN DIEGO’S MOTION FOR PARTIAL JUDGMENT ATTORNEYS AT LAW SAN FRANCISCO (CASE NO. CPF-14-514004) 1 announce, let alone resolve, an offsetting benefits dispute. 2 San Diego’s conduct cannot satisfy the reasonable best efforts standard in Paragraph 11.1. 3 “[B]est efforts are construed in the context of the circumstances in a particular case. Cal. Pines 4 Property Owners Ass’n v. Pedotti, 206 Cal. App. 4th 384, 393 (2012). Here, the parties negotiated 5 a contract with a 110-year term and performed under that contract for decades without so much as 6 mentioning offsetting benefits. San Diego now contends the price should be $334 million less—in 7 six years alone. In the circumstances of these cases, sending one letter before each of the 2014 8 and 2016 lawsuits that fails to even mention “offsetting benefits” does not constitute best efforts. 9 See In re Marriage of Hublou, 231 Cal. App.3d 956, 960 (1991) (“good efforts” do not constitute 10 “best efforts”). 11 B. Metropolitan’s reformation cross-claims and mistake defenses 3 12 San Diego argues that the court should adjudicate Metropolitan’s reformation cross-claims 13 and mistake defenses in its favor because Metropolitan has not demonstrated a mistake. San 14 Diego’s motion hinges on a single sentence of testimony from Bill Hasencamp, Metropolitan’s 15 witness on Colorado River supplies and one of several witnesses on the Exchange Agreement: 16 “I’m not aware of any mistake made by any party.” (Mtn. at 4:19-25.) San Diego’s argument is 17 wrong for several reasons. 18 First, San Diego fundamentally misunderstands Mr. Hasencamp’s testimony and 19 Metropolitan’s cross-claims and defenses. Metropolitan does not contend that it made a mistake 20 when it negotiated the 2003 Exchange Agreement. To the contrary, the evidence demonstrates 21 that Metropolitan intended to enter an Exchange Agreement instead of a wheeling transaction; it 22 thus believed that the Exchange Agreement was not subject to the Wheeling Statutes. (5/25 Tr. at 23 1179:9-1181:4 [Upadhyay direct]; id. at 1310:13-22, 1311:20-1312:3 [Upadhyay cross]; 5/26 Tr. 24 1376:24-1377:10, 1378:18-1380:18 [Kightlinger direct]; id. at 1525:17-1526:8, 1533:6-11, 25 1534:3-10 [former Metropolitan Chief Financial Officer Brian Thomas direct].) That is still 26 Metropolitan’s belief. And nothing in the Exchange Agreement contradicts Metropolitan’s belief. 27 3 Metropolitan’s 9th and 11th cross-claims in the 2014 and 2016 actions, 11th and 13th cross- 28 claims in the 2018 action, and 27th and 28th affirmative defenses in all three cases. MANATT, PHELPS & -5- PHILLIPS, LLP METROPOLITAN’S OPPOSITION TO SAN DIEGO’S MOTION FOR PARTIAL JUDGMENT ATTORNEYS AT LAW SAN FRANCISCO (CASE NO. CPF-14-514004) 1 So when asked, any Metropolitan witness would say the same thing: Metropolitan did not make a 2 mistake. 3 It is nevertheless possible that the Court will disagree with Metropolitan’s belief and hold 4 that the price term requires an offsetting benefits determination. If that happens, then 5 Metropolitan’s execution of the Exchange Agreement (and Mr. Hasencamp’s testimony) was 6 based on the mistaken belief that no such determination was required because the Exchange 7 Agreement is not a wheeling transaction and there also was no contractual agreement for such a 8 determination (or it would have been stated in the Exchange Agreement and would have started in 9 2003). Put another way, if the Court holds that the price term requires an offsetting benefits 10 determination, then Metropolitan’s contrary view at the time it executed the contract will be 11 deemed a mistake as a matter of fact and law. 12 Accordingly, and as detailed below, Metropolitan pleaded its reformation cross-claims 13 and mistake defenses as conditional. 14 • Metropolitan’s cross-claim for reformation of the Exchange Agreement price term: 15 “Metropolitan is entitled to reformation under Civil Code section 3399, if the 16 Court finds that the Exchange Agreement is subject to, based on, or incorporates 17 the ‘offsetting benefits’ provision of the Wheeling Statutes, and the Court has 18 jurisdiction over the matter.” 2014 Cross-Compl. ¶ 119; 2016 Cross-Compl. ¶ 119; 19 2018 Cross-Compl. ¶ 141 (emphasis added as to all). 20 • Metropolitan’s cross-claim for reformation as to rights and duties under the 21 Wheeling Statutes: “Under Civil Code § 3399, Metropolitan is entitled to 22 reformation of the Exchange Agreement to reflect its rights and duties under the 23 Wheeling Statutes, if the Court finds that the Exchange Agreement transaction is 24 subject to the Wheeling Statutes.” 2014 Cross-Compl. ¶ 131; 2016 Cross-Compl. ¶ 25 131; 2018 Cross-Compl. ¶ 153 (emphasis added as to all). 26 • Metropolitan’s mistake of fact defense: “San Diego’s claims are barred by the 27 doctrine of mistake of fact. Among other reasons, if San Diego’s new position that 28 the Exchange Agreement is a wheeling transaction and subject to the Wheeling MANATT, PHELPS & -6- PHILLIPS, LLP METROPOLITAN’S OPPOSITION TO SAN DIEGO’S MOTION FOR PARTIAL JUDGMENT ATTORNEYS AT LAW SAN FRANCISCO (CASE NO. CPF-14-514004) 1 Statutes is correct, then Metropolitan was under the mistaken belief that San 2 Diego’s prior position that the transaction was not wheeling and was not subject to 3 the Wheeling Statutes was the correct one, as San Diego knew.” (2014 Answer at 4 31:20-27; 2016 Answer at 31:26-32:5; 2018 Answer at 37:4-11 [emphasis added 5 as to all].) 6 • Metropolitan’s mistake of law defense: “San Diego’s claims are barred by the 7 doctrine of mistake of law. Among other reasons, if San Diego’s new position that 8 the Exchange Agreement is a wheeling transaction and subject to the Wheeling 9 Statutes is correct, then Metropolitan was under the mistaken belief that San 10 Diego’s prior position that the transaction was not wheeling and was not subject to 11 the Wheeling Statutes was the correct one, as San Diego knew.” (2014 Answer at 12 32:1-8; 2016 Answer at 32:6-13; 2018 Answer at 37:12-19 [emphasis added as to 13 all].) 14 San Diego fails to account for the conditional nature of Metropolitan’s cross-claims and 15 defenses in which a mistake exists only if the Court agrees with San Diego’s new offsetting 16 benefits position. 17 Second, San Diego errs by treating Metropolitan’s reformation cross-claims as the same. 18 Metropolitan does not only seek conditional reformation of the price term of the Exchange 19 Agreement. Metropolitan also seeks conditional reformation as to the parties’ rights and duties 20 under the Wheeling Statutes. Even if the court does not reform the price term, if the Wheeling 21 Statutes apply to the contract, the Court should reform it to give effect to that application. The 22 Wheeling Statutes cannot be reduced to a single clause about offsetting benefits in a single 23 sentence. They include numerous requirements that must be met in order for the Wheeling 24 Statutes to apply to a transaction and prior to any offsetting benefits determination. If the 25 Wheeling Statutes apply, the contract must account for all requirements. For example, as 26 Metropolitan pleads in its 11th cross-claim in the 2014 and 2016 actions and its 13th cross-claim 27 in the 2018 action, “as to Metropolitan’s potential duties, should there be a need for third party 28 MANATT, PHELPS & -7- PHILLIPS, LLP METROPOLITAN’S OPPOSITION TO SAN DIEGO’S MOTION FOR PARTIAL JUDGMENT ATTORNEYS AT LAW SAN FRANCISCO (CASE NO. CPF-14-514004) 1 approvals, Metropolitan does not wish to violate the law by continuing to deliver water under the 2 Exchange Agreement without those approvals.” 3 Third, reformation is expressly permitted where through “a mistake of one party, which 4 the other at the time knew or suspected, a written contract does not truly express the intention of 5 the parties.” Cal. Code Civ. Proc. § 3399. Metropolitan did not believe that the Wheeling Statutes 6 would apply to the Exchange Agreement and San Diego knew that belief. San Diego’s lead 7 negotiator, Scott Slater, testified that he knew that Metropolitan would “not [embrace] the 8 concept of wheeling” in the Exchange Agreement. (5/19 Tr. at 675:19-676:9 [reading from 9 9/6/2013 deposition transcript].) San Diego failed to inform Metropolitan that it was mistaken, 10 and instead represented that the Exchange Agreement was not a wheeling agreement subject to 11 the Wheeling Statutes. (DTX-1143 [San Diego and Metropolitan joint appellate brief in the QSA 12 Cases], pp. 147-153.) See Baines v. Zuieback, 84 Cal. App. 2d 483, 490 (1948) (the only fraud 13 necessary to sustain a judgment of reformation ‘“is such as may be inferred from the failure of the 14 defendant to correct the mistake of the plaintiff, known to or suspected by the former at the time 15 of the execution of the [contract]. This is all that is required by section 3339 of the Civil Code.’” 16 (citation omitted)). 17 The Court should permit the parties to complete post-trial briefing and present closing 18 arguments before weighing all the evidence and entering judgment. 19 C. Metropolitan’s cost-causation declaratory relief cross-claim 4 20 San Diego seeks judgment on Metropolitan’s cost causation cross-claim based on two 21 strawmen. San Diego first argues that it is entitled to judgment if Metropolitan seeks a declaration 22 that cost causation applies. (Mtn. at 6:9-17.) Metropolitan does not seek such a declaration. San 23 Diego second argues that it is entitled to judgment if Metropolitan seeks a declaration that it 24 complied with cost causation. (Mtn. at 6:18-27.) Metropolitan does not seek either declaration 25 that San Diego imagines in its motion. The motion should be denied on that basis alone. 26 The declaration Metropolitan seeks is alleged in its cross-complaints. The cross-claim 27 4 Metropolitan’s 5th cross-claim in the 2014 and 2016 actions and 7th cross-claim in the 2018 28 action. MANATT, PHELPS & -8- PHILLIPS, LLP METROPOLITAN’S OPPOSITION TO SAN DIEGO’S MOTION FOR PARTIAL JUDGMENT ATTORNEYS AT LAW SAN FRANCISCO (CASE NO. CPF-14-514004) 1 explains: “The parties agree that a ‘cost causation’ concept applies to Metropolitan’s rates; 2 however, the parties interpret that term differently.” (2014 Cross-Compl. ¶ 87; 2016 Cross- 3 Compl. ¶ 87; 2018 Cross-Compl. ¶ 109.) The disagreement is the reason for the requested 4 declaration. (Id.) “Metropolitan contends that ‘cost causation’ is consistent with Metropolitan’s 5 legal requirements under the common law and the Metropolitan Water District Act; and as to the 6 pre-set wheeling rate, the Wheeling Statutes”—i.e., that cost causation means “reasonableness” in 7 that Metropolitan’s rates should “result[] in revenue which will pay the costs of the district” and 8 be “uniform for like classes of service.” (2014 Cross-Compl. ¶¶ 88, 90; 2016 Cross-Compl. ¶¶ 88, 9 90; 2018 Cross-Compl. ¶¶ 110, 112.) San Diego, on the other hand, contends that “Metropolitan 10 should determine which member agency caused each cost, and then charge only that member 11 agency for that cost.” (2014 Cross-Compl. ¶ 88; 2016 Cross-Compl. ¶ 88; 2018 Cross-Compl. ¶ 12 110.) The controversy that requires declaratory relief is the parties’ disagreement over the 13 meaning of the term cost causation. The motion is silent on the controversy at issue and it should 14 be denied on that basis as well. 15 Metropolitan has presented evidence on the definition of cost causation as used in the 16 water industry. (See, e.g., 5/27 Tr. 1648:15-1649:4 [as to industry principles and guidance, Rick 17 Giardina’s testimony that cost causation is the methodology to develop reasonable and equitable 18 rates based on cost of service as outlined in the definitive American Water Works Association’s 19 M1 Principles of Water Rates, Fees and Charges manual, and that there is no definition of cost 20 causation other than the M1’s definition], 1672:18-1673:5 [same].) That industry definition 21 amounts to reasonableness. That is the same standard that underpins Metropolitan’s legal 22 requirements. See San Diego Cnty. Water Auth. v. Metro. Water Dist. of S. California, 12 Cal. 23 App. 5th 1124, 1129, 1144 (2017), as modified on denial of reh’g (July 18, 2017) (Wheeling 24 Statutes do not prohibit “reasonable wheeling charges”); id. at 1151 (the common law standard is 25 reasonableness), 1152 (under Proposition 26, a fee, charge, or rate is not a “tax” if it does not 26 exceed “reasonable costs” and the allocation bears a “fair or reasonable relationship” to the 27 payors), 1154 (same for Government Code section 54999.7). San Diego has presented no contrary 28 evidence on Metropolitan’s cost causation claim. See Casetta v. United States Rubber Co., 260 MANATT, PHELPS & -9- PHILLIPS, LLP METROPOLITAN’S OPPOSITION TO SAN DIEGO’S MOTION FOR PARTIAL JUDGMENT ATTORNEYS AT LAW SAN FRANCISCO (CASE NO. CPF-14-514004) 1 Cal. App. 2d 792, 815-16 (1968) (uncontradicted testimony of a witness to a particular fact 2 should be accepted as proof of that fact). 3 III. CONCLUSION 4 San Diego’s motion should be denied and judgment should be entered in Metropolitan’s 5 favor on each of the issues discussed above. 6 Dated: July 15, 2022 MANATT, PHELPS & PHILLIPS, LLP 7 8 By: Barry W. Lee 9 Attorneys for Respondent, Defendant, and 10 Cross-Complainant METROPOLITAN WATER DISTRICT 11 OF SOUTHERN CALIFORNIA 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MANATT, PHELPS & - 10 - PHILLIPS, LLP METROPOLITAN’S OPPOSITION TO SAN DIEGO’S MOTION FOR PARTIAL JUDGMENT ATTORNEYS AT LAW SAN FRANCISCO (CASE NO. CPF-14-514004) 1 PROOF OF SERVICE 2 I, Michelle L. Cooper, declare as follows: 3 I am employed in San Francisco County, San Francisco, California. I am over the age of eighteen years and not a party to this action. My business address is MANATT, PHELPS & 4 PHILLIPS, LLP, One Embarcadero Center, 30th Floor, San Francisco, California 94111. On July 15, 2022, I served the within: 5 METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA’S 6 OPPOSITION TO SAN DIEGO COUNTY WATER AUTHORITY’S MOTION FOR PARTIAL JUDGMENT (CODE CIV. PROC. § 631.8); DECLARATION OF BARRY 7 W. LEE IN SUPPORT THEREOF 8 on the interested parties in this action addressed as follows: 9 (BY ELECTRONIC SERVICE) By transmitting the above documents to a vendor, First 10 Legal, to serve them by File & ServeXpress™ to the parties listed on the Court’s service list and to the persons at the electronic mail addresses listed below. 11 Dan Jackson 12 Warren A. Braunig Nicholas Goldberg 13 Max Alderman Julia Greenberg 14 KEKER, VAN NEST & PETERS LLP 633 Battery Street 15 San Francisco, CA 94111-1809 415.391.5400/Fax: 415.397.7188 16 djackson@keker.com; wbraunig@keker.com; ngoldberg@keker.com; malderman@keker.com; 17 jgreenberg@keker.com Attorneys for Petitioner and Plaintiff 18 SAN DIEGO COUNTY WATER AUTHORITY