Complaint Mcwd Cgc 15 547125 7-30-15

8/20/2019 Complaint Mcwd Cgc 15 547125 7-30-15

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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: 1 Image: 05014377

COMPLAINT

MARINA COAST WATER DISTRICT VS. CALIFORNIA-AMERICAN WATER

COMPANY A CALIFORNIA ET AL

001C05014377

Instructions

Please place this sheet on top o the document to be scanned.


2/30

SUMMONS

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

FOR COURT USE ONLY

(SOLO P R USO DE LA CORTE)

SUM 100

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 cour t 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. I f 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/ demandante. Una carta o una IIam 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 tiempo, puede perde r

el

caso

par

incumplimiento y

Ia

corte

e

podra quitar su sue/do, dinero y bienes sin mas advertencia.

Hay otros requisi tos legales. Es recomendab/e que /lame a

un

abogado inmediatamente. Sino conoce

un

abogado, puede ll amar a un servicio de

remision a abogados. Sino puede

pagar un

abogado, es posible que cumpla con los requisitos para obtener servicios legales gratuitos de un

programa de servicios lega les sin fines de Iuera. Puede encontra r 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 exen tos 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.

The name and address of the court is:

EI nombre y direcci6n de Ia corte es):

The Superior Court of California, County of San Francisco

400

McAllister

Street

San

Francisco, California 94102

CASE

NUMBER

(Numero del Caso)

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 abogado del demandante, o del demandante que no tiene abogado, es):

For MARINA

COAST

WATER DISTRICT:

Form Adopted for Mandatory Use

Judtctal oun il of alifornia

SUM-100 [Rev July 1 2009]

3. D

on

behalf of (specify):

under D CCP 416.10 (corporation)

D CCP 416.20 (defunct corporation)

D

CCP 416.40 (association or partnership)

D other (specify):

4. D by personal delivery

on

(date):

SUMMONS

D

D

D

CCP 416.60 (minor)

CCP 416.70 (conservatee)

CCP 416.90 (authorized person)

Pa e 1 of 1

Code of Civil Procedure§§ 41220, 465

www cow·tinfo ca

gov


3/30

JAMES L. MARKMAN Bar No. 43536)

[email protected]

2 B. TILDEN KIM Bar No. 143937)

[email protected]

3 KYLE

H

BROCHARD Bar No. 293369)

[email protected]

4 RICHARDS, WATSON GERSHON, A P.C.

355 South Grand Avenue, 40th Floor

5 Los Angeles, California 90071-3101

Telephone: 213.626.8484

6 Facsimile: 213.626.0078

7

MARK FOGELMAN Bar No. 5051 0)

8

[email protected]

RUTH STONER MUZZIN Bar No. 276394)

9 [email protected]

FRIEDMAN SPRINGWATERLLP

10 33 New

Montgomery Street, Suite 290

San Francisco, California 94105

Telephone: 415.834.3800

Facsimile: 415.834.1044

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Attorneys for Plaintiff

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13 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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•

THE P RTIES ND 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

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

24

25

7

F CTU L LLEG TIONS

LONG-STANDING WATER SUPPLY CRISIS

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.

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COMPLAINT

OF

MARINA

COAST

WATER DISTRICT


5/30

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.

4

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 ofCAW 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.

1 1

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

12.

THE PROPOSED REGIONAL DESALINATION PROJECT

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

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COMPLAINT OF MARINA COAST WATER DISTRICT


6/30

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.

5

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.

1

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

20

21

22

23

24

25

26

27

28

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

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

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

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

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

Environmental Impact Report ( EIR ) for a project that would provide a long-term water

supply for CAW s Monterey District and generate CAW s compliance with the above

referenced orders of the State Water Board. Rehearing of the CPUC s EIR certification

decision was never requested, direct court review ofD.09-12-017 was never sought, and D.09-

12-017 became final and non-appealable in January 2010.

-3-



7/30

2

3

17.

THE COLLINS CONFLICT OF INTEREST

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.

1

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

21

22

23

20. Marina is informed and believes and based on that information and bel ief

alleges: Collins offered to submit his resignation from

Agency s

Board of Directors to Weeks

in or about January of2010 in order to avoid a conflict

of

interest while he worked as a sub-

consultant advocating for the RDP, and during 2010, Collins made at least one offer to resign

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

-4-

COMPLAINT

OF

MARINA COAST WATER DISTRICT


8/30

•

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

2

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,

-5-



9/30

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1 simultaneously retained his seat on Agency's Board ofDirectors.

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

6

7

8

9

10

11

12

13

34. On April

7

2010, the parties to the RDP Settlement Agreement filed a motion

with the CPUC, asking the CPUC to approve their settlement, the WPA and the RDP, and to

grant CAW a CPCN to construct the delivery facilities that, under the WPA, would constitute

theCAW-owned portion of the project (the

CAW

Only Facilities ).

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

Substantial Completion, CAW would be obligated to reimburse Marina for any and all costs or

expenses incurred by Marina in connection with the RDP, but CAW would not be required to

reimburse Marina

if

the failure to reach Substantial Completion was due to an Event ofDefault

ofAgency, 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.

18

19

20

21

22

23

24

25

26

MARINA TERMINATES PAYMENTS

FOR

COLLINS

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

Administrative Services, Kelly Cadiente, concerning Cadiente 's detailed inspection

of

RDP

related invoices from RMC, including charges for Collins' work.

37. Upon Heitzman's subsequent detailed inspection ofCollins' charges for work on

the RDP, in or about August 2010 Heitzman determined that Collins had not confined his work

for RMC to the agreed scope of outreach to the agricultural community.

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

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 ofCollins' sub-consulting services.

-7-

COMPLAINT

OF MARINA

COAST

WATER DISTRICT


11/30

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' sub-

3 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.

8

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

Director of Agency.

12

42.

In

or

about

August

or September of 2010,

Heitzman

informed

MacLean of

3 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.

8

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' sub-

26 consulting arrangement with RMC on the RDP was terminated by RMC on December 2, 2010.

27

28

46.

THE CPUC APPROVES THE RDP

On December 2, 2010, in D.10-12-016,

which

was released

on

December 3,

-8-

COMPLAINT

OF MARINA

COAST

WATER

DISTRICT


12/30

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 Board·s

5 CDO.

6

47. Pursuant to

0.10-12-016,

theCAW 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

provided to CAW at the public agencies' cost of production.

2

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

3 sourcewater for the

RDP

would be withdrawn from the basin by a public agency pursuant to an

4 existing right of withdrawal from the basin, including offset against Marina's refraining in part

5 from its historic and ongoing pumping from the basin. D.l0-12-016 reaffirmed the CPUC's

6

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

9

open to retain jurisdiction over future project matters.

8

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

2

going forward as advanced under the

CAW

Credit Line Agreement.

22

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

-9-

COMPLAINT

OF MARINA

COAST WATER DISTRICT


13/30

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.

7

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 RDP-

21 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

56.

AGENCY AND CAW

USE COLLINS AS

AN EXCUSE

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

-10-

COMPLAINT

OF

MARINA



14/30

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.

7

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

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

61.

InNovember 2011, Collins was indicted on two charges of criminal conflict of

21 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

-11-

COMPLAINT

OF



15/30

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.

4

5

63.

CAW UNVEILS ITS NEW'' PROJECT

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

reli ef from the Court

of

Appeal. Marina responded to CAW and stated its position that, in

7

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

67.

THE DECLARATORY RELIEF ACTION

On October 4, 2012, CAW filed a complaint for declaratory re lief against Marina

-12-

COMPLAINT

OF



16/30

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.

4

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.

8

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.

-13-

COMPLAINT

OF MARINA

COAST

WATER DISTRICT


17/30

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.

5

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.

9

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

20

21

22

23

24

25

26

27

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

April29, 2015 that Collins violated Government Code section 1090 and that, although

Government Code§ 53511, Water Code§ 30066, and Water Code Appendix§ 52-39 applied

to the RDP Contracts other than the RDP Settlement Agreement, Government Code

§ 1092(b) s four-year statute oflimitations for a conflict

of

interest should control, rather than

the sixty-day statute oflimitations provided by Government Code §

53

511, Water Code

§ 30066, or Water Code

Appendix§

52-39, and that therefore Agency should prevail on its

cross-complaint (except as to the CAW Credit Line Agreement, as to which the San Francisco

Superior Court found that Agency- though it had asserted

invalidity-

did not present evidence

28 of invalidity}.

-14-

COMPLAINT OF MARINA

COAST

WATER DISTRICT


18/30

1

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,

5

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,

9

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.

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

-15-

COMPLAINT

OF



19/30

z

'2

_

'

a.

'

u

2

3

4

5

6

7

8

9

1

11

12

13

14

15

16

17

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

90. Further, due to

CAW

waiting until after March 2011 to question the validity

of

the RDP Contracts in light of Collins' apparent conflict. and then refusing to implement the

RDP based upon that apparent conflict, despite its full knowledge

of

the facts underlying the

Collins matter for many months before that time, Marina has sustained actual damages, in the

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

91. Further, due to Agency waiting until after March 20

11

to question the validity of

the RDP Contracts in light

of

Collins' apparent conflict, and then refusing to implement the

RDP based upon that apparent conflict, despite its full knowledge of the facts underlying the

Collins matter for many months before that time, Marina has sustained actual damages, in the

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

or mutually exclusive, Marina pleads them in the alternative.

FIRST

CAUSE

OF

ACTION

(Breach ofWarranties and Representations -WPA)

(Against Agency

and

Does 1-50)

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 authority to enter into that contract.

22

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 WPA that it had the legal capacity

-16-

COMPLAINT

OF MARINA



20/30

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.

5

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.

8

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

13

14

SECOND CAUSE OF ACTION

(Breach

of

Contract-

Repudiation)

(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 WPA, 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

-17-

COMPLAINT

OF



21/30

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

2 trial.

3

4

5

THIRD

CAUSE

OF

ACTION

(Breach

of

Contract-Repudiation)

(Against CAW and Does 1-50)



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

26

27

FOURTH

CAUSE OF ACTION

(Promissory

Estoppel)

(Against CAW, Agency and Does 1-50)

28 11I. Marina hereby incorporates by reference the allegations set forth in paragraphs 1

-18-

COMPLAINT

OF MARINA



22/30

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 WPA 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

24

25

FIFTH

CAUSE OF ACTION

(Quasi-Contract Unjust

Enrichment)

(Against CAW and Does 1-50)



28 119. In April of2012, CAW demanded and RMC provided to CAW RMC s work

-19-

COMPLAINT

OF MARINA



23/30

z

2

,_

i

0

0..

product related to the RDP which work had been paid for

in

substantial part by Marina.

2 120. CAW received a benefit from Marina·s good faith performance under the RDP

3 Contracts including but not limited to Marina·s 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.

1

11

12

13

123.

SIXTH CAUSE OF

ACTION

Breach

of

the Implied Covenant

of

Good Faith and Fair Dealing)

Against CAW

the Agency and Does 1-50)

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

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

20

21

22

23

24

25

26

27

28

125.

By

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

of

the RDP Contracts in good faith and/or by their attempts to frustrate Marina s good faith

performance

of

the RDP Contracts CAW and the Agency have breached the implied covenant

of

good faith and fair dealing and deprived Marina

of

the benefits of the RDP Contracts.

126.

CAW

and the

Agency s

violation of the implied covenant of good faith and fair

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

SEVENTH CAUSE OF ACTION

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

Against CAW and Does 1-50)

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

-20-

COMPLAINT

OF



24/30

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 utili ty's violation of law or of an order or decision

of

the CPUC.

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

-21-

COMPLAINT

OF MARINA COAST WATER DISTRICT


25/30

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 0-

4 08-008 and D.10-12-016.

5

PRAYER FOR RELIEF

6

WHEREFORE plaintiff

Marina Coast Water District prays for

judgment

as

7 follows:

8 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

18

20

21

22

23

24

25

26

27

28

JURY DEMAND

Marina

demands trial

by

jury

in this action.

July 30, 2015 RICHARDS,

WATSON

GERSHON

a Professional Corporation

FRIEDMAN

SPRINGWATER, LLP

.

.

..

; f 7

- - ~ ) v c : ; ~

::11-r

(/---(_/

/,J,

fj j

fA

YxJ

x_

~ c _ _ •

_____;

By: I -

t -JAMES L. MARKMAN

Attorneys for Marina Coast Water District

-22-

COMPLAINT OF

MARINA



26/30

xhibit


27/30

W TER

PURCH SE

GREEMENT

By

and

Among


MONTEREY COUNTY

WATER RESOURCES

AGENCY

And

CALIFORNIA-AMERICAN WATER

COMPANY

Dated as of April 6 20 I 0

100500094 DOC

}

xhibit


28/30

1

2.

3.

4.

5

6.

7.

8

9

10

11.

12.

13.

14

15.

16.

17.

18.

19.

20.

21.

22.

23.

24.

25.

26.

{00500094.DOC 2

T BLE OF CONTENTS

Governing

Tenns .................................................................................................. 3

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

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

Design, Engineering Construction and Permitting ofthe Regional Desalination

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

Ownership ofMCWD,

MCWRA, and CAW Facil ities ..................................... 33

Advisory Committee

...........................................................................................

34

Financing

of

the Project Facilities ......................................................................

39

Brackish Source Water Supply

and

Management

..............................................

44

Water Supply Obligations

and Deliveries ......................................................... .46

Measurement

of

Water

....................................................................................... 51

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

Compliance

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

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

CAW

................................................................................................................... 59

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

Casualty

Loss ..................................................................................................... 60

Insurance

............................................................................................................

61

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

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

Dispute

Reso lutio n .............................................................................................. 64

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

Representatives;

Notices

........................................................... ......................... 68

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

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

Force Majeure

.....................................................................................................

69

Conditions

Precedent ..........................................................................................

69

Other Provisions .................................................................................................

70


29/30

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,

S a l i n ~ 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, Sui te 200, Coronado, CA

92118. Each ofMCWD,

MCWRA

and CAW are referred to herein individually as a

Party

and

collectively as the Parties.

RECITALS:

A. MCWD provides

water

service within a service area, as may be subsequently

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.

C.

MCWRA's

boundaries are coextensive with the external boundaries ofthe

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 attached hereto.

E On September 20, 2004, CAW filed Application No. 04-09-019 ( Application 04-

09-0 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

{00500094 DOC v 2}


30/30

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 I0 MCWD, and on April 6, 20 I0 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.

K. MCWD, MCWRA and CAW, individually and collectively,

have

determined and

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.

M. MCWD, MCWRA, and CAW, as part of a settlement of issues

pending

in

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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