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1 MANATT, PHELPS and 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
Telephone: (415) 291-7450
F I L E D
Superior Court of California,
4 Facsimile: (415) 291-7474 County of San Francisco
Email: bwlee@manatt.com 10/13/2020
5 Email: jjrodriguez@manatt.com Clerk of the Court
BY: JUDITH NUNEZ
Deputy Clerk
6 MORGAN, LEWIS and BOCKIUS LLP
Colin C. West (SBN 184095)
7 One Market, Spear Street Tower
San Francisco, California 94105-1596
8 Telephone: (415) 422-1000
Facsimile: (415) 422-1101
9 Email: colin.west@morganlewis.com
10 THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA
Marcia Scully (SBN 80648)
11 Heather C. Beatty (SBN 161907)
Patricia J. Quilizapa (SBN 233745)
12 700 North Alameda Street
Los Angeles, CA 90012-2944
13 Telephone: (213) 217-6834
Facsimile: (213) 217-6890
14 Email: hbeatty@mwdh2o.com
15 Attorneys for Respondent and Defendant
THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA
16
SUPERIOR COURT OF THE STATE OF CALIFORNIA
17
FOR THE COUNTY OF SAN FRANCISCO
18
SAN DIEGO COUNTY WATER Case No. CPF-14-514004
19 AUTHORITY,
Assigned for all purposes to the
20 Petitioner and Plaintiff, Hon. Anne-Christine Massullo, Dept. 304
21 v. METROPOLITAN WATER DISTRICT
OF SOUTHERN CALIFORNIA’S
22 THE METROPOLITAN WATER DISTRICT MEMORANDUM OF POINTS AND
OF SOUTHERN CALIFORNIA, ALL AUTHORITIES IN SUPPORT OF
23 PERSONS INTERESTED IN THE VALIDITY DEMURRERS TO, OR IN THE
OF THE RATES ADOPTED BY THE ALTERNATIVE, MOTIONS TO
24 METROPOLITAN WATER DISTRICT OF STRIKE, PORTIONS OF FIRST
SOUTHERN CALIFORNIA ON APRIL 8, AMENDED COMPLAINT
25 2014 TO BE EFFECTIVE JANUARY 1, 2015 (CORRECTED)
AND JANUARY 1, 2016; and DOES 1-10,
26 Date: February 10, 2021
Respondents and Defendants. Time: 9:15 a.m.
27
28
M ANATT , P HELPS METROPOLITAN’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRERS, OR IN THE
AND P HILLIPS , LLP
ALTERNATIVE, MOTIONS TO STRIKE, PORTIONS OF FIRST AMENDED COMPLAINT (CORRECTED)
ATTO RNEY S AT LAW
LOS A NG EL ES CASE NO. CPF-14-514004
1 TABLE OF CONTENTS
2 Page
3 I. INTRODUCTION .............................................................................................................. 1
4 II. SUMMARY OF ALLEGATIONS AND JUDICIALLY NOTICEABLE FACTS............ 2
5 A. Wheeling and Offsetting Benefits ........................................................................... 2
6 B. San Diego’s First Three Causes of Action Challenging Metropolitan’s
Rates ........................................................................................................................ 4
7
C. San Diego’s Fourth Cause of Action for Breach of the Exchange
8 Agreement ............................................................................................................... 4
9 D. San Diego’s Fifth Cause of Action for Declaratory Relief ..................................... 5
10 III. LEGAL STANDARD ......................................................................................................... 5
11 IV. ARGUMENT ...................................................................................................................... 7
12 A. The demurrers to the first three causes of action should be sustained and/or
the motion to strike granted as to the offsetting benefits wheeling rate
13 challenge ................................................................................................................. 7
14 1. A facial challenge fails because the wheeling rate Resolution
provides for offsetting benefits ................................................................... 7
15 2. An as-applied challenge fails because there is no allegation of an
applicable transaction or denial of offsetting benefits ................................ 7
16
3. San Diego’s offsetting benefits claims are moot as to future
17 transactions because there is no longer a wheeling rate.............................. 8
4. San Diego is precluded from bringing an offsetting benefits
18 challenge to the wheeling rate methodology............................................... 8
19 a. Collateral estoppel bars the claim ................................................... 8
b. The validation statute bars the claim ............................................. 10
20
B. The demurrers to the fourth cause of action should be sustained and/or the
21 motion to strike granted as to the offsetting benefits breach of contract
claim ...................................................................................................................... 11
22
1. San Diego’s claim is barred by the statute of limitations.......................... 11
23
2. San Diego’s claim fails because it cannot allege a breach ........................ 11
24 3. Offsetting benefits do not apply to the exchange ...................................... 12
25 4. San Diego is precluded by collateral estoppel from bringing an
offsetting benefits breach claim ................................................................ 13
26
C. The demurrer to the fifth cause of action in the SAC should be sustained
27 and/or the motion to strike granted ....................................................................... 14
28 -i-
METROPOLITAN’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRERS, OR IN THE
ALTERNATIVE, MOTIONS TO STRIKE, PORTIONS OF FIRST AMENDED COMPLAINT (CORRECTED)
CASE NO. CPF-14-514004
1 TABLE OF CONTENTS
(continued)
2 Page
3 V. CONCLUSION ................................................................................................................. 15
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6
7
8
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28 -ii-
METROPOLITAN’S MEMORANDUM IN SUPPORT OF DEMURRERS, OR IN THE ALTERNATIVE
MOTIONS TO STRIKE, PORTIONS OF FIRST AMENDED COMPLAINT (CORRECTED)
CASE NO. CPF-14-514004
1 TABLE OF AUTHORITIES
2 Page
3 CASES
4 Blank v. Kirwan,
39 Cal. 3d 311 (1985) ............................................................................................................... 6
5
Colonies Partners, L.P. v. Superior Court,
6 239 Cal. App. 4th 689 (2015).................................................................................................. 10
Committee for Responsible Planning v. City of Indian Wells,
7 225 Cal. App. 3d 191 (1990)................................................................................................... 10
8 Curtis v. Kellogg and Andelson,
73 Cal. App. 4th 492 (1999).................................................................................................... 11
9
DKN Holdings LLC v. Wade Faerber,
10 61 Cal. 4th 813 (2015) ............................................................................................................ 13
11 Fire Ins. Exch. v. Superior Court,
116 Cal. App. 4th 446 (2004).................................................................................................... 6
12
Frantz v. Blackwell,
13 189 Cal. App. 3d 91 (1987)....................................................................................................... 5
Frommhagen v. Board of Supervisors,
14 197 Cal. App. 3d 1292 (1987)................................................................................................... 9
15 Gananian v. Wagstaffe,
199 Cal. App. 4th 1532 (2011).................................................................................................. 8
16
George Arakelian Farms, Inc. v. Agricultural Labor Relations Bd.,
17 49 Cal. 3d 1279 (1989) ............................................................................................................. 8
18 Klinell v. Shirey,
223 Cal. App. 2d 239 (1963)..................................................................................................... 9
19
Levy v. City of Santa Monica,
20 114 Cal. App. 4th 1252 (2004).................................................................................................. 8
Lilienthal and Fowler v. Superior Court,
21 12 Cal. App. 4th 1848 (1993).................................................................................................... 6
22 Lucido v. Superior Court,
51 Cal. 3d 335 (1990) ......................................................................................................... 8, 13
23
Marina Tenants Assn. v. Deauville Marina Development Co.,
24 181 Cal. App. 3d 122 (1986)................................................................................................. 2, 5
25 Mathieu v. Norrell Corp.,
115 Cal. App. 4th 1174 (2004).................................................................................................. 6
26
Metropolitan Water Dist. of So. Cal. v. Imperial Irrigation Dist., et al.,
27 80 Cal. App. 4th 1403 (2000)............................................................................................ 2, 3, 7
28 -iii-
METROPOLITAN’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRERS, OR IN THE
ALTERNATIVE, MOTIONS TO STRIKE, PORTIONS OF FIRST AMENDED COMPLAINT (CORRECTED)
CASE NO. CPF-14-514004
1 TABLE OF AUTHORITIES
(continued)
2 Page
3 Pacific Mut. Life Ins. Co. of Cal. v. McConnell,
44 Cal. 2d 715 (1955) ......................................................................................................... 9, 13
4
Performance Plastering v. Richmond Am. Homes of Cal.,
5 Inc., 153 Cal. App. 4th 659 (2007) ........................................................................................... 5
6 PH II, Inc. v. Superior Court,
33 Cal. App. 4th 1680 (1992).................................................................................................... 6
7 Price v. Sixth Dist. Agricultural Ass’n,
8 201 Cal. 502 (1927) .................................................................................................................. 9
Reid v. City of San Diego,
9 24 Cal. App. 5th 343 (2018).................................................................................................... 10
10 Richman v. Hartley,
224 Cal. App. 4th 1182 (2014)................................................................................................ 12
11
San Diego County Water Authority v. Metropolitan Water Dist. of So. Cal.,
12 12 Cal. App. 5th, 1124 (2017).......................................................................................... passim
13 San Luis Coastal Unified Sch. Dist. v. City of Morro Bay,
81 Cal. App. 4th 1044 (2000).................................................................................................. 14
14 Travis v. County of Santa Cruz,
15 100 Cal. App. 4th 614 (2002).................................................................................................... 7
Tribecca Companies, LLC v. First American Title Ins. Co.,
16 239 Cal. App 4th 1088 ............................................................................................................ 12
17 Wilson v. City of Laguna Beach,
6 Cal. App. 4th 543 (1992)...................................................................................................... 14
18
STATUTES
19
Cal. Civ. Proc. Code § 337............................................................................................................ 11
20 Cal. Civ. Proc. Code § 430.10(e) .................................................................................................... 5
21 Cal. Civ. Proc. Code § 430.30(a) .................................................................................................... 5
Cal. Civ. Proc. Code § 436.............................................................................................................. 6
22
Cal. Civ. Proc. Code § 870...................................................................................................... 10, 11
23
Cal. Civ. Proc. Code § 870(a) ................................................................................................. 10, 11
24 Cal. Civ. Proc. Code § 1060.......................................................................................................... 14
25 Cal. Gov't Code § 970 ................................................................................................................... 15
26 Cal. Gov't Code §§ 970, et seq. ................................................................................................. 2, 14
Cal. Gov’t Code Code § 970.4 ...................................................................................................... 14
27
Cal. Water Code §§ 1810, et seq. .................................................................................................... 2
28 -iv-
METROPOLITAN’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRERS, OR IN THE
ALTERNATIVE, MOTIONS TO STRIKE, PORTIONS OF FIRST AMENDED COMPLAINT (CORRECTED)
CASE NO. CPF-14-514004
1 TABLE OF AUTHORITIES
(continued)
2 Page
3 Cal. Water Code § 1811(c) ......................................................................................................... 4, 7
4 Metropolitan Act, Stats. 1969, ch. 209, § 134............................................................................... 15
West’s Ann. Wat. – Appen. § 109-134 ......................................................................................... 15
5
Wheeling Statutes.................................................................................................................. 3, 7, 12
6
7 OTHER AUTHORITIES
8
9 Metropolitan Administrative Code § 4119 ................................................................................. 3, 7
Metropolitan Administrative Code § 4405 ..................................................................................... 3
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28 -v-
METROPOLITAN’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRERS, OR IN THE
ALTERNATIVE, MOTIONS TO STRIKE, PORTIONS OF FIRST AMENDED COMPLAINT (CORRECTED)
CASE NO. CPF-14-514004
1 I. INTRODUCTION
2 The first three causes of action in San Diego County Water Authority’s (“San Diego”)
3 First Amended Complaint in the 2014 Action (“FAC”) and Second Amended Complaint in the
4 2016 Action (“SAC”) challenge Metropolitan Water District of Southern California’s
5 (“Metropolitan”) pre-set wheeling rate for 2015-2018 in part because it allegedly does not include
6 an offsetting benefits credit. This rate applies only to wheeling to member agencies for up to one
7 year (the price for other wheeling transactions is negotiated), and “offsetting benefits” refers to a
8 credit for a particular transaction if the wheeling provides benefits for use of the conveyance
9 system. San Diego’s wheeling rate challenge fails for multiple reasons: (1) Metropolitan’s
10 wheeling rate Resolution in fact provides for offsetting benefits, as San Diego agrees in the FAC
11 and SAC; (2) San Diego does not allege a transaction governed by the wheeling rate, nor the
12 denial of an offsetting benefits request, because neither occurred; (3) while San Diego alleges an
13 interest in a future transaction governed by the wheeling rate, the rate no longer exists; and (4)
14 San Diego is precluded from challenging the wheeling rate methodology, as its legality was
15 litigated in its 2010 and 2012 Actions. 1
16 In its fourth cause of action in the FAC and SAC, San Diego contends that Metropolitan
17 breached the parties’ 2003 Exchange Agreement by charging a price that did not include an
18 offsetting benefits credit. The offsetting benefits breach claim fails for multiple reasons: (1) it is
19 barred by the statute of limitations; (2) San Diego cannot allege a breach; (3) offsetting benefits
20 do not apply; and (4) San Diego is precluded from challenging the legality of the price term,
21 entitling San Diego to damages, as this was litigated in its 2010 and 2012 Actions.
22 Finally, in its fifth cause of action in the SAC, San Diego seeks a declaration that
23 Metropolitan must satisfy a judgment “in a manner that does not cause [San Diego] to pay any
24 portion of the judgment, interest on the judgment, or the court-awarded attorneys’ fees and
25 costs[.]” (SAC Prayer ¶ 5.) The cause of action fails as it does not allege a legal basis for the
26
1
These cases are San Diego County Water Authority v. Metropolitan Water District of Southern
27 California et al, Case Nos. CPF-14-514004 (“2014 Action”), and CPF-16-515282 (“2016
Action”). They follow Case No. CPF-10-510830 (“2010 Action”), consolidated with CPF-12-
28 512466 (“2012 Action”). 1
M ANATT , P HELPS METROPOLITAN’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRERS, OR IN THE
AND P HILLIPS , LLP
ALTERNATIVE, MOTIONS TO STRIKE, PORTIONS OF FIRST AMENDED COMPLAINT (CORRECTED)
ATTO RNEY S AT LAW
LOS A NG EL ES CASE NO. CPF-14-514004
1 requested declaration and none exists: the declaration would contravene Government Code
2 Section 970, et seq., which controls how public agencies satisfy judgments.
3 Metropolitan demurs to the offsetting benefits portions of the first four causes of action,
4 and to the fifth cause of action in its entirety, because San Diego fails to state facts sufficient to
5 constitute a cause of action. In the alternative, Metropolitan moves to strike the improper
6 allegations in the FAC and SAC and each of these causes of action. 2
7 II. SUMMARY OF ALLEGATIONS AND JUDICIALLY NOTICEABLE FACTS
8 Relevant to these demurrers/motions to strike, San Diego alleges five causes of action in
9 the 2016 Action for (1) writ relief for misallocation of costs in Metropolitan’s 2015-2018
10 transportation rates and wheeling rate; (2) declaratory relief regarding these rates; (3)
11 determination of invalidity regarding these rates; (4) breach of the price term in Section 5.2 of the
12 parties’ 2003 Exchange Agreement; and (5) declaratory relief as to how Metropolitan may satisfy
13 a money judgment. The first four causes of action are also alleged in the 2014 Action. Judicially
14 noticeable facts are also relevant: “The rule is well settled that a complaint otherwise good on its
15 face is nevertheless subject to demurrer when facts judicially noticed render it defective . . . The
16 theory is that the pleader should not be allowed to bypass a demurrer by suppressing facts which
17 the court will judicially notice.” Marina Tenants Assn. v. Deauville Marina Development Co.,
18 181 Cal. App. 3d 122, 130 (1986) (internal quotations omitted).
19 A. Wheeling and Offsetting Benefits
20 “Wheeling” refers to use of a public agency’s facilities to convey water that is not owned
21 by the agency, if there is unused capacity, in exchange for fair compensation. Water Code §§
22 1810 et seq. (the “Wheeling Statutes”) (applying to use of up to 70 percent of the facility’s
23 unused capacity); San Diego County Water Authority v. Metropolitan Water Dist. of So. Cal.
24 (“SDCWA”), 12 Cal. App. 5th, 1124, 1135 (2017); Metropolitan Water Dist. of So. Cal. v.
25 Imperial Irrigation Dist., et al. (“Imperial”), 80 Cal. App. 4th 1403, 1407 (2000).
26 2
Metropolitan is concurrently filing a demurrer and, in the alternative, a motion to strike in the
2016 Action, advancing the same authorities and arguments with respect to the first four causes of
27 action as are contained in its submissions in this action. The 2014 Action does not include a cause
of action similar to the fifth cause of action in the 2016 Action. With the exception of this
28 footnote, the memoranda filed in the 2014 and 2016 2 Actions are identical.
M ANATT , P HELPS METROPOLITAN’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRERS, OR IN THE
AND P HILLIPS , LLP
ALTERNATIVE, MOTIONS TO STRIKE, PORTIONS OF FIRST AMENDED COMPLAINT (CORRECTED)
ATTO RNEY S AT LAW
LOS A NG EL ES CASE NO. CPF-14-514004
1 Throughout the years at issue, Metropolitan had a fixed, pre-set rate for wheeling service
2 (“wheeling rate”), applicable to wheeling for member agencies for transactions up to one year.
3 The wheeling rate components were Metropolitan’s System Access Rate, Water Stewardship
4 Rate, a treatment surcharge (for treated water), actual power cost, and an administration fee. 3 The
5 charges for other wheeling transactions (for member agencies for transactions over one year, and
6 for third parties) were negotiated and contracted for individually. SDCWA, 12 Cal. App. 5th at
7 1138 n.7. In 1997, Metropolitan’s Board of Directors adopted Resolution 8520, supporting the
8 wheeling rate. Id. at 1148. Resolution 8520 provided for a reduction for benefits, if any, on a
9 case-by-case basis for a particular one-year wheeling transaction:
10 The wheeling rates shall be reduced to reflect the regional water
supply benefits provided to Metropolitan’s service area, if any, on a
11 case-by-case basis in response to a particular wheeling transaction.
The regional benefits, if any shall be calculated by Metropolitan in
12 the same manner as such benefits are calculated for use in the Local
Projects and Groundwater Recovery Program. 4
13
14 In the FAC and SAC, San Diego agrees that Resolution 8520 provides for offsetting benefits.
15 (FAC ¶¶ 4, 23-24; SAC ¶¶ 23-24, 55.)
16 In 2000, the Court of Appeal held that the Wheeling Statutes did not as a matter of law
17 prevent Metropolitan from having a fixed, pre-set wheeling rate, rather than setting a price based
18 on each transaction. Imperial, 80 Cal. App. 4th at 1407-08. The Court noted that “Metropolitan
19 will provide offsetting benefits on a case-by-case basis.” Id. at 1420. 5
20 By August 2020, no transactions governed by the wheeling rate had occurred in over 10
21 years. On August 18, 2020, the Metropolitan Board of Directors repealed the wheeling rate and
22
3
(FAC and SAC ¶ 39); SDCWA, 12 Cal. App. 5th at 1138. Metropolitan Administrative Code
23 Section 4405 set the rate, and Section 4120 (renumbered 4119 in 2000) defined the transactions to
which the rate was applicable: wheeling to member agencies for up to one year. (See Request for
24 Judicial Notice (“RJN”), Ex. A (Sections 4119, 4405).)
4
25 (RJN Ex. B (Resolution of the Board of Directors of the Metropolitan Water District of
Southern California Fixing and Adopting Wheeling Rates).)
26 5
The Court explained that Metropolitan’s pre-set wheeling rate “simplifies the factors to be
considered in setting the rate for a particular transaction. The Metropolitan Water District need
27 only modify the fixed rate as applied to a proposed wheeling transaction after considering any
necessitated power costs, treatment costs, replacement costs, or offsetting benefits.” Id. at 1434
28 (emphasis added). 3
M ANATT , P HELPS METROPOLITAN’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRERS, OR IN THE
AND P HILLIPS , LLP
ALTERNATIVE, MOTIONS TO STRIKE, PORTIONS OF FIRST AMENDED COMPLAINT (CORRECTED)
ATTO RNEY S AT LAW
LOS A NG EL ES CASE NO. CPF-14-514004
1 Resolution 8520. 6 Now the price for all wheeling regardless of duration will be set based on each
2 transaction. 7
3 B. San Diego’s First Three Causes of Action Challenging Metropolitan’s Rates
4 Relevant here, San Diego’s first three causes of action in the FAC and SAC allege
5 Metropolitan’s pre-set wheeling rate for 2015-2018 was unlawful because Metropolitan “failed to
6 comply with its statutory obligation to provide wheelers, including [San Diego], with ‘reasonable
7 credit for any offsetting benefits for the use of [Metropolitan’s] conveyance system’” (FAC and
8 SAC ¶ 4 (quoting Wat. Code § 1811(c) (second alteration original).) San Diego appears to
9 advance both a facial and an as-applied challenge. San Diego does not identify a wheeling
10 transaction of one year or less in 2015-2018 as would be governed by Metropolitan’s wheeling
11 rate, nor does it allege that it requested a credit for offsetting benefits for any such transaction.
12 Neither occurred.
13 C. San Diego’s Fourth Cause of Action for Breach of the Exchange Agreement
14 San Diego alleges that Metropolitan breached Section 5.2 of the 2003 Exchange
15 Agreement by not accounting for offsetting benefits in the price term. (FAC and SAC ¶ 44.) San
16 Diego’s own allegations contradict each other. San Diego alleges the price in Section 5.2 is the
17 wheeling rate (FAC ¶¶ 5, 34, 62; SAC ¶¶ 5, 35, 54); but also alleges that, as Section 5.2 states, the
18 price “shall be equal to the charge or charges set by Metropolitan’s Board of Directors pursuant to
19 applicable law and regulation and generally applicable to the conveyance of water by
20 Metropolitan on behalf of its member agencies,” meaning, as the Court of Appeal found,
21 Metropolitan’s transportation rates: the System Access Rate, System Power Rate, and Water
22 Stewardship Rate (FAC and SAC ¶¶ 42-43 and Ex. A (Exchange Agreement § 5.2). 8 The
23
6
(RJN Ex. C (August 2020 Board Letter), Ex. D (Aug. 2020 Board Minutes), Ex. E (current
24 Metropolitan Administrative Code).)
7
25 See id.; SDCWA, 12 Cal. App. 5th at 1138 n.7.
8
26 SDCWA, 12 Cal. App. 5th at 1138-39 (the parties agree the Exchange Agreement price means
the transportation rates: the System Access Rate, System Power Rate, and Water Stewardship
27 Rate). “The Price that Metropolitan charges the Water Authority for delivering the Water
Authority’s Non-Metropolitan Water under the Exchange Agreement is comprised of the System
28 Access Rate, the System Power Rate, and the Water 4 Stewardship Rate.” (FAC & SAC ¶ 43.)
M ANATT , P HELPS METROPOLITAN’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRERS, OR IN THE
AND P HILLIPS , LLP
ALTERNATIVE, MOTIONS TO STRIKE, PORTIONS OF FIRST AMENDED COMPLAINT (CORRECTED)
ATTO RNEY S AT LAW
LOS A NG EL ES CASE NO. CPF-14-514004
1 transportation rates on which the price term is based are not the same as the challenged wheeling
2 rate. San Diego, 12 Cal. App. 5th at 1138-39 (while the transportation rates and wheeling rate
3 share certain components, the transportation rates are not the same as the wheeling rate).
4 Metropolitan accepted the price term proposed by San Diego 9, and the Exchange
5 Agreement was executed on October 10, 2003. (FAC and SAC, Ex. A.) The duration of the
6 Exchange Agreement transaction is multi-decade: it extends from 2003 to at least 2037 as to part
7 of the exchanged water (that part received from the Imperial Irrigation District); and from 2003 to
8 2112 for the rest of the exchanged water (the canal lining water). (FAC and SAC, Ex. A § 7.1.)
9 D. San Diego’s Fifth Cause of Action for Declaratory Relief
10 In the SAC in the 2016 Action, San Diego seeks a judicial declaration that Metropolitan
11 may not satisfy a judgment in a manner that causes San Diego to pay a portion. (SAC Prayer ¶ 5.)
12 San Diego does not allege a legal basis for the Court to direct the manner in which Metropolitan,
13 as a public entity, satisfies a money judgment. (See SAC ¶¶ 84-88.)
14 III. LEGAL STANDARD
15 A party may demur to a pleading when any ground for objection appears on its face or
16 from any matter of which the court may take judicial notice. Code Civ. Proc. § 430.30(a). 10 A
17 complaint is deficient as a matter of law when it fails to “state facts sufficient to constitute a cause
18 of action” against a defendant. Code Civ. Proc. § 430.10(e). Courts treat a demurrer as admitting
19 all material facts properly pleaded, but not contentions, deductions, or conclusions of fact or law.
20 9
“[T]he Water Authority and Metropolitan negotiated the 2003 Exchange Agreement for delivery
21 of the Water Authority’s Non-Metropolitan Water to the Water Authority’s own distribution and
water storage facilities.” (FAC & SAC ¶ 18.) ‘“Unable to agree upon the long-term price the
22 Water Authority would be charged for water received under the [Exchange Agreement], the
parties agreed to an initial price with future prices linked to standard water rates, lawfully set.’”
23 (FAC & SAC ¶ 20 (citing SDCWA, 12 Cal. App. 5th at 1136).) “Specifically, pursuant to Section
5.2 of the Exchange Agreement, Metropolitan agreed that the Price for transporting the Water
24 Authority’s Non-Metropolitan Water ‘shall be equal to the charge or charges set by
Metropolitan’s Board of Directors pursuant to applicable law and regulation and generally
25 applicable to the conveyance of water by Metropolitan on behalf of its member agencies.’” (FAC
& SAC ¶ 20; see also FAC & SAC ¶ 42.)
26 10
See also Performance Plastering v. Richmond Am. Homes of Cal., Inc., 153 Cal. App. 4th 659,
665 (2007) (“In analyzing the complaint, we give the complaint a reasonable interpretation, and
27 treat the demurrer as admitting all material facts properly pleaded. We also consider matters. . .
incorporated by reference.” (citing Frantz v. Blackwell, 189 Cal. App. 3d 91, 94 (1987) (internal
28 quotations and citation omitted)). Marina Tenants5Ass’n, 181 Cal. App. 3d at 130.
M ANATT , P HELPS METROPOLITAN’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRERS, OR IN THE
AND P HILLIPS , LLP
ALTERNATIVE, MOTIONS TO STRIKE, PORTIONS OF FIRST AMENDED COMPLAINT (CORRECTED)
ATTO RNEY S AT LAW
LOS A NG EL ES CASE NO. CPF-14-514004
1 Blank v. Kirwan, 39 Cal. 3d 311, 318 (1985).
2 Although in its first four causes of action, San Diego challenges Metropolitan’s rates and
3 alleges contract breach on multiple legal theories, the Court may consider each asserted basis
4 separately. A “‘cause of action’ means a group of related paragraphs in the complaint reflecting a
5 separate theory of liability.” Lilienthal and Fowler v. Superior Court, 12 Cal. App. 4th 1848,
6 1853-54 (1993). Courts may dispose of claims that constitute part of a count in a complaint if the
7 claims could have been pleaded as separate causes of action. Mathieu v. Norrell Corp., 115 Cal.
8 App. 4th 1174, 1188 (2004); see also Fire Ins. Exch. v. Superior Court, 116 Cal. App. 4th 446,
9 452 (2004) (“Ordinarily, a general demurrer does not lie as to a portion of a cause of action . . . .
10 The trial court has broad discretion, however, to fashion suitable methods of practice in order to
11 manage complex litigation.”). Here, San Diego could have pleaded its offsetting benefits claims
12 as separate causes of action, but weaving them into other causes of action does not save them
13 from demurrer.
14 Alternatively, the Court may strike the allegations at issue. The Court may strike “any
15 irrelevant, false, or improper matter inserted in any pleading,” or “all or any part of any pleading
16 not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court.”
17 Cal. Code Civ. Proc. § 436. Where portions of a cause of action are “substantively defective on
18 the face of the complaint,” “the defendant should not have to suffer discovery and navigate the
19 often dense thicket of proceedings in summary adjudication.” PH II, Inc. v. Superior Court, 33
20 Cal. App. 4th 1680, 1682 (1992). “[W]hen a substantive defect is clear from the face of a
21 complaint, such as . . . a purported claim of right which is legally invalid, a defendant may attack
22 that portion of the cause of action by filing a motion to strike.” Id. at 1682-83. Because the
23 offsetting benefits claims and the fifth cause of action are improper and do not conform with law,
24 the Court may strike them.
25
26
27
28 6
M ANATT , P HELPS METROPOLITAN’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRERS, OR IN THE
AND P HILLIPS , LLP
ALTERNATIVE, MOTIONS TO STRIKE, PORTIONS OF FIRST AMENDED COMPLAINT (CORRECTED)
ATTO RNEY S AT LAW
LOS A NG EL ES CASE NO. CPF-14-514004
1 IV. ARGUMENT
A. The demurrers to the first three causes of action should be sustained and/or
2 the motion to strike granted as to the offsetting benefits wheeling rate
challenge.
3
1. A facial challenge fails because the wheeling rate Resolution provides
4 for offsetting benefits.
5 San Diego’s facial challenge to Metropolitan’s wheeling rate in 2015-2018 for allegedly
6 not providing for offsetting benefits requires the Court to examine the text of the supporting
7 Resolution 8520. See Travis v. County of Santa Cruz, 100 Cal. App. 4th 614, 619-20 (2002). The
8 facial challenge fails because, as the FAC and SAC admit, Resolution 8520 provides for
9 offsetting benefits. (FAC ¶¶ 4, 23-24; SAC 23-24, 55.)
10 As Resolution 8520 makes clear, the pre-set wheeling rate is a uniform rate unconnected
11 to any particular transaction. (RJN, Ex. A (Resolution 8520), p. 3.) Offsetting benefits can apply
12 only to a particular transaction, where benefits to the system owner are applicable. See Wat. Code
13 § 1811(c) (the credit for offsetting benefits is for a particular “use of the conveyance system”).
14 Accordingly, Resolution 8520 provided for a case-by-case reduction of the wheeling rate
15 when appropriate for a particular transaction: the amount “shall be reduced to reflect the regional
16 water supply benefits provided to Metropolitan’s service area, if any, on a case-by-case basis in
17 response to a particular wheeling transaction.” (RJN, Ex. A, p. 4 (emphasis added); see also FAC
18 and SAC ¶ 23.) The Court of Appeal held that the Wheeling Statutes permitted Metropolitan to
19 pre-set its wheeling rate (Imp
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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)
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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 and 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 Telephone: (415) 291-7450 F I L E D Superior Court of California, 4 Facsimile: (415) 291-7474 County of San Francisco Email: bwlee@manatt.com 10/13/2020 5 Email: jjrodriguez@manatt.com Clerk of the Court BY: JUDITH NUNEZ Deputy Clerk 6 MORGAN, LEWIS and BOCKIUS LLP Colin C. West (SBN 184095) 7 One Market, Spear Street Tower San Francisco, California 94105-1596 8 Telephone: (415) 422-1000 Facsimile: (415) 422-1101 9 Email: colin.west@morganlewis.com 10 THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA Marcia Scully (SBN 80648) 11 Heather C. Beatty (SBN 161907) Patricia J. Quilizapa (SBN 233745) 12 700 North Alameda Street Los Angeles, CA 90012-2944 13 Telephone: (213) 217-6834 Facsimile: (213) 217-6890 14 Email: hbeatty@mwdh2o.com 15 Attorneys for Respondent and Defendant THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA 16 SUPERIOR COURT OF THE STATE OF CALIFORNIA 17 FOR THE COUNTY OF SAN FRANCISCO 18 SAN DIEGO COUNTY WATER Case No. CPF-14-514004 19 AUTHORITY, Assigned for all purposes to the 20 Petitioner and Plaintiff, Hon. Anne-Christine Massullo, Dept. 304 21 v. METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA’S 22 THE METROPOLITAN WATER DISTRICT MEMORANDUM OF POINTS AND OF SOUTHERN CALIFORNIA, ALL AUTHORITIES IN SUPPORT OF 23 PERSONS INTERESTED IN THE VALIDITY DEMURRERS TO, OR IN THE OF THE RATES ADOPTED BY THE ALTERNATIVE, MOTIONS TO 24 METROPOLITAN WATER DISTRICT OF STRIKE, PORTIONS OF FIRST SOUTHERN CALIFORNIA ON APRIL 8, AMENDED COMPLAINT 25 2014 TO BE EFFECTIVE JANUARY 1, 2015 (CORRECTED) AND JANUARY 1, 2016; and DOES 1-10, 26 Date: February 10, 2021 Respondents and Defendants. Time: 9:15 a.m. 27 28 M ANATT , P HELPS METROPOLITAN’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRERS, OR IN THE AND P HILLIPS , LLP ALTERNATIVE, MOTIONS TO STRIKE, PORTIONS OF FIRST AMENDED COMPLAINT (CORRECTED) ATTO RNEY S AT LAW LOS A NG EL ES CASE NO. CPF-14-514004 1 TABLE OF CONTENTS 2 Page 3 I. INTRODUCTION .............................................................................................................. 1 4 II. SUMMARY OF ALLEGATIONS AND JUDICIALLY NOTICEABLE FACTS............ 2 5 A. Wheeling and Offsetting Benefits ........................................................................... 2 6 B. San Diego’s First Three Causes of Action Challenging Metropolitan’s Rates ........................................................................................................................ 4 7 C. San Diego’s Fourth Cause of Action for Breach of the Exchange 8 Agreement ............................................................................................................... 4 9 D. San Diego’s Fifth Cause of Action for Declaratory Relief ..................................... 5 10 III. LEGAL STANDARD ......................................................................................................... 5 11 IV. ARGUMENT ...................................................................................................................... 7 12 A. The demurrers to the first three causes of action should be sustained and/or the motion to strike granted as to the offsetting benefits wheeling rate 13 challenge ................................................................................................................. 7 14 1. A facial challenge fails because the wheeling rate Resolution provides for offsetting benefits ................................................................... 7 15 2. An as-applied challenge fails because there is no allegation of an applicable transaction or denial of offsetting benefits ................................ 7 16 3. San Diego’s offsetting benefits claims are moot as to future 17 transactions because there is no longer a wheeling rate.............................. 8 4. San Diego is precluded from bringing an offsetting benefits 18 challenge to the wheeling rate methodology............................................... 8 19 a. Collateral estoppel bars the claim ................................................... 8 b. The validation statute bars the claim ............................................. 10 20 B. The demurrers to the fourth cause of action should be sustained and/or the 21 motion to strike granted as to the offsetting benefits breach of contract claim ...................................................................................................................... 11 22 1. San Diego’s claim is barred by the statute of limitations.......................... 11 23 2. San Diego’s claim fails because it cannot allege a breach ........................ 11 24 3. Offsetting benefits do not apply to the exchange ...................................... 12 25 4. San Diego is precluded by collateral estoppel from bringing an offsetting benefits breach claim ................................................................ 13 26 C. The demurrer to the fifth cause of action in the SAC should be sustained 27 and/or the motion to strike granted ....................................................................... 14 28 -i- METROPOLITAN’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRERS, OR IN THE ALTERNATIVE, MOTIONS TO STRIKE, PORTIONS OF FIRST AMENDED COMPLAINT (CORRECTED) CASE NO. CPF-14-514004 1 TABLE OF CONTENTS (continued) 2 Page 3 V. CONCLUSION ................................................................................................................. 15 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -ii- METROPOLITAN’S MEMORANDUM IN SUPPORT OF DEMURRERS, OR IN THE ALTERNATIVE MOTIONS TO STRIKE, PORTIONS OF FIRST AMENDED COMPLAINT (CORRECTED) CASE NO. CPF-14-514004 1 TABLE OF AUTHORITIES 2 Page 3 CASES 4 Blank v. Kirwan, 39 Cal. 3d 311 (1985) ............................................................................................................... 6 5 Colonies Partners, L.P. v. Superior Court, 6 239 Cal. App. 4th 689 (2015).................................................................................................. 10 Committee for Responsible Planning v. City of Indian Wells, 7 225 Cal. App. 3d 191 (1990)................................................................................................... 10 8 Curtis v. Kellogg and Andelson, 73 Cal. App. 4th 492 (1999).................................................................................................... 11 9 DKN Holdings LLC v. Wade Faerber, 10 61 Cal. 4th 813 (2015) ............................................................................................................ 13 11 Fire Ins. Exch. v. Superior Court, 116 Cal. App. 4th 446 (2004).................................................................................................... 6 12 Frantz v. Blackwell, 13 189 Cal. App. 3d 91 (1987)....................................................................................................... 5 Frommhagen v. Board of Supervisors, 14 197 Cal. App. 3d 1292 (1987)................................................................................................... 9 15 Gananian v. Wagstaffe, 199 Cal. App. 4th 1532 (2011).................................................................................................. 8 16 George Arakelian Farms, Inc. v. Agricultural Labor Relations Bd., 17 49 Cal. 3d 1279 (1989) ............................................................................................................. 8 18 Klinell v. Shirey, 223 Cal. App. 2d 239 (1963)..................................................................................................... 9 19 Levy v. City of Santa Monica, 20 114 Cal. App. 4th 1252 (2004).................................................................................................. 8 Lilienthal and Fowler v. Superior Court, 21 12 Cal. App. 4th 1848 (1993).................................................................................................... 6 22 Lucido v. Superior Court, 51 Cal. 3d 335 (1990) ......................................................................................................... 8, 13 23 Marina Tenants Assn. v. Deauville Marina Development Co., 24 181 Cal. App. 3d 122 (1986)................................................................................................. 2, 5 25 Mathieu v. Norrell Corp., 115 Cal. App. 4th 1174 (2004).................................................................................................. 6 26 Metropolitan Water Dist. of So. Cal. v. Imperial Irrigation Dist., et al., 27 80 Cal. App. 4th 1403 (2000)............................................................................................ 2, 3, 7 28 -iii- METROPOLITAN’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRERS, OR IN THE ALTERNATIVE, MOTIONS TO STRIKE, PORTIONS OF FIRST AMENDED COMPLAINT (CORRECTED) CASE NO. CPF-14-514004 1 TABLE OF AUTHORITIES (continued) 2 Page 3 Pacific Mut. Life Ins. Co. of Cal. v. McConnell, 44 Cal. 2d 715 (1955) ......................................................................................................... 9, 13 4 Performance Plastering v. Richmond Am. Homes of Cal., 5 Inc., 153 Cal. App. 4th 659 (2007) ........................................................................................... 5 6 PH II, Inc. v. Superior Court, 33 Cal. App. 4th 1680 (1992).................................................................................................... 6 7 Price v. Sixth Dist. Agricultural Ass’n, 8 201 Cal. 502 (1927) .................................................................................................................. 9 Reid v. City of San Diego, 9 24 Cal. App. 5th 343 (2018).................................................................................................... 10 10 Richman v. Hartley, 224 Cal. App. 4th 1182 (2014)................................................................................................ 12 11 San Diego County Water Authority v. Metropolitan Water Dist. of So. Cal., 12 12 Cal. App. 5th, 1124 (2017).......................................................................................... passim 13 San Luis Coastal Unified Sch. Dist. v. City of Morro Bay, 81 Cal. App. 4th 1044 (2000).................................................................................................. 14 14 Travis v. County of Santa Cruz, 15 100 Cal. App. 4th 614 (2002).................................................................................................... 7 Tribecca Companies, LLC v. First American Title Ins. Co., 16 239 Cal. App 4th 1088 ............................................................................................................ 12 17 Wilson v. City of Laguna Beach, 6 Cal. App. 4th 543 (1992)...................................................................................................... 14 18 STATUTES 19 Cal. Civ. Proc. Code § 337............................................................................................................ 11 20 Cal. Civ. Proc. Code § 430.10(e) .................................................................................................... 5 21 Cal. Civ. Proc. Code § 430.30(a) .................................................................................................... 5 Cal. Civ. Proc. Code § 436.............................................................................................................. 6 22 Cal. Civ. Proc. Code § 870...................................................................................................... 10, 11 23 Cal. Civ. Proc. Code § 870(a) ................................................................................................. 10, 11 24 Cal. Civ. Proc. Code § 1060.......................................................................................................... 14 25 Cal. Gov't Code § 970 ................................................................................................................... 15 26 Cal. Gov't Code §§ 970, et seq. ................................................................................................. 2, 14 Cal. Gov’t Code Code § 970.4 ...................................................................................................... 14 27 Cal. Water Code §§ 1810, et seq. .................................................................................................... 2 28 -iv- METROPOLITAN’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRERS, OR IN THE ALTERNATIVE, MOTIONS TO STRIKE, PORTIONS OF FIRST AMENDED COMPLAINT (CORRECTED) CASE NO. CPF-14-514004 1 TABLE OF AUTHORITIES (continued) 2 Page 3 Cal. Water Code § 1811(c) ......................................................................................................... 4, 7 4 Metropolitan Act, Stats. 1969, ch. 209, § 134............................................................................... 15 West’s Ann. Wat. – Appen. § 109-134 ......................................................................................... 15 5 Wheeling Statutes.................................................................................................................. 3, 7, 12 6 7 OTHER AUTHORITIES 8 9 Metropolitan Administrative Code § 4119 ................................................................................. 3, 7 Metropolitan Administrative Code § 4405 ..................................................................................... 3 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -v- METROPOLITAN’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRERS, OR IN THE ALTERNATIVE, MOTIONS TO STRIKE, PORTIONS OF FIRST AMENDED COMPLAINT (CORRECTED) CASE NO. CPF-14-514004 1 I. INTRODUCTION 2 The first three causes of action in San Diego County Water Authority’s (“San Diego”) 3 First Amended Complaint in the 2014 Action (“FAC”) and Second Amended Complaint in the 4 2016 Action (“SAC”) challenge Metropolitan Water District of Southern California’s 5 (“Metropolitan”) pre-set wheeling rate for 2015-2018 in part because it allegedly does not include 6 an offsetting benefits credit. This rate applies only to wheeling to member agencies for up to one 7 year (the price for other wheeling transactions is negotiated), and “offsetting benefits” refers to a 8 credit for a particular transaction if the wheeling provides benefits for use of the conveyance 9 system. San Diego’s wheeling rate challenge fails for multiple reasons: (1) Metropolitan’s 10 wheeling rate Resolution in fact provides for offsetting benefits, as San Diego agrees in the FAC 11 and SAC; (2) San Diego does not allege a transaction governed by the wheeling rate, nor the 12 denial of an offsetting benefits request, because neither occurred; (3) while San Diego alleges an 13 interest in a future transaction governed by the wheeling rate, the rate no longer exists; and (4) 14 San Diego is precluded from challenging the wheeling rate methodology, as its legality was 15 litigated in its 2010 and 2012 Actions. 1 16 In its fourth cause of action in the FAC and SAC, San Diego contends that Metropolitan 17 breached the parties’ 2003 Exchange Agreement by charging a price that did not include an 18 offsetting benefits credit. The offsetting benefits breach claim fails for multiple reasons: (1) it is 19 barred by the statute of limitations; (2) San Diego cannot allege a breach; (3) offsetting benefits 20 do not apply; and (4) San Diego is precluded from challenging the legality of the price term, 21 entitling San Diego to damages, as this was litigated in its 2010 and 2012 Actions. 22 Finally, in its fifth cause of action in the SAC, San Diego seeks a declaration that 23 Metropolitan must satisfy a judgment “in a manner that does not cause [San Diego] to pay any 24 portion of the judgment, interest on the judgment, or the court-awarded attorneys’ fees and 25 costs[.]” (SAC Prayer ¶ 5.) The cause of action fails as it does not allege a legal basis for the 26 1 These cases are San Diego County Water Authority v. Metropolitan Water District of Southern 27 California et al, Case Nos. CPF-14-514004 (“2014 Action”), and CPF-16-515282 (“2016 Action”). They follow Case No. CPF-10-510830 (“2010 Action”), consolidated with CPF-12- 28 512466 (“2012 Action”). 1 M ANATT , P HELPS METROPOLITAN’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRERS, OR IN THE AND P HILLIPS , LLP ALTERNATIVE, MOTIONS TO STRIKE, PORTIONS OF FIRST AMENDED COMPLAINT (CORRECTED) ATTO RNEY S AT LAW LOS A NG EL ES CASE NO. CPF-14-514004 1 requested declaration and none exists: the declaration would contravene Government Code 2 Section 970, et seq., which controls how public agencies satisfy judgments. 3 Metropolitan demurs to the offsetting benefits portions of the first four causes of action, 4 and to the fifth cause of action in its entirety, because San Diego fails to state facts sufficient to 5 constitute a cause of action. In the alternative, Metropolitan moves to strike the improper 6 allegations in the FAC and SAC and each of these causes of action. 2 7 II. SUMMARY OF ALLEGATIONS AND JUDICIALLY NOTICEABLE FACTS 8 Relevant to these demurrers/motions to strike, San Diego alleges five causes of action in 9 the 2016 Action for (1) writ relief for misallocation of costs in Metropolitan’s 2015-2018 10 transportation rates and wheeling rate; (2) declaratory relief regarding these rates; (3) 11 determination of invalidity regarding these rates; (4) breach of the price term in Section 5.2 of the 12 parties’ 2003 Exchange Agreement; and (5) declaratory relief as to how Metropolitan may satisfy 13 a money judgment. The first four causes of action are also alleged in the 2014 Action. Judicially 14 noticeable facts are also relevant: “The rule is well settled that a complaint otherwise good on its 15 face is nevertheless subject to demurrer when facts judicially noticed render it defective . . . The 16 theory is that the pleader should not be allowed to bypass a demurrer by suppressing facts which 17 the court will judicially notice.” Marina Tenants Assn. v. Deauville Marina Development Co., 18 181 Cal. App. 3d 122, 130 (1986) (internal quotations omitted). 19 A. Wheeling and Offsetting Benefits 20 “Wheeling” refers to use of a public agency’s facilities to convey water that is not owned 21 by the agency, if there is unused capacity, in exchange for fair compensation. Water Code §§ 22 1810 et seq. (the “Wheeling Statutes”) (applying to use of up to 70 percent of the facility’s 23 unused capacity); San Diego County Water Authority v. Metropolitan Water Dist. of So. Cal. 24 (“SDCWA”), 12 Cal. App. 5th, 1124, 1135 (2017); Metropolitan Water Dist. of So. Cal. v. 25 Imperial Irrigation Dist., et al. (“Imperial”), 80 Cal. App. 4th 1403, 1407 (2000). 26 2 Metropolitan is concurrently filing a demurrer and, in the alternative, a motion to strike in the 2016 Action, advancing the same authorities and arguments with respect to the first four causes of 27 action as are contained in its submissions in this action. The 2014 Action does not include a cause of action similar to the fifth cause of action in the 2016 Action. With the exception of this 28 footnote, the memoranda filed in the 2014 and 2016 2 Actions are identical. M ANATT , P HELPS METROPOLITAN’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRERS, OR IN THE AND P HILLIPS , LLP ALTERNATIVE, MOTIONS TO STRIKE, PORTIONS OF FIRST AMENDED COMPLAINT (CORRECTED) ATTO RNEY S AT LAW LOS A NG EL ES CASE NO. CPF-14-514004 1 Throughout the years at issue, Metropolitan had a fixed, pre-set rate for wheeling service 2 (“wheeling rate”), applicable to wheeling for member agencies for transactions up to one year. 3 The wheeling rate components were Metropolitan’s System Access Rate, Water Stewardship 4 Rate, a treatment surcharge (for treated water), actual power cost, and an administration fee. 3 The 5 charges for other wheeling transactions (for member agencies for transactions over one year, and 6 for third parties) were negotiated and contracted for individually. SDCWA, 12 Cal. App. 5th at 7 1138 n.7. In 1997, Metropolitan’s Board of Directors adopted Resolution 8520, supporting the 8 wheeling rate. Id. at 1148. Resolution 8520 provided for a reduction for benefits, if any, on a 9 case-by-case basis for a particular one-year wheeling transaction: 10 The wheeling rates shall be reduced to reflect the regional water supply benefits provided to Metropolitan’s service area, if any, on a 11 case-by-case basis in response to a particular wheeling transaction. The regional benefits, if any shall be calculated by Metropolitan in 12 the same manner as such benefits are calculated for use in the Local Projects and Groundwater Recovery Program. 4 13 14 In the FAC and SAC, San Diego agrees that Resolution 8520 provides for offsetting benefits. 15 (FAC ¶¶ 4, 23-24; SAC ¶¶ 23-24, 55.) 16 In 2000, the Court of Appeal held that the Wheeling Statutes did not as a matter of law 17 prevent Metropolitan from having a fixed, pre-set wheeling rate, rather than setting a price based 18 on each transaction. Imperial, 80 Cal. App. 4th at 1407-08. The Court noted that “Metropolitan 19 will provide offsetting benefits on a case-by-case basis.” Id. at 1420. 5 20 By August 2020, no transactions governed by the wheeling rate had occurred in over 10 21 years. On August 18, 2020, the Metropolitan Board of Directors repealed the wheeling rate and 22 3 (FAC and SAC ¶ 39); SDCWA, 12 Cal. App. 5th at 1138. Metropolitan Administrative Code 23 Section 4405 set the rate, and Section 4120 (renumbered 4119 in 2000) defined the transactions to which the rate was applicable: wheeling to member agencies for up to one year. (See Request for 24 Judicial Notice (“RJN”), Ex. A (Sections 4119, 4405).) 4 25 (RJN Ex. B (Resolution of the Board of Directors of the Metropolitan Water District of Southern California Fixing and Adopting Wheeling Rates).) 26 5 The Court explained that Metropolitan’s pre-set wheeling rate “simplifies the factors to be considered in setting the rate for a particular transaction. The Metropolitan Water District need 27 only modify the fixed rate as applied to a proposed wheeling transaction after considering any necessitated power costs, treatment costs, replacement costs, or offsetting benefits.” Id. at 1434 28 (emphasis added). 3 M ANATT , P HELPS METROPOLITAN’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRERS, OR IN THE AND P HILLIPS , LLP ALTERNATIVE, MOTIONS TO STRIKE, PORTIONS OF FIRST AMENDED COMPLAINT (CORRECTED) ATTO RNEY S AT LAW LOS A NG EL ES CASE NO. CPF-14-514004 1 Resolution 8520. 6 Now the price for all wheeling regardless of duration will be set based on each 2 transaction. 7 3 B. San Diego’s First Three Causes of Action Challenging Metropolitan’s Rates 4 Relevant here, San Diego’s first three causes of action in the FAC and SAC allege 5 Metropolitan’s pre-set wheeling rate for 2015-2018 was unlawful because Metropolitan “failed to 6 comply with its statutory obligation to provide wheelers, including [San Diego], with ‘reasonable 7 credit for any offsetting benefits for the use of [Metropolitan’s] conveyance system’” (FAC and 8 SAC ¶ 4 (quoting Wat. Code § 1811(c) (second alteration original).) San Diego appears to 9 advance both a facial and an as-applied challenge. San Diego does not identify a wheeling 10 transaction of one year or less in 2015-2018 as would be governed by Metropolitan’s wheeling 11 rate, nor does it allege that it requested a credit for offsetting benefits for any such transaction. 12 Neither occurred. 13 C. San Diego’s Fourth Cause of Action for Breach of the Exchange Agreement 14 San Diego alleges that Metropolitan breached Section 5.2 of the 2003 Exchange 15 Agreement by not accounting for offsetting benefits in the price term. (FAC and SAC ¶ 44.) San 16 Diego’s own allegations contradict each other. San Diego alleges the price in Section 5.2 is the 17 wheeling rate (FAC ¶¶ 5, 34, 62; SAC ¶¶ 5, 35, 54); but also alleges that, as Section 5.2 states, the 18 price “shall be equal to the charge or charges set by Metropolitan’s Board of Directors pursuant to 19 applicable law and regulation and generally applicable to the conveyance of water by 20 Metropolitan on behalf of its member agencies,” meaning, as the Court of Appeal found, 21 Metropolitan’s transportation rates: the System Access Rate, System Power Rate, and Water 22 Stewardship Rate (FAC and SAC ¶¶ 42-43 and Ex. A (Exchange Agreement § 5.2). 8 The 23 6 (RJN Ex. C (August 2020 Board Letter), Ex. D (Aug. 2020 Board Minutes), Ex. E (current 24 Metropolitan Administrative Code).) 7 25 See id.; SDCWA, 12 Cal. App. 5th at 1138 n.7. 8 26 SDCWA, 12 Cal. App. 5th at 1138-39 (the parties agree the Exchange Agreement price means the transportation rates: the System Access Rate, System Power Rate, and Water Stewardship 27 Rate). “The Price that Metropolitan charges the Water Authority for delivering the Water Authority’s Non-Metropolitan Water under the Exchange Agreement is comprised of the System 28 Access Rate, the System Power Rate, and the Water 4 Stewardship Rate.” (FAC & SAC ¶ 43.) M ANATT , P HELPS METROPOLITAN’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRERS, OR IN THE AND P HILLIPS , LLP ALTERNATIVE, MOTIONS TO STRIKE, PORTIONS OF FIRST AMENDED COMPLAINT (CORRECTED) ATTO RNEY S AT LAW LOS A NG EL ES CASE NO. CPF-14-514004 1 transportation rates on which the price term is based are not the same as the challenged wheeling 2 rate. San Diego, 12 Cal. App. 5th at 1138-39 (while the transportation rates and wheeling rate 3 share certain components, the transportation rates are not the same as the wheeling rate). 4 Metropolitan accepted the price term proposed by San Diego 9, and the Exchange 5 Agreement was executed on October 10, 2003. (FAC and SAC, Ex. A.) The duration of the 6 Exchange Agreement transaction is multi-decade: it extends from 2003 to at least 2037 as to part 7 of the exchanged water (that part received from the Imperial Irrigation District); and from 2003 to 8 2112 for the rest of the exchanged water (the canal lining water). (FAC and SAC, Ex. A § 7.1.) 9 D. San Diego’s Fifth Cause of Action for Declaratory Relief 10 In the SAC in the 2016 Action, San Diego seeks a judicial declaration that Metropolitan 11 may not satisfy a judgment in a manner that causes San Diego to pay a portion. (SAC Prayer ¶ 5.) 12 San Diego does not allege a legal basis for the Court to direct the manner in which Metropolitan, 13 as a public entity, satisfies a money judgment. (See SAC ¶¶ 84-88.) 14 III. LEGAL STANDARD 15 A party may demur to a pleading when any ground for objection appears on its face or 16 from any matter of which the court may take judicial notice. Code Civ. Proc. § 430.30(a). 10 A 17 complaint is deficient as a matter of law when it fails to “state facts sufficient to constitute a cause 18 of action” against a defendant. Code Civ. Proc. § 430.10(e). Courts treat a demurrer as admitting 19 all material facts properly pleaded, but not contentions, deductions, or conclusions of fact or law. 20 9 “[T]he Water Authority and Metropolitan negotiated the 2003 Exchange Agreement for delivery 21 of the Water Authority’s Non-Metropolitan Water to the Water Authority’s own distribution and water storage facilities.” (FAC & SAC ¶ 18.) ‘“Unable to agree upon the long-term price the 22 Water Authority would be charged for water received under the [Exchange Agreement], the parties agreed to an initial price with future prices linked to standard water rates, lawfully set.’” 23 (FAC & SAC ¶ 20 (citing SDCWA, 12 Cal. App. 5th at 1136).) “Specifically, pursuant to Section 5.2 of the Exchange Agreement, Metropolitan agreed that the Price for transporting the Water 24 Authority’s Non-Metropolitan Water ‘shall be equal to the charge or charges set by Metropolitan’s Board of Directors pursuant to applicable law and regulation and generally 25 applicable to the conveyance of water by Metropolitan on behalf of its member agencies.’” (FAC & SAC ¶ 20; see also FAC & SAC ¶ 42.) 26 10 See also Performance Plastering v. Richmond Am. Homes of Cal., Inc., 153 Cal. App. 4th 659, 665 (2007) (“In analyzing the complaint, we give the complaint a reasonable interpretation, and 27 treat the demurrer as admitting all material facts properly pleaded. We also consider matters. . . incorporated by reference.” (citing Frantz v. Blackwell, 189 Cal. App. 3d 91, 94 (1987) (internal 28 quotations and citation omitted)). Marina Tenants5Ass’n, 181 Cal. App. 3d at 130. M ANATT , P HELPS METROPOLITAN’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRERS, OR IN THE AND P HILLIPS , LLP ALTERNATIVE, MOTIONS TO STRIKE, PORTIONS OF FIRST AMENDED COMPLAINT (CORRECTED) ATTO RNEY S AT LAW LOS A NG EL ES CASE NO. CPF-14-514004 1 Blank v. Kirwan, 39 Cal. 3d 311, 318 (1985). 2 Although in its first four causes of action, San Diego challenges Metropolitan’s rates and 3 alleges contract breach on multiple legal theories, the Court may consider each asserted basis 4 separately. A “‘cause of action’ means a group of related paragraphs in the complaint reflecting a 5 separate theory of liability.” Lilienthal and Fowler v. Superior Court, 12 Cal. App. 4th 1848, 6 1853-54 (1993). Courts may dispose of claims that constitute part of a count in a complaint if the 7 claims could have been pleaded as separate causes of action. Mathieu v. Norrell Corp., 115 Cal. 8 App. 4th 1174, 1188 (2004); see also Fire Ins. Exch. v. Superior Court, 116 Cal. App. 4th 446, 9 452 (2004) (“Ordinarily, a general demurrer does not lie as to a portion of a cause of action . . . . 10 The trial court has broad discretion, however, to fashion suitable methods of practice in order to 11 manage complex litigation.”). Here, San Diego could have pleaded its offsetting benefits claims 12 as separate causes of action, but weaving them into other causes of action does not save them 13 from demurrer. 14 Alternatively, the Court may strike the allegations at issue. The Court may strike “any 15 irrelevant, false, or improper matter inserted in any pleading,” or “all or any part of any pleading 16 not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court.” 17 Cal. Code Civ. Proc. § 436. Where portions of a cause of action are “substantively defective on 18 the face of the complaint,” “the defendant should not have to suffer discovery and navigate the 19 often dense thicket of proceedings in summary adjudication.” PH II, Inc. v. Superior Court, 33 20 Cal. App. 4th 1680, 1682 (1992). “[W]hen a substantive defect is clear from the face of a 21 complaint, such as . . . a purported claim of right which is legally invalid, a defendant may attack 22 that portion of the cause of action by filing a motion to strike.” Id. at 1682-83. Because the 23 offsetting benefits claims and the fifth cause of action are improper and do not conform with law, 24 the Court may strike them. 25 26 27 28 6 M ANATT , P HELPS METROPOLITAN’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRERS, OR IN THE AND P HILLIPS , LLP ALTERNATIVE, MOTIONS TO STRIKE, PORTIONS OF FIRST AMENDED COMPLAINT (CORRECTED) ATTO RNEY S AT LAW LOS A NG EL ES CASE NO. CPF-14-514004 1 IV. ARGUMENT A. The demurrers to the first three causes of action should be sustained and/or 2 the motion to strike granted as to the offsetting benefits wheeling rate challenge. 3 1. A facial challenge fails because the wheeling rate Resolution provides 4 for offsetting benefits. 5 San Diego’s facial challenge to Metropolitan’s wheeling rate in 2015-2018 for allegedly 6 not providing for offsetting benefits requires the Court to examine the text of the supporting 7 Resolution 8520. See Travis v. County of Santa Cruz, 100 Cal. App. 4th 614, 619-20 (2002). The 8 facial challenge fails because, as the FAC and SAC admit, Resolution 8520 provides for 9 offsetting benefits. (FAC ¶¶ 4, 23-24; SAC 23-24, 55.) 10 As Resolution 8520 makes clear, the pre-set wheeling rate is a uniform rate unconnected 11 to any particular transaction. (RJN, Ex. A (Resolution 8520), p. 3.) Offsetting benefits can apply 12 only to a particular transaction, where benefits to the system owner are applicable. See Wat. Code 13 § 1811(c) (the credit for offsetting benefits is for a particular “use of the conveyance system”). 14 Accordingly, Resolution 8520 provided for a case-by-case reduction of the wheeling rate 15 when appropriate for a particular transaction: the amount “shall be reduced to reflect the regional 16 water supply benefits provided to Metropolitan’s service area, if any, on a case-by-case basis in 17 response to a particular wheeling transaction.” (RJN, Ex. A, p. 4 (emphasis added); see also FAC 18 and SAC ¶ 23.) The Court of Appeal held that the Wheeling Statutes permitted Metropolitan to 19 pre-set its wheeling rate (Imp