SUPERIOR COURT OF CALIFORNIA

COUNTY OF SAN FRANCISCO

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Case Number: CGC-13-528312

Filing Date: Jun-25-2014 8:55
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ORDER

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

COAST WATER DISTRICT et al

001 C04530036

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FILED

San Francisco County Superior Court

JUN 2 5 2014
CLERK,QF Tt!CQQ!,IAT
-~~?c.1i'~" I tail ;Ue:____ -

BY:

Deputy-Cierk

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SUPERIOR COURT OF CALIFORNIA

COUNTY OF SAN FRANCISCO

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CALIFORNIA-AMERICAN WATER CO.,

Plaintiff,

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Case No. CGC- 13-528312

ORDER OVERRULING DEMURRER OF
MARINA COAST WATER DISTRICT

vs.
MARINA COAST WATER DISTRICT, ET
AL.,

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Defendants.

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AND RELATED CROSS ACTIONS

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Introduction
There are three parties in this case: California-American Water Company (Cal-Am),
Marina Coast Water District (Marina), and Monterey County Water Resources Agency

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(Monterey). The parties entered into several contracts, collectively referred to as the RDP
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Agreements. Cal-Am and Monterey have argued that the RDP Agreements are void, while

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Marina says they are enforceable. In ruling on Marina's Motion for Summary Adjudication of

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its Cross-Complaint and the first cause of action in Cal-Am's Complaint, involving the validity

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of the RDP Agreements, I found that the "Agreements were validated by operation of statute"

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"[b]ecause Monterey was a party to the Agreements[,]" that "Cal-Am is barred from seeking to
void these agreements by the validation statutes[,]" but "Monterey's time for challenging the

CGC 13-528312

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validity of the agreements under [Government Code] 1092 has not expired." February 25,
2014 Order, 9, 14-15. Monterey's Cross-Complaint followed.

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Monterey asserts a single cause of action for declaratory relief. Monterey pled that an
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"actual controversy has arisen and presently exists between the parties in that [Monterey]
contends that the RDP Agreements are void as a result of Collins' conduct and financial interest

in the RDP Agreements, whereas [Marina] disagrees and contends the RDP Agreements are

valid." Monterey Cross-Complaint~ 22. Monterey requested a declaration that the RDP

Agreements are void. !d.

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at~

23. Monterey named Cal-Am as a cross-defendant. !d.

Monterey pled that Cal-Am was a party to the RDP Agreements. !d.

at~

at~

3.

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By the present demurrer Marina seeks an order dismissing Cal-Am from Monterey's
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Cross-Complaint as improperly joined. I heard argument this date.

The demurrer is overruled.

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Requests for Judicial Notice

Both Monterey and Cal-Am request judicial notice of one Marina's briefs, two total,

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arguing that the Public Utilities Commission should not approve the settlement agreement
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between Monterey and Cal-Am. The requests are unopposed and granted. Evid. Code 452(h).

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Discussion
C.C.P. 430.10(d) contemplates a demurrer when there is a defect or misjoinder of
parties. Royal Surplus Lines Ins. Co., Inc. v. Ranger Ins. Co., I 00 Cal.App.4th 193, !98 (2002),
quoting 5 Witkin, CALIFORNIA PROCEDURE, Pleading, 926, 3 85-86 (4th ed. 1997). Demurrers

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CGC 13-528312

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on the ground of misjoinder lie only when the defect appears on the face of the complaint or
matters judicially noticed. !d.

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Marina makes two arguments.
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First, Marina contends that Cal-Am is not properly party to the Cross-Complaint because

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Monterey did not allege any controversy between Monterey and Cal-Am. 1 Second, Marina

asserts that I have already determined that the RDP Agreements are valid as to Cal-Am, so there

is no need for further proceedings involving Cai-Am. 2

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The first argument presumes that every declaratory relief action must truthfully allege
that the plaintiff (or cross-complainant) has interests adverse to every other party, i.e., that in a

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declaratory relief action based on contract involving multiple parties, one may not bring into the
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suit any party with which the plaintiff agrees on the disposition of the case. This is very odd.

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Normally all parties to such a contract ought to be involved. As a party with a conceded interest

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in the outcome of the case, Cal-Am should be able to participate. C.C.P. 389(a). Indeed at

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argument Marina's counsel actually agreed that later in this litigation Cal-Am would have every

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right to participate in the suit, perhaps on matters of remedies, or other consequences of

declaratory relief. While Marina's counsel suggested this only recommended that Cal-Am be

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brought back in at that later stage, counsel has effectively agreed, as he must, that Cal-Am has an
interest in the suit.
I turn to Marina's second argument. If I am to afford complete relief to Monterey by

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invalidating the RDP Agreements it will necessarily affect the contractual relationship between

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Monterey and Cal-Am under the same contracts. Contrary to Marina's professed understanding,

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I have not ruled on the effect Monterey's invalidating the RDP Agreements would have on the

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Motion, 2-3; Reply, 3.

Motion, 3-4; Reply, 3.

CGC 13-528312

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relationship between Marina and Cal-Am under the same agreements. 3 In the summary
judgment order, I found only that the validating statutes were triggered by Monterey's enabling

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act and foreclosed Cal-Am, but not Monterey, from challenging the validity of the contract. It is

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enough for now to note that Monterey hopes to invalidate the RDP Agreements which bind it to
both Marina and Cal-Am.
As suggested above, Cal-Am is a necessary party. The relief that Monterey requests, a

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declaration that the RDP Agreements are invalid, would be incomplete in the absence of Cal-

Am. C.C.P. 389(a)(l). 4 No party has suggested that Cal-Am would be bound by a judicial

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declaration that the RDP Agreements are invalid if it is not a party. Marina's only argument on

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this point is that the contract is valid as to Cal-Am so complete relief would be afforded to
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Monterey if the Court declared only that Marina caunot enforce the contract against Monterey.

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See Reply, 4. But Monterey seeks a declaration that the RDP Agreements are invalid, both its

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agreements with Marina and Cal-Am. Monterey Opposition, 3. Cal-Am is properly a party.

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Prejudice

Marina acknowledges that even if there is a misjoinder, it must also show prejudice.

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Motion at 4. Marina argues that it will be prejudiced by the asserted misjoinder of Cal-Am
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because it will be forced to contend with two parties whose interests are aligned, rather than just
one. Motion, 5. This is not apparent from the face of the complaint or the matters judicially

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Marina goes too far in interpreting the "S/J Order [a]s a fmal, binding ruling that the RDP Agreements are valid as
a matter of law" as to Cal-Am. Reply at 6. It is one thing to say that Cal-Am is barred from challenging the validity
of the RDP Agreements by the validation statutes, as triggered by Monterey's enabling act. It is different to say that
Cal-Am continues to be bound by the RDP Agreements even after Monterey invalidates the contract. The Court has
not addressed, or been presented with, the second question. Marina also goes too far in contending that "the Court
has already 'validated' the RDP Agreements as to Cal-Am." See Reply at 8. The Court held that the RDP
Agreements had been validated by the passage of time under Monterey's enabling statute, such that only Monterey
could now seek to invalidate them.
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"Section 389 of the Code of Civil Procedure requires joinder of persons materially interested in an action whenever
feasible. [Citation.] Parties to a contract should usually be joined in an action challenging the validity of the
contract." Vanoni v. County ofSonoma, 40 Cai.App.3d 743, 746 (1974).

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noticed. If Marina is right that Cal-Am and Monterey's interests are aligned, then even if both
Cal-Am and Monterey file papers, Marina ought to be able to dispose of them with the same

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filing. There is no prejudice.

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Conclusion
The demurrer is overruled.

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Dated: June 24, 2014

Curtis E.A. Karnow
Judge Of The Superior Court

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CGC 13-528312

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Superior Court of California

County of San Francisco

CALIFORNIA-AMERICAN WATER CO,

Plaintiff(s)

Case Number: CGC-13-528312

CERTIFICATE OF ELECTRONIC SERVICE
(CCP 1010.6(6) & CRC 2.260(g))

vs.
MARINA COAST WATER DISTRICT, et ai
Defendant(s)

AND RELATED CROSS-ACTIONS

I, DANIAL LEMIRE, a Deputy Clerk of the Superior Court of the County of San
Francisco, certify that I am not a party to the within action.
On June 25, 2014, I electronically served THE ATTACHED ORDER via File &
ServeXpress on the recipients designated on the Transaction Receipt located on the File &
ServeXpress website.
Dated: June 25, 2014

CERTIFICATE OF ELECTRONIC SERVICE