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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 04/29/2022
5 Email: jjrodriguez@manatt.com Clerk of the Court
BY: RONNIE OTERO
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 PRE-
PERSONS INTERESTED IN THE TRIAL BRIEF
22 VALIDITY OF THE RATES ADOPTED BY
THE METROPOLITAN WATER DISTRICT
23 OF SOUTHERN CALIFORNIA ON APRIL 8,
2014 TO BE EFFECTIVE JANUARY 1, 2015
24 AND JANUARY 1, 2016; and DOES 1-10,
25 Respondents and
Defendants.
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MANATT, PHELPS &
PHILLIPS, LLP METROPOLITAN’S PRE-TRIAL BRIEF
ATTORNEYS AT LAW
SAN FRANCISCO
(CASE NO. CPF-14-514004)
1 THE METROPOLITAN WATER DISTRICT OF
SOUTHERN CALIFORNIA,
2
Respondent, Defendant and Cross-
3 Complainant,
4 vs.
5 SAN DIEGO COUNTY WATER
AUTHORITY,
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Petitioner, Plaintiff and Cross-
7 Defendant.
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MANATT, PHELPS &
PHILLIPS, LLP METROPOLITAN’S PRE-TRIAL BRIEF
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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MANATT, PHELPS &
PHILLIPS, LLP METROPOLITAN’S PRE-TRIAL BRIEF
ATTORNEYS AT LAW
SAN FRANCISCO
(CASE NO. CPF-14-514004)
1 TABLE OF CONTENTS
2 Page
3 I. INTRODUCTION .............................................................................................................. 1
4 II. SUMMARY OF EVIDENCE ............................................................................................. 3
A. Metropolitan and its rates ........................................................................................ 3
5
B. The Wheeling Statutes ............................................................................................ 4
6 C. The Exchange Agreement ....................................................................................... 6
7 D. San Diego’s Representations about the Exchange Agreement ............................... 9
E. Performance of the Exchange Agreement............................................................. 11
8
III. SAN DIEGO’S RATE CLAIMS AND METROPOLITAN’S RATE CROSS-
9 CLAIMS AND DEFENSES ............................................................................................. 11
A. The wheeling rate and Resolution 8520 were lawful ............................................ 11
10
B. San Diego’s rate and reverse validation claims are moot ..................................... 12
11 IV. PROPOSITION 26 ............................................................................................................ 12
12 V. SATISFACTION OF THE 2010/2012 JUDGMENT ....................................................... 14
VI. SAN DIEGO’S CONTRACT CLAIMS AND METROPOLITAN’S CONTRACT
13 CROSS-CLAIMS AND DEFENSES ............................................................................... 15
14 A. The Exchange Agreement does not include “offsetting benefits.” ....................... 15
B. San Diego is judicially estopped from arguing that the Wheeling Statutes
15 apply to the Exchange Agreement. ....................................................................... 18
16 C. As the conveyance facility owner, Metropolitan determines offsetting
benefits. ................................................................................................................. 20
17 D. San Diego’s damages theory is incorrect and exemplifies why the facility
owner has discretion to determine fair compensation ........................................... 21
18
E. If the Court determines that the Wheeling Statutes apply, the Exchange
19 Agreement should be reformed. ............................................................................ 22
VII. CONCLUSION ................................................................................................................. 24
20
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25
26
27
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MANATT, PHELPS &
PHILLIPS, LLP
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ATTORNEYS AT LAW
SAN FRANCISCO
TABLE OF CONTENTS
1 TABLE OF AUTHORITIES
2 Page
3 CASES
4 Baines v. Zuieback,
84 Cal. App. 2d 483 (1948)..................................................................................................... 22
5
Brinton v. Bankers Pension Servs., Inc.,
6 76 Cal. App. 4th 550 (1999).................................................................................................... 17
Brown v. Goldstein,
7 34 Cal. App. 5th 418 (2019).................................................................................................... 16
8 California Cannabis Coalition v. City of Upland,
3 Cal. 5th 924 (2017) .............................................................................................................. 12
9
California Farm Bureau Fed’n v. State Water Res. Control Bd.,
10 51 Cal. 4th 421 (2011), as modified (Apr. 20, 2011) .............................................................. 13
11 Demetris v. Demtris,
125 Cal. App. 2d 440 (1954)................................................................................................... 22
12
Donovan v. RRL Corp.,
13 26 Cal. 4th 261 (2001) ............................................................................................................ 23
Employers Reins. Co. v. Super. Court,
14 161 Cal. App. 4th 906 (2008).................................................................................................. 17
15 First American Title Ins. & Trust Co. v. Cook,
12 Cal. App. 3d 592 (1970)..................................................................................................... 23
16
Gananian v. Wagstaffe,
17 199 Cal. App. 4th 1532 (2011)................................................................................................ 12
18 In re Quantification Settlement Agreement Cases,
201 Cal. App. 4th 758 (2011)........................................................................................... passim
19
Jackson v. Cty. of Los Angeles,
20 60 Cal. App. 4th 171 (1997).................................................................................................... 19
Levy v. City of Santa Monica,
21 114 Cal. App. 4th 1252 (2004)................................................................................................ 12
22 Metropolitan Water Dist. of So. Cal. v. Imperial Irrigation Dist., et al.,
80 Cal. App. 4th 1403 (2000)........................................................................................... passim
23
Oasis West Realty, LLC v. Goldman,
24 51 Cal. 4th 811 (2011) ............................................................................................................ 16
25 People ex rel. Lockyer v. Sun Pac. Farming Co.,
77 Cal. App. 4th 619 (2000).................................................................................................... 19
26
Ponderosa Homes, Inc. v. City of San Ramon,
27 23 Cal. App. 4th 1761 (1994).................................................................................................. 13
28
MANATT, PHELPS &
PHILLIPS, LLP
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ATTORNEYS AT LAW
SAN FRANCISCO
TABLE OF AUTHORITIES
1 TABLE OF AUTHORITIES
(continued)
2
Page
3
4 San Diego Cty. 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), review
5 denied (Sept. 27, 2017) .................................................................................................... passim
6 San Luis Coastal Unified Sch. Dist. v. City of Morro Bay,
81 Cal. App. 4th 1044 (2000).................................................................................................. 15
7
SLPR, L.L.C. v. San Diego Unified Port Dist.,
8 49 Cal. App. 5th 284 (2020).................................................................................................... 17
9 State Water Res. Control Bd. Cases,
136 Cal. App. 4th 674, 695 n.9 (2006) ................................................................................... 19
10 Thrifty Payless, Inc. v. Mariners Mile Gateway, LLC,
11 185 Cal. App. 4th 1050 (2010)................................................................................................ 17
Vaillette v. Fireman’s Fund Ins. Co.,
12 18 Cal. App. 4th 680 (1993).................................................................................................... 17
13 Wilson v. City of Laguna Beach,
6 Cal. App. 4th 543 (1992)...................................................................................................... 15
14
STATUTES
15 Admin. Code, § 4123 ...................................................................................................................... 3
16 Admin. Code, § 4124 ...................................................................................................................... 4
17 Admin. Code, § 4125 ...................................................................................................................... 4
Civ. Code §§ 1636 ........................................................................................................................ 16
18
Civ. Code § 3399 .......................................................................................................................... 22
19
Code Civ. Proc. § 1060 ................................................................................................................. 14
20 Evid. Code § 623 ........................................................................................................................... 19
21 Former Metropolitan Admin. Code § 4119 .................................................................................. 12
22 Government Code § 970.4 ............................................................................................................ 15
Water Code appen., § 109‐57 ........................................................................................................ 12
23
Water Code appen., §§ 109-134 ................................................................................................ 3, 15
24
Water Code appen., §§ 109‐350 et seq ......................................................................................... 13
25 Water Code § 1148.......................................................................................................................... 5
26 Water Code §§ 1810 et seq. ............................................................................................................ 4
27 Water Code § 1811(c) ......................................................................................................... 4, 11, 18
Water Code § 1812.......................................................................................................................... 5
28
MANATT, PHELPS &
PHILLIPS, LLP
- iii -
ATTORNEYS AT LAW
SAN FRANCISCO
TABLE OF AUTHORITIES
1 TABLE OF AUTHORITIES
(continued)
2
Page
3
4 Water Code § 1812(b) ............................................................................................................. 18, 21
5 Water Code § 1813.......................................................................................................................... 5
Water Code § 1814........................................................................................................................ 18
6
OTHER AUTHORITIES
7
99 Ops. Cal. Atty. Gen. 1 (2016) .................................................................................................. 13
8 Cal. Const., art. XIIIC, § 1(e)........................................................................................................ 12
9 Cal. Const., art. XIIIC, § 1, subd. (e)(1) ....................................................................................... 14
10 Cal. Const., art. XIIIC, § 1, subd. (e)(2) ....................................................................................... 14
Cal. Const., art. XIIIC, § 1, subd. (e)(4) ....................................................................................... 14
11
Webster’s Third New Int’l Dictionary 1136 (1970) ..................................................................... 13
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MANATT, PHELPS &
PHILLIPS, LLP
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ATTORNEYS AT LAW
SAN FRANCISCO
TABLE OF AUTHORITIES
1 I. INTRODUCTION
2 At its core, this is a single-issue case. Petitioner, Plaintiff, and Cross-Defendant San Diego
3 County Water Authority (“San Diego”) allege that Respondents, Defendant, and Cross-
4 Complainant Metropolitan Water District of Southern California (“Metropolitan”) has failed to
5 provide San Diego with a reasonable credit for offsetting benefits in the price term of the parties’
6 2003 Exchange Agreement. San Diego cannot meet its burden of proof for several reasons.
7 San Diego’s unprecedented offsetting benefits theory asks the Court to read language into
8 the Wheeling Statutes, Water Code, sections 1810 et seq. that does not exist and that contradicts
9 the statute. The Wheeling Statutes do not apply to agreements to exchange separate sources of
10 water. The Wheeling Statutes also do not apply where the facility owner owns the water. The
11 Wheeling Statutes by their express terms apply to the use of a maximum of 70% of the unused
12 capacity in the facility owner’s water conveyance facility to transport water owned by the
13 wheeling party, and only while such unused capacity exists. San Diego’s witnesses, including its
14 former General Manager, Maureen Stapleton, have testified that the parties’ Exchange Agreement
15 is a contract for the exchange of separate sources of water, that Metropolitan owns the water once
16 San Diego makes it available, and the exchange occurs regardless of whether unused capacity
17 exists in Metropolitan’s system. The conditions precedent for the Wheeling Statutes to apply do
18 not exist here. Not surprisingly, Ms. Stapleton and San Diego have repeatedly and unequivocally
19 agreed (until these lawsuits) that the Wheeling Statutes do not apply to the Exchange Agreement.
20 San Diego’s theory would also require the Court to interpret the term “offsetting benefits”
21 in a manner directly at odds with statutory language. San Diego argues that Metropolitan is
22 required to credit San Diego with a monetary offset against the Exchange Agreement’s stated
23 price term, measured by the amount Metropolitan allegedly would have been required to pay for
24 another supply of water had San Diego not purchased conserved Colorado River water from
25 Imperial Irrigation District (“IID”) nor acquired canal lining water. Neither the Wheeling Statutes
26 nor any other law San Diego cites requires any such offset. The Wheeling Statutes require the
27 facility owner to provide a credit only in certain instances when there are offsetting benefits to the
28 facility owner “for the use of conveyance facility”—e.g., power generated from pushing water
MANATT, PHELPS &
PHILLIPS, LLP
ATTORNEYS AT LAW
SAN FRANCISCO
METROPOLITAN’S PRE-TRIAL BRIEF (CASE NO. CPF-14-514004)
1 through an aqueduct. San Diego’s theory that the Wheeling Statutes mean “avoided cost” supply-
2 related offsetting benefits is invented out of whole cloth.
3 San Diego’s only hook for its novel damages theory is Metropolitan’s Resolution 8520,
4 which Metropolitan’s Board of Directors adopted in 1997 and repealed in 2020. That Resolution
5 applied only to a narrow scope of transactions: short-term wheeling transactions to its member
6 agencies, of a duration of one year or less. In those cases, Metropolitan voluntarily elected to
7 consider a discount to its wheeling rate based on regional water supply benefits provided to
8 Metropolitan’s service area on a case-by-case basis, if applicable. No evidence exists that any
9 party intended Resolution 8520 to apply to the Exchange Agreement, which has a 110-year term.
10 San Diego’s inability to prevail on basic statutory interpretation issues undermines nearly every
11 cause of action and supports nearly every cross-claim in all three consolidated cases.
12 The evidence at trial will also demonstrate that San Diego’s claims fail on the facts. San
13 Diego’s rate and reverse validation claims fail for the additional reasons that they challenge a
14 wheeling rate that no longer exists, was not and was never intended to be the contract price, as a
15 rate limited to wheeling for one year or less, would never be applicable to the 110-year Exchange
16 Agreement, and did not govern any transactions in any of the years at issue. The Wheeling
17 Statutes do not require a generally applicable rate to account for offsetting benefits. See
18 Metropolitan Water Dist. of So. Cal. v. Imperial Irrigation Dist., et al. (“IID”), 80 Cal. App. 4th
19 1403, 1420 (2000). Of course, such a requirement is impossible because, as the statutory scheme
20 acknowledges, the determination of the existence of and, if they exist, the value of offsetting
21 benefits are unique to each transaction.
22 San Diego’s contract claims fair no better. San Diego’s lead contract negotiators concede
23 that they proposed the price term, and they never proposed to include an offsetting benefits
24 requirement in the 2003 Exchange Agreement. That should be the end of it. Recognizing that
25 those facts are undisputed, San Diego argues that the phrase “lawful wheeling rate” that it used
26 during the 2003 negotiations, is a surrogate for the Wheeling Statutes. Nonsense. First, that
27 phrase is not in the 2003 Exchange Agreement, which proves that neither party intended that
28 result. Legally, San Diego’s undisclosed intent is irrelevant.
MANATT, PHELPS &
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ATTORNEYS AT LAW METROPOLITAN’S TRIAL BRIEF (CASE NO. CPF-14-514004)
SAN FRANCISCO
1 There is no basis for a court to find a breach and award contract damages to enforce a
2 contract term that was neither contemplated nor stated in the contract. Moreover, even if the
3 Court were to accept San Diego’s argument that the Wheeling Statutes apply to Section 5.2 of the
4 Exchange Agreement, the Wheeling Statutes expressly provide that the system owner—
5 Metropolitan—makes the determinations (1) whether the transaction confers offsetting benefits to
6 Metropolitan for the use of its conveyance facility; and, (2) if so, the amount of any appropriate
7 credit. San Diego can then seek judicial review of those decisions.
8 For these reasons, the additional reasons below, and the reasons Metropolitan will
9 advance at trial, San Diego cannot meet is burden on any issue.
10 II. SUMMARY OF EVIDENCE
11 A. Metropolitan and its rates
12 Metropolitan is a voluntary cooperative of 26 member public agencies, including San
13 Diego. Metropolitan delivers wholesale water to its member agencies from two principal sources:
14 the Colorado River via the Colorado River Aqueduct (“CRA”) and the State Water Project
15 (“SWP”) via the California Aqueduct. SDWCA I, 12 Cal. App. 5th at 1131. Metropolitan is
16 required by statute to establish rates for the water it delivers that will generate sufficient revenue
17 to pay its expenses. Wat. Code appen., §§ 109-134.
18 To replace an earlier bundled rate, Metropolitan’s Board of Directors adopted an
19 unbundled rate structure that provided transparency, effective January 2003, allocating costs to
20 separate rate components, including supply and transportation. Metropolitan’s supply rates
21 recover its costs of obtaining water supply from the SWP and the Colorado River, as well as
22 maintaining and developing additional water supplies. Transportation rates recover the costs of
23 constructing, operating, and maintaining Metropolitan’s integrated water conveyance
24 infrastructure. As described by the Court of Appeal:
25 The transportation rates consist of three subcomponents. A ‘system
26 access rate’ is designed to recover the capital, operating, and
maintenance costs associated with transportation facilities, including
27 ‘conveyance’ facilities that transport water from the [SWP] and
Colorado River Aqueduct and ‘distribution’ facilities that transport
28 water within Metropolitan’s service area. (Admin. Code, § 4123.) A
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ATTORNEYS AT LAW METROPOLITAN’S TRIAL BRIEF (CASE NO. CPF-14-514004)
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1 ‘system power rate’ recovers the cost of pumping water through the
[SWP] and Colorado River Aqueduct to Southern California.
2 (Admin. Code, § 4125.) A ‘water stewardship rate’ is designed to
3 recover the costs of conservation programs and other water
management programs that reduce and defer system capacity
4 expansion costs. (See Admin. Code, § 4124.).
5
San Diego Cty. Water Auth. v. Metro. Water Dist. of S. California, 12 Cal. App. 5th 1124, 1138
6
(2017), as modified on denial of reh’g (July 18, 2017), review denied (Sept. 27, 2017) (“SDCWA
7
I”). These cases concern Metropolitan’s unbundled transportation rates which, make up the price
8
term of the Exchange Agreement between Metropolitan and San Diego described below.
9
Metropolitan provides two services to its member agencies for which it charges or did
10
charge established rates: (1) full-service water service in which Metropolitan supplies and
11
transports water; and (2) “wheeling” service, in which Metropolitan transports water supplied by
12
others (the pre-set wheeling rate was repealed in 2020). Metropolitan’s former wheeling rate at
13
issue in these cases applied only to wheeling by member agencies for up to one year; the charges
14
for other wheeling transactions over one year, and exchange agreements of any duration, were
15
negotiated. Now all wheeling transactions are negotiated. Metropolitan establishes rates for both
16
services based on the components described above. The rate for full-service water includes the
17
supply and transportation rate components. The former wheeling rate, included the System
18
Access Rate and former Water Stewardship Rate (“WSR”), but not the System Power Rate nor
19
any supply rates. Actual power costs and an administrative fee were are also charged for
20
wheeling.
21
B. The Wheeling Statutes
22
“Wheeling” refers to use of a public agency’s facilities to convey water that is not owned
23
by the agency, if there is unused capacity, in exchange for fair compensation, which the facility
24
owner has discretion to determine. Wat. Code §§ 1810 et seq. (applying to use of up to 70% of
25
the facility’s unused capacity); SDCWA I, 12 Cal. App. 5th, 1124, 1135 (2017); IID), 80 Cal.
26
App. 4th at 1420. The Wheeling Statutes define fair compensation as: “reasonable charges
27
incurred by the owner of the conveyance system, including capital, operation, maintenance, and
28
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ATTORNEYS AT LAW METROPOLITAN’S TRIAL BRIEF (CASE NO. CPF-14-514004)
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1 replacement costs, increased costs from any necessitated purchase of supplemental power, and
2 including reasonable credit for any offsetting benefits for the use of the conveyance system.” Wat.
3 Code § 1811(c) (emphasis added). The offsetting benefits credit, if any, contemplated by the
4 Wheeling Statutes is limited to benefits “for the use of the conveyance system.” Other benefits—
5 for instance, any benefits related to a particular water supply—are not “offsetting benefits” under
6 the statute because such benefits, if any, are not from the “use of the conveyance system.”
7 Under the Wheeling Statutes the owner of the conveyance facility—here Metropolitan—
8 determines “…the amount and availability of unused capacity. . . [and] [t]he terms and
9 conditions, including operation and maintenance requirements and scheduling, quality
10 requirements, terms or use, priorities, and fair compensation.” Wat. Code § 1812 (emphasis
11 added). The wheeler can seek judicial review of those determinations, and “the court shall sustain
12 the determination of the public agency if it finds that the determination is supported by substantial
13 evidence.” Wat. Code § 1813.
14 As noted above, until August 2020, Metropolitan had a fixed, pre-set rate wheeling rate
15 applicable to wheeling for member agencies for transactions up to one year. In 1997,
16 Metropolitan’s Board of Directors adopted Resolution 8520, supporting the wheeling rate. Id. at
17 1148. Resolution 8520 provided for a reduction for benefits, if any, on a case-by-case basis for a
18 particular one-year wheeling transaction:
19 The wheeling rates shall be reduced to reflect the regional water
supply benefits provided to Metropolitan’s service area, if any, on a
20 case-by-case basis in response to a particular wheeling transaction.
The regional benefits, if any shall be calculated by Metropolitan in
21 the same manner as such benefits are calculated for use in the Local
Projects and Groundwater Recovery Program.
22
23 In 2000, the Court of Appeal held that the Wheeling Statutes did not as a matter of law
24 prevent Metropolitan from having a fixed, pre-set wheeling rate, rather than setting a price based
25 on each transaction. IID, 80 Cal. App. 4th at 1407-08. The Court noted that “Metropolitan will
26 provide offsetting benefits on a case-by-case basis.” Id. at 1420. By August 2020, no transactions
27 governed by the wheeling rate had occurred in over 10 years. On August 18, 2020, the
28 Metropolitan Board of Directors repealed the wheeling rate and Resolution 8520. Now the price
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1 for all wheeling regardless of duration is set based on each transaction.
2 C. The Exchange Agreement
3 Metropolitan is one of a few California parties with rights to Colorado River water. Id. IID
4 also has rights to Colorado River water and it has sold conserved Colorado River water to other
5 parties. Id. “The initial purchaser of Imperial’s conserved water was Metropolitan. In 1988,
6 Metropolitan agreed to pay for various projects to conserve water in exchange for which Imperial
7 transferred the conserved water to Metropolitan. In 1998, a decade later, IID and San Diego
8 entered a similar agreement [“the IID-San Diego Transfer Agreement”].” Id. at 1135.
9 IID agreed to transfer up to 200,000 acre-feet of conserved Colorado River water per year
10 to San Diego, contingent on Metropolitan agreeing to accept delivery of the “transfer water” from
11 IID at Lake Havasu, Arizona, and deliver a like quantity of water to San Diego at its connection
12 to the Metropolitan system in San Diego. San Diego proposed a wheeling agreement with
13 Metropolitan, but the parties were unable to negotiate an agreement under the Wheeling Statutes.
14 San Diego’s internal documents during contract negotiations and testimony in these cases make
15 clear that San Diego contemplated two separate and distinct options: a wheeling transaction
16 governed by the Wheeling Statutes and an exchange agreement under which Metropolitan would
17 take ownership of the IID transfer water and not introduce non-Metropolitan water into the
18 aqueduct. In other words, there could be no wheeling under the exchange option. Unable to
19 negotiate a wheeling agreement, the parties entered into a 30-year exchange agreement.
20 In the 2010/2012 Actions, the Court of Appeal explained some of the differences between
21 wheeling and exchange agreements:
22 While functionally related, wheeling and exchange agreements are
not the same. A wheeling agreement calls for the transportation of
23 water when there is available capacity in the water conveyance
system. An exchange agreement promises the delivery of a specified
24 quantity of water. Water is not wheeled unless available, but an
exchange agreement requires delivery of an agreed-upon quantity of
25 water every month. Recipients under a wheeling agreement receive
less than the transfer amount due to evaporation and other transit
26 losses, but the conveyance system operator bears transit losses under
an exchange agreement. As the trial testimony in the present case
27 established, the parties here preferred an exchange agreement to a
wheeling agreement. The Water Authority wanted guaranteed
28 delivery and Metropolitan wanted the greater operational flexibility
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SAN FRANCISCO
1 of an exchange agreement that permits the use of available facilities
and supply sources.
2
SDCWA I, 12 Cal. App. 5th at 1136 (emphasis added).
3
Under the 1998 Exchange Agreement, San Diego agreed to pay Metropolitan $90 per
4
acre-foot with annual increases. The agreement was conditioned on the State Legislature’s
5
appropriation of $235 million to Metropolitan for projects, including to line the earthen All-
6
American and Coachella Canals to conserve a water supply that Congress had allocated to
7
Metropolitan that would otherwise be lost through seepage (“canal lining water”). This canal
8
lining water and the IID transfer water is at the heart of these cases.
9
There were no exchanges under the 1998 Exchange Agreement because, as recognized in
10
the agreement, Colorado River water rights first needed to be quantified. In 2003, various water
11
agencies with rights to Colorado River water, including Metropolitan and IID, negotiated
12
numerous agreements collectively referred to as the “Quantification Settlement Agreement”
13
(“QSA”). The Exchange Agreement, which was amended under the QSA, is one of those
14
agreements. In re Quantification Settlement Agreement Cases, 201 Cal. App. 4th 758, 788 (2011)
15
(“QSA Cases”). Although the Exchange Agreement price term did not need to change as part of
16
the QSA, San Diego wanted to change the price term and proposed two options to Metropolitan.
17
Under Option 1, San Diego would continue to pay the same price negotiated in the 1998
18
Exchange Agreement. Under Option 2, Metropolitan would assign to San Diego Metropolitan’s
19
right to approximately 77,000 acre-feet of conserved canal lining water annually for 110 years, as
20
well as Metropolitan’s $235 million legislative appropriation for canal lining and other projects.
21
San Diego proposed that in return, it would pay a higher contract price based on Metropolitan’s
22
unbundled transportation rates. Metropolitan would exchange (and not wheel) both the IID water
23
and the canal lining water. Metropolitan allowed San Diego to choose between the two options.
24
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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 04/29/2022 5 Email: jjrodriguez@manatt.com Clerk of the Court BY: RONNIE OTERO 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 PRE- PERSONS INTERESTED IN THE TRIAL BRIEF 22 VALIDITY OF THE RATES ADOPTED BY THE METROPOLITAN WATER DISTRICT 23 OF SOUTHERN CALIFORNIA ON APRIL 8, 2014 TO BE EFFECTIVE JANUARY 1, 2015 24 AND JANUARY 1, 2016; and DOES 1-10, 25 Respondents and Defendants. 26 27 28 MANATT, PHELPS & PHILLIPS, LLP METROPOLITAN’S PRE-TRIAL BRIEF ATTORNEYS AT LAW SAN FRANCISCO (CASE NO. CPF-14-514004) 1 THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA, 2 Respondent, Defendant and Cross- 3 Complainant, 4 vs. 5 SAN DIEGO COUNTY WATER AUTHORITY, 6 Petitioner, Plaintiff and Cross- 7 Defendant. 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -2- MANATT, PHELPS & PHILLIPS, LLP METROPOLITAN’S PRE-TRIAL BRIEF 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 -3- MANATT, PHELPS & PHILLIPS, LLP METROPOLITAN’S PRE-TRIAL BRIEF ATTORNEYS AT LAW SAN FRANCISCO (CASE NO. CPF-14-514004) 1 TABLE OF CONTENTS 2 Page 3 I. INTRODUCTION .............................................................................................................. 1 4 II. SUMMARY OF EVIDENCE ............................................................................................. 3 A. Metropolitan and its rates ........................................................................................ 3 5 B. The Wheeling Statutes ............................................................................................ 4 6 C. The Exchange Agreement ....................................................................................... 6 7 D. San Diego’s Representations about the Exchange Agreement ............................... 9 E. Performance of the Exchange Agreement............................................................. 11 8 III. SAN DIEGO’S RATE CLAIMS AND METROPOLITAN’S RATE CROSS- 9 CLAIMS AND DEFENSES ............................................................................................. 11 A. The wheeling rate and Resolution 8520 were lawful ............................................ 11 10 B. San Diego’s rate and reverse validation claims are moot ..................................... 12 11 IV. PROPOSITION 26 ............................................................................................................ 12 12 V. SATISFACTION OF THE 2010/2012 JUDGMENT ....................................................... 14 VI. SAN DIEGO’S CONTRACT CLAIMS AND METROPOLITAN’S CONTRACT 13 CROSS-CLAIMS AND DEFENSES ............................................................................... 15 14 A. The Exchange Agreement does not include “offsetting benefits.” ....................... 15 B. San Diego is judicially estopped from arguing that the Wheeling Statutes 15 apply to the Exchange Agreement. ....................................................................... 18 16 C. As the conveyance facility owner, Metropolitan determines offsetting benefits. ................................................................................................................. 20 17 D. San Diego’s damages theory is incorrect and exemplifies why the facility owner has discretion to determine fair compensation ........................................... 21 18 E. If the Court determines that the Wheeling Statutes apply, the Exchange 19 Agreement should be reformed. ............................................................................ 22 VII. CONCLUSION ................................................................................................................. 24 20 21 22 23 24 25 26 27 28 MANATT, PHELPS & PHILLIPS, LLP -i- ATTORNEYS AT LAW SAN FRANCISCO TABLE OF CONTENTS 1 TABLE OF AUTHORITIES 2 Page 3 CASES 4 Baines v. Zuieback, 84 Cal. App. 2d 483 (1948)..................................................................................................... 22 5 Brinton v. Bankers Pension Servs., Inc., 6 76 Cal. App. 4th 550 (1999).................................................................................................... 17 Brown v. Goldstein, 7 34 Cal. App. 5th 418 (2019).................................................................................................... 16 8 California Cannabis Coalition v. City of Upland, 3 Cal. 5th 924 (2017) .............................................................................................................. 12 9 California Farm Bureau Fed’n v. State Water Res. Control Bd., 10 51 Cal. 4th 421 (2011), as modified (Apr. 20, 2011) .............................................................. 13 11 Demetris v. Demtris, 125 Cal. App. 2d 440 (1954)................................................................................................... 22 12 Donovan v. RRL Corp., 13 26 Cal. 4th 261 (2001) ............................................................................................................ 23 Employers Reins. Co. v. Super. Court, 14 161 Cal. App. 4th 906 (2008).................................................................................................. 17 15 First American Title Ins. & Trust Co. v. Cook, 12 Cal. App. 3d 592 (1970)..................................................................................................... 23 16 Gananian v. Wagstaffe, 17 199 Cal. App. 4th 1532 (2011)................................................................................................ 12 18 In re Quantification Settlement Agreement Cases, 201 Cal. App. 4th 758 (2011)........................................................................................... passim 19 Jackson v. Cty. of Los Angeles, 20 60 Cal. App. 4th 171 (1997).................................................................................................... 19 Levy v. City of Santa Monica, 21 114 Cal. App. 4th 1252 (2004)................................................................................................ 12 22 Metropolitan Water Dist. of So. Cal. v. Imperial Irrigation Dist., et al., 80 Cal. App. 4th 1403 (2000)........................................................................................... passim 23 Oasis West Realty, LLC v. Goldman, 24 51 Cal. 4th 811 (2011) ............................................................................................................ 16 25 People ex rel. Lockyer v. Sun Pac. Farming Co., 77 Cal. App. 4th 619 (2000).................................................................................................... 19 26 Ponderosa Homes, Inc. v. City of San Ramon, 27 23 Cal. App. 4th 1761 (1994).................................................................................................. 13 28 MANATT, PHELPS & PHILLIPS, LLP - ii - ATTORNEYS AT LAW SAN FRANCISCO TABLE OF AUTHORITIES 1 TABLE OF AUTHORITIES (continued) 2 Page 3 4 San Diego Cty. 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), review 5 denied (Sept. 27, 2017) .................................................................................................... passim 6 San Luis Coastal Unified Sch. Dist. v. City of Morro Bay, 81 Cal. App. 4th 1044 (2000).................................................................................................. 15 7 SLPR, L.L.C. v. San Diego Unified Port Dist., 8 49 Cal. App. 5th 284 (2020).................................................................................................... 17 9 State Water Res. Control Bd. Cases, 136 Cal. App. 4th 674, 695 n.9 (2006) ................................................................................... 19 10 Thrifty Payless, Inc. v. Mariners Mile Gateway, LLC, 11 185 Cal. App. 4th 1050 (2010)................................................................................................ 17 Vaillette v. Fireman’s Fund Ins. Co., 12 18 Cal. App. 4th 680 (1993).................................................................................................... 17 13 Wilson v. City of Laguna Beach, 6 Cal. App. 4th 543 (1992)...................................................................................................... 15 14 STATUTES 15 Admin. Code, § 4123 ...................................................................................................................... 3 16 Admin. Code, § 4124 ...................................................................................................................... 4 17 Admin. Code, § 4125 ...................................................................................................................... 4 Civ. Code §§ 1636 ........................................................................................................................ 16 18 Civ. Code § 3399 .......................................................................................................................... 22 19 Code Civ. Proc. § 1060 ................................................................................................................. 14 20 Evid. Code § 623 ........................................................................................................................... 19 21 Former Metropolitan Admin. Code § 4119 .................................................................................. 12 22 Government Code § 970.4 ............................................................................................................ 15 Water Code appen., § 109‐57 ........................................................................................................ 12 23 Water Code appen., §§ 109-134 ................................................................................................ 3, 15 24 Water Code appen., §§ 109‐350 et seq ......................................................................................... 13 25 Water Code § 1148.......................................................................................................................... 5 26 Water Code §§ 1810 et seq. ............................................................................................................ 4 27 Water Code § 1811(c) ......................................................................................................... 4, 11, 18 Water Code § 1812.......................................................................................................................... 5 28 MANATT, PHELPS & PHILLIPS, LLP - iii - ATTORNEYS AT LAW SAN FRANCISCO TABLE OF AUTHORITIES 1 TABLE OF AUTHORITIES (continued) 2 Page 3 4 Water Code § 1812(b) ............................................................................................................. 18, 21 5 Water Code § 1813.......................................................................................................................... 5 Water Code § 1814........................................................................................................................ 18 6 OTHER AUTHORITIES 7 99 Ops. Cal. Atty. Gen. 1 (2016) .................................................................................................. 13 8 Cal. Const., art. XIIIC, § 1(e)........................................................................................................ 12 9 Cal. Const., art. XIIIC, § 1, subd. (e)(1) ....................................................................................... 14 10 Cal. Const., art. XIIIC, § 1, subd. (e)(2) ....................................................................................... 14 Cal. Const., art. XIIIC, § 1, subd. (e)(4) ....................................................................................... 14 11 Webster’s Third New Int’l Dictionary 1136 (1970) ..................................................................... 13 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MANATT, PHELPS & PHILLIPS, LLP - iv - ATTORNEYS AT LAW SAN FRANCISCO TABLE OF AUTHORITIES 1 I. INTRODUCTION 2 At its core, this is a single-issue case. Petitioner, Plaintiff, and Cross-Defendant San Diego 3 County Water Authority (“San Diego”) allege that Respondents, Defendant, and Cross- 4 Complainant Metropolitan Water District of Southern California (“Metropolitan”) has failed to 5 provide San Diego with a reasonable credit for offsetting benefits in the price term of the parties’ 6 2003 Exchange Agreement. San Diego cannot meet its burden of proof for several reasons. 7 San Diego’s unprecedented offsetting benefits theory asks the Court to read language into 8 the Wheeling Statutes, Water Code, sections 1810 et seq. that does not exist and that contradicts 9 the statute. The Wheeling Statutes do not apply to agreements to exchange separate sources of 10 water. The Wheeling Statutes also do not apply where the facility owner owns the water. The 11 Wheeling Statutes by their express terms apply to the use of a maximum of 70% of the unused 12 capacity in the facility owner’s water conveyance facility to transport water owned by the 13 wheeling party, and only while such unused capacity exists. San Diego’s witnesses, including its 14 former General Manager, Maureen Stapleton, have testified that the parties’ Exchange Agreement 15 is a contract for the exchange of separate sources of water, that Metropolitan owns the water once 16 San Diego makes it available, and the exchange occurs regardless of whether unused capacity 17 exists in Metropolitan’s system. The conditions precedent for the Wheeling Statutes to apply do 18 not exist here. Not surprisingly, Ms. Stapleton and San Diego have repeatedly and unequivocally 19 agreed (until these lawsuits) that the Wheeling Statutes do not apply to the Exchange Agreement. 20 San Diego’s theory would also require the Court to interpret the term “offsetting benefits” 21 in a manner directly at odds with statutory language. San Diego argues that Metropolitan is 22 required to credit San Diego with a monetary offset against the Exchange Agreement’s stated 23 price term, measured by the amount Metropolitan allegedly would have been required to pay for 24 another supply of water had San Diego not purchased conserved Colorado River water from 25 Imperial Irrigation District (“IID”) nor acquired canal lining water. Neither the Wheeling Statutes 26 nor any other law San Diego cites requires any such offset. The Wheeling Statutes require the 27 facility owner to provide a credit only in certain instances when there are offsetting benefits to the 28 facility owner “for the use of conveyance facility”—e.g., power generated from pushing water MANATT, PHELPS & PHILLIPS, LLP ATTORNEYS AT LAW SAN FRANCISCO METROPOLITAN’S PRE-TRIAL BRIEF (CASE NO. CPF-14-514004) 1 through an aqueduct. San Diego’s theory that the Wheeling Statutes mean “avoided cost” supply- 2 related offsetting benefits is invented out of whole cloth. 3 San Diego’s only hook for its novel damages theory is Metropolitan’s Resolution 8520, 4 which Metropolitan’s Board of Directors adopted in 1997 and repealed in 2020. That Resolution 5 applied only to a narrow scope of transactions: short-term wheeling transactions to its member 6 agencies, of a duration of one year or less. In those cases, Metropolitan voluntarily elected to 7 consider a discount to its wheeling rate based on regional water supply benefits provided to 8 Metropolitan’s service area on a case-by-case basis, if applicable. No evidence exists that any 9 party intended Resolution 8520 to apply to the Exchange Agreement, which has a 110-year term. 10 San Diego’s inability to prevail on basic statutory interpretation issues undermines nearly every 11 cause of action and supports nearly every cross-claim in all three consolidated cases. 12 The evidence at trial will also demonstrate that San Diego’s claims fail on the facts. San 13 Diego’s rate and reverse validation claims fail for the additional reasons that they challenge a 14 wheeling rate that no longer exists, was not and was never intended to be the contract price, as a 15 rate limited to wheeling for one year or less, would never be applicable to the 110-year Exchange 16 Agreement, and did not govern any transactions in any of the years at issue. The Wheeling 17 Statutes do not require a generally applicable rate to account for offsetting benefits. See 18 Metropolitan Water Dist. of So. Cal. v. Imperial Irrigation Dist., et al. (“IID”), 80 Cal. App. 4th 19 1403, 1420 (2000). Of course, such a requirement is impossible because, as the statutory scheme 20 acknowledges, the determination of the existence of and, if they exist, the value of offsetting 21 benefits are unique to each transaction. 22 San Diego’s contract claims fair no better. San Diego’s lead contract negotiators concede 23 that they proposed the price term, and they never proposed to include an offsetting benefits 24 requirement in the 2003 Exchange Agreement. That should be the end of it. Recognizing that 25 those facts are undisputed, San Diego argues that the phrase “lawful wheeling rate” that it used 26 during the 2003 negotiations, is a surrogate for the Wheeling Statutes. Nonsense. First, that 27 phrase is not in the 2003 Exchange Agreement, which proves that neither party intended that 28 result. Legally, San Diego’s undisclosed intent is irrelevant. MANATT, PHELPS & PHILLIPS, LLP -2- ATTORNEYS AT LAW METROPOLITAN’S TRIAL BRIEF (CASE NO. CPF-14-514004) SAN FRANCISCO 1 There is no basis for a court to find a breach and award contract damages to enforce a 2 contract term that was neither contemplated nor stated in the contract. Moreover, even if the 3 Court were to accept San Diego’s argument that the Wheeling Statutes apply to Section 5.2 of the 4 Exchange Agreement, the Wheeling Statutes expressly provide that the system owner— 5 Metropolitan—makes the determinations (1) whether the transaction confers offsetting benefits to 6 Metropolitan for the use of its conveyance facility; and, (2) if so, the amount of any appropriate 7 credit. San Diego can then seek judicial review of those decisions. 8 For these reasons, the additional reasons below, and the reasons Metropolitan will 9 advance at trial, San Diego cannot meet is burden on any issue. 10 II. SUMMARY OF EVIDENCE 11 A. Metropolitan and its rates 12 Metropolitan is a voluntary cooperative of 26 member public agencies, including San 13 Diego. Metropolitan delivers wholesale water to its member agencies from two principal sources: 14 the Colorado River via the Colorado River Aqueduct (“CRA”) and the State Water Project 15 (“SWP”) via the California Aqueduct. SDWCA I, 12 Cal. App. 5th at 1131. Metropolitan is 16 required by statute to establish rates for the water it delivers that will generate sufficient revenue 17 to pay its expenses. Wat. Code appen., §§ 109-134. 18 To replace an earlier bundled rate, Metropolitan’s Board of Directors adopted an 19 unbundled rate structure that provided transparency, effective January 2003, allocating costs to 20 separate rate components, including supply and transportation. Metropolitan’s supply rates 21 recover its costs of obtaining water supply from the SWP and the Colorado River, as well as 22 maintaining and developing additional water supplies. Transportation rates recover the costs of 23 constructing, operating, and maintaining Metropolitan’s integrated water conveyance 24 infrastructure. As described by the Court of Appeal: 25 The transportation rates consist of three subcomponents. A ‘system 26 access rate’ is designed to recover the capital, operating, and maintenance costs associated with transportation facilities, including 27 ‘conveyance’ facilities that transport water from the [SWP] and Colorado River Aqueduct and ‘distribution’ facilities that transport 28 water within Metropolitan’s service area. (Admin. Code, § 4123.) A MANATT, PHELPS & PHILLIPS, LLP -3- ATTORNEYS AT LAW METROPOLITAN’S TRIAL BRIEF (CASE NO. CPF-14-514004) SAN FRANCISCO 1 ‘system power rate’ recovers the cost of pumping water through the [SWP] and Colorado River Aqueduct to Southern California. 2 (Admin. Code, § 4125.) A ‘water stewardship rate’ is designed to 3 recover the costs of conservation programs and other water management programs that reduce and defer system capacity 4 expansion costs. (See Admin. Code, § 4124.). 5 San Diego Cty. Water Auth. v. Metro. Water Dist. of S. California, 12 Cal. App. 5th 1124, 1138 6 (2017), as modified on denial of reh’g (July 18, 2017), review denied (Sept. 27, 2017) (“SDCWA 7 I”). These cases concern Metropolitan’s unbundled transportation rates which, make up the price 8 term of the Exchange Agreement between Metropolitan and San Diego described below. 9 Metropolitan provides two services to its member agencies for which it charges or did 10 charge established rates: (1) full-service water service in which Metropolitan supplies and 11 transports water; and (2) “wheeling” service, in which Metropolitan transports water supplied by 12 others (the pre-set wheeling rate was repealed in 2020). Metropolitan’s former wheeling rate at 13 issue in these cases applied only to wheeling by member agencies for up to one year; the charges 14 for other wheeling transactions over one year, and exchange agreements of any duration, were 15 negotiated. Now all wheeling transactions are negotiated. Metropolitan establishes rates for both 16 services based on the components described above. The rate for full-service water includes the 17 supply and transportation rate components. The former wheeling rate, included the System 18 Access Rate and former Water Stewardship Rate (“WSR”), but not the System Power Rate nor 19 any supply rates. Actual power costs and an administrative fee were are also charged for 20 wheeling. 21 B. The Wheeling Statutes 22 “Wheeling” refers to use of a public agency’s facilities to convey water that is not owned 23 by the agency, if there is unused capacity, in exchange for fair compensation, which the facility 24 owner has discretion to determine. Wat. Code §§ 1810 et seq. (applying to use of up to 70% of 25 the facility’s unused capacity); SDCWA I, 12 Cal. App. 5th, 1124, 1135 (2017); IID), 80 Cal. 26 App. 4th at 1420. The Wheeling Statutes define fair compensation as: “reasonable charges 27 incurred by the owner of the conveyance system, including capital, operation, maintenance, and 28 MANATT, PHELPS & PHILLIPS, LLP -4- ATTORNEYS AT LAW METROPOLITAN’S TRIAL BRIEF (CASE NO. CPF-14-514004) SAN FRANCISCO 1 replacement costs, increased costs from any necessitated purchase of supplemental power, and 2 including reasonable credit for any offsetting benefits for the use of the conveyance system.” Wat. 3 Code § 1811(c) (emphasis added). The offsetting benefits credit, if any, contemplated by the 4 Wheeling Statutes is limited to benefits “for the use of the conveyance system.” Other benefits— 5 for instance, any benefits related to a particular water supply—are not “offsetting benefits” under 6 the statute because such benefits, if any, are not from the “use of the conveyance system.” 7 Under the Wheeling Statutes the owner of the conveyance facility—here Metropolitan— 8 determines “…the amount and availability of unused capacity. . . [and] [t]he terms and 9 conditions, including operation and maintenance requirements and scheduling, quality 10 requirements, terms or use, priorities, and fair compensation.” Wat. Code § 1812 (emphasis 11 added). The wheeler can seek judicial review of those determinations, and “the court shall sustain 12 the determination of the public agency if it finds that the determination is supported by substantial 13 evidence.” Wat. Code § 1813. 14 As noted above, until August 2020, Metropolitan had a fixed, pre-set rate wheeling rate 15 applicable to wheeling for member agencies for transactions up to one year. In 1997, 16 Metropolitan’s Board of Directors adopted Resolution 8520, supporting the wheeling rate. Id. at 17 1148. Resolution 8520 provided for a reduction for benefits, if any, on a case-by-case basis for a 18 particular one-year wheeling transaction: 19 The wheeling rates shall be reduced to reflect the regional water supply benefits provided to Metropolitan’s service area, if any, on a 20 case-by-case basis in response to a particular wheeling transaction. The regional benefits, if any shall be calculated by Metropolitan in 21 the same manner as such benefits are calculated for use in the Local Projects and Groundwater Recovery Program. 22 23 In 2000, the Court of Appeal held that the Wheeling Statutes did not as a matter of law 24 prevent Metropolitan from having a fixed, pre-set wheeling rate, rather than setting a price based 25 on each transaction. IID, 80 Cal. App. 4th at 1407-08. The Court noted that “Metropolitan will 26 provide offsetting benefits on a case-by-case basis.” Id. at 1420. By August 2020, no transactions 27 governed by the wheeling rate had occurred in over 10 years. On August 18, 2020, the 28 Metropolitan Board of Directors repealed the wheeling rate and Resolution 8520. Now the price MANATT, PHELPS & PHILLIPS, LLP -5- ATTORNEYS AT LAW METROPOLITAN’S TRIAL BRIEF (CASE NO. CPF-14-514004) SAN FRANCISCO 1 for all wheeling regardless of duration is set based on each transaction. 2 C. The Exchange Agreement 3 Metropolitan is one of a few California parties with rights to Colorado River water. Id. IID 4 also has rights to Colorado River water and it has sold conserved Colorado River water to other 5 parties. Id. “The initial purchaser of Imperial’s conserved water was Metropolitan. In 1988, 6 Metropolitan agreed to pay for various projects to conserve water in exchange for which Imperial 7 transferred the conserved water to Metropolitan. In 1998, a decade later, IID and San Diego 8 entered a similar agreement [“the IID-San Diego Transfer Agreement”].” Id. at 1135. 9 IID agreed to transfer up to 200,000 acre-feet of conserved Colorado River water per year 10 to San Diego, contingent on Metropolitan agreeing to accept delivery of the “transfer water” from 11 IID at Lake Havasu, Arizona, and deliver a like quantity of water to San Diego at its connection 12 to the Metropolitan system in San Diego. San Diego proposed a wheeling agreement with 13 Metropolitan, but the parties were unable to negotiate an agreement under the Wheeling Statutes. 14 San Diego’s internal documents during contract negotiations and testimony in these cases make 15 clear that San Diego contemplated two separate and distinct options: a wheeling transaction 16 governed by the Wheeling Statutes and an exchange agreement under which Metropolitan would 17 take ownership of the IID transfer water and not introduce non-Metropolitan water into the 18 aqueduct. In other words, there could be no wheeling under the exchange option. Unable to 19 negotiate a wheeling agreement, the parties entered into a 30-year exchange agreement. 20 In the 2010/2012 Actions, the Court of Appeal explained some of the differences between 21 wheeling and exchange agreements: 22 While functionally related, wheeling and exchange agreements are not the same. A wheeling agreement calls for the transportation of 23 water when there is available capacity in the water conveyance system. An exchange agreement promises the delivery of a specified 24 quantity of water. Water is not wheeled unless available, but an exchange agreement requires delivery of an agreed-upon quantity of 25 water every month. Recipients under a wheeling agreement receive less than the transfer amount due to evaporation and other transit 26 losses, but the conveyance system operator bears transit losses under an exchange agreement. As the trial testimony in the present case 27 established, the parties here preferred an exchange agreement to a wheeling agreement. The Water Authority wanted guaranteed 28 delivery and Metropolitan wanted the greater operational flexibility MANATT, PHELPS & PHILLIPS, LLP -6- ATTORNEYS AT LAW METROPOLITAN’S TRIAL BRIEF (CASE NO. CPF-14-514004) SAN FRANCISCO 1 of an exchange agreement that permits the use of available facilities and supply sources. 2 SDCWA I, 12 Cal. App. 5th at 1136 (emphasis added). 3 Under the 1998 Exchange Agreement, San Diego agreed to pay Metropolitan $90 per 4 acre-foot with annual increases. The agreement was conditioned on the State Legislature’s 5 appropriation of $235 million to Metropolitan for projects, including to line the earthen All- 6 American and Coachella Canals to conserve a water supply that Congress had allocated to 7 Metropolitan that would otherwise be lost through seepage (“canal lining water”). This canal 8 lining water and the IID transfer water is at the heart of these cases. 9 There were no exchanges under the 1998 Exchange Agreement because, as recognized in 10 the agreement, Colorado River water rights first needed to be quantified. In 2003, various water 11 agencies with rights to Colorado River water, including Metropolitan and IID, negotiated 12 numerous agreements collectively referred to as the “Quantification Settlement Agreement” 13 (“QSA”). The Exchange Agreement, which was amended under the QSA, is one of those 14 agreements. In re Quantification Settlement Agreement Cases, 201 Cal. App. 4th 758, 788 (2011) 15 (“QSA Cases”). Although the Exchange Agreement price term did not need to change as part of 16 the QSA, San Diego wanted to change the price term and proposed two options to Metropolitan. 17 Under Option 1, San Diego would continue to pay the same price negotiated in the 1998 18 Exchange Agreement. Under Option 2, Metropolitan would assign to San Diego Metropolitan’s 19 right to approximately 77,000 acre-feet of conserved canal lining water annually for 110 years, as 20 well as Metropolitan’s $235 million legislative appropriation for canal lining and other projects. 21 San Diego proposed that in return, it would pay a higher contract price based on Metropolitan’s 22 unbundled transportation rates. Metropolitan would exchange (and not wheel) both the IID water 23 and the canal lining water. Metropolitan allowed San Diego to choose between the two options. 24