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SUPERIOR COURT OF CALIFORNIA

COUNTY OF SAN FRANCISCO

Document Scanning Lead Sheet


Jul-30-2015 2:44 pm

Case Number: CGC-15-547125


Filing Date: Jul-30-2015 2:39
Filed by: ROSSALY DELAVEGA
Juke Box: 001

Image: 05014377

COMPLAINT

MARINA COAST WATER DISTRICT VS. CALIFORNIA-AMERICAN WATER


COMPANY, A CALIFORNIA ET AL

001C05014377

Instructions:
Please place this sheet on top of the document to be scanned.

SUM-100

SUMMONS

FOR COURT USE ONLY


(SOLO PARA USO DE LA CORTE)

(CITACION JUDICIAL)
NOTICE TO DEFENDANT:
(AVISO AL DEMANDADO):
CALIFORNIA-AMERICAN WATER COMPANY, a California corporation;
MONTEREY COUNTY WATER RESOURCES AGENCY; and DOES I through
50. inclusive

YOU ARE BEING SUED BY PLAINTIFF:


(LO ESTA DEMANDANDO EL DEMANDANTE):
MARINA COAST WATER DISTRICT

NOTICE! You have been sued. The court may decide against you without your being heard unless you respond within 30 days. Read the information
below
You have 30 CALENDAR DAYS after this summons and legal papers are served on you to file a written response at this court and have a copy
served on the plaintiff. A letter or phone call will not protect you. Your written response must be in proper legal form if you want the court to hear your
case. There may be a court form that you can use for your response You can find these court forms and more information at the California Courts
Online Self-Help Center (www.courtinfo.ca.gov/selfhelp), your county law library, or the courthouse nearest you. If you cannot pay the filing fee, ask
the court clerk for a fee waiver form. If you do not file your response on time, you may lose the case by default, and your wages, money, and property
may be taken without further warning from the court.
There are other legal requirements. You may want to call an attorney right away. If you do not know an attorney, you may want to call an attorney
referral service. If you cannot afford an attorney, you may be eligible for free legal services from a nonprofit legal services program. You can locate
these nonprofit groups at the California Legal Services Web site (www.lawhelpcalifornia.org), the California Courts Online Self-Help Center
(wwwcourtinfo.ca.gov/selfhelp), or by contacting your local court or county bar association. NOTE: The court has a statutory lien for waived fees and
costs on any settlement or arbitration award of $10,000 or more in a civil case. The court's lien must be paid before the court will dismiss the case.
!AVISO! Lo han demandado. Sino responde dentro de 30 dias, Ia corte puede decidir en su contra sin escuchar su version. Lea Ia informacion a
con tin uacion
T1ene 30 DiAS DE CALENOAR/0 despues de que le entreguen est a citacion y papeles legales para presentar una respuesta par escrito en esta
corte y hacer que se entregue una copia a/ demand ante. Una carta o una II am ada telefonica no lo protegen Su respuesta por escrito tiene que estar
en formato legal correcto si desea que procesen su caso en Ia corte. Es posible que haya un formu/ario que usted pueda usar para su respuesta.
Puede encontrar estos formularios de Ia corte y mas informacion en el Centro de Ayuda de /as Cortes de California (www.sucorte.ca.gov), en Ia
biblloteca de /eyes de su con dado o en Ia corte que le que de mas cerca. Sino puede pagar Ia cuota de presentacion, pida a/ secretario de Ia corte
que le de un formulario de ex en cion de pago de cuotas. Sino presenta su respuesta a tiempo, puede perder el caso par incumplimiento y Ia corte Je
podra quitar su sue/do, dinero y bienes sin mas advertencia.
Hay otros requisitos legales. Es recomendab/e que /lame a un abogado inmediatamente. Sino conoce a un abogado, puede llamar a un servicio de
remision a abogados. Sino puede pagar a un abogado, es posible que cumpla con los requisitos para obtener servicios legales gratuitos de un
program a de servicios legales sin fines de Iuera. Puede encontrar estos grupos sin fines de /ucro en e/ sitio web de California Legal Services,
(www.lawhelpcalifornia.org), en el Centro de Ayuda de las Cortes de California, (www.sucorte.ca.gov) o poniendose en con/acto con Ia corte o el
colegio de abogados locales. A VI SO: Por ley, Ia corte tiene derecho a reclamar las cuotas y los costas exentos por imponer un gravamen sabre
cualquier recuperacion de $10,000 o mas de valor recibida mediante un acuerdo o una concesion de arbitraje en un caso de derecho civil. Tiene que
pagar el gravamen de Ia corte antes de que Ia corte pueda desechar el caso.
CASE NUMBER
The name and address of the court is:
(Numero del Caso)
(EI nombre y direcci6n de Ia corte es):
The Superior Court of California, County of San Francisco
400 McAllister Street
San Francisco, California 94102
The name, address, and telephone number of plaintiffs attorney, or plaintiff without an attorney, is:
(EI nombre, Ia direcci6n y el numero de telefono del abog ado del demandante, o del demandante que no tiene abogado, es):
For MARINA COAST WATER DISTRICT:

3.

D
under

4.

on behalf of (specify):

D
D
D
D

CCP 416.10 (corporation)


CCP 416.20 (defunct corporation)
CCP 416.40 (association or partnership)

D
D
D

CCP 416.60 (minor)


CCP 416.70 (conservatee)
CCP 416.90 (authorized person)

other (specify):
by personal delivery on (date):
Pa e 1 of 1

Form Adopted for Mandatory Use


Judtctal CounCil of California

SUM-100 [Rev July 1, 2009]

SUMMONS

Code of Civil Procedure 41220, 465


www.cowtinfo.ca gov

2
3
4

5
6

JAMES L. MARKMAN (Bar No. 43536)


jmarkman@rwglaw.com
B. TILDEN KIM (Bar No. 143937)
tkim@rwglaw.com
KYLE H. BROCHARD (Bar No. 293369)
kbrochard@rwglaw.com
RICHARDS, WATSON & GERSHON, A P.C.
355 South Grand Avenue, 40th Floor
Los Angeles, California 90071-3101
Telephone: 213.626.8484
Facsimile: 213.626.0078

MARK FOGELMAN (Bar No. 5051 0)


8 mfogelman@ffiedmanspring.com
RUTH STONER MUZZIN (Bar No. 276394)
9 rmuzzin@friedmanspring.com
FRIEDMAN & SPRINGWATERLLP
10 33 New Montgomery Street, Suite 290
San Francisco, California 94105
11 Telephone: 415.834.3800
Facsimile: 415.834.1044
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Attorneys for Plaintiff
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MARINA COAST WATER DISTRICT
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SUPERIOR COURT OF THE STATE OF CALIFORNIA

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COUNTY OF SAN FRANCISCO

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16
17 MARINA COAST WATER DISTRICT,
18
Plaintiff,
v.
CALIFORNIA-AMERICAN WATER
20 COMPANY, a California corporation;
MONTEREY COUNTY WATER
21
RESOURCES AGENCY; and DOES 1
through 50, inclusive,
22
23
24
25

Defendants.

Case No.

COMPLAINT OF MARINA COAST


WATER DISTRICT FOR
(1) BREACH OF WARRANTIES AND
REPRESENTATIONS; (2) BREACH
OF CONTRACT; (3) PROMISSORY
ESTOPPEL;
(4) UNJUST ENRICHMENT; AND
(5) VIOLATION OF LAW OR CPUC
ORDERS OR DECISIONS
JURY TRIAL DEMANDED
[Exempt from fees - Gov. Code 61 03]

26
27
28
COMPLAINT OF MARINA COAST WATER DISTRICT

THE PARTIES AND VENUE


2

I.

Marina Coast Water District ("Marina"') is a public entity, and at all relevant

3 times was, a special district formed in 1960 under the County Water District Law, found at
4 Division 12 of the California Water Code, for the purpose of installing and operating a water
5 supply, water distribution system and wastewater collection system for the City of Marina and
6 neighboring communities within Monterey County ("the County").
7

2.

California American Water Company ("CAW") is, and at all relevant times was,

8 a California corporation regulated by the California Public Utilities Commission ("CPUC").


9

3.

Monterey County Water Resources Agency ("Agency") is a public entity, and at

I 0 all relevant times was, a Water Resources Agency created pursuant to the Monterey County

11

Water Resources Agency Act, found at Chapter 52 ofthe Appendix to West's Annotated

12 California Water Code.


13

4.

Agency is governed by the five elected members ofthe Monterey County Board

14 of Supervisors sitting as Agency's governing board ("Supervisors"). The Supervisors are


15 advised by an eleven-member Board of Directors.
16

5.

Marina does not know the true names and capacities of defendants sued herein as

17 DOES 1 through 50, inclusive, and therefore sues these defendants by such fictitious names.
18 Marina will amend this complaint to allege their true names and capacities when ascertained.
6.

The parties herein have agreed to file this action in the San Francisco Superior

20 Court. Pursuant to Code of Civil Procedure section 394( a), venue is proper in this judicial
21 district because this is an action brought by a local agency against another local agency, neither
22 ofwhich is located in this county.

23

FACTUAL ALLEGATIONS

24

LONG-STANDING WATER SUPPLY CRISIS

25

7.

In 1995, the State Water Resources Control Board ("State Water Board") issued

26 order No. WR 95-10, requiring CAW to adopt conservation measures and find replacement
27 sources sufficient to allow CAW to cease and desist diverting 70% of the water it had been
28 appropriating illegally annually from the Carmel River.

-1COMPLAINT OF MARINA COAST WATER DISTRICT

8.

In 1998, the Legislature enacted Assembly Bill ("AB") 1182, which recognized

2 the long-standing water supply crisis on the Monterey Peninsula and required the CPUC to
3 identify and implement a long-term alternative to a dam proposed by CAW.

9.

In September 2003, after an extensive scoping and public comment process, the

5 CPUC issued Decision ("D.") 03-09-022, dismissing CAW's original dam application, setting
6 forth procedures for conducting environmental review of a desalination project application
7 instead of a dam, and finding that the CPUC should be the lead agency under the California
8 Environmental Quality Act ("CEQA") for environmental review ofCA W's replacement water

9 supply project. Rehearing of the CPUC's lead agency decision was never requested and direct
10 court review of D.03-09-022 was never sought.
11

10.

In September 2004, pursuant to CPUC direction, CAW filed its Coastal Water

12 Project ("CWP") application, Application ("A.") 04-09-019, requesting the CPUC issue to it a
13 certificate of public convenience and necessity ("CPCN") authorizing CAW to construct and
14 operate a replacement water supply desalination project.

15

11.

Ultimately, CAW's CWP proposal in A.04-09-019 came to encompass three

16 desalination project alternatives: 1) CAW's initial proposal to use open ocean seawater intake
17 through the existing once-through cooling system at the Moss Landing power plant; 2) the
18 Regional Desalination Project ("RDP") alternative for a public-private partnership between
19 CAW, Agency and Marina using subsurface vertical or slant wells for intake of brackish
20 desalination source water; and 3) an exclusively CAW-owned North Marina alternative that
21 would be very similar to the RDP alternative, also using subsurface wells for intake, except that
22 the North Marina alternative would use slant wells only instead of vertical wells and would be
23 wholly-owned by CAW rather than a public-private partnership.
24
25

THE PROPOSED REGIONAL DESALINATION PROJECT


12.

Under the RDP alternative, Agency would own and operate the brackish

26 sourcewater intake wells, Marina would own and operate the desalination plant (required by a
27 Monterey County ordinance to be publicly-owned) and would take about one-sixth of the
28 product water to serve its own customers in lieu of drawing on its existing sources in the

-2COMPLAINT OF MARINA COAST WATER DISTRICT

Salinas Valley Groundwater Basin in Monterey County, for which Marina possessed water
2 rights, and CAW would own and operate the system for delivery of about five-sixths of the
3 desalinated product water to its own customers, as well as to storage facilities on the Monterey
4 Peninsula.

13.

The Carmel River is located outside the Salinas Valley Groundwater Basin.

6 CAW's Monterey Peninsula service area is located outside the Salinas Valley Groundwater
7 Basin. Marina's service area is located within the Salinas Valley Groundwater Basin. For the
8 RDP alternative, the source water wells for the RDP and the desalination facility would be
9 located in the Salinas Valley Groundwater Basin.
10

14.

The concept of the RDP alternative was finalized in a CPUC-mandated

11 alternative dispute resolution process which involved all parties to A.04-09-0 19 and which was
12 ultimately concluded in April of 2010. As envisioned in the proposed settlement, the RDP
13 would make use ofMarina's lawful right to take water from the Salinas Valley Groundwater
14 Basin, land owned by Marina that could accommodate source water wells for the desalination
15 process, a site for the desalination plant owned and/or controlled by Marina, a public entity, as
16 required by County ordinance, and Marina's right to dispose ofbrine, the waste product from
17 the desalination process, through the Outfall of the Monterey Regional Water Pollution Control
18 Agency.
~~
~~

19

15.

On October 20,2009, the State Water Board issued a Cease-and-Desist Order,

20 WR 2009-0060 (the "CDO"), modifying Order WR 95-10 and requiring CAW to undertake
21

additional specific measures to incrementally reduce the above-mentioned illegal diversions of

22 water from the Carmel River by no later than December 31, 2016.
23

16.

On December 17, 2009, in D.09-12-017, the CPUC certified the Final

24 Environmental Impact Report ("EIR") for a project that would provide a long-term water
25 supply for CAW's Monterey District and generate CAW's compliance with the above26 referenced orders of the State Water Board. Rehearing of the CPUC's EIR certification
27 decision was never requested, direct court review ofD.09-12-017 was never sought, and D.0928 12-017 became final and non-appealable in January 2010.

-3COMPLAINT OF MARINA COAST WATER DISTRICT

THE COLLINS CONFLICT OF INTEREST

2
3

17.

In or about early January of 2010, at the suggestion and insistence of Agency

4 Supervisor Louis Calcagno ("Calcagno") and Agency General Manager Curtis Weeks
5 ("Weeks''), Jim Heitzman, ("Heitzman") Marina's General Manager at the time, agreed that
6 RMC Water and Environment ("RMC"), an engineering and consulting firm employed by
7 Marina to assist with the RDP on behalf of Marina, CAW and Agency, could engage Stephen
8 Collins ("Collins"), then a member of Agency's Board ofDirectors, as a sub-consultant for the
9 RDP.
10

18.

In or about January of2010 Weeks represented to Heitzman that the Supervisors

11 and Weeks considered Collins' engagement as a paid sub-consultant crucial to obtaining


12 support among the agricultural community, including the Ag Land Trust ("Ag Land"), for
13 CPUC approval of the RDP, and Weeks insisted that Marina cooperate to have Collins engaged
14 for pay to work on issues involving the RDP.
15

19.

Heitzman questioned Weeks as to whether there would be a conflict of interest if

16 Collins remained on Agency's Board of Directors while he would be paid to advocate for the
17 RDP, and Heitzman was assured by Weeks that Agency had a legal opinion of County Counsel
18 that there would be no cont1ict of interest.
~~
~~

19

20.

Marina is informed and believes and based on that information and belief

20 alleges: Collins offered to submit his resignation from Agency's Board of Directors to Weeks
21 in or about January of2010 in order to avoid a conflict of interest while he worked as a sub22 consultant advocating for the RDP, and during 2010, Collins made at least one offer to resign
23 from Agency's Board of Directors in the presence of Supervisor Calcagno and Deputy County
24 Counsel Irven Grant ("Grant"). Collins did not resign from Agency's Board of Directors in
25 2010.
26

21.

In 2010, Weeks represented to Heitzman that the Board of Supervisors did not

27 want Collins to resign from Agency's Board of Directors, and Weeks assured Collins and
28 Heitzman that there would not be an actual conflict of interest if Collins followed the advice of

-4COMPLAINT OF MARINA COAST WATER DISTRICT


Agency in performing his duties as a member of Agency's Board ofDirectors.

22.

In or about January of 2010, Collins reached agreement on a sub-consulting

3 contract with RMC. On several occasions in 2010, Heitzman expressed concern to Weeks that
4 Collins might have a conflict of interest due to his position on Agency's Board ofDirectors.
5 Weeks consistently responded to Heitzman that there was an opinion of County Counsel that

6 authorized Collins' concurrent roles as an Agency Director and as a paid sub-consultant for
7 RMC's work on the RDP.

23.

Heitzman asked Weeks to provide a copy ofthe purported opinion of County

9 Counsel authorizing Collins to be paid working to advocate for the RDP while retaining his
10 position as an Agency Director. Neither Collins nor Weeks ever showed Heitzman a copy of
11 any written County Counsel opinion confirming Collins' lack of a conflict of interest, although
12 Heitzman repeatedly asked to see it.
13

THE REIMBURSEMENT, WATER PURCHASE AND RDP SETTLEMENT

14

AGREEMENTS

15

24.

On or about February 26, 2010, CAW, Agency and Marina entered into the

16 Reimbursement Agreement. Agency's Board of Supervisors approved the Reimbursement


17 Agreement during a regular public meeting on February 26, 2010.
18

25.

The Reimbursement Agreement provided for reimbursement by CAW of certain

19 Marina and Agency expenses related to the proposed RDP that were incurred prior to CPUC
20 approval of the RDP, and which were to be repaid by Marina and Agency from long-term RDP
21 financing, should the project be approved by Marina, Agency and the CPUC and thereafter
22 become operational.
23

26.

The Reimbursement Agreement was approved by the CPUC on August 12, 2010

24 in D.1 0-08-008. No court challenge was timely made to D.1 0-08-008. In reliance on CAW
25 and Agency's promises in the Reimbursement Agreement, Marina materially changed its
26 position to its detriment and incurred consulting, engineering and other expenses related to the
27 proposed RDP, in excess of$25,000, in an amount to be proved at trial.
28

27.

Subsequent to entering into the Reimbursement Agreement, CAW, Marina,


-5COMPLAINT OF MARINA COAST WATER DISTRICT

Agency and other parties. including Surfrider Foundation and the Public Trust Alliance,
2 reached a proposed settlement of A.04-09-0 19 and entered into the RDP Settlement
3 Agreement, which was intended to result in the implementation ofthe RDP.
4

28.

The RDP Settlement Agreement required the parties to request CPUC approval

5 of the RDP as the least costly. most environmentally benign, and only feasible replacement
6 water supply project of the three proposed CWP project alternatives that were analyzed in the
7 Final EIR.
8

29.

The RDP would be implemented by the Water Purchase Agreement ("WPA"), a

9 contract between Marina, Agency and CAW, which was executed by the parties in April 2010.
10 A true and correct copy of the fully executed WP A is attached hereto as Exhibit "A."
11
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31.

Also on April 5, 2010, Agency's Board of Directors, the appointed advisory

16 board of which Collins was a member, adopted a motion recommending that Agency approve

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17 the Settlement Agreement and the WPA, with Collins voting "yes."

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14 RDP Settlement Agreement, the WPA, and the RDP.

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13 approved Marina's participation in the RDP, conditioned on the CPUC's final approval of the

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12 EIR, Marina approved execution ofthe RDP Settlement Agreement and the WPA, and

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On April 5, 2010, by its Resolution 2010-20 and relying on the CPUC's Final

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32.

On April6, 2010, Agency, by action ofthe Board of Supervisors, passed and

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19 adopted Resolution 10-091, conditionally approving the Regional Desalination Project,


20 contingent on final approval by the CPUC, and authorized the execution ofthe RDP Settlement
21 Agreement and the WPA. Upon receiving said authorization Weeks executed the RDP
22 Settlement Agreement and the WPA.

In reliance on CAW and Agency's promises in the

23 WP A, Marina materially changed its position to its detriment and incurred consulting,
24 engineering and other expenses related to the proposed RDP, in excess of$25,000, in an
25 amount to be proved at trial.
26

33.

Agency, through its General Manager Weeks, and/or some or all of the

27 Supervisors were aware prior to April 6, 2010 that Collins had been retained by RMC in
28 January 2010 under a sub-consulting contract to do work related to the proposed RDP while he

-6COMPLAINT OF MARINA COAST WATER DISTRICT


1 simultaneously retained his seat on Agency's Board of Directors. CAW was also aware, as of
2 no later than May of 2010, that Collins was working as a sub-consultant to RMC while
3 retaining his position as a Director of Agency, but CAW took no steps until April of 2011 to
4 disclose this information to the CPUC.
5

34.

On April 7, 2010, the parties to the RDP Settlement Agreement filed a motion

6 with the CPUC, asking the CPUC to approve their settlement, the WPA and the RDP, and to
7 grant CAW a CPCN to construct the delivery facilities that, under the WPA, would constitute

8 theCA W-owned portion of the project (the "CAW Only Facilities").


9

35.

Pursuant to section 7.4 of the WPA, if, for any reason the RDP did not reach

10 Substantial Completion, CAW would be obligated to reimburse Marina for any and all costs or
11 expenses incurred by Marina in connection with the RDP, but CAW would not be required to
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12 reimburse Marina if the failure to reach Substantial Completion was due to an Event of Default

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13 of Agency, in which event Agency would be responsible for reimbursing Marina instead.
14 During 2010, CAW President Rob MacLean ("MacLean") also promised Heitzman that CAW
15 would reimburse Marina for its expenditures in connection with the RDP, according to the
16 CPUC's orders and whether or not the project was completed, and Marina relied on MacLean's
17 promise.
MARINA TERMINATES PAYMENTS FOR COLLINS

18
~~
~~

19

36.

In or about August of2010, Heitzman consulted with Marina Director of

20 Administrative Services, Kelly Cadiente, concerning Cadiente's detailed inspection of RDP21 related invoices from RMC, including charges for Collins' work.
22

37.

Upon Heitzman's subsequent detailed inspection of Collins' charges for work on

23 the RDP, in or about August 2010 Heitzman determined that Collins had not confined his work
24 for RMC to the agreed scope of outreach to the agricultural community.
25

38.

After Heitzman consulted with Cadiente, in or about August 2010, Marina

26 ceased paying RMC for work by Collins, and Marina reversed and took a credit for amounts
27 that Marina had already paid RMC for work by Collins, in order to ensure that Marina did not
28 pay for any of Collins' sub-consulting services.

-7COMPLAINT OF MARINA COAST WATER DISTRICT

39.

Also in or about August 2010, Heitzman informed Weeks and Lynde! Melton

2 ("Melton"), a principal at RMC, of Marina's action regarding invoices for Collins' sub3 consulting services and its refusal to pay for future Collins sub-consulting services.
4

40.

When Heitzman informed Weeks of Marina's refusal to pay RMC for Collins'

5 sub-consulting services, Heitzman again asked Weeks for the written legal opinion that
6 purportedly permitted Collins to work as a sub-consultant for RMC in relation to the proposed
7 RDP while remaining a Director of Agency.

41.

As with all of Heitzman's requests for such a written legal opinion, in August

9 2010 Weeks again failed to provide Heitzman with any written legal opinion concerning
10 Collins' work as a sub-consultant for RMC in relation to the proposed RDP while remaining a
11 Director of Agency.
12

42.

In or about August or September of 2010, Heitzman informed MacLean of

13 Marina's refusal to pay for Collins' sub-consulting services and the reason for its refusal, and
14 Marina reversed and fully credited CAW's prior reimbursements to Marina under the
15 Reimbursement Agreement of all of the Collins portions ofRMC's charges. As a result of
16 Heitzman and Marina's actions, all of Collins' charges to RMC in 2010 were paid by RMC
17 alone.

18

43.

On or about September 27,2010, at a regular public meeting of Agency's Board

19 of Directors, at the behest of County Counsel, Charles McKee ("McKee"), or Grant, Collins
20 recused himself from a vote due to his "ongoing" relationship with RMC.
21

44.

Later in that same September 27, 2010 meeting, both Collins and Director Silvio

22 Bernardi recused themselves from a vote due to their "ongoing" relationships with Ag Land.
23

45.

From January 2010 through November 2010, Collins billed RMC and was paid

24 by RMC for approximately $160,000 in sub-consulting services in support ofthe proposed


25 RDP. Collins' final invoice to RMC was issued in late November, 2010. Collins' sub26 consulting arrangement with RMC on the RDP was terminated by RMC on December 2, 2010.
THE CPUC APPROVES THE RDP

27

28

46.

On December 2, 2010, in D.10-12-016, which was released on December 3,

-8COMPLAINT OF MARINA COAST WATER DISTRICT

20 I 0 and modified by D.ll-04-035. the CPUC granted the motion to finally approve the RDP
2 Settlement Agreement. the RDP and the WPA.. issued a CPCN to CAW authorizing it to
~

3 construct and operate its portion of the project facilities (the "CAW Only Facilities'') necessary
4 to deliver water to the Monterey Peninsula and to comply timely with the State Water Boards

5 CDO.
6

47.

Pursuant to 0.10-12-016, theCA W Only Facilities, valued at approximately

7 $106 million. would be incorporated in the rate base used to calculate the water rates paid by
8 CAW customers. Pursuant to D .1 0-12-016 and the WP A, Agency's brackish source water
9 wells and Marina's desalination plant, valued at approximately $300 million together. would
10 not be incorporated into CAW's rate base; rather, the desalinated product water would be
11 provided to CAW at the public agencies' cost of production.
12

48.

Pursuant to 0.10-12-016 and the WPA, all Salinas Valley Groundwater Basin

13 sourcewater for the RDP would be withdrawn from the basin by a public agency pursuant to an
14 existing right of withdrawal from the basin, including offset against Marina's refraining in part
15 from its historic and ongoing pumping from the basin. D.l0-12-016 reaffirmed the CPUC's
16 certification of the Final EIR and the CPUC's role as CEQA lead agency for the RDP, and kept
17 proceeding A.04-09-0 19 open to retain jurisdiction over future project matters.
18

49.

In D.l 0-12-016, the CPUC permitted CAW to later apply for rate recovery of

19 amounts paid to Marina under the WPA, including Marina's $5.8 million in costs through
20 December 31, 2009 set forth in Exhibit D to the WPA, as well as Marina's RDP-related costs
21
22

going forward as advanced under the CAW Credit Line Agreement.


50.

The CPUC found in 0.10-12-016 that time was ofthe essence and the RDP

23 should commence without delay. The CPUC filed a lead agency CEQA Notice of
24 Determination ("NOD") with the State Clearinghouse on December 6, 2010. No court
25 challenges were timely made to D.10-12-016 or D.11-04-035.
26

51.

Marina's AprilS, 2010 RDP approval became final and effective after the

27 condition precedent of CPUC approval was satisfied on December 2, 2010. Marina filed its
28 own CEQA responsible agency NOD with the State Clearinghouse and the Monterey County

-9COMPLAINT OF MARINA COAST WATER DISTRICT

Recorder on December 10.2010. Marina filed an amended NOD on December 13.2010.


2 correcting a typographical error in its December 10, 2010 NOD. Based on information and
3 belief. Marina alleges that on or about December 10,2010, without Marina's knowledge.
4 Supervisor Calcagno met with Weeks. McKee, Collins, Monterey County Administrative
5 Officer Lew Bauman, and/or Supervisor Dave Potter ("Potter'') for the purpose of developing a
6 plan to remove Marina from the RDP.

Besides the Reimbursement Agreement, the Settlement Agreement and the

8 WPA, CAW, Agency and Marina also negotiated, and on or about January 11, 2011 entered
9 into: 1) the Regional Desalination Project Management Agreement with RMC; and 2) the
10 CAW Credit Line Agreement, in relation to CAW's obligations under section 7.1(c) of the
11

WP A. The Settlement Agreement, the Reimbursement Agreement, the WP A, the Regional

12 Desalination Project Management Agreement, and the CAW Credit Line Agreement are
13 collectively referred to herein as the "RDP Contracts" or "the Agreements."
14

53.

On January 11, 2011 the County Supervisors, in their capacity as the Board of

15 Supervisors for Agency, reconsidered and gave final approval to the RDP and the RDP
16 Contracts, and Agency's execution and performance ofthe RDP Contracts, including the WPA.
17 Agency filed a responsible agency NOD under CEQA on January 13, 2011.
18

54.

On or about March 29, 2011, pursuant to a draw request from Marina, CAW

19 advanced funds to Marina under the CAW Credit Line Agreement in the approximate amount
20 of $3 million. Marina expended that $3 million and substantial additional funds on RDP21

related costs including for technical, engineering and financing services, and in regard to

22 seeking a coastal development permit from the California Coastal Commission.


23

55.

No party or member of the public challenged the validity of the RDP Contracts

24 within the statute oflimitations provided by Government Code 53511, Water Code 30066,
25 or Water Code Appendix 52-39.
26
27

AGENCY AND CAW USE COLLINS AS AN EXCUSE


56.

In or about April 201 1, allegations concerning Collins' conflict of interest in his

28 dual role for the RDP were publicized in the local press, and Collins resigned from Agency's
-10COMPLAINT OF MARINA COAST WATER DISTRICT

Board of Directors on April 11, 2011.


2

57.

Following the publication of Collins' conflict of interest, in letters dated July 7.

3 2011, July 20, 2011 and August 20, 2011, Agency declared that the RDP Contracts were void.
4 Over the next several weeks, CAW, Agency and Marina agreed to engage in mediation to
5 attempt to resolve their differences concerning the RDP; their CPUC-sponsored mediation
6 continued through January 2012.

58.

Prior to the August 12, 2011 Coastal Commission meeting, Agency. Supervisor

8 Potter, Weeks, and/or others sought to influence the Coastal Commission to delay its decision
9 on an application for a coastal development permit for the RDP test wells, materially impeding

I 0 the implementation of the RDP.


11

59.

On September 28, 2011, CAW notified Marina by letter that, solely on the basis

12 of Agency's stated position in its counsel's letters of July 7 and 20 and August 22, 2011 that
13 the RDP Contracts were void, which CAW stated it viewed as an "anticipatory breach"' and a
14 "repudiation" of the RDP Contracts, CAW was exercising a purported right to "terminate" the
15 RDP Contracts.
16

60.

Marina responded to CAW by letter on September 29, 2011, stating its position

17 that CAW's attempt to terminate the RDP Contracts as well as its efforts to pursue mutually
18 exclusive alternate water projects constituted breaches of contract and violation of CPUC
19 decisions.
20
21

61.

InN ovember 2011, Collins was indicted on two charges of criminal conflict of

interest related to his simultaneous holding of a position on Agency Board of Directors and

22 acting as a sub-consultant to RMC in relation to its RDP activities , 1) related to the vote by
23 Agency Board of Directors to recommend Agency Board of Supervisors' approval of certain
24 RDP Contracts on April 5, 2010, and 2) related to the Board of Supervisors' earlier approval of
25 the Reimbursement Agreement; Collins was also indicted on other charges not related to the
26 RDP.
27

62.

On or about January 17, 2012, CAW by letter to Marina and Agency invoked

28 and reaffirmed its September28, 2011 letter, unilaterally stating that CPUC-sponsored
-11COMPLAINT OF MARINA COAST WATER DISTRICT

mediation had terminated and that CAW had terminated the RDP Contracts. whereby the sole
2 basis stated for CAW's purported termination was the alleged repudiation of the RDP Contracts
3 by Agency.
CAW UNVEILS ITS "NEW'' PROJECT

63.

On April 23, 2012, CAW filed a new application, A.12-04-0 19, requesting the

6 CPUC to grant it a CPCN to implement a project virtually identical to theCA W-only North
7 Marina alternative project that was rejected by the CPUC as inferior to the RDP in D.l 0-12-

8 016.
9

64.

CAW represented to the CPUC in A.12-04-0 19 that its new application would

10 rely on the same CPUC-certified EIR that the CPUC relied upon in approving the RDP and that
11 was the subject of a CEQA lawsuit filed by Ag Land against Marina. On April 30, 2012
12 Marina moved to intervene in A.12-04-019. Marina's motion to intervene in A.l2-04-019 was
13 granted over CAW's objection.
14

65.

Between May 8, 2012 and May 23, 2012, in correspondence copied to County

15 Counsel, CAW urged Marina to abandon its defense ofthe Ag Land lawsuit, including pursuit
16 of relief from the Court of Appeal. Marina responded to CAW and stated its position that, in
17 order to mitigate its damages and uphold its RDP Contract obligations, it was required to
18 continue its course of defending the Ag Land CEQA case, to uphold the validity of the RDP
19 EIR, avoid a potential claim that Ag Land was the prevailing party in the litigation for purposes
20 of recovering attorney fees and costs, and vindicate the CPUC' s exclusive jurisdiction over the
21 RDP.
22

66.

On or about June 28,2012, without conceding that such a procedure was

23 required, Marina presented Agency with a Government Code claim for damages in an amount
24 potentially in excess of $20 million (the "Marina Claim"). On or about September 18, 2012,
25 CAW presented Marina with a Government Code claim for damages in an amount in excess of
26 $6 million (the "CAW Claim"). CAW never presented a Government Code claim to Agency.

27
28

THE DECLARATORY RELIEF ACTION

67.

On October 4, 2012, CAW filed a complaint for declaratory relief against Marina
-12COMPLAINT OF MARINA COAST WATER DISTRICT

1 and Agency in the Monterey County Superior Court. Marina timely answered and also filed a
2 cross-complaint, seeking declaratory relief as to certain of its affirmative defenses to Cal-Am's
3 complaint.

68.

CAW's complaint asserted two causes of action, seeking: 1) a determination of

5 the validity ofthe RDP Contracts; and, 2) ifthe RDP Contracts were determined to be valid
6 and not void, a determination that CAW had a right to terminate the RDP Contracts ''under the
7 doctrine of anticipatory repudiation."

69.

On or before December 4, 2012, CAW and Agency, along with the County,

9 executed a settlement agreement, purporting to settle all claims related to the October 4, 2012
10 complaint as among CAW and Agency.
11

70.

As a part of their December 4, 2012 settlement, CAW, Agency and the County

12 agreed to waive application of the provision of section 10.72 of the Monterey County Code of
13 Ordinances that requires any desalination facility in Monterey County to be owned by a public
14 entity.
15

71.

Marina is informed and believes that CAW's filing of its complaint for

16 declaratory relief, and CAW's, the County's and Agency's entry into their December 4, 2012
17 settlement agreement constituted a collusive effort to damage Marina and gain an unfair
18 litigation advantage.
72.

On December 21, 2012, the Monterey County Superior Court granted Marina's

20 motion for transfer of venue and transferred the case to the San Francisco Superior Court. On
21

January 29, 2013, the San Francisco Superior Court docketed the transferred case as Case No.

22 CGC-13-528312.
23

73.

Marina and Agency entered into an agreement tolling the time limits for

24 commencement of litigation on all unexpired causes of action between them, which was
25 effective beginning January 8, 2013 and, following intervening extensions, expired on June 30,
26 2015. Marina and CAW entered into an agreement tolling the time limits between them for
27 commencement of litigation related to the CAW Claim, which was effective beginning April
28 15,2013 and, following intervening extensions, expired on June 30, 2015.
-13COMPLAINT OF MARINA COAST WATER DISTRICT

74.

The San Francisco Superior Court granted summary adjudication in favor of

2 Marina on CAW's first cause of action on February 25,2014, holding. among other things. that
3 the Validating Act applied to preserve the validity of the RDP Contracts as against CAW's
4 complaint.

75.

Agency sought leave to file, and on April 14, 2014 did file. a cross-complaint

6 seeking to invalidate the RDP Contracts due to Collins' conflict of interest.


7

76.

Agency knew the facts underlying Collins' conflict well before March 11, 2011

8 and could have asserted them at any time after April of 2010, but it failed to do so.

77.

CAW knew the facts underlying Collins' conflict well before March 11, 2011

10 and could have asserted them at any time after May of2010 or September of2010, at the latest,
11 but it failed to do so.
12

78.

The San Francisco Superior Court held a bench trial on December 2-5, 2014 on

13 the issue of contract validity.


14

79.

In 0.15-03-002, issued on March 18, 2015, the CPUC approved CAW's

15 payments to Agency under the Reimbursement Agreement and 0.10-08-008 and it authorized
16 CAW's recovery ofthose payments in rates, denying without prejudice CAW's request for
17 approval ot: and authorization to recover in rates, amounts it had paid to Agency under the
18 WPA, the CAW Credit Line Agreement and D.1 0-12-016.
~~
~~

19

80.

After trial, the San Francisco Superior Court determined in a decision dated

20 April29, 2015 that Collins violated Government Code section 1090 and that, although
21 Government Code 53511, Water Code 30066, and Water Code Appendix 52-39 applied
22 to the RDP Contracts other than the RDP Settlement Agreement, Government Code
23 1092(b)' s four-year statute oflimitations for a conflict of interest should control, rather than
24 the sixty-day statute oflimitations provided by Government Code 53 511, Water Code
25 30066, or Water Code Appendix 52-39, and that therefore Agency should prevail on its
26 cross-complaint (except as to the CAW Credit Line Agreement, as to which the San Francisco
27 Superior Court found that Agency- though it had asserted invalidity- did not present evidence
28 of invalidity}.
-14COMPLAINT OF MARINA COAST WATER DISTRICT

- - - -

81.

------

-------------

-------------------------

The San Francisco Superior Court also determined in an order dated April 29,

2 2015 that, in light ofits decision on Agency's cross-complaint it should reconsider its decision
3 to grant summary adjudication in favor of Marina on CAW's first cause of action, and it
4 vacated its February 25, 2014 order in that regard,

82,

On June 1, 2015, the San Francisco Superior Court entered Judgment on CAW's

6 complaint, Marina's cross-complaint and Agency's cross-complaint declaring each of the


7 Reimbursement Agreement, WPA, RDP Settlement Agreement and Project Management
8 Agreement void, and declaring the CAW Credit Line Agreement not void,

83,

On June 30,2015 Marina filed its Notice of Appeal ofthe June 1, 2015

10 Judgment ofthe San Francisco Superior Court in Case No. CGC-13-528312.

11

84.

As of June 11, 2015, Marina estimated its necessary expenditures on the RDP

12 pursuant to the RDP Contracts, not including computation of interest accrued and accruing, was
13 $18,336,518.
14

85.

On June 30, 2015 Marina demanded payment from CAW of amounts due to

15 Marina for its necessary expenditures on the RDP, as alleged herein whether under sections 7.4
16 and 14 ofthe WPA or otherwise, in the amount Marina estimated was due as of June 11,2015.
17

86.

On June 3 0, 2015 Marina demanded payment from Agency of amounts due to

18 Marina for its necessary expenditures on the RDP, as alleged herein whether under sections 7.4
19 and 14 of the WPA or otherwise, in the amount Marina estimated was due as of June 11, 2015.
20

87.

To date, Marina has not received payment from either of CAW or Agency in

21 response to its demands of June 30,2015.


22

88.

In reasonable reliance on the various promises, requirements and representations

23 incorporated in the RDP Contracts, Marina justifiably expended substantial sums attempting in
24 good faith to perform its obligations under the RDP Contracts, to implement the RDP, and to
25 defend its actions taken in the course of its good faith attempts.
26

89.

Marina's expenditures on the RDP included technical and engineering costs,

27 project management costs, legal costs and funding costs, all ofwhich were to be reimbursed or
28 repaid to Marina by CAW or, in the case of a material breach by Agency, to be reimbursed or
-15COMPLAINT OF MARINA COAST WATER DISTRICT

repaid to Marina by Agency, pursuant to section 7.4 ofthe WPA.


2

90.

Further, due to CAW waiting until after March 2011 to question the validity of

3 the RDP Contracts in light of Collins' apparent conflict. and then refusing to implement the
4 RDP based upon that apparent conflict, despite its full knowledge of the facts underlying the

5 Collins matter for many months before that time, Marina has sustained actual damages, in the
6 approximate amount of $18,000,000 plus interest, to be proven at trial.
7

91.

Further, due to Agency waiting until after March 20 11 to question the validity of

8 the RDP Contracts in light of Collins' apparent conflict, and then refusing to implement the
9 RDP based upon that apparent conflict, despite its full knowledge of the facts underlying the
10 Collins matter for many months before that time, Marina has sustained actual damages, in the
11
z

'2
,_

"'a.0""
"'
0
u

12

approximate amount of $18,000,000 plus interest, to be proven at trial.


92.

To the extent that any of the causes of action set forth herein may be inconsistent

13 or mutually exclusive, Marina pleads them in the alternative.


14

FIRST CAUSE OF ACTION

15

(Breach ofWarranties and Representations -WPA)

16

(Against Agency and Does 1-50)

17

93.

Marina hereby incorporates by reference the allegations set forth in paragraphs 1

18 through 92, inclusive.

94.

When Weeks executed the WPA on behalfofAgency on April6, 2010, Agency

20 represented and warranted under section 17 ofthe WPA that it had the legal capacity and
21
22

authority to enter into that contract.

95.

To the extent that Collins' actions on April 5, 2010 or at any other time

23 constituted an illegal conflict of interest depriving Agency from validly contracting with
24 Marina and were known as such by Weeks, Weeks' execution misrepresented Agency's
25 capacity and authority to enter into the WP A and thereby breached its warranty to Marina.

26

96.

When Agency performed its pre-effective date obligations under the WP A

27 beginning on April 6, 2010 and continuing through January 11, 2011, it was acting pursuant to
28 its representations and warranties under section 17 of the WP A that it had the legal capacity
-16COMPLAINT OF MARINA COAST WATER DISTRICT

and authority to enter into that contract.


2

97.

To the extent that Collins' actions on April 5. 2010 or at any other time

3 constituted an illegal conflict of interest, Agency continued to misrepresent its capacity and
4 authority to enter into the WPA and thereby breached its warranty to Marina.

98.

When Agency re-approved the RDP and the WPA on .January 11, 2011, it again

6 represented and warranted under section 17 of the WP A as executed by Weeks that it had the
7 legal capacity and authority to enter into that contract.

99.

On January 11, 2011, Agency again misrepresented its capacity and authority to

9 enter into the WP A and thereby breached its warranty to Marina.


10

100.

Agency's breach of its warranty to Marina in the WPA has damaged Marina in

11 an amount to be determined at trial.


12

SECOND CAUSE OF ACTION

13

(Breach of Contract- Repudiation)

14

(Against Agency and Does 1-50)

15

101.

Marina hereby incorporates by reference the allegations set forth in paragraphs 1

16 through 100, inclusive.


17

102.

Marina in good faith performed its obligations under each of the RDP Contracts

18 through at least January 16, 2012, except for those obligations for which performance was
19 excused or rendered impracticable or impossible.
20

103.

By its letters of .July 7 and 20, 2011 and August 22, 2011, and by its actions as

21 alleged herein, Agency presented to Marina a clear indication that Agency did not intend to
22 perform its obligations under any ofthe RDP Contracts, including but not limited to its
23 obligations under sections 7.4 and 14 ofthe WPA to reimburse Marina for any and all costs
24 or expenses incurred in connection with the WP A, if the fault for the RDP failing to reach
25 Substantial Completion was the sole fault of Agency.
26

104.

Agency's repudiation ofthe RDP Contracts as expressed in its letters and

27 implied by its actions was not justified or excused.


28

105.

Agency's breach, by its failure and refusal to perform the RDP Contracts, has
-17COMPLAINT OF MARINA COAST WATER DISTRICT

damaged Marina in a minimum amount of $18 million dollars, or an amount to be proven at


2 trial.

THIRD CAUSE OF ACTION

(Breach of Contract-Repudiation)

(Against CAW and Does 1-50)

106.

Marina hereby incorporates by reference the allegations set forth in paragraphs 1

7 through 105, inclusive.


8

107.

Marina in good faith performed its obligations under each ofthe RDP Contracts

9 through at least January 16, 2012, except for those obi igations for which performance was
10 excused, impossible or impracticable.
11

108.

By its letters ofSeptember 28,2011 and January 17,2012, CAW purported to

12 unilaterally terminate each of the RDP Contracts. including the provisions of sections 7.4 and
13 14 ofthe WPA, whereby CAW was obligated to reimburse Marina for any and all costs or
14 expenses incurred in connection with the WPA, unless the fault for the RDP failing to reach
I5 Substantial Completion was the sole fault of either Agency or Marina. CAW's purported
I6 unilateral termination of the RDP Contracts constituted a clear indication that CAW did not
17 intend to perform its obligations under any of the RDP Contracts, including its obligations
I8 under sections 7.4 and 14 ofthe WPA.
109.

CAW's failure and refusal to perform the RDP Contracts, including its

20 obligations under sections 7.4 and 14 of the WP A, constituted a material breach of each of
21 those contracts.
22

II 0.

CAW's breach, by its failure and refusal to perform the RDP Contracts, has

23 damaged Marina in a minimum amount of $18 million dollars, or an amount to be proven at


24 trial.
25

FOURTH CAUSE OF ACTION

26

(Promissory Estoppel)

27

(Against CAW, Agency and Does 1-50)

28

11I.

Marina hereby incorporates by reference the allegations set forth in paragraphs 1


-18COMPLAINT OF MARINA COAST WATER DISTRICT

through 11 0, inclusive.
2

112.

In entering into each ofthe RDP Contracts. Marina in good faith believed that it

3 was entering into a valid contract.


4

113.

In entering into each of the RDP Contracts, Marina in good faith relied on the

5 promises of CAW and the Agency in each of those contracts, including their promises to cany
6 out those contracts and to cooperate in implementing the RDP; Marina relied as well on
7 MacLean's promise to Heitzman that CAW would reimburse Marina for its expenditures in
8 connection with the RDP.
9

114.

According to the April 29, 2015 decision ofthe San Francisco Superior Court,

10 the Reimbursement Agreement, the Settlement Agreement, the WP A and the RDP Project
11 Management Agreement were void ab initio.
12

115.

Nonetheless, Marina relied on the promises of CAW and the Agency in entering

13 into each ofthe RDP Contracts, in performing the RDP Contracts, including incunence of
14 RDP-related costs in a minimum amount of $18 million, or an amount to be proven at trial.
15

116.

Due to its reliance on the promises of CAW and the Agency in entering into each

16 ofthe RDP Contracts, including those later found by the San Francisco Superior Court to be
17 void ab initio, Marina incurred damages, in a minimum amount of $18 million, or an amount to
18 be proven at trial.
19

117.

By this complaint, and notwithstanding the decision ofthe San Francisco

20 Superior Court finding the RDP Contracts to be void ab initio, which Marina has appealed and
21 which thus is not final, Marina seeks to enforce the promises made by CAW and the Agency, in
22 the interests ofjustice.
23

FIFTH CAUSE OF ACTION

24

(Quasi-Contract I Unjust Enrichment)

25

(Against CAW and Does 1-50)

26

118.

Marina hereby incorporates by reference the allegations set forth in paragraphs 1

27 through 117, inclusive.


28

119.

In April of2012, CAW demanded and RMC provided to CAW RMC's work
-19COMPLAINT OF MARINA COAST WATER DISTRICT

product related to the RDP, which work had been paid for in substantial part by Marina.
2

120.

CAW received a benefit from Marinas good faith performance under the RDP

3 Contracts, including but not limited to, Marinas expenditures on consulting and engineering
4 work product intended to facilitate the implementation of the RDP, and Marina's expenditures
5 on its successful defense of the Ag Land CEQA litigation.
6

121.

Marina reasonably and justifiably expected to be compensated for its RDP-

7 related expenditures.
8

122.

CAW would be unjustly enriched if Marina were not compensated for its RDP-

9 related expenditures.

2
,_
;;i
0
0..

10

SIXTH CAUSE OF ACTION

11

(Breach of the Implied Covenant of Good Faith and Fair Dealing)

12

(Against CAW, the Agency and Does 1-50)

13

123.

Marina hereby incorporates by reference the allegations set forth in paragraphs 1

""
u
0

14 through 122, inclusive.


15

124.

The RDP Contracts, and the legal relationships between Marina, CAW and the

16 Agency, contained an implied covenant of good faith and fair dealing, which provides that each
17 party would deal fairly with the other, and that no party would do anything to deprive the other
18 parties of the benefits of the agreements.
~~
~~

19

125.

By the acts alleged in this complaint, including by their failure to carry out each

20 of the RDP Contracts in good faith and/or by their attempts to frustrate Marina's good faith
21 performance of the RDP Contracts, CAW and the Agency have breached the implied covenant
22 of good faith and fair dealing and deprived Marina of the benefits of the RDP Contracts.
23

126.

CAW and the Agency's violation of the implied covenant of good faith and fair

24 dealing have damaged Marina in an amount and to an extent to be determined at trial.


25

SEVENTH CAUSE OF ACTION

26

(Public Utility Violation of Law, or Orders or Decisions ofthe CPUC)

27

(Against CAW and Does 1-50)

28

127.

Marina hereby incorporates by reference the allegations set forth in paragraphs 1


-20COMPLAINT OF MARINA COAST WATER DISTRICT

1 through 126. inclusive.


2

128.

Section 2106 of the Public Utilities Code provides that a public utility shall be

3 liable for loss, damage or injury to those affected by the utility's violation of law or of an order
4 or decision ofthe CPUC.
5

129.

Section 2106 of the Public Utilities Code provides that exemplary damages may

6 be awarded by a court against a public utility that is liable for loss, damage or injury to those
7 affected by the utility's violation of law or of an order or decision of the CPU C.
8

130.

By its failure to honor its commitments in the Commission-approved RDP

9 Contracts, CAW violated 0.10-12-016 and 0.10-08-008.


10

131.

By its failure to honor its commitments in the Commission-approved RDP

11 Contracts, CAW damaged Marina. as alleged herein.


12

132.

By its failure to pay Marina's RDP-related costs through December 31, 2009 in

13 the approximate amount of$5.8 million, as directed by the CPUC in 0.10-12-016, CAW
14 violated D.10-12-016.
15

133.

By its failure to pay Marina's RDP-related costs incurred after January 11, 2011,

16 as directed by the CPUC in D.! 0-12-016, Cal-Am violated D.l 0-12-016.


17

134.

CAW's violation of D.1 0-12-016 damaged Marina, as alleged herein.

18

135.

By its failure to inform the CPUC of Collins' apparent conflict of interest during

19 2010 and 2011, CAW violated the CPUC's Rule of Practice and Procedure 1.1 (Cal. Code
20 Regs., tit. 20, section 1.1 (''Rule 1.1'') and 0.10-12-016.
21

136.

By its failure to inform the CPUC of Collins' apparent conflict of interest during

22 2010 and 2011, CAW damaged Marina, as alleged herein.


23

13 7.

Having indicated to Marina on September 28, 2011 a lack of intent to implement

24 the RDP as ordered by the CPUC, CAW then falsely represented to the CPUC in a filing on
25 November 28, 2011 that it was "not seeking to implement a different project" from the RDP,
26 thereby providing the CPUC with the false impression that CAW did not decide to abandon the
27 RDP until2012. This constituted another violation ofRule 1.1 by CAW.
28

138.

By making its false representations to the CPUC, CAW misled the CPUC and
-21COMPLAINT OF MARINA COAST WATER DISTRICT

prevented performance ofthe RDP Contracts, thereby damaging Marina.


2

139.

As a public water district in Monterey County, Marina was damaged by CAW.

3 Marina is entitled to damages from CAW on account of CAW's violations of Rule 1.1. D.1 04 08-008 and D.10-12-016.

PRAYER FOR RELIEF

WHEREFORE, plaintiff Marina Coast Water District prays for judgment as

7 follows:

1.

Marina be awarded compensatory damages from Agency and/or CAW for their

9 respective breach of warranty and/or breach of contract;


10

2.

In the alternative, Marina be awarded compensatory damages from CAW and/or

11 Agency on Marina's Fourth and Fifth Causes of Action, as permitted by law;


12

3.

Marina be awarded exemplary damages from CAW for the latter's violations of

13 CPUC Rule ofPractice and Procedure 1.1, D.10-08-008 and D.10-12-016.


14

4.

That Marina recover from defendants its costs of suit herein, including attorney's

15 fees incurred to the extent allowed by law.


16

For such other relief as the Court may deem just and proper in the circumstances.

17

JURY DEMAND

18

Marina demands trial by jury in this action.


20
21
22
23
24
25

July 30, 2015

RICHARDS, WATSON & GERSHON


a Professional Corporation
FRIEDMAN & SPRINGWATER, LLP

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By:

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. _____;

t -JAMES L. MARKMAN
Attorneys for Marina Coast Water District

26
27
28

-22COMPLAINT OF MARINA COAST WATER DISTRICT

Exhibit A

WATER PURCHASE AGREEMENT

By and Among

MARINA COAST WATER DISTRICT,

MONTEREY COUNTY WATER RESOURCES AGENCY

And

CALIFORNIA-AMERICAN WATER COMPANY

Dated as of April 6, 20 I 0

100500094 DOC v 2}

Exhibit A

TABLE OF CONTENTS

1.

Governing Tenns .................................................................................................. 3

2.

Term ............................................................... :.................... .-............................... 22

3.

Project Facilities and CAW Facilities Description ............................................. 23

4.

Design, Engineering, Construction and Permitting ofthe Regional Desalination


Project. ................................................................................................................ 24

5.

Ownership ofMCWD, MCWRA, and CAW Facilities ..................................... 33

6.

Advisory Committee ........................................................................................... 34

7.

Financing of the Project Facilities ...................................................................... 39

8.

Brackish Source Water Supply and Management .............................................. 44

9.

Water Supply Obligations and Deliveries .......................................................... .46

10.

Measurement of Water ........................................................................................ 51

11.

Payment Provisions ............................................................................................. 52

12.

Compliance with Laws ....................................................................................... 59

13.

No MCWD or MCWRA Responsibility for Delivery and Distribution of Water by


CAW ................................................................................................................... 59

14.

Indemnification; Fees and Expenses ................................................................... 59

15.

Casualty Loss ...................................................................................................... 60

16.

Insurance ............................................................................................................. 61

17.

Representations and Warranties .......................................................................... 63

18.

Assignment. ........................................................................................................ 64

19.

Dispute Resolution .............................................................................................. 64

20.

Events of Default and Remedies ......................................................................... 66

21.

Representatives; Notices ..................................................................................... 68

22.

Cessation of Delivery and Use ............................................................................ 69

23.

Limitation on Recourse ......... :............................................................................. 69

24.

Force Majeure ..................................................................................................... 69

25.

Conditions Precedent .......................................................................................... 69

26.

Other Provisions .................................................................................................. 70

{00500094.DOC v 2)

THIS WATER PURCHASE AGREEMENT ("Agreement"), dated as of April 6, 20 I 0


(the "Execution Date"), is by and among the MARINA COAST WATER DISTRICT, a County
Water District organized and operating under the County Water District Law, Sections 30000
and following of the California Water Code ("MCWD"), having its principal address at II
Reservation Road. Marina, CA 93933; MONTEREY COUNTY WATER RESOURCES
AGENCY ("MCWRA"), a duly constituted Water Resources Agency created pursuant to the
Monterey County Water Resources Agency Act, found at California Water Code Appendix
Chapter 52, having its principal address at 893 Blanco Circle, Salin~s, CA 9390 I; and
CALIFORNIA-AMERICAN WATER COMPANY, a California corporation and regulated
public utility ("CAW"), having its principal address at I 033 B A venue, Suite 200, Coronado, CA
92118. Each ofMCWD, MCWRA and CAW are referred to herein individually as a "Party" and
collectively as the "Parties."
RECITALS:
MCWD provides water service within a service area, as may be subsequently
A.
amended or revised from time to time without the approval of the other Parties, located in
Monterey County, California, that includes lands within the City of Marina and certain other
areas within Monterey County, including lands on the former Fort Ord (the "MCWD Service
Area"). The current MCWD Service Area is depicted on Exhibit A attached hereto.
B.
MCWD acts on behalf of persons served within the MCWD Service Area to
furnish water for beneficial use, to protect the groundwater underlying MCWD, and to conserve
the water supply for future as well as present use.
MCWRA's boundaries are coextensive with the external boundaries ofthe
C.
County of Monterey, and within those boundaries, MCWRA is responsible under the Agency
Act, among other things, to increase, and prevent the waste or diminution of the water supply,
including the control of groundwater extractions as required to prevent or deter the loss of usable
groundwater through intrusion of seawater and the replacement of groundwater so controlled
through the development and distribution of a substitute surface supply, and to prohibit
groundwater exportation from the Salinas Basin.
D.
CAW provides water service in various areas within California, including a
service area in Monterey County (as may be subsequently amended or revised from time to time
without the approval of the other Parties) (the "CAW Service Area"), adjacent to MCWD Service
Area and within the boundaries of MCWRA. The current CAW Service Area is depicted in
Exhibit B attached hereto.
E.
On September 20, 2004, CAW filed Application No. 04-09-019 ("Application 0409-0 19") seeking approval of the Coastal Water Project (as defined in Application 04-09-0 19)
from the California Public Utilities Commission ("CPUC"). Application No. 04-09-019 was
amended on July 14, 2005, and the application remains pending before the CPUC.
F.

MCWD, MCWRA and CAW are active parties in Application No. 04-09-019.

G.
On January 30, 2009, the CPUC, acting as Lead Agency under CEQA, issued a
Draft Environmental Impact Report ("DEIR," State Clearinghouse No. 200610 I 04) analyzing
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the potential environmental impacts of a project designated the "Coastal Water Project" and
alternatives to it. The CPUC duly received and analyzed extensive public comment on the
DEIR. MCWD, MCWRA, and CAW provided comments on the DEIR.
H.
On December 17,2009, in Decision No. 09-12-017 which was issued in
Application 04-09-019, the CPUC, as Lead Agency, after considering all relevant environmental
documents, duly certified a Final Environmental hnpact Report. The Final Environmental
Impact Report described and studied three alternative projects which are being considered for
approval by the Commission in the proceeding- the Moss Landing Project, the North Marina
Project, and a third alternative project variously referred to as the "Regional Alternative" and the
"Regional Project" and "Phase I ofthe Regional Project." The principal element of that latter
alternative project is a regional desalination water supply project, with other smaller elements.
This Agreement does not contemplate or address any elements other than "Phase I of the
Regional Project."

I.
On April 5, 20 I 0, MCWD, and on April 6, 20 I 0, MCWRA, each acting as a
Responsible Agency under CEQA, and having fully considered all relevant environmental
documents, including the Final Environmental Impact Report, approved this Agreement for a
regional desalination project subject to CPUC approval, as more specifically described in Article
3 (the "Regional Desalination Project").
J.
The Regional Desalination Project contemplates the development, construction
and operation of a regional desalination water supply project as described and analyzed in the
FEIR.
MCWD, MCWRA and CAW, individually and collectively, have determined and
K.
found that the Regional Desalination Project is the least costly of the proposed alternative
projects, the most feasible ofthose projects, and is in the best interests ofthe customers served
by each of MCWD and CAW and that the Regional Desalination Project as implemented by this
Agreement serves the public interest and is consistent with the Agency Act. The Parties have
also determined that the Regional Desalination Project best conserves and protects public trust
assets, resources and values impacted by providing a water supply.

L.
CAW has determined that purchasing Product Water from MCWD will allow
CAW to provide its customers inCA W's Service Area with Product Water at a significantly
lower cost than by means of any ofthe other proposed alternative projects described in the FEIR.
MCWD, MCWRA, and CAW, as part of a settlement of issues pending in
M.
Application 04-09-019, as set forth in that certain Settlement Agreement to be filed with the
CPUC in Application 04-09-019 (the "Settlement Agreement"), have negotiated this Agreement
and certain other agreements contemplated by the Settlement Agreement.
N.
The Parties intend that the development, construction and operation of the
Regional Desalination Project occur in accordance with the FEIR and that MCWD and MCWRA
each act as a Responsible Agency in accordance with CEQA to implement the Regional
Desai ination Project.

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