Document Scanning Lead Sheet: Superior Court of California County of San Francisco

SUPERIOR COURT OF CALIFORNIA
COUNTY OF SAN FRANCISCO
Document Scanning Lead Sheet

Feb-28-2013 1 07 pm
Case Number: CGC-13-528312

Filing Date: Feb-28-2013 1:06
Filed by: MARYANN E. MORAN
Juke Box: 001
Image: 03961587
ANSWER
CALIFORNIA-AMERICAN WATER COMPANY, A CALIFORNIA CO VS. MARINA

COAST WATER DISTRICT et al
001C03961587
Instructions:
Please place this sheet on top of the document to be scanned.
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F su!rior ~rt ofFranciBCb

~rniP
ALLEN MATKINS LECK GAMBLE

MALLORY & NATSIS LLP
ROBERT R. MOORE (BAR NO. 113818)
MICHAEL J. BETZ (BARNO. 196228)
CATHY A. HONGOLA (BAR NO. 234489)
Three Embarcadero Center, 12th Floor
San Francisco, CA 94111-407 4
Phone: (415) 837-1515
Fax: (415) 837-1516
E-Mail: rmoore@allenmatkins.com
mbetz@allenmatkins.com
chongOfa@allenmatkins.com
County ot san
fEB '28 Z0\3
CL~K OF THE COURT

BY:
61)
/2.,..~
Deputy Clerk
Attorneys for Plaintiff
8 CALIFORNIA-AMERICAN WATER COMPANY, a
California corporation
9
10
SUPERIOR COURT OF THE STATE OF CALIFORNIA
11
FOR THE COUNTY OF SAN FRANCISCO
12
13 CALIFORNIA-AMERICAN WATER
COMPANY, a California corporation,
14
Plaintiff,
15
v.
16
MARINA COAST WATER DISTRICT;
17 MONTEREY COUNTY WATER
Case No. CGC-13-528312

CALIFORNIA-AMERICAN WATER
COMPANY'S VERIFIED ANSWER TO CROSSCOMPLAINT OF MARINA COAST WATER
DISTRICT FOR DECLARATORY RELIEF
Complaint Filed: October 4, 2012

Cross-Complaint Filed: November 19, 2012
RESOURCES AGENCY; and DOES 2

18 through 10, inclusive,
Defendant.
19
20
MARINA COAST WATER DISTRICT,

21 Cross-Complainant,
Cross-Complainant,
22
23
llJ
~-r
I L~
"I
v.
24 CALIFORNIA-AMERICAN WATER
COMPANY, a California Corporation;
25 MONTEREY COUNTY WATER
RESOURCES AGENCY; and ROES 1
26 through 50, inclusive,
Cross-Defendants.
27
28
lAW OffiCES
Allen Matkins lock Gambkl

Mallory & Natsis LLP
86914704/SF
California-American Water Company's Verified Answe1 to Cross-Complaint of Marina

Coast Water District for Declaratory Relief
-----------------------
Cross-Defendant California-American Water Company ("CAW") hereby answers
2 the Marina Coast Water District's ("MCWD") Cross-Complaint for Declaratory Relief as
3 follows (paragraph numbers below correspond to paragraph numbers of the cross4 complaint).
THE PARTIES
5
6
1.
In answer to paragraph 1, CAW admits the allegations in this paragraph.
2.
In answer to paragraph 2, CAW admits it is, and at all relevant times was, a
8 California corporation and water utility regulated by the California Public Utilities
9 Commission ("CPUC").
Except as expressly admitted, CAW denies each and every
10 allegation of this paragraph.

11
3.
In answer to paragraph 3, CAW admits the allegations in this paragraph.
12
4.
In answer to paragraph 4, CAW lacks sufficient knowledge or belief to know
13 the truth or falsity of the allegations in this paragraph and therefore denies each and every
14 such allegation.
15
5.
In answer to paragraph 5, CAW denies each and every allegation of this
16 paragraph.
GENERAL ALLEGATIONS
17
18
6.
In answer to paragraph 6, CAW admits that in 1995, the State Water
19 Resources Control Board issued Order No. WR 95-10, requiring CAW to adopt
20 conservation measures and find replacement sources sufficient for 10,730 acre feet per
21 year then being diverted from the Carmel River.
Except as expressly admitted, CAW
22 denies each and every allegation ofthis paragraph.

23
7.
In answer to paragraph 7, CAW admits that on October 20, 2009, the Water
24 Board issued a final Cease-and-Desist Order requiring CAW to undertake additional

25 measures to reduce its diversion of water from the Carmel River by no later than
26 December 31, 2016. CAW further admits that on December 17, 2009, in Decision No. 0927 12-017, the CPUC certified the Final Environmental Impact Report for a project that
28
LAW OFFICES
-2-
Allen Matkins Leek Gamble

Mallory & Nalsls LLP
869147.04/SF
California-American Water Company's Verified Answer to Cross-Complaint of Marina

would provide a long-term water supply for CAW's Monterey District.
Except as
2 expressly admitted, CAW denies each and every allegation of this paragraph.
8.
In answer to paragraph 8, CAW admits that in December 2010, the CPUC, in
4 D.l0-12-016, approved implementation of the Regional Desalination Project ("RDP").

5 CAW further admits that to meet its obligation to reduce its diversion of water from the
6 Carmel River, CAW entered into a series of agreements relating to the development and
7 implementation of a desalination plant and related facilities. CAW, the Monterey County
8 Water Resources Agency ("Agency"), and MCWD negotiated a Water Purchase
9 Agreement ("Water Purchase Agreement"), and, with other parties, a Settlement
I 0 Agreement ("Settlement Agreement"), which were both approved by the CPUC on
11 December 2, 2010 in Decision No. 10-12-016 (modified by Decision No. 11-04-035) and,
12 along with other agreements, provided for development, financing, and construction of the
13 RDP.
CAW also admits that on or about January 11, 2011, the Agency approved the
14 Water Purchase Agreement and Settlement Agreement.
Except as expressly admitted,
15 CAW denies each and every allegation ofthis paragraph.

16
9.
In answer to paragraph 9, CAW admits that the Water Purchase Agreement
17 required, m general, the following: the Agency to construct, own, and operate wells;
18 MCWD to construct, own, and operate the desalination plant to treat the water pumped
19 from the Agency's wells; and, CAW to construct, own, and operate facilities to distribute
20 the treated water to CAW's customers in Monterey County. CAW further admits that
21 before the CPUC approved the Water Purchase Agreement in December 2010, CAW, the
22 Agency, and MCWD entered into the February 26, 2010 Reimbursement Agreement,
23 approved on August 12, 2010 in CPUC Decision No. 10-08-008. The Water Purchase
24 Agreement, Settlement Agreement, and Reimbursement Agreement are referred to
25 collectively as the "Agreements." Except as expressly admitted, CAW denies each and
26 every allegation of this paragraph.
27
10.
In answer to paragraph 10, CAW admits Stephen P. Collins ("Collins") was
28 a member of the Agency's Board of Directors and was retained by RMC as a sublAW OFFICES
-3-
Allen Mat~lns Lee~ Gamble

Mallory & Natsls LLP
869147 04/SF

-----------
---
--
1 consultant. Except as expressly admitted, CAW denies each and every allegation of this
2 paragraph.
3
11.
In answer to paragraph 11, CAW admits RMC retained and paid Collins as a
4 sub-consultant from January 8, 2010 until at least December 2, 2010. CAW further admits
5 that Collins' duties for RMC included attending meetings to promote the RDP. Except as
6 expressly admitted, CAW denies each and every allegation ofthis paragraph.
7
12.
In answer to paragraph 12, CAW lacks sufficient knowledge or belief to
8 know the truth or falsity of the allegations in this paragraph and therefore denies each and
9 every such allegation.
10
13.
11 know the truth or falsity of the allegations in this paragraph and therefore denies each and
12 every such allegation.
13
14.
In answer to paragraph 14, CAW admits that in or about September 2010,
14 MCWD informed CAW that MCWD would cease seeking reimbursement for payments to
15 RMC that included amounts for Mr. Collins sub-consulting services. Except as expressly
16 admitted, CAW denies each and every allegation of this paragraph.
17
15.
In answer to paragraph 15, CAW admits that the Agency's meeting minutes
18 for September 27, 2010 reflect that Collins recused himself from a discussion and vote due
19 to his ongoing relationship with the AgLand Trust. Except as expressly admitted, CAW
20 denies each and every allegation of this paragraph.
21
16.
22 know the truth or falsity of the allegations in this paragraph, based on the phrasing of the
23 allegation in paragraph 16, and therefore denies each and every such allegation.
24
17.
In answer to paragraph 17, CAW admits that in or about April 2011, conflict
25 of interest allegations arose concerning Collins and that Collins resigned from the
26 Agency's Board of Directors. Except as expressly admitted, CAW denies each and every
28
LAW OFFICES
-4-
Allen Malklns leek Gamble

86914 7 ,04/SF

------------------
18.
---
----
In answer to paragraph 18, CAW denies each and every allegation of this
2 paragraph.
3
19.
In answer to paragraph 19, CAW admits that the Agency has, in letters,
4 media reports, and other conduct, declared the Agreements to be void pursuant to
5 Government Code section 1090 et seq.
CAW admits that MCWD has disputed the
6 Agency's position and has taken the position that any claims that the Agreements are
7 invalid are time-barred and are precluded by a variety of statutory provisions, including
8 those in the Public Utilities Code. CAW further admits that if, and only if, the Agreements
9 are determined to be valid and not void, then CAW maintains that the Agency's conduct in
10 declaring the RDP Agreements void, including in letters and media interviews, constituted
11 an anticipatory repudiation of the Agreements, so CAW had a right to terminate the
12 Agreements under the doctrine of anticipatory repudiation. Except as expressly admitted,
13 CAW denies each and every allegation of this paragraph.
14
FIRST CAUSE OF ACTION
15
(Declaratory Relief)
16
(Against CAW, Agency, and ROES 1 through 50)
17
20.
In answer to paragraph 20, CAW restates and incorporates its responses to
18 each of the referenced allegations.

19
21.
In answer to paragraph 21, CAW admits a controversy exists as to whether
20 challenges to the validity of the Agreements are time-barred.
Except as expressly
21 admitted, CAW denies each and every allegation ofthis paragraph.

22
22.
In answer to paragraph 22, CAW alleges Monterey County Water Resources
23 Agency Act, West's Annotated California Water Code-Appendix, section 52-39 speaks for
Except as expressly admitted, CAW denies each and every allegation of this
24 itself.
25 paragraph.
26
23.
In answer to paragraph 23, CAW alleges that California Code of Civil
27 Procedure Section 863 speaks for itself. Except as expressly admitted, CAW denies each
28 and every allegation ofthis paragraph.
LAW OFFICES
-5-

869147 04/SF

24.
2 challenges to the validity of the Agreements are time-barred. CAW also admits that on or
3 about January 11, 2011, the Agency approved the Water Purchase Agreement and
4 Settlement Agreement.

6
SECOND CAUSE OF ACTION
25.

11
26.
12 challenges to the validity of the Agreements are time-barred. CAW alleges that California
13 Water Code section 30066 speaks for itself. Except as expressly admitted, CAW denies
14 each and every allegation ofthis paragraph.
15
27.
16 Procedure 863 speaks for itself. Except as expressly admitted, CAW denies each and
17 every allegation ofthis paragraph.
18
28.
19 challenges to the validity of the Agreements are time-barred. CAW also admits that on or
22 allegation ofthis paragraph.

23
THIRD CAUSE OF ACTION
24
25
26
29.

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LAW OFFICES
-6-

869147.04/SF
Califomia-American Water Company's Verified Answer to Cross-Complaint of Marina

30.
2 challenges to the validity of the Agreements are time~barred. CAW alleges that California
3 Government Code section 53511 speaks for itself. Except as expressly admitted, CAW
5
31.
6 Procedure 863 speaks for itself. Except as expressly admitted, CAW denies each and
7 every allegation of this paragraph.
8
32.
9 challenges to the validity of the Agreements are time~barred. CAW also admits that on or

13
FOURTH CAUSE OF ACTION
14
15
16
33.

18
34.
19 challenges to the validity of the Agreements are
time~ barred.
CAW alleges that California
20 Public Utilities Code section 1731 speaks for itself. Except as expressly admitted, CAW
22
35.
23 challenges to the validity of the Agreements are time~ barred. CAW further admits that the
24 RDP, Water Purchase Agreement, and Settlement Agreement were approved by the CPUC
25 in December 2010. Except as expressly admitted, CAW denies each and every allegation
26 of this paragraph.
27
FIFTH CAUSE OF ACTION
28
lAW OFFICES
-7-

869147.04/SF

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

2
36.

4
37.
In answer to paragraph 3 7, CAW admits a controversy exists as to whether
5 challenges to the validity of the Agreements are time-barred. CAW alleges that California
6 Public Utilities Code section 1756 speaks for itself. Except as expressly admitted, CAW
8
38.
9 challenges to the validity of the Agreements are time-barred. CAW further admits that the
10 RDP, Water Purchase Agreement, and Settlement Agreement were approved by the CPUC
11 in December 2010. Except as expressly admitted, CAW denies each and every allegation
12 ofthis paragraph.
13
SIXTH CAUSE OF ACTION
14
15
(Against CAW, Agency, and ROES 1 through SO)
16
3 9.
In answer to paragraph 3 9, CAW restates and incorporates its responses to
17 each ofthe referenced allegations.

18
40.
19 challenges to the validity of the Agreements are barred by the Public Utilities Code. CAW
20 alleges that California Public Utilities Code section 1709 speaks for itself. Except as
22
41.
23 challenges to the validity of the Agreements are batTed by the Public Utilities Code. CAW
24 further admits that the Water Purchase Agreement and Settlement Agreement were
25 approved by the CPUC on December 2, 2010. Except as expressly admitted, CAW denies
26 each and every allegation ofthis paragraph.
27
SEVENTH CAUSE OF ACTION
28
lAW OfFICES

Mallory & Natsls ~~P
86914704/SF
-8California-American Water Company's Verified Answer to Cross-Complaint of Marina

42.
3 each ofthe referenced allegations.

4
43.
5 challenges to the validity of the Agreements are barred by the Public Utilities Code. CAW
6 alleges that California Public Utilities Code section 1759 speaks for itself. Except as
8
44.
9 challenges to the validity ofthe Agreements are barred by the Public Utilities Code. CAW
10 further admits that the RDP, Water Purchase Agreement, and Settlement Agreement were
11 approved by the CPUC in December 2010. CAW alleges that California Public Utilities
12 Code sections 17 56 and 17 59 speaks for themselves. Except as expressly admitted, CAW
FIRST AFFIRMATIVE DEFENSE
14
15
45.
The Cross-Complaint fails to state a claim upon which relief can be granted.
SECOND AFFIRMATIVE DEFENSE
16
17
46.
The Cross-Complaint is barred in whole or in part based on the doctrine of
18 unclean hands.
19
THIRD AFFIRMATIVE DEFENSE
47.
20
21 waiver.
FOURTH AFFIRMATIVE DEFENSE
22
48.
23
24 estoppel.
FIFTH AFFIRMATIVE DEFENSE
25
49.
26
27 laches.
28
U\WOFflCES
-9-

869147.04/SF

PRAYER
WHEREFORE, CAW prays for judgment herein as follows:
1.
That plaintiff Marina Coast Water District take nothing by way of the Cross-
4 Complaint on file herein;
2.
For costs of suit incurred herein; and
3.
For such other and further relief as the court deems just and proper.
7
8
9 Dated: February :2~ 2013
ALLEN MATKINS LECK GAMBLE

MALLORY & NATSIS LLP
10
11
By:
12
13
14
i7.~~kr i2. ~ "-.J

ROBERT R. MOORE
Attorneys for Plaintiff & CrossDefendant
CALIFORNIA-AMERICAN WATER
COMPANY, a California corporation
15
16
17
18
19
20
21
22
23
24
25
26
27
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LAW OFFICES
-10-
Al1en Matkins Leek Gamble

Mallory & Notsis LLP
869147.04/SF

-----------------------
1
VERIFICATION
I am president of California-American Water Company, a party to this action, and
7
8
9
10
11
am authorized to make this verification on its behalf: I have read the foregoing
CALIFORNIA~ AMERICAN
WATER COMPANY'S VERIFIED ANSWER TO CROSS~COMPLAINT OF
MARINA COAST WATER DISTRICT FOR DECLARATORY RELIEF and know it') contents. I am
informed and believe and on that ground allege that the matters stated in that document are
true.
I declare under penalty of perjury under the laws of the State of California that the
foregoing is true and correct.

Dated: February 2._~1-, 2013
12
ROBERT G. MACLEAN
13
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15
16
17
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19
20
21
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tAW OFFICES
-II-
Allan Matkins Lock Gamble

869147 .01/SF
California-America-n Water Company's Verified Answer to Cross-Complaint ofiviii.riniCoast Water District for Declaratory Relief
~-------------------------------
PROOF OF SERVICE
I am employed in the County of San Francisco, State of California. I am over the age of
eighteen (18) and am not a party to this action. My business address is Three Embarcadero
3 Center, 12th Floor, San Francisco, CA 94111-4074.
On February 28, 2013, I served the within document(s) described as:
CALIFORNIA-AMERICAN WATER COMPANY'S VERIFIED ANSWER TO CROSS-COMPLAINT

OF MARINA COAST WATER DISTRICT FOR DECLARATORY RELIEF
6
on the interested parties in this action as stated below:
7
James L. Markham, Esq.
8 B. Tilden Kim, Esq.
Toussaint S. Bailey, Esq.
9 Bryon Miller, Esq.
Richards, Watson & Gershon
10 355 South Grand Avenue, 40 1h Floor
Los Angeles, CA 90071-31 01
11
Mark Fogelman, Esq.
12 Ruth Stoner Muzzin, Esq.
Friedman & Springwater LLP
13 33 New Montgomery Street, Sutie 290
San Francisco, CA 94105
14
Charles McKee, Esq.
15 Monterey County Counsel Office
168 W. Alisal Street, 3rd Floor
16 Salinas. CA 93901-2680
Attorneys for Marina Coast Water District
17 Marc Wasser, Esq.

Law Offices of Marc Wasser
18 400 Capitol Mall, Suite 2640
Sacramento. CA 95814
19
Attorneys for County of Monterey
20
21
Attorneys for Marina Coast Water District
Attorneys for County of Monterey
BY OVERNIGHT DELIVERY: I deposited ina box or other facility regularly

maintained by FedEx, or delivered to a courier or driver authorized by said express service
carrier to receive documents, a true copy of the foregoing document(s) in sealed envelopes
or packages designated by the express service carrier, addressed as indicated above on the
above-mentioned date, with fees for overnight delivery paid or provided for.
22
I declare under penalty of perjury under the laws of the State of California that the
23 foregoing is true and correct.
24
Executed on February 28, 2013, at San Francisco, California.
25
JudithHidde
(Type or print name)
26
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876954.01/SF
~ ~
(Signature of Declarant)

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SUPERIOR COURT OF CALIFORNIA

COUNTY OF SAN FRANCISCO

Document Scanning Lead Sheet

Case Number: CGC-13-528312

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

F su!rior ~rt ofFranciBCb

ALLEN MATKINS LECK GAMBLE

fEB '28 Z0\3

CL~K OF THE COURT

Attorneys for Plaintiff

8 CALIFORNIA-AMERICAN WATER COMPANY, a

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF SAN FRANCISCO

MARINA COAST WATER DISTRICT;

17 MONTEREY COUNTY WATER

Case No. CGC-13-528312

Complaint Filed: October 4, 2012

RESOURCES AGENCY; and DOES 2

MARINA COAST WATER DISTRICT,

Allen Matkins lock Gambkl

California-American Water Company's Verified Answe1 to Cross-Complaint of Marina

Cross-Defendant California-American Water Company ("CAW") hereby answers

In answer to paragraph 1, CAW admits the allegations in this paragraph.

Except as expressly admitted, CAW denies each and every

10 allegation of this paragraph.

In answer to paragraph 3, CAW admits the allegations in this paragraph.

In answer to paragraph 4, CAW lacks sufficient knowledge or belief to know

In answer to paragraph 5, CAW denies each and every allegation of this

In answer to paragraph 6, CAW admits that in 1995, the State Water

Except as expressly admitted, CAW

22 denies each and every allegation ofthis paragraph.

24 Board issued a final Cease-and-Desist Order requiring CAW to undertake additional

Allen Matkins Leek Gamble

California-American Water Company's Verified Answer to Cross-Complaint of Marina

would provide a long-term water supply for CAW's Monterey District.

In answer to paragraph 8, CAW admits that in December 2010, the CPUC, in

4 D.l0-12-016, approved implementation of the Regional Desalination Project ("RDP").

14 Water Purchase Agreement and Settlement Agreement.

Except as expressly admitted,

15 CAW denies each and every allegation ofthis paragraph.

In answer to paragraph 9, CAW admits that the Water Purchase Agreement

In answer to paragraph 10, CAW admits Stephen P. Collins ("Collins") was

Allen Mat~lns Lee~ Gamble

California-American Water Company's Verified Answer to Cross-Complaint of Marina

In answer to paragraph 12, CAW lacks sufficient knowledge or belief to

In answer to paragraph 13, CAW lacks sufficient knowledge or belief to

In answer to paragraph 14, CAW admits that in or about September 2010,

In answer to paragraph 16, CAW lacks sufficient knowledge or belief to

Allen Malklns leek Gamble

California-American Water Company's Verified Answer to Cross-Complaint of Marina

CAW admits that MCWD has disputed the

FIRST CAUSE OF ACTION

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

In answer to paragraph 20, CAW restates and incorporates its responses to

18 each of the referenced allegations.

In answer to paragraph 21, CAW admits a controversy exists as to whether

20 challenges to the validity of the Agreements are time-barred.

21 admitted, CAW denies each and every allegation ofthis paragraph.

In answer to paragraph 22, CAW alleges Monterey County Water Resources

In answer to paragraph 23, CAW alleges that California Code of Civil

Allen Matkins Leek Gamble

California-American Water Company's Verified Answer to Cross-Complaint of Marina

In answer to paragraph 24, CAW admits a controversy exists as to whether