This case was last updated from Los Angeles County Superior Courts on 08/15/2019 at 09:18:20 (UTC).

IRVINE RANCH WATER DIST. VS. ORANGE COUNTY WATER DIST., ETAL

Case Summary

On 03/02/2017 IRVINE RANCH WATER DIST filed an Other lawsuit against ORANGE COUNTY WATER DIST , ETAL. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judge overseeing this case is AMY D. HOGUE. The case status is Pending - Other Pending.
Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****8278

  • Filing Date:

    03/02/2017

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Other

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judge

AMY D. HOGUE

 

Party Details

Plaintiffs and Cross Defendants

IRVINE RANCH WATER DISTRICT A CALIFORNIA

IRVINE RANCH WATER DISTRICT

Defendants and Cross Plaintiffs

ALL PERSONS INTERESTED IN THE MATTER OF

ORANGE COUNTY WATER DISTRICT A CALIF.

ORANGE COUNTY WATER DISTRICT

GOLDEN STATE WATER COMPANY

MESA WATER DISTRICT

YORBA LINDA WATER DISTRICT

EAST ORANGE COUNTY WATER DISTRICT

CITY OF ANAHEIM A CALIFORNIA MUNICIPAL CORPORATION AND CHARTER CITY

Interested Parties and Cross Plaintiffs

GOLDEN STATE WATER COMPANY

CITY OF ANAHEIM

Attorney/Law Firm Details

Plaintiff Attorneys

ALSTON & BIRD LLP

NAMUO CLYNTON WILLIAM

CASEY EDWARD JOSEPH

Defendant and Cross Plaintiff Attorneys

RUTAN & TUCKER LLP

KUPERBERG JOEL DAVID

NEWMARK GREGORY JOE

ALISON M. KOTT CITY ATTORNEY'S OFFICE

MEYERS NAVE RIBACK SILVER & WILSON

LARSEN JOSEPH DAVID

RUTUAN & TUCKER

Interested Party Attorneys

KOTT ALISON MELLOR

SLATER SCOTT STEVEN

DUNN JEFFREY VINCENT

DEFELICE DIANE CATHERINE

DIAZ JESSICA LANA

 

Court Documents

Stipulation and Order

6/10/2019: Stipulation and Order

Petition for Writ of Mandate

6/12/2019: Petition for Writ of Mandate

Reply

6/12/2019: Reply

Request for Judicial Notice

6/12/2019: Request for Judicial Notice

Brief

6/12/2019: Brief

Notice

6/12/2019: Notice

Notice of Lodging

6/12/2019: Notice of Lodging

Minute Order

6/28/2019: Minute Order

Trial Brief

7/26/2019: Trial Brief

Request for Judicial Notice

7/26/2019: Request for Judicial Notice

Brief

7/26/2019: Brief

Brief

7/26/2019: Brief

Brief

7/26/2019: Brief

Brief

7/26/2019: Brief

Notice of Lodging

7/26/2019: Notice of Lodging

Answer

7/29/2019: Answer

Cross-Complaint

7/29/2019: Cross-Complaint

Answer

7/29/2019: Answer

250 More Documents Available

 

Docket Entries

  • 03/27/2020
  • Hearingat 09:30 AM in Department 86 at 111 North Hill Street, Los Angeles, CA 90012; Hearing on Petition for Writ of Mandate

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  • 08/02/2019
  • Docketat 09:30 AM in Department 86; Trial Setting Conference (on Fifth Amended Petition/Compaint) - Held

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  • 08/02/2019
  • DocketMinute Order ( (Trial Setting Conference on Fifth Amended Petition/Complaint ...)); Filed by Clerk

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  • 08/02/2019
  • DocketAnswer; Filed by ALL PERSONS INTERESTED IN THE MATTER OF (Defendant)

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  • 08/02/2019
  • DocketNotice of Ruling; Filed by Irvine Ranch Water District (Plaintiff)

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  • 07/30/2019
  • Docketat 09:30 AM in Department 86; Non-Appearance Case Review (Re Submitted Matter) - Held - Taken under Submission

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  • 07/30/2019
  • DocketNotice (PLAINTIFF AND PETITIONER IRVINE RANCH WATER DISTRICT'S TRIAL SETTING CONFERENCE STATEMENT); Filed by Irvine Ranch Water District (Plaintiff)

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  • 07/30/2019
  • DocketMinute Order ( (Non-Appearance Case Review Re Submitted Matter)); Filed by Clerk

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  • 07/30/2019
  • DocketNotice of Joinder (Name Extension) (DEFENDANT AND RESPONDENT ORANGE COUNTY WATER DISTRICT?S JOINDER IN REAL PARTIES IN INTERESTS? OBJECTIONS TO SUPPLEMENTAL TRIAL BRIEF AND REQUEST FOR JUDICIAL NOTICE FILED BY PETITIONER AND PLAINTIFF IRVINE RANCH WATER DISTRICT); Filed by ORANGE COUNTY WATER DISTRICT, A CALIF. (Defendant)

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  • 07/30/2019
  • DocketObjection (REAL PARTIES IN INTEREST?S OBJECTIONS TO SUPPLEMENTAL TRIAL BRIEF AND REQUEST FOR JUDICIAL NOTICE FILED BY PETITIONER AND PLAINTIFF IRVINE RANCH WATER DISTRICT); Filed by Golden State Water Company (Real Party in Interest)

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443 More Docket Entries
  • 03/02/2017
  • DocketStipulation and Order; Filed by Plaintiff/Petitioner

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  • 03/02/2017
  • DocketNotice; Filed by Plaintiff/Petitioner

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  • 03/02/2017
  • DocketAnswer to Cross-Complaint; Filed by Plaintiff/Petitioner

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  • 03/02/2017
  • DocketAnswer to Cross-Complaint; Filed by Plaintiff/Petitioner

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  • 03/02/2017
  • DocketAnswer to Cross-Complaint; Filed by Plaintiff/Petitioner

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  • 03/02/2017
  • DocketAnswer to Cross-Complaint; Filed by Plaintiff/Petitioner

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  • 03/02/2017
  • DocketNotice; Filed by Clerk

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  • 03/02/2017
  • DocketMiscellaneous-Other; Filed by Clerk

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  • 03/02/2017
  • DocketMiscellaneous-Other; Filed by Clerk

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  • 03/02/2017
  • DocketComplaint; Filed by IRVINE RANCH WATER DISTRICT, A CALIFORNIA (Plaintiff)

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Tentative Rulings

Case Number: ****8278 Hearing Date: June 16, 2022 Dept: 15

Superior Court of California

County of Los Angeles

Department 15

IRVINE RANCH WATER DISTRICT,

Plaintiff,

v.

ORANGE COUNTY WATER DISTRICT, et al.,

Defendants.

Case No.: ****8278

Hearing Date: 06/16/2022

[Tentative] RULING RE:

Cross-Defendant IRWD’s Motion for Summary Judgment re Cross-Complaint by the District Complainants

TENTATIVE RULING: The motion is DENIED.

BACKGROUND INFORMATION

  1. The Parties

  1. Plaintiff, OCWD, and Plaintiff’s Pleadings

Plaintiff Irvine Ranch Water District (“IRWD”) is a California water district formed pursuant to Water Code section 34000 et seq. As a retail water agency, IRWD services approximately 110,000 water service connections within its service area, which includes all of the City of Irvine and portions of the cities of Tustin, New Port Beach, Costa Mesa, Orange and Lake Forest as well as unincorporated areas of Orange County.

OCWD is a special district formed under the Orange County Water District Act (the “Act”). The OCWD is a public entity established by the California legislature and generally empowered to manage, replenish, regulate and protect groundwater supplies within its boundaries. (Orange County Water Dist. v. Sabic Innovative Plastics US, LLC (2017) 14 Cal. App. 5th 343, 357. “Despite its name, the [OCWD] is not a county water district under the County Water District Law (Wat. Code, 30000 et seq.). Instead, it operates under its own governing act, the OCWD Act, with its own set of powers and responsibilities.” (Ibid.) OCWD imposes various assessments and surcharges on persons and entities who pump groundwater from the basin (commonly known as “producers”).

IRWD filed a lawsuit against OCWD and “all persons interest in the matter of Orange County Water District Resolution Nos. 16-4-37, 14-4-45, and 17-11, 20-4-47” seeking to avoid or reduce its payment of assessments and penalty surcharges and to challenge the validity of OCWD’s assessments and resolutions. IRWD’s claims can be summarized as follows (operative complaint is the seventh amended petition/complaint filed on 6/2/2021):

  1. The Cross-Complainants

As interested parties, various producers answered IRWD’s petition/complaint, intervened, and filed a total of three cross-complaints in this case:

Each of the cross-complaints is against a single cross-defendant—IRWD.

  1. Procedural History

IRWD’s causes of action and the cross-complainants’ two declaratory relief causes of action related to the interpretation of the Act have been adjudicated through various phases of trial.

  1. Phase 1 Trial

On March 26, 2019, the court entered an order on phase 1 of trial, which addressed IRWD’s first four causes of action and the first cause of action in each of the cross-complaints. Ultimately, the court rejected IRWD’s interpretation of “supplemental sources” and “outside the watershed of the Santa Ana River.” IRWD urged the court to interpret these phrases to mean water from any source other than the waters draining into the Santa Ana River. Because IRWD’s source for recycled water is wastewater rather than water that drains into the Santa Ana River, IRWD argued that its source is “outside the watershed” and, therefore, should be deemed a “supplemental source.” The court, instead, found that the legislature intended “outside the watershed of the Santa Ana River” to mean a geographical region rather than, as IRWD contends, a dynamic system of drainage. As such, the court found that it was not reasonable to interpret “supplemental sources” to include recycled water. Accordingly, the court denied relief on IRWD’s first, second, third, and fourth causes of action. The court granted declaratory relief on the first cause of action in each of the cross-complaints.

  1. Phase 2 Trial

On September 30, 2019, the court entered an order on phase 2 of trial, in which the court adjudicated IRWD’s fifth, sixth, and tenth causes of action and the second cause of action in each of the cross-complaints. The court found that IRWD was entitled to a declaration that OCWD “must seek relief through the legal process to limit ‘unlawful exportation of water from the district’” and that the OCWD “may establish an unlawful export under any legal theory, including a legal theory grounded in the Act, to the extent one may exist.” In so finding, the court rejected the producers’ argument that OCWD had broad authority to prevent groundwater export, which was not limited to filing a lawsuit. Further, the court found that IRWD did not meet its burden to invalidate three resolutions adopted by the OCWD. As such, the court granted IRWD relief on its fifth cause of action, denied IRWD relief on its sixth and tenth causes of action, and denied the producers’ relief on the second cause of action in each of the cross-complaints.

  1. Phase 2a Trial

On November 12, 2020, the court entered an order on phase 2a of trial, adjudicating IRWD’s eleventh and twelfth causes of action. At issue was whether or not the 2019 PL/S (production limitation and surcharge), which limits a producer’s production of groundwater to the amount of its water demands within the district and imposes a surcharge for all water exceeding the production limit, was valid. The court found that the 2019 PL/S was valid and that “the interpretation espoused by IRWD would be contrary to the purposes of the Act and create an inconsistency with the mater management tools within it.” As such the court denied IRWD relief on its eleventh and twelfth causes of action.

  1. IRWD’s Motion to Dismiss—Phase 3 Claims

Phases 1, 2, and 2a of trial adjudicated every cause of action in IRWD’s seventh amended petition/complaint except the 7th cause of action (which sought declaratory relief relating to IRWD’s rights under the 1933 judgment). IRWD moved for an order dismissing the seventh cause of action without prejudice. Over objection, the court granted IRWD’s motion and dismissed IRWD’s seventh cause of action without prejudice.

  1. IRWD’s Motion for Judgment

Because all causes of action as between IRWD and OCWD in the seventh amended petition/complaint had been adjudicated or dismissed, IRWD filed a motion for judgment as between IRWD and OCWD. On May 24, 2022, the court denied that motion, finding that based on the overlapping nature of the parties’ claims in this action, the request was not proper. The court found that the judgment requested by IRWD would likely lead to piecemeal disposition of the issues through multiple appeals in this single action—particularly given that on appeal in a reverse validation action, the producers would not be entitled to be heard as a matter of right and must seek intervention.

  1. Summary of Pending Proceedings

All that remains to be decided in this case are the cross-complainants’ third and/or fourth causes of action for declaratory relief related to IRWD’s rights under the 1933 judgment and/or injunctive relief. All of IRWD’s causes of action and the cross-complainants’ first and second causes of action have already been decided.

  1. IRWD’s Pending Motion for Summary Judgment

On March 11, 2022, IRWD filed a motion for summary judgment of the District Complainants’ cross-complaint (i.e., the third and fourth causes of action). IRWD did not file a motion as against Anaheim’s cross-complaint or Golden State’s cross-complaint

  1. The Parties’ Positions

LEGAL STANDARD

  1. Motions for Summary Judgment Standard

“Summary judgment shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. In determining if the papers show that there is no triable issue as to any material fact, the court shall consider all of the evidence set forth in the papers, except the evidence to which objections have been made and sustained by the court, and all inferences reasonably deducible from the evidence, except summary judgment shall not be granted by the court based on inferences reasonably deducible from the evidence if contradicted by other inferences or evidence that raise a triable issue as to any material fact.” (Cal. Civ. Proc. Code 437c(c).)

“A party may move for summary adjudication of issues, either by itself or as an alternative to summary judgment. If it appears that the proof supports the granting of the motion for summary adjudication as to some but not all the issues involved in the action, or that one or more of the issues raised by a claim is admitted, or that one or more of the issues raised by a defense is conceded, the court shall, by order, specify that those issues are without substantial controversy. Moreover, upon a motion for summary adjudication, the court shall, by written order or oral order recorded verbatim, specify those issues raised by the motion for summary adjudication as to which there exists a material, triable controversy, and shall specifically refer to the evidence which establishes a triable issue of fact regarding each of those issues ....” (Cal. Civ. Proc. Code 437c(f)).

A defendant moving for summary judgment/summary adjudication must show “that one or more elements of the cause of action . . . cannot be established, or that there is a complete defense to the cause of action.” (Cal. Civ. Proc. Code 437c(p)(2); see also, Cal. Civ. Proc. Code 437c(o).)

“The defendant may, but need not, present evidence that conclusively negates an element of the plaintiff's cause of action. The defendant may also present evidence that the plaintiff does not possess, and cannot reasonably obtain, needed evidence—as through admissions by the plaintiff following extensive discovery to the effect that he has discovered nothing. But… the defendant must indeed present evidence." (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 855 [italics in original].) In other words, all that the defendant need do is to show that the plaintiff cannot establish at least one element of the cause of action--for example, that the plaintiff cannot prove element X.” (Id., at 853.) The court in Aguilar distilled summary judgment to “a single proposition: If a party moving for summary judgment in any action . . . would prevail at trial without submission of any issue of material fact to a trier of fact for determination, then he should prevail on summary judgment. In such a case . . . the ‘court should grant’ the motion ‘and “avoid a . . . trial’ rendered ‘useless’ by nonsuit or directed verdict or similar device. (Id. at 855.)

As noted in Aguilar, “the party moving for summary judgment bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact; if he carries his burden of production, he causes a shift, and the opposing party is then subjected to a burden of production of his own to make a prima facie showing of the existence of a triable issue of material fact.” (Aguilar, supra, 25 Cal.4th at 850.) Thus, courts usually follow a three-step analysis: “First, we identify the issues framed by the pleadings . . . . [ ] Secondly, we determine whether the moving party’s showing has established facts which negate the opponent’s claim and justify a judgment in movant’s favor. . . . [ ] When a . . . motion prima facie justifies a judgment, the third and final step is to determine whether the opposition demonstrates the existence of a triable, material factual issue.” (Ojavan Investors, Inc. v. Cal. Coastal Comm. (1997) 54 Cal.App.4th 373, 385 [citation and footnote omitted].)

The California Supreme Court confirmed that the purpose of the 1992 and 1993 amendments to the summary judgment statute was “ ‘to liberalize the granting of [summary judgment] motions.’ ” (Perry v. Bakewell Hawthorne, LLC (2017) 2 Cal.5th 536, 542.) It is no longer called a “disfavored” remedy. “Summary judgment is now seen as a ‘particularly suitable means to test the sufficiency’ of the plaintiff’s or defendant’s case.” (Ibid.)

Opposing parties must present substantial evidence in order to avoid summary judgment. (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 163.) “In some instances…, ‘evidence may be so lacking in probative value that it fails to raise any triable issue.’” (Whitmire v. Ingersoll-Rand Co. (2010) 184 Cal.App.4th 1078, 1083-1084.) “A complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial.” (Hunter v. Pacific Mechanical Corp (1995) 37 Cal.App.4th 1282, 1286, disapproved on other grounds by Aguilar, supra, at 865; accord Saelzler v. Advanced Group 400 (2001) 25 Cal.4th 763, 780 [“‘If the plaintiff is unable to meet her burden of proof regarding an essential element of her case, all other facts are rendered immaterial.’”].)

Courts “construe the moving party's affidavits strictly, construe the opponent's affidavits liberally, and resolve doubts about the propriety of granting the motion in favor of the party opposing it.’” (Unilab Corp.v. Angeles-IPA (2016) 244 Cal.App.4th 622, 636; internal citation omitted.) The court focuses on issue finding; it does not resolve issues of fact. The court seeks to find contradictions in the evidence, or inferences reasonably deducible from the evidence, which raise a triable issue of material fact.” (Johnson v. United Cerebral Palsy, etc. (2009) 173 Cal.App.4th 740, 754; internal citation omitted.) "[S]ummary judgment cannot be granted when the facts are susceptible [of] more than one reasonable inference . . .” (Rosas v. BASF Corp. (2015) 236Cal.App.4th1378,1392.)

  1. Standard When No Alternate Relief for Summary Adjudication Stated in Notice

“It is elemental that a notice of motion must state in writing the ‘grounds upon which it will be made.’” (Gonzales v. Superior Court (1987) 189 Cal. App. 3d 1542, 1545). Only the grounds specified in the notice of motion may be considered by the trial court.” (Id.) “This rule has been held to be especially true in the case of motions for summary adjudication of issues.” (Id.)

“The language in Code of Civil Procedure section 437c, subdivision (f) makes it clear that a motion for summary adjudication cannot be considered by the court unless the party bringing the motion duly gives notice that summary adjudication is being sought.” (Id. at 1545–46). If a party desires adjudication of particular issues or sub-issues, that party must make its intentions clear in the motion .... (Id. at 1546). “There is a sound reason for this rule: ‘... the opposing party may have decided to raise only one triable issue of fact in order to defeat the motion, without intending to concede the other issues. It would be unfair to grant a summary adjudication order unless the opposing party was on notice that an issue-by-issue adjudication might be ordered if summary judgment was denied.’” (Id.) “The motion must be denied if the movant fails to establish an entitlement to summary adjudication of the matters thus specified; the court cannot summarily adjudicate other issues or claims, even if a basis to do so appears from the papers.” (Schmidlin v. City of Palo Alto (2007) 157 Cal.App.4th 728, 744).

Here, IRWD’s notice only requests summary judgment and no alternative summary adjudication relief. Accordingly, to the extent that any one issue creates a triable issue of fact for any remaining claim, the entire motion must be denied. In other words, the court may only grant summary judgment if there are no triable issues of fact for every element and every issue of every cause of action or not at all—i.e., all or nothing.

LEGAL ANALYSIS

  1. “Actual Controversy” and “Ripeness”

  1. Legal Standard

“The ripeness requirement, a branch of the doctrine of justiciability, prevents courts from issuing purely advisory opinions.” (Communities for a Better Environment v. State Energy Resources Conservation & Development Com. (2017) 19 Cal.App.5th 725, 732). Although the ‘precise content’ of the doctrine is ‘difficult to define and hard to apply,’ generally speaking, a controversy is ripe ‘when it has reached, but has not passed, the point that the facts have sufficiently congealed to permit an intelligent and useful decision to be made.’” (Id. at 733). In contrast, unripe cases are those “in which parties seek a judicial declaration on a question of law, though no actual dispute or controversy ever existed between them requiring the declaration for its determination.” (Id.)

“Unsurprisingly, ripeness is often an issue when a litigant seeks declaratory relief pursuant to Code of Civil Procedure section 1060, as such relief is permissible to resolve ‘a probable future controversy relating to the legal rights and duties of the parties.’” (Id.)

The “actual controversy” language in Code of Civil Procedure section 1060 encompasses a probable future controversy relating to the legal rights and duties of the parties. (Environmental Defense Project of Sierra County v. County of Sierra (2008) 158 Cal.App.4th 877, 885). In short, as it relates to a future controversy, that “controversy is ‘ripe’ when it has reached, but has not passed, the point that the facts have sufficiently congealed to permit an intelligent and useful decision to be made.” (Id.)

In determining whether a controversy is ripe in the context of a request for declaratory relief, courts engage in the two-pronged analysis: “(1) whether the dispute is sufficiently concrete to make declaratory relief appropriate; and (2) whether the withholding of judicial consideration will result in a hardship to the parties.” (Communities for a Better Environment, supra, 19 Cal. App. 5th at 733). “Under the first prong, the courts will decline to adjudicate a dispute if ‘the abstract posture of [the] proceeding makes it difficult to evaluate ... the issues’ [citation], if the court is asked to speculate on the resolution of hypothetical situations [citation], or if the case presents a ‘contrived inquiry.”’ (Id.) “Under the second prong, the courts will not intervene merely to settle a difference of opinion; there must be an imminent and significant hardship inherent in further delay.” (Id.)

The ripeness inquiry “should not prevent courts from resolving concrete disputes if the consequence of a deferred decision will be lingering uncertainty in the law, especially when there is widespread public interest in the answer to a particular legal question.” (Id. at 734).

For example:

  1. Analysis

IRWD argues that there is no “actual controversy” between the parties and any perceived threat that IRWD would enforce its rights under the 1933 judgment is speculative. It argues that it has essentially not taken any steps to exercise these rights—it does not own any land in the surplus zone, it has not conducted any environmental review, it has not applied for, or obtained, any regulatory approvals, and it has not installed a groundwater production well in the surplus zone. Tellingly, IRWD does not disavow or relinquish its alleged rights under the 1933 judgment—rather it argues that any production of groundwater in the surplus one under IRWD’s water rights under the 1933 judgment is “years away.”

IRWD’s conduct in this case over the years belie their current arguments.

First, IRWD’s own allegations in its pleadings admit to the existence of an actual controversy relating to its rights under the 1933 judgment.

In each of these amended petitions/complaints, IRWD, therefore, already expressly and specifically described its position in terms of its rights under the 1933 judgment and forecast, in detail, its intention to exercise its rights in the future by describing all of the steps it must take to do so. A court, therefore, need not speculate or engage in an academic theoretical discussion on IRWD’s position. IRWD, for the past four-plus years, has made IRWD’s rights under the 1933 judgment an active and live controversy in this very proceeding. (See, Tashakori v. Lakis (2011) 196 Cal.App.4th 1003, 1012-1013 (the threat of a lawsuit can satisfy the actual controversy requirement for declaratory relief; here, more than a threat of a lawsuit, IRWD actually filed a lawsuit listing these pending issues)).

Second, IRWD’s discovery responses reiterate the existence of this active controversy and more importantly, its intention to continue to exercise its alleged rights, its intention to appeal rulings in this case, and its belief that it need not own land to exercise its rights.

Third, in filing an answer to the District Complainants’ third amended cross-complaint in August 2021 (i.e., in responding to these very claims about which IRWD now challenge), IRWD states that it “admits that an actual, present, and justiciable controversy now exists between the Districts and IRWD regarding questions pertaining to IRWD’s exercise of its right to pump and transport groundwater in accordance with the 1933 Judgment as outlined in paragraphs 57 through 60 of the Seventh Amended Complaint.” (Newmark Decl., Ex. 16, 66). Further, it admits that a judicial declaration is necessary to establish the parties’ rights and obligations in connection with the 1933 judgment…” (Id., 70.) IRWD, therefore, has responded to the District Complainants’ declaratory relief allegations by judicially admitting that an actual controversy now exists that requires a judicial resolution.

Fourth, in filing IRWD’s motion to dismiss their seventh cause of action without prejudice (declaratory relief relating to the 1933 judgment) in September 2021, IRWD continued to make statements relating to its intention to preserve its rights under the 1933 judgment:

. . . IRWD has a duty as a public agency to maintain its ability to bring a claim to enforce a water right in the future (especially in time of a worsening drought), which right is at issue in the Seventh Cause of Action. IRWD’s duties as a public agency preclude it from dismissing this claim with prejudice and potentially depriving its constituents from the benefit of a water right. . .

[IRWD] also has fiduciary duties as a public agency that preclude it from waiving the benefits of a water right, and thus IRWD cannot consent to a dismissal of this claim with prejudice. . .

The parties may differ as to IRWD’s rights under that [1933] Judgment, but IRWD should not be put to the Hobbesian choice of forfeiting a water right to avoid the high cost of litigation threatened by OCWD, or spend hundreds of thousands of dollars in legal fees at this time. Since IRWD should not be forced to dismiss its claim with prejudice and be foreclosed from protecting a water right in the future (as the drought worsens), the Court should grant this motion. . .

(Newmark Decl., Ex. 16, 3:16-20; 5:21-22; 9:13-19). Even in dismissing their seventh cause of action to adjudicate their rights under the 1933 judgment, therefore, IRWD maintained its right to “to bring a claim to enforce” in the future while at the same time wanting to “avoid the high cost of litigation.”

Fifth, in granting IRWD’s motion to dismiss without prejudice on November 8, 2021, the court noted the interplay of IRWD’s rights under the 1933 judgment and the court’s rulings on the prior phases of trial in this proceeding:

“In fact, the court’s decision on the seventh cause of action would have no impact on the underlying validity of the 2019 production limitation and surcharge. Instead, a ruling on the seventh cause of action would address the 2019 production limitation and surcharge applicability as to IRWD. That is, the court would determine whether the valid production limitation and surcharge (which was determined under Phase 2a of trial) could be applied to IRWD—Does the 1933 judgment trump the otherwise valid 2019 production limitation and surcharge?”

The court also considered the prejudice to the cross-complainants in granting IRWD’s motion:

“In fact, as noted earlier, the three pending cross-complaints all seek adjudication of the same issue raised by IRWD in its seventh cause of action. Thus, the opposing parties can suffer no prejudice if the IRWD’s seventh cause of action is dismissed without prejudice. The cross-complainants are able to continue to litigate the issue to obtain a final judgment. The final judgment would thereafter preclude IRWD from litigating the seventh cause of action in the future. While IRWD has sought dismissal of its seventh cause of action to manage its public funds and avoid lengthy protracted discovery as well as the expense of trial…the cross-complaints may preclude IRWD from preserving public funds…”

Through the parties’ own representations to the court, therefore, the court proceeded with the understanding that the dispute between the parties was actual, pending, ongoing, still being litigated, and required a judicial determination.

As this record establishes, the analysis in Environmental Defense Project and Steinberg apply under the circumstances of this case:

As such, the court finds that an actual controversy exists between the parties.

Finally, on a related note, the court also finds Anaheim/Golden State’s argument persuasive. While IRWD’s motion rests on the assumption that various predicate facts have not yet occurred (e.g., no ownership of land, no approvals for groundwater well, etc.), those “predicates” are conditioned on IRWD being right in its interpretation of the 1933 judgment. However, the controversy raised by the cross-complainants is that IRWD has no rights under the 1933 judgment—i.e., if they prevail, IRWD would never have the right to own land in the surplus area, obtain an approval, etc. IRWD’s predicate “facts”, therefore, require a predicate determination that IRWD has rights under the 1933 judgment. As such, the “actual controversy” or whether or not IRWD has any rights under the 1933 judgment must first be determined before any one of the many “predicate steps” IRWD raises would ever be at issue.

For these reasons, the motion is DENIED.

  1. Anticipatory and Hypothetical Injury

IRWD argues that any injury to the District Complainants is hypothetical because IRWD has paid assessments and/or that any injury is predicated on IRWD purchasing land and producing groundwater under the 1933 judgment and OCWD not being able to retain any replenishment water in any given year. The manner in which IRWD frames its argument, however, appears to conflate the concept of the District Complainants’ damages (and whether or not they are speculative) and injury (as a legal standing concept).

First, the court notes that the elements of declaratory relief do not require a claimant to establish damages that are certain. Specifically, declaratory relief under section 1060 requires the following:

Any person interested under a written instrument, excluding a will or a trust, or under a contract, or who desires a declaration of his or her rights or duties with respect to another, or in respect to, in, over or upon property, or with respect to the location of the natural channel of a watercourse, may, in cases of actual controversy relating to the legal rights and duties of the respective parties, bring an original action or cross-complaint in the superior court for a declaration of his or her rights and duties in the premises, including a determination of any question of construction or validity arising under the instrument or contract. He or she may ask for a declaration of rights or duties, either alone or with other relief; and the court may make a binding declaration of these rights or duties, whether or not further relief is or could be claimed at the time. The declaration may be either affirmative or negative in form and effect, and the declaration shall have the force of a final judgment. The declaration may be had before there has been any breach of the obligation in respect to which said declaration is sought.

(Cal. Civ. Proc. Code 1060.) Minimally, all that it requires (after an actual controversy) is a request for a determination of rights and duties. As the court held above, an actual controversy exists between the parties, such that the elements of declaratory relief have been met. Given that IRWD moved for summary judgment (and not summary adjudication of any issue), that IRWD did not categorically negate an element of the cross-complainants’ claim requires denial of the entire motion.

Second, IRWD appears to be arguing injury, not in the context of damages, but in the context of standing. IRWD cites the following:

“One who invokes the judicial process does not have ‘standing’ if he, or those whom he properly represents, does not have a real interest in the ultimate adjudication because the actor has neither suffered nor is about to suffer any injury of significant magnitude reasonably to assure that all of the relevant facts and issues will be adequately presented.” (Id., emphasis added.) (California Water & Telephone Co. v. County of Los Angeles (1967) 253 Cal.App.2d 16, 22-23).

To the extent that IRWD is arguing that the District Complainants lack standing, the court disagrees. The District Complainants are not attempting to assert the rights of others, but their own rights. Indeed, one of the declarations that the District Complainants seek is that the District Complainants are not bound by a judgment under which IRWD asserts water rights pursuant to the 1933 judgment. As such, the District Complainants are seeking relief on a direct interest in which they would be affected—whether or not they may be bound by IRWD’s rights under the 1933 judgment directly affects them (even if not monetarily, the judicial determination of being bound legally). That is sufficient for the court to find the District Complainants “interested parties” for the purposes of standing.

To the extent that IRWD is arguing that the District Complainants’ monetary damages is speculative, the court finds that, at best, that raises a triable issue of fact. IRWD argues that given IRWD’s past payment of assessments, continued payment of assessments, and IRWD’s theory of how OCWD would manage BPP or surcharge or assessment charges, the District Complainants would not have to pay more in assessments even if IRWD were to assert its rights under the 1933 judgment. The District Complainants argue that if IRWD were to increase its groundwater production by 4,500 acre feet in a year when replenishment water is not available, and if that additional pumping is not offset by reductions in pumping by other producers, it is possible the OCWD Board of Directors would decrease the BPP by one percent or more depending upon the overall condition of the groundwater basin. (SMF No 95; see Declaration of John Kennedy [“Kennedy Decl.”], 5.) That would result in the District Complainants’ paying higher assessments. These are competing damages theory that raise various questions of fact for the fact finder to determine.

Further, and in any event, the relief sought in a declaratory relief action is not how much the District Complainants would suffer monetarily. The District Complainants are not seeking monetary damages. Rather, they are asking the court to determine the parties’ respective rights and the effect and validity of the 1933 Judgment. As the court found that an actual controversy exists and that the District Complainants seek a declaration relating to their direct interests, that is sufficient for the cause of action to withstand a summary judgment motion.

The motion is, therefore, also DENIED on this ground.

  1. Injunctive Relief

Given that IRWD seeks summary judgment, and not summary adjudication, and given that the court has found that the District Complainants’ declaratory relief claim stands, the court may not piece-meal decide this issue.

EVIDENTIARY RULINGS

The court rules on the District Complainants’ objections to the Declaration of Paul Cook as follows:

Dated: June 15, 2022

Hon. Lawrence Riff

Superior Court Judge



Case Number: ****8278 Hearing Date: April 6, 2022 Dept: 51

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES

IRVINE RANCH WATER DISTRICT,

Plaintiff,

vs.

ORANGE COUNTY WATER DISTRICT, et al.

Defendants

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Case No. BS16827(Lead Case)

TENTATIVE RULING ON IRWD’S MOTION FOR JUDGMENT

And Cross-Actions )

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The court wishes to limit argument on April 6, 2022 to the question whether Judge Riff in Department 51 or Judge Beckloff in Department 86 should decide the pending motion. The court is tentatively inclined toward Judge Beckloff’s (promptly) hearing the motion. The court wishes to know if any party would object.

Dated: April 4, 2022 /s/

Lawrence P. Riff

Judge of the Superior Court



b"

Case Number: ****8278 Hearing Date: November 5, 2021 Dept: 86

IRVINE RANCH WATER DISTRICT v. ORANGE COUNTY WATER DISTRICT

Case Number: ****8278 [Lead Case], BS175195 [Consolidated Case]

Hearing Date: November 5, 2021

[Tentative] ORDER GRANTING MOTION TO DISMISS WITHOUT PREJUDICE


This lawsuit challenges Respondent Orange County Water District’s (OCWD) adoption of Resolutions Nos. 16-4-37 and 14-4-45, which established the Basin Production Percentage, the Basin Equity Assessment (BEA) and the rate per acre-foot (af) of the Basin Equity Assessment (BEA) Rate for fiscal years 2016-2017 and 2017-2018.

At Phase 1 of the trial, Judge Hogue addressed the First through Fourth Causes of Action in the Third Amended Petition; specifically, the court found recycled water is not a Supplemental Source of water under the definition of that term in Section 31.4(c) of the Orange County Water District Act (OCWD Act).

At issue in Phase 2 of Trial was the interpretation of Section 2(9) the of the OCWD Act. In Phase 2 of Trial, Petitioner, Irvine Ranch Water District (IRWD) requested relief in the Fifth, Sixth and Tenth Causes of Action alleged in IRWD’s Fourth Amended Petition and Complaint for Declaratory Relief (Fourth Amended Petition).

IRWD now moves for an order to dismiss without prejudice the seventh cause of action from IRWD’s Seventh Amended Petition. Real Parties in Interest (Producers) and Respondent, OCWD, oppose the motion to the extent IRWD seeks the dismissal without prejudice.

The motion is granted; the seventh cause of action in the Seventh Amended Petition is dismissed without prejudice.

ANALYSIS

IRWD moves to dismiss without prejudice the seventh cause of action in its Seventh Amended Petition on the grounds that good cause has been shown as required by Code of Civil Procedure section 581, subdivision (e).

Code of Civil Procedure section 581 states in relevant part:

“(b) An action may be dismissed in any of the following instances:

(1) With or without prejudice, upon written request of the plaintiff to the clerk, filed with papers in the case, or by oral or written request to the court at any time before the actual commencement of trial, upon payment of the costs, if any.

. . .

(d) Except as otherwise provided in subdivision (e), the court shall dismiss the complaint, or any cause of action asserted in it, in its entirety or as to any defendant, with prejudice, when upon the trial and before the final submission of the case, the plaintiff abandons it.

(e) After the actual commencement of trial, the court shall dismiss the complaint, or any causes of action asserted in it, in its entirety or as to any defendants, with prejudice, if the plaintiff requests a dismissal, unless all affected parties to the trial consent to dismissal without prejudice or by order of the court dismissing the same without prejudice on a showing of good cause.” (Emphasis added.)

By way of background, IRWD’s seventh cause of action pertains to water rights allegedly granted to The Irvine Company under a 1933 judgment. The cause of action alleges The Irvine Company transferred those rights to IRWD by way of a 2006 quitclaim deed, and OCWD cannot enforce its production limitation and surcharge against IRWD’s groundwater rights under the 1933 judgment differently than OCWD applies assessments and surcharges against Laguna Beach County Water District, another holder of water rights under the 1933 judgment. (7AP ¶¶ 98-100.)

IRWD argues there is good cause to dismiss the seventh cause of action without prejudice under the circumstances here. First, IRWD explains that while trial has begun on the petition through a bifurcated procedure agreed upon by the parties, trial on this specific cause of action has not begun. Petitioner also argues very little discovery has begun on this specific cause of action. Further, IRWD has a duty as a public agency to maintain its ability to bring a claim to enforce its water rights in the future, which IRWD could not do if the court dismissed the claim with prejudice. IRWD contends adjudication of this cause of action will likely result in complex and costly discovery proceedings in order to interpret and apply an 88-year-old water rights judgment. The court should not interfere with IRWD’s duty to manage its funding in view of the interest of its customers who are members of the public.

Good cause to dismiss a matter without prejudice where the defendants do not agree and trial has begun is not defined in any way by the statute.[1] Generally, “[h]owever, ‘good cause’ includes reasons that are fair, honest, in good faith, not trivial, arbitrary, capricious, or pretextual, and reasonably related to legitimate needs, goals, and purposes.” (Laraway v. Sutro & Co., Inc. (2002) 96 Cal.App.4th 266, 274.) “In determining the meaning of ‘good cause’ in a particular context, the courts utilize common sense based upon the totality of the circumstances.” (Id.)

IRWD and Producers rely on Gray v. Superior Court (1997) 52 Cal.App.4th 165 to inform on good cause in this context.

In Gray v. Superior Court, the Court held a plaintiff could not voluntarily dismiss his partition complaint without prejudice after an evidentiary hearing before an unfavorable ruling by a referee. The Court held the trial had commenced where evidence had been presented to the referee even though the referee's findings were of an advisory nature only. (Id. at 173.) Analyzing the cases refusing to allow a plaintiff to dismiss an action as a matter of right under Code of Civil Procedure section 581, the Court observed they were of two types: “Those in which allowing a dismissal would frustrate a statutory scheme, and those in which courts interpret ‘trial’ so broadly as to include certain proceedings at the stages of pleading or discovery.” (Id. at 172.) The Court concluded allowing a voluntary dismissal after an evidentiary hearing before a referee “denigrates the partition statutes” and circumvents that statutory scheme. (Id. at 173.)

More specifically, the Court explained:

“The thread running through all these cases seems to be one of fairness: Once the parties commence putting forth the facts of their case before some sort of fact finder, such as an arbitrator, or at the pretrial stage a ruling is made on an issue of law or on admitted facts which effectively disposes of the plaintiff's case against him, it is unfair—and perhaps a mockery of the system—to allow the plaintiff to dismiss his complaint and refile. While our system is adversary and grounded on vigorous disputation, it is also dedicated to justice and grounded on the fundamental fairness of its proceedings. [¶] The thread of fairness is twisted out of true by the facts of this case. Here the parties spent two days litigating their case with seven witnesses. The referee made detailed recommendations of factual findings to the court. The referee was the factfinding arm of the court. Doubtless had real party prevailed before the referee, he would not have dismissed his complaint. To allow real party to dismiss in the wake of an unfavorable referee's recommendation would work an injustice. Trial had ‘actually commenced’ within the meaning of [Code of Civil Procedure] section 581 and within the policies of fairness in the cases set forth above. Moreover, a dismissal under [Code of Civil Procedure] section 581 denigrates the partition statutes, which provide that a party dissatisfied with a referee's report may move that it be modified or set aside, and that the court may order a new report or appoint a new referee. ([Code Civ. Proc.] ; 873.290.) A dismissal circumvents this statutory scheme.” (Id. at 173.)

Based on Gray v. Superior Court, supra, 52 Cal.App.4th at 165, the court finds the effect of dismissing before trial on this specific cause of action appears to be nearly the equivalent of dismissing the claim before trial given the circumstances. The court cannot find a dismissal without prejudice would frustrate Code of Civil Procedure 581. That the court has considered and ruled on other bifurcated and independent claims during other phases of trial does not appear to be determinative where those rulings are separate and distinct claims independent of the seventh cause of action.

Although Producers argue the court’s prior rulings directly inform on and are “essential” to the seventh cause of action requesting an interpretation of the 1933 judgment, their assertion is unpersuasive. Producers suggest the seventh cause of action seeks a judicial declaration that “OCWD cannot apply or impose the 2019 production limitation and surcharge on IRWD’s exercise of its 1933 Water Right and the amount of ground water production allowed under that right granted under the 1933 Judgment . . . .” (7AP ¶ 99.) Producers report the Phase 2a specifically resolved the validity of the of the 2019 production limitation and surcharge.

The Phase 2a trial did not address or consider, however, the 1933 judgment—the central issue in IRWD’s seventh cause of action. In fact, the court’s decision on the seventh cause of action would have no impact on the validity of the 2019 production limitation and surcharge. Instead, a ruling on the seventh cause of action would determine whether the valid production limitation and surcharge could be applied to IRWD. That is, does the 1933 judgment trump the otherwise valid 2019 production limitation and surcharge.

Further, even if the legal issues from prior trial phases informed on this cause of action, it is unclear how this fact informs on whether good cause exists to dismiss the seventh cause of action without prejudice under Code of Civil Procedure section 581.[2] There appears to be no evidence submitted to the trier of fact or witnesses presented in earlier phases of this litigation that would be relevant to the interpretation of the 1933 judgment.[3] Nothing suggests evidence interpreted by the court in one phase might be interpreted differently for purposes of the seventh cause of action in some later trial.

The remaining issued raised by OCWD and Producers does not appear to inform on whether good cause exists to dismiss the seventh cause of action without prejudice.

For example, the parties seem to dispute when the seventh cause of action arose. IRWD argues it only recently added the seventh cause of action to the Seventh Amended Petition. OCWD suggests the underlying allegation—if not the cause of action itself—has been included in the pleadings since IRWD filed its First Amended Petition in September 27, 2016. Nonetheless, the timing associated with the seventh cause of action—or its allegations—is of no consequence to the court’s analysis under Code of Civil Procedure section 581.

Finally, with respect to general prejudice arguments, prejudice affecting a “good cause” finding is that arising from trial beginning on a specific claim that is then dismissed before the adjudication is completed by the tier of fact. Such prejudice would likely undermine a good cause finding. As such, OCWD’s claim that extensive discovery has been undertaken does not undermine a good cause finding because such discovery costs would exist where a matter is dismissed on the eve of trial and is statutorily permitted to be dismissed without prejudice. Alleged prejudice from the risk of “lost evidence” is similar.

That a dismissal without prejudice does not appear to offend the purpose of Code of Civil Procedure section 581 under these circumstances, the court finds IRWD’s desire to manage its resources while preserving its claims as public entity to be an adequate “good cause” to dismiss this claim without prejudice. The court is also persuaded as the seventh cause of action is a claim distinct and independent from those already adjudicated.

CONCLUSION

Based on the foregoing, the motion is granted.

IT IS SO ORDERED.

November 5, 2021 ________________________________

Hon. Mitchell Beckloff

Judge of the Superior Court


[1] “Statutes requiring good cause for a court order rarely define the phrase and, then, only in terms of those reasons that are insufficient.” (Laraway v. Sutro & Co., Inc. (2002) 96 Cal.App.4th 266, 274.)

[2] In fact, Producers argue there are pending cross-claims to adjudicate the issue. Thus, it appears there would be no prejudice to them if the court dismissed the seventh cause of actino without prejudice because Producers could still adjudicate the claim. (See Producers’ Response 6:23-26.)

[3] Producers cite City of Santa Maria v. Adam (2012) 211 Cal.App.4th 266 to suggest that where bifurcated trial has begun on some issues but not others any pending claim must be dismissed with prejudice. (Producers’ Response 12:14-24.) The court disagrees with their analysis. The Court noted: “The LOG parties contend that dismissal of their other causes of action was without prejudice. We reject the contention. The LOG parties asked for dismissal without prejudice after trial had commenced and after the trial court observed that they had not submitted any evidence on causes of action other than quiet title. After commencement of trial, dismissal without prejudice may be had if all affected parties consent or the court finds good cause for same. (Code Civ. Proc., ; 581, subd. (e).) The LOG parties offer nothing to show that they met either condition.” (City of Santa Maria v. Adam, supra, 211 Cal.App.4th at 285 n. 10 [emphasis added].)

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Case Number: ****8278    Hearing Date: September 11, 2020    Dept: 86

IRVINE RANCH WATER DISTRICT v. ORANGE COUNTY WATER DISTRICT

Case Number: ****8278 [Lead Case], BS175192 [Consolidated Case]

Hearing Date: September 11, 2020

[Tentative] ORDER ON PHASE 2a OF TRIAL:

____________ Relief on Eleventh Cause of Action in IRWD’s Petition and Complaint

____________ Relief on Twelfth Cause of Action in IRWD’s Petition and Complaint


On April 17, 2019, the Orange County Water District (OCWD) adopted a production limitation and surcharge (the 2019 PL/S) through its Resolution D. (AR2a 8007-8010.)[1] Irvine Ranch Water District (IRWD) challenges the 2019 PL/S and asserts it is invalid on three grounds. First, IRWD contends the OCWD improperly calculated the 2019 PL/S under the plain language of the Orange County Water District Act (the Act). Second, IRWD argues the OCWD abused its discretion when it calculated the 2019 PL/S because substantial evidence does not support its required findings. Finally, IRWD claims the 2019 PL/S is an unconstitutional assessment and/or charge.

IRWD’s challenge to the 2019 PL/S is contained in the Sixth Amended and Supplemental Petition and Complaint (the Petition) in its eleventh cause of action for a writ of mandate and the twelfth cause of action, a derivative claim, for declaratory relief.

IRWD alleges at paragraph 115 of the Petition:

“In adopting Resolution No. D on April 17, 2019, OCWD imposed a production limitation and surcharge that violates applicable law, including the OCWD Act and the California Constitution. Without limiting the foregoing, the 2019 production limitation and associated surcharge are legally impermissible because (a) the purpose of said action is to prohibit the export of groundwater to a location outside the OCWD district boundaries, which is contrary to the legislative purpose for a production limitation under the OCWD Act and in contravention of the restrictions on OCWD’s authority to prohibit exports set forth in Section 2(9) of the Act; (b) OCWD would use a methodology to determine an exceedance of the production limitation . . . that is in contravention of the OCWD Act; and (c) the surcharge bears no reasonable relationship to OCWD’s cost of service or the groundwater producer’s burden on the governmental activity at issue.”

The OCWD as well as Real Parties in Interest, various water districts and the City of Anaheim, (Water Producers) oppose IRWD’s request to invalidate the 2019 PL/S.

STATEMENT OF THE CASE

The Parties:

IRWD is a California water district formed pursuant to Water Code section 34000 et seq. As a retail water agency, IRWD services approximately 110,000 water service connections within its service area, which includes all of the City of Irvine and portions of the cities of Tustin, Newport Beach, Costa Mesa, Orange and Lake Forest as well as unincorporated areas of Orange County.

The OCWD is a special district formed under the Act. (Water Code, Appendix Chapter 40.)[2] The OCWD is a public entity established by the California Legislature and generally empowered to manage, replenish, regulate, and protect groundwater supplies within its boundaries. (Orange County Water Dist. v. Sabic Innovative Plastics US, LLC (2017) 14 Cal.App.5th 343, 357 [citing ;; 40-1 and 40-2].) “Despite its name, the District is not a county water district under the County Water District Law (Wat. Code, ; 30000 et seq.) or a state water district under the California Water District Law (id., ; 34000 et seq.). Instead, it operates under its own governing act, the OCWD Act, with its own set of powers and responsibilities.” (Ibid.) OCWD’s district boundaries lie within the boundaries of the Orange County Groundwater Basin (OC Basin), although a portion of the OC Basin is outside the OCWD’s political boundaries. (AR1-4159.)

OCWD Management of the OC Basin:

Pursuant to Sections 23, 27, 27.1 and 31.5 of the Act, the OCWD establishes and collects “replenishment assessments” and “basin equity assessments” as a means of purchasing water to replenish the OC Basin, including imported water (for example, water imported from the State Water Project in Northern California or the Colorado River) from a Metropolitan Water District member agency. OCWD’s other powers concerning management of the OC Basin are specifically set forth in Section 2 of the Act.

Phase 2 of Trial:

In Phase 2 of trial the court adjudicated the question of the extent of the OCWD’s authority with unlawful exports of water outside the district. Resolution of the issue required the court ot interpret the Act at Section 2(9).

The court agreed with IRWD’s interpretation. The court explained:

“As noted earlier—and as not disputed by OCWD or the Water Producers—OCWD has only the powers bestowed upon it by the Legislature. (Palmer v. West Kern County Water Dist., supra, 193 Cal.App.2d 41, 45 [quoting Biggart v. Lewis (1920) 183 Cal. 660, 666].) Section 2(9) expressly speaks to the manner in which OCWD may prevent unlawful exports. The Legislature clearly determined OCWD may prevent unlawful exportation of water through the legal process; the Legislature did not empower OCWD with broad regulatory authority.[3] The Legislature expressly defined OCWD’s power in that way. Contrary to the position of the Water Producers, the statutory provision operates as a limit.”

(Phase 2 Trial Order, p. 6.) Thus, the court determined that Section 2(9) limits the authority of the OCWD to commencing legal action to prevent unlawful exports of water outside the district.

ISSUES:

Section 31.5 of the Act:

To accomplish its purpose, the Legislature provided the OCWD certain management tools, including authority to impose a production limits and surcharges. For example, Section 31.5 of the OCWD Act allows the OCWD to impose production limits. Section 31.5, subdivision (g)(2)(c) provides the OCWD board may determine for an ensuing water year:

“That a . . . . limitation from groundwater within the district [is] necessary for the protection of the water supply of the district.”

In dispute here is the meaning of Section 31.5, subdivision (g)(2)(G). It provides:

“Production requirements or limitations and the surcharge for production in excess of the basin production limitations on persons and operators within the district that will apply during the ensuing water year. The requirements and limitations shall be on the amount of groundwater produced by those persons and operators expressed in a percentage of overall water produced or obtained by those persons or operators from groundwater within the district and from supplemental sources.”

Resolution D and 2019 PL/S:

As noted, the OCWD board adopted Resolution D on April 17, 2019. The production limitation limits a producer’s production of groundwater to the amount of its water demands within the district. The surcharge is imposed for all water exceeding the production limitation. (AR2a 8007-8010.)

At the time it adopted Resolution D, the OCWD board found and determined:

“The Production Limitation is 100 percent for all 19 retail Groundwater Producers and is necessary for the protection of the water supply of the District. The Surcharge for production in excess of the Production Limitation is $2,000 per acre-feet.” (AR2a 8008.)

It also found:

“The Basin Equity Assessment and production requirements and limitations from groundwater within the District established by this resolution are necessary to prevent excessive groundwater production to protect the water supply of the District.” (AR2a 8008.)

The Parties’ Positions:

IRWD argues the 2019 PL/S constitutes a de facto prohibition on the exportation of groundwater outside the district, thereby unlawfully circumventing the court’s ruling that the OCWD’s authority to limit the exportation of ground is confined to legal action under Section 2(9). IRWD contends the “OCWD attempted to fashion a production limitation that would mirror OCWD’s methodology for determining when an export occurs. . . . To implement that plan, OCWD sought to impose a production limitation of 100%, so that the surcharge would be paid if groundwater production exceeded 100% of the producer’s total water demands within OCWD.” (Opening Brief 15:5-10.)[4]

In opposition, the OCWD and Water Producers dispute IRWD’s characterization of the 2019 PL/S. Specifically, they argue the 2019 PL/S merely seeks to limit production in excess of the production limitations by creating a financial disincentive to exporting groundwater from the OC Basin. As corroborated by an OCWD staff report: “Board action to establish a Production Limitation and Surcharge would not prevent a Producer from pumping as much water as it desires.” (AR2a 7537.) The also argue the 2019 PL/S does not affect any groundwater export that occurs so long as groundwater production is at less than 100 percent of total water use within the district.

IRWD’S CLAIM THE 2019 PL/S IS INCONSISTENT WITH THE PLAIN LANGUAGE OF THE ACT

IRWD claims the 2019 PL/S is inconsistent with the plan language of Section 31.5, subdivision (g)(2)(G).

The interpretation of provisions of the Act is a question of law. To interpret a statute, the court begins “with the actual language of the statute, and if the text is clear as applied to a given case, and it does not fall into any of the exceptions [such as absurd results, and results at odds with the unmistakable or clear intent of the Legislature], stop there. [Citation omitted.] As Oliver Wendell Holmes said, ‘we do not inquire what the legislature meant; we ask only what the statute means.’ [Citation omitted.]” (J.A. Jones Constr. Co. v. Superior Court (1994) 27 Cal.App.4th 1568, 1575.)

Here, Section 31.5, subdivision (g)(2)(G), states in its entirety:

“Production requirements or limitations and the surcharge for production in excess of the basin production limitations on persons and operators within the district that will apply during the ensuing water year. The requirements and limitations shall be on the amount of groundwater produced by those persons and operators expressed in a percentage of overall water produced or obtained by those persons or operators from groundwater within the district and from supplemental sources.”

IRWD asserts “[u]nder Section 31.5(g)(2)(G), a production limitation is based on production within the OCWD boundaries, not the amount of water used within those boundaries.” (Opening Brief 15:22-23 [emphasis added].) IRWD describes its interpretation in a percentage formula as:

Groundwater produced within OCWD’s Boundaries

Groundwater produced within OCWD + Supplemental Sources

IRWD argues the OCWD’s 2019 PL/S instead interprets the production limitation to be based on the amount of water used within those boundaries. This interpretation as expressed in mathematical formula is as follows:

Groundwater produced within OCWD’s Boundaries

Groundwater used within OCWD’s Boundaries + Supplemental Source water

Based on the plain language of the statute, IRWD states the OCWD’s adoption of a 100 percent production limitation is improperly based on the amount of groundwater used within the district, instead of on the amount of groundwater produced within the district—the latter being the proper methodology under the plain language of the statute.

IRWD notes Section 31.5, subdivision (g)(2)(G) states a production limitation is “expressed in a percentage of overall water produced or obtained by those persons or operators from groundwater within the district and from supplemental sources.” IRWD asserts the Water Producers and the OCWD apply two different meanings to the term “groundwater produced” in this same sentence of the subdivision. Such statutory interpretation conflicts with well-establish rules on statutory construction. (See Braun v. Bureau of State Audits (1998) 67 Cal.App.4th 1382, 1389 [“Where the same words are repeated in a statute there is a presumption that the same meaning is intended . . . .”])

Under IRWD’s plain language interpretation of Section 31.5, subdivision (g)(2)(G), a production limitation may only be expressed as a percentage of water pumped from within the district (regardless of where the water is used) plus supplemental sources (regardless of where the water is used).

As a matter of plain language interpretation, IRWD’s argument makes sense. IRWD suggests a straightforward application of the language.

It appears to the court both the OCWD and the Water Producers implicitly concede IRWD’s plain language interpretation is correct. That is, if the court considered nothing outside of Section 31.5, subdivision (g)(2)(G), IRWD is correct.[5]

Moving past the plain language meaning of the statute [and it is not entirely clear to the court why the court should do so], the OCWD focuses on the statutory scheme as a whole and the legislative history [again the need for extrinsic evidence is unclear given the plain language of the statute] suggesting management ratios have always focused on water use within the district. Based on context and the OCWD’s purpose, the OCWD and Water Producers assert IRWD’s interpretation of Section 31.5, subdivision (g)(2)(G) is wrong.

The court recognizes, as argued by the OCWD, the court “must read statutes as a whole, giving effect to all of their provisions” and read all parts of a statute together “in a manner that gives effect to each, yet does not lead to disharmony with the others.” (Jurcoane v. Superior Court (2001) 93 Cal.App.4th 886, 893.) The court also acknowledges the general language in other subdivisions of Section 31.5 addressing basin equity assessment, production requirements and production limitations were created to assist the OCWD in protecting water supplies within the district. (; 31.5, subd. (a).) Without harmonizing all of Section 31.5, the OCWD contends IRWD’s interpretation leads to absurd results. (Remington Investments, Inc. v. Hamedani (1997) 55 Cal.App.4th 1033, 1040. [“Whenever one of two or more possible constructions of a status leads to an absurdity, the appearance of the absurdity is an indication that the proposed construction is incorrect.”])

[The OCWD makes additional contextual arguments – the jurisdiction of the Act is limited to the district itself and operators “within the district,” supplemental sources are sources outside the OC Basin, and annexation.]

The Water Producers note that although a production limitation has been imposed 24 times since 1980 (AR2a 11924-11926, 11963-11964), the OCWD has never used a formula that presumes the water extracted from the OCWD could be used anywhere. (Kennedy Decl. ¶¶ 5-7.) They argue this fact further supports to the OCWD’s interpretation. (Doe v. Becerra “[E]vidence that the agency ‘has consistently maintained the interpretation in question, especially if [it] is long-standing’ . . . , and indications that the agency’s interpretation was contemporaneous with legislative enactment of the statute being interpreted,” are factors to consider in determining whether an agency’s interpretation is probably correct.”])

Additionally, every year, IRWD submits a “Basin Equity Assessment Report,” which is used to determine pumping over the basin production percentage as it relates to IRWD, and therefore its liability for basin equity assessment payments. (AR2a 11412 – 11446 [Weghorst Depo., Exh. 191].) In each of these reports, the denominator of the basin production percentage equation is based on water use within the district. (See, e.g., AR2a 11412, [Line 2, reporting “All water from Supplemental Sources (Ag AND Non-ag) used solely within OCWD boundaries . . . .”]) The Water Producers and the OCWD argue producers have always determined compliance with the basin production percentage based on the percentage their production of OCWD groundwater represents in relation to their total water use within the district.

[The court requests the OCWD and Water Producers address why the plain language interpretation of Section 31.5, subdivision (g)(2)(G) advanced by IRWD leads to absurd results in terms of basin equity assessments, basin production percentages and production limitations. The court also requests the OCWD explain the narrative (and chart) in Kennedy’s declaration.]

IRWD’S CLAIMS THE OCWD’S FINDINGS ARE UNSUPPORTED

Section 31.5 of the Act requires the OCWD make certain findings to adopt a production limitation such as 2019 PL/S. In addition to other findings, to adopt a production limitation, the OCWD must find:

“That a . . . production . . . limitation from groundwater within the district [is] necessary for the protection of the water supply of the district.”

IRWD argues the OCWD’s findings lack evidentiary support. More specifically, IRWD contends substantial evidence does not support the OCWD’s finding “the 2019 PL/S was ‘necessary for the protection of the water supply of the district.’ ” (Opening Brief 21:22-23.)

The decision to impose a production limitation is a quasi-legislative act and entitled to some deference from the court. (See e.g. Home Builders Assn. of Tulare/Kings Counties, Inc. v. City of Lemoore (2010) 185 Cal.App.4th 554, 561; Balch Enterprises, Inc. v. New Haven Unified School District (1990) 219 Cal.App.3d 783, 792.)[6]

Traditional mandate actions are generally used to review an administrative agency’s quasi-legislative actions of administrative agencies. Judicial review in such cases are governed by several principals. First, the judicial inquiry is generally “confined to the question whether the classification is ‘arbitrary, capricious, or [without] reasonable or rational basis.” (American Coatings Assn. v. South Coast Air Quality Management Dist. reasonable basis Garrick Development Co. v. Hayward Unified School Dist.

Where administrative proceedings are quasi-legislative in nature, “courts exercise limited review out of deference to separation of powers between the Legislature and the judiciary, and to the presumed expertise of the agency within the scope of its authority.” (Western Oil & Gas Assn. v. Air Resources Board Ibid.)

Accordingly, under this deferential standard of review, the OCWD quasi-legislative actions—such as setting a production limitation—are presumed to be valid. IRWD therefore has the burden to establish the OCWD’s decisions are arbitrary, capricious or without a reasonable or rationale basis.

IRWD attacks three justifications offered by the OCWD for the production limitations it believes are unsubstantiated.

First, IRWD argues OCWD implemented the 2019 PL/S solely to prevent the export of district groundwater to areas outside of the OCWD’s service area. (AR2a 7553, 8024-8025.) IRWD contends such a justification is contrary to the Act and constitutes an impermissible expansion of the OCWD’s authority. According to IRWD, the 2019 PL/S should be rejected as an

improper attempt by the OCWD to restrict the exportation of water outside the district. Such power, IRWD argues, is in direct conflict with the authority provided to the OCWD under Section 2(9) of the Act.

Second, to the extent the OCWD justifies its actions as a way to “disincentivize any Groundwater Producer from unilaterally pumping groundwater in excess of its total water demands and potentially exporting the groundwater to neighboring agencies inside or outside of OCWD,” IRWD cries disingenuous. (AR2a 7533-34, 8025.) IRWD so contends because the OCWD admits no sale or transfer of groundwater to another agency outside of the district’s boundaries has ever previously occurred. (AR2a 8453.) IRWD argues OCWD merely created speculative hypotheticals to justify its actions. (Opening Brief 19:11-23.) Accordingly, IRWD argues this false justification does not constitute substantial evidence sufficient to withstand this court’s review. (Poncio v. Department of Resources Recycling & Recovery (2019) 34 Cal.App.5th 663, 673.)

Finally, IRWD argues the OSCWD’s final justification—“[s]etting a 100% Production Limitation ensures that large amounts of additional groundwater pumping will not unexpectedly occur in the future, which would have the effect of worsening this situation and negating District efforts to refill the Basin”—is factually untrue. (AR2a 7554, 8025.) First, IRWD notes the OC Basin is currently at “optimal” level. Second, according to IRWD, the 2019 PL/S will not reduce groundwater pumping and is merely concerned with the location where the water is used.

The OCWD disputes IRWD’s factual spin. The OCWD contends the OC Basin is in constant overdraft—a situation necessitating the use of the OC Basin management tools provide to the OCWD by the Legislature.[7] (AR1 3777; 3790; 3791; AR2a 7066-7067; 7606.) Further, as the population continues to grow within the district, demand for water will increase requiring active management by the OCWD. (AR 942; 1958)

The OCWD persuasive argues the 2019 PL/S does not prevent the exportation of groundwater. Instead, the OCWD designed the production limitation to stop overproduction generally. (AR2a 7606-7607.) In fact, the OCWD acknowledges a producer could export water from the OC Basin with no surcharge so long as the producer did not exceed the 100 percent production limitation on an annual basis. Finally, the OCWD notes the surcharge provides a disincentive but not a prohibition; in this context and given the circumstances, the court recognizes this is a difference with a distinction.

Based on the foregoing, the court finds IRWD did not meet its burden of demonstrating the 2019 PL/S is arbitrary, capricious or without reasonable or rationale support.

IRWD’S CLAIM THE 2019 PL/S IS UNCONSTITUTIONAL

Finally, IRWD contends the surcharge promulgated by the OCWD violates the constitutional limitation on assessments and fees that can lawfully be charged by water agencies. According to IRWD, the surcharge bears no relationship to OCWD’s operating costs for management and replenishment of the OC Basin. In fact, IRWD contends the $2,000 per AF surcharge is “exorbitant.”

The OCWD argues the surcharge is not a tax. It is a penalty; therefore, it is not subject to the constitutional limitation.

In 1996, Proposition 218 added (among other things) article XIII C to the California Constitution, which restricts the authority of local governments to impose taxes by requiring voter approval of all taxes imposed by local governments. (City of San Buenaventura v. United Water Conservation Dist. (2017) 3 Cal.5th 1191, 1200.) In 2010, when Proposition 26 was passed by voters, it expanded the reach of article XIII C’s voter approval requirement by broadening the definition of “tax” to include “any levy, charge, or exaction of any kind imposed by a local government.” (Id. [quoting Cal. Const., art. XIII C, ; 1, subd. (e)].)

“The local government bears the burden of proving by a preponderance of the evidence that a levy, charge, or other exaction is not a tax, that the amount is no more than necessary to cover the reasonable costs of the governmental activity, and that the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor’s burdens on, or benefits received from, the governmental activity.” (Cal. Const., art. XIII C, ; 1, subd. (e)(7).)

In support of its argument the surcharge associated with the 2019 LP/S is a tax, IRWD relies on Capistrano Taxpayers Assn., Inc. v. City of San Juan Capistrano (2015) 235 Cal.App.4th 1493. IRWD argues a tiered pricing structure—similarly to the surcharge here—cannot be considered a penalty because it would create a “loophole” so large it would virtually repeal the relevant constitutional provisions. (Id. at 1515.)

The OCWD and Water Producers argue Capistrano Taxpayers Assn., Inc. v. City of San Juan Capistrano is distinguishable. The court agrees.

The tiered water rate structure at issue in Capistrano Taxpayers Assn., Inc. is not analogous to the OCWD’s use of basin equity assessments, basin production percentage and production limitations as legislatively-approved water district management tools. As the OCWD argues, each mechanism serves a different purpose and function; importantly, the OCWD does not use the production limitation surcharge to generate revenue, unlike the revenue producing tiered water rate structure in Capistrano Taxpayers Assn., Inc. (See Capistrano Taxpayers Assn., Inc. v. City of San Juan Capistrano, supra, 235 Cal.App.4th at 1499-1500.) It is also worth noting that the Court found the tiered water rate structure at issue in Capistrano Taxpayers Assn., Inc. violated Proposition 218, a proposition that no party argues is applicable to the OCWD. (See City of San Buenaventura v. United Water Conservation Dist. (2017) 3 Cal.5th 1191, 1198.)

Here, the OCWD primarily funds its operations through a combination of property taxes collected on lands within the district, and volumetric groundwater charges (known as replenishment assessments) paid by water producers for each acre foot of water pumped. (AR2a 11045.) Additionally, the OCWD collects basin equity assessments from water producers who pump in excess of the basin production percentage, which is set annually by the OCWD at levels a water producer may pump without significantly depleting the OC Basin. (AR2a 280, 5733-5737, 11045.)

The OCWD Board set a $2,000 surcharge – it argues, a penalty – for purposes of preventing overproduction from the OC Basin in furtherance of “the protection of the water supply of the district.” (AR2a 8127- 8130.) Thus, as authorized by the Act, the production limitation is not intended to raise revenue but to discourage specific conduct.

Finally, the OCWD set the surcharge at an amount determined by the OCWD board to deter excessive pumping of the OC Basin. (AR2a 3736-3751; 10468-10502; Kennedy Decl. ¶ 3.)[8] The OCWD notes the Legislature expressly granted the OCWD the authority to set a “surcharge in an amount to be determined in the discretion of the board.” (; 31.5, subd. (g)(2)(D).) The evidence demonstrates the OCWD did not set the surcharge to generate revenue; it did so to disincentive behavior. (AR2a 8024.) On behalf of the OCWD, John Kennedy testified that in setting the OCWD’s surcharge at a very high level he “wanted to make it a large enough penalty that nobody would do it.” (AR2a 8475, 7604.)

The court finds that the surcharge is properly characterized as a penalty, not subject to Proposition 26.

CONCLUSION

For the foregoing reasons, the court finds for/against IRWD as to causes of action eleven and twelve in the Petition.

IT IS SO ORDERED.

September 11, 2020

Hon. Mitchell L. Beckloff, Judge


[1] Citations to the Administrative Record are in the following format: “AR1 page number” for the Administrative Record prepared for Phase 1 of Trial and “AR2 page number” for the Compendium of Evidence prepared for Phase 2 of Trial, and “AR2a page number” for the Compendium of Evidence and Administrative Record prepared for Phase 2a of Trial.

[2] All further statutory references are to this Code unless otherwise noted.

[3] Unlike the services district discussed in Gomes v. Mendocino City Community Services District (2019) 35 Cal.App.5th at 249 or the Almeda County Water District (; 31142.26, subd. (a)), the Legislature did not empower OCWD with broad regulatory authority.

[4] “Total Water Demand” is not defined in the Act, but, as described by IRWD, the concept refers to the water served by the producer and used by its customers from all sources, such as imported water, groundwater, etc. (Opening Brief 15:2-4.)

[5] The court finds the implicit concession in language such as: “In doing so, IRWD strips the context surrounding the setting of a PL and isolates language found in subdivision (g)(2)(G) of ; 31.5 of the Act in a manner that leads to absurd results, namely a PL that would be useless for managing the basin.” (OCWD Opposition 15:21-23.) The Water Producers similarly argue the plain text of the statute supports their interpretation, but they focus on reasons the plain language of the statute should not apply. (Water Producers’ Opposition 14:27, 16:7.)

[6] Collectively, these cases suggest an agency’s decision to impose a fee, charge or other exaction is a quasi-legislative act.

[7] The annual overdraft is the quantity by which the production of groundwater exceeds natural replenishment of groundwater supplies within OCWD. (; 24 [AR2a 37]; AR1 3853; AR2a 7066.) OCWD contends that OCWD groundwater remains in a constant overdraft; for example, Basin’s annual overdraft for water year 2017-18 was 195,000 acre feet. (AR2a 7066.)

[8] OCWD notes that the 2019 PL/S surcharge of $2,000 is less than the surcharge set in 2009 ($2,400/AF) and 2010 ($2,800/AF). According to the OCWD, IRWD did not challenge these past surcharge amounts.



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