2

3
4

JAMES L. MARKMAN (Bar No. 43536)

jmarkman(ll)rwglaw.com
B. TILDEN KIM (Bar No. 143937)
tkim(alrwglaw .com
KYLE H. BROCHARD (Bar No. 293369)
kbrochard(alrwglaw .com
355 South tlrand Avenue, 40th Floor
Los Angeles, California 90071-310 I
Telephone: 213.626.8484
Facsimile: 213.626.0078

ELECTRONICALLY

FILED

Superior Court of California,

County of San Francisco

MAY 16 2014
Clerk of the Court
BY: WILLIAM TRUPEK
Deputy Clerk

6
7 MARK FOGELMAN (Bar No. 50510)
RUTH STONER MUZZIN (Bar No. 276394)
8 FRIEDMAN & SPRINGWATERLLP
33 New Montgomery Street, Suite 290
9 San Francisco, California 94105
Telephone: 415.834.3800
10
Attorneys for Defendant and Cross-Complainant
11 MARINA COAST WATER DISTRICT
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF SAN FRANCISCO
14 CALIFORNIA-AMERICAN WATER
COMPANY, a California corporation,
Plaintift~
v.

Case No. CGC-13-528312

MARINA COAST WATER DISTRICT'S

ANSWER TO MONTEREY COUNTY
WATER RESOURCES AGENCY'S
CROSS-COMPLAINT FOR
DECLARATORY RELIEF

MARINA COAST WATER DISTRICT;

MONTEREY COUNTY WATER
[Exempt from filing fees pursuant to Govt. Code 61 03]
18 RESOURCES AGENCY; and DOES 2
through 10, inclusive,
October 4, 2012
Complaint Filed:
19
November 19,2012
Marina X-Complaint Filed:
Defendants.
20 - - - - - - - - - - - - - - - - i Monterey X-Complaint Filed: Aprill6, 2014
Trial Date:

21 AND RELATED CROSS-ACTIONS.

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MARINA'S ANSWER TO MONTEREY'S CROSS-COMPLAINT
l !221-0005\l713236v!.doc

Vacated

Cross-defendant Marina Coast Water District ("Marina") hereby answers Cross-

2 complainant Monterey County Water Resources Agency's ("Monterey") Cross-Complaint

3 for Declaratory Relief (the "Cross-Complaint") as follows:
4

1.

Marina admits paragraph I of the Cross-Complaint.

2.

Marina admits paragraph 2 of the Cross-Complaint.

3.

Marina admits paragraph 3 of the Cross-Complaint, except denies that Cal-

7 Am is a proper "cross-defendant" in this Cross-Complaint.

4.

Marina has insufficient knowledge of facts to admit or deny the allegations

9 contained in paragraph 4 of the Cross-Complaint, and based thereon, denies each and every
I 0 allegation contained therein.
z

II

5.

Marina admits paragraph 5 of the Cross-Complaint.

""

12

6.

Marina admits paragraph 6 of the Cross-Complaint, except insofar as (I)

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13 RMC Water and Environment was an additional party to the Project Management
14 Agreement and (2) the Monterey Regional Water Pollution Control Agency, the Public
15 Trust Alliance, Surfrider Foundation and Citizens for Public Water were additional parties
16 to the Settlement Agreement.
17

7.

Marina admits the first and second sentences of paragraph 7 of the Cross-

18 Complaint. Marina denies the third sentence but admits that the Reimbursement
19 Agreement was executed by Marina on February 25, 20 I 0; and that Cal-Am and Monterey
20 executed that agreement on February 26, 2010. Marina denies the fourth sentence of
21 paragraph 7 but admits that the Settlement Agreement and the Water Purchase Agreement
22 were dated April 6, 20 I 0; and that the Settlement Agreement, the Water Purchase
23 Agreement, the Credit Line Agreement and the Project Management Agreement were
24 effective January II, 2011. Marina admits the fifth and sixth sentence of paragraph 7 of the
25 Cross-Complaint.
26

8.

Marina admits paragraph 8 of the Cross-Complaint as to the Settlement

27 Agreement, the Water Purchase Agreement, the Credit Line Agreement and the Project
28 Management Agreement; and Marina denies paragraph 8 as to the Reimbursement
-2MARINA'S ANSWER TO MONTEREY'S CROSS-COMPLAINT
ll221-0005\l713236vl.doc

1 Agreement.
2

9.

Marina denies all of material allegations of paragraph 9 of the Cross-

3 Complaint, but admits that "Stephen P. Collins, [) was a long-serving member of the
4 Agency's appointed board of directors."
5

I 0.

Marina denies paragraph 10 of the Cross-Complaint, but admits that from

6 January 8, 2010 through December 2, 2010, with the knowledge and approval of Monterey
7 and Cal-Am, Collins was "retained as a consultant by RMC and paid to advocate approval
8 of the regional desalination project and the RDP Agreements while serving as a member of
9 the Agency's appointed board of directors."
10

11.

Marina admits paragraph II of the Cross-Complaint.

11

12.

Marina admits the first sentence in paragraph 12 of the Cross-Complaint, and

12 denies the remaining allegations contained therein.

13

13.

Except to the extent that Monterey's statement "the RDP Agreements were

14 void" is a legal conclusion Marina admits paragraph 13 of the Cross-Complaint.

15

14.

With the exception of Marina's contention that Cal-Am wrongfully

16 terminated the RDP Agreements, and Cal-Am's representation that it purported to terminate
17 the RDP Agreements based on Monterey's repudiation of those agreements beginning on
18 July 7, 2011, Marina admits that the CPUC declined to force Cal-Am to implement the
19 RDP and that Cal-Am is pursuing an alternative water supply project.
20

15.

With the exception of "several months" and "failed" in the first sentence of

21 paragraph 15 of the Cross-Complaint, Marina admits the first sentence of paragraph 15 of

22 the Cross-Complaint. Marina contends that the parties' negotiated over the course of more
23 than a year. Marina further contends that the only reason the regional desalination project
24 "failed" is because Monterey and/or Cal-Am had wrongfully terminated and/or declared
25 void the RDP Agreements. Marina admits the second and third sentences of paragraph 15
26 of the Cross-Complaint, except denies the following clause of the final sentence, which
27 consists of argument and legal conclusion and therefore requires no answer: "despite the
28 corruption that infected the RDP Agreements because of Collins' misconduct."
-3MARINA'S ANSWER TO MONTEREY'S CROSS-COMPLAINT
! 1221-0005\!713236vl.doc

16.

Marina admits the first sentence of paragraph 16 of the Cross-Complaint.

2 Marina contends that Cal-Am, notwithstanding its allegations made in its complaint, has at
3 all materials times, been aligned with Monterey in positing that the RDP Agreements were
4 void, and based thereon, denies all other material allegations contained in paragraph 16 of
5 the Cross-Complaint.
6

17.

Marina admits the first sentence of paragraph 17 of the Cross-Complaint.

7 Marina denies the second sentence of paragraph 17 of the Cross-Complaint as it

8 mischaracterizes the allegations contained in Marina's cross-complaint.
9

18.

Marina admits paragraph 18 ofthe Cross-Complaint.

I0

19.

Marina admits paragraph 19 of the Cross-Complaint.

II

20.

Marina admits paragraph 20 of the Cross-Complaint.

12

21.

Marina denies paragraph 21 of the Cross-Complaint.

13

22.

In paragraph 20 of the Cross-Complaint, Monterey admits that as to Cal-Am,

14 the RDP Agreements have been validated by section 52-39 of the Agency Act and that CalIS Am is, thereby, barred from challenging the RDP Agreements. There is no "actual
16 controversy" between Monterey and Cal-Am, and thus, Marina denies the allegation that
17 "[a]n actual controversy has arisen and presently exists between the parties," insofar as CalIS Am is a "party" to the Cross-Complaint. Marina admits all other material allegations of
19 paragraph 22 of the Cross-Complaint.
20

23.

In paragraph 20 of the Cross-Complaint, Monterey admits that as to Cal-Am,

21 the RDP Agreements have been validated by section 52-39 of the Agency Act and that Cal22 Am is, thereby, barred from challenging the RDP Agreements. There is no "actual
23 controversy" between Monterey and Cal-Am, and thus, Marina denies the allegation in
24 paragraph 23 of the Cross-Complaint that as to Cal-Am, a declaration of the RDP
25 Agreements' validity or invalidity is subject to Monterey's request for declaratory relief.
26 Marina admits all other material allegations of paragraph 23 of the Cross-Complaint.
27

24.

Marina denies paragraph 24 of the Cross-Complaint.

28

25.

In paragraph 20 of the Cross-Complaint, Monterey admits that as to Cal-Am,

-4MARINA'S ANSWER TO MONTEREY'S CROSS-COMPLAINT

1122! -0005\ 17l3236v! .doc

1 the RDP Agreements have been validated by section 52-39 of the Agency Act and that Cal2 Am is, thereby, barred from challenging the RDP Agreements. There is no "actual

3 controversy" between Monterey and Cal-Am, and thus, Marina denies the allegation in
4 paragraph 25 of the Cross-Complaint that there is a "controversy" as to Cal-Am. Marina
5 admits all other material allegations of paragraph 23 of the Cross-Complaint.
6

26.

Marina denies that Monterey is entitled to its requested prayer on page 6,

7 lines 3 to 6 of the Cross-Complaint.

8
9

As separate, distinct and affirmative defenses, Marina alleges as follows:

10

FIRST AFFIRMATIVE DEFENSE

11

(Failure to State Facts Sufficient to Constitute a Cause of Action)

12
13

1.

The Cross-Complaint fails to state facts sufficient to constitute a cause of

14 action against Marina.

15

SECOND AFFIRMATIVE DEFENSE

16

(Statute of Limitations)

17
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2.

The Cross-Complaint, and each and every cause of action contained therein,

18 is barred by reason ofPlaintiffs' failure to comply with the applicable periods of limitation
19 set forth in Government Code section 1092(b ), Code of Civil Procedure sections 342 and
20 860, 863 et seq., Government Code sections 911.2 and 53511 et seq., the Monterey County
21 Water Resources Agency Act, Cal. Water Code App., Chapter 52, section 52-39, the
22 County Water District Act, Cal. Water Code section 30066, Public Utilities Code sections
23

1731, subdivision (b), 1756, subdivision (t), and 1759, subdivision (a), and other applicable

24 statutes.
25

THIRD AFFIRMATIVE DEFENSE

26

(Failure to Include Indispensable Parties)

27

3.

The Cross-Complaint should be dismissed for failure to include as defendants

28 indispensable parties.
-5MARINA'S ANSWER TO MONTEREY'S CROSS-COMPLAINT
J 122J-0005\1713236v I .doc

FOURTH AFFIRMATIVE DEFENSE

(Laches)

4.

The Cross-Complaint is barred, in whole or in part, by the Doctrine of

4 Laches.

FIFTH AFFIRMATIVE DEFENSE

(Unclean Hands)

5.

The Cross-Complaint is barred, in whole or in part, by the Doctrine of

8 Unclean Hands. SIXTH AFFIRMATIVE DEFENSE

(No Violation of Govt. Code Section 1090)

10

6.

The RDP Agreements were not subject to a Government Code Section 1090

II violation because Stephen D. Collins did not have a "cognizable financial interest" when
12 Monterey approved one or more of the RDP Agreements.
13

SEVENTH AFFIRMATIVE DEFENSE

14

(Waiver)

15

7.

The Cross-Complaint is barred, in whole or in part, by the Doctrine of

16 Waiver.

~~
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17

SEVENTH AFFIRMATIVE DEFENSE

18

(Estoppel)

19

8.

The Cross-Complaint is barred, in whole or in part, by the Doctrine of

20 Estoppel.
21

EIGHTH AFFIRMATIVE DEFENSE

22

(Defect and/or Misjoinder of Parties)

23

9.

The Cross-Complaint should be dismissed for defect or misjoinder of

24 California-American Water Company as a cross-defendant.

25

EIGHTH AFFIRMATIVE DEFENSE

26

(No Violation of Govt. Code Section I 090)

27

I 0.

The RDP Agreements were not subject to any Government Code Section

28 I 090 violation because Stephen D. Collins was not involved in the "making" of one or
-6MARINA'S ANSWER TO MONTEREY'S CROSS-COMPLAINT
11221-0005\! 713236vl .doc

more ofthe RDP Agreements within the meaning of Government Code Section 1090.
2

NINTH AFFIRMATIVE DEFENSE

(The RDP Agreements Are Not Void Ab Initio)

11.

Even if the RDP Agreements were subject to a Government Code Section

5 1090 violation committed by a member ofMonterey's Board of Directors, Stephen D.

6 Collins, the proper remedy is disgorgement of profits obtained by Stephen D. Collins. The
7 RDP Agreements are not void ab initio.
8

TENTH AFFIRMATIVE DEFENSE

(Failure to Comply With Validating Act Procedures)

12.

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11 various procedural requirements under the Validating Act, ineluding but not limited to
12 failure to bring an in-rem proeeeding (CCP 860.); failure to publish the summons,

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The Cross-Complaint is procedurally barred for failure to comply with the

13 "direeted to 'all persons interested in the matter," in both a newspaper of general circulation

14 in the county where the aetion is pending and also within the boundaries of the public

""' 15 ageney (i.e., Monterey County (CCP 861, 861.1); failure to notify by publication once a
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16 week for three consecutive weeks, with at least five days intervening between respective
17 publication dates; and failure to complete service within twenty-one days after the first day
18 of publication. (Gov. Code 6063.).
19
20

WHEREFORE, Cross-defendant Marina Coast Water District prays judgment as

21 follows:
22

1.

That Monterey takes nothing by its Cross-Complaint and is not entitled to any

23 ofthejudicial deelarations sought in the Cross-Complaint, but instead, that judgment be

24 entered in favor of Cross-defendant Marina Coast Water Distriet.
25

2.

That Cross-defendant Marina Coast Water District recovers from Monterey

26 its costs of suit herein, including attorney's fees to the extent allowed by law.
27 Ill
28 Ill
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-7-

-~~~~~""M""A""R"'IN=A's ANSWER TO MONTEREY'S CROSS-COMPLAINT

1122! -0005\1713236v Ldoc

3.

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

2 circumstances.
3

4 Dated: May 16, 2014

RICHARDS, WATSON & GERSHON

A Professional Corporation

6
By: /s/ James L. Markman
JAMES L. MARKMAN
Attorneys for Defendant and CrossComplainant
MARINA COAST WATER DISTRICT

9
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VERIFICATION IS REQUIRED

12
13

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11 PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 446, NO

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-8-

MARINA'S ANSWER TO MONTEREY'S CROSS-COMPLAINT

I 122l-0005\1713236vl.doc

PROOF OF SERVICE

2
3

I, Linda I. Pomatto, declare:

I am a resident of the state of California and over the age of eighteen years and not a party
to the within action. My business address is 355 South Grand Avenue, 40th Floor, Los Angeles,
5 California 90071-3101. On May 16,2014, I served the within document(s) described as:

MARINA COAST WATER DISTRICT'S ANSWER TO MONTEREY COUNTY

WATER RESOURCES AGENCY'S CROSS-COMPLAINT FOR DECLARATORY
7 RELIEF
8

on the interested parties in this action as stated below:

Robert R. Moore, Esq.

Michael J. Betz
Ketakee R. Kane
ALLEN MATKINS
Three Embarcadero Center
San Francisco, CA 94111
AttorneysjiJr California American Water Company

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14
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17

18
19
20
21

Marc Wasser, Esq.

Law Offices of Marc Wasser
400 Capitol Mall, Suite 2640
Sacramento, CA 95814
Attorneys for California-American Water Company
Mr. Charles J. McKee
County of Monterey
168 West Alisal Street, 3'd Floor
Salinas, CA 93 90 1-24 3 9
Attorneys for County ofMonterey
Mark Fogelman
Ruth Stoner Muzzin
FR1EDMAN & SPRINGWATER LLP
33 New Montgomery Street, Suite 290
San Francisco, CA 94105
AllorneysjiJr Marina Coast Water District

22
was served electronically via LexisNexis File & Serve on the recipients designated on the
23 Transaction Receipt located on the LexisNexis File & serve website.
24

I declare under penalty of perjury under the laws of the State of California that the
foregoing is true and correct. Executed on May 16,2014, at Los Angeles, California.

25
26
27

Linda I. Pomatto
(Type or print name)

28
-1ll221-0005\l546486vl.doc