SUPERIOR COURT OF CALIFORNIA COUNTY OF SAN FRANCISCO

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Case Number: CGC-13-528312 Filing Date: Apr-15-2014 11:11 Filed by: SHAWNA VANTREE Juke Box: 001 Image: 04447780

ORDER

CALIFORNIA-AMERICAN WATER COMPANY, A CALIFORNIA CO VS. MARINA COAST WATER DISTRICTet al

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SUPERIOR COURT OF CALIFORNIA COUNTY OF SAN FRANCISCO

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CALIFORNIA-AMERICAN WATER CO., Plaintiff, vs. MARINA COAST WATER DISTRICT, ET AL., Defendants.

Case No. CGC -13-528312 ORDER GRANTING MOTION OF MONTEREY COUNTY WATER RESOURCESAGENCYFORLEAVETO FILE CROSS COMPLAINT

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AND RELATED CROSS ACTIONS The parties Cal-Am, the Marina Coast Water District (Marina), the Monterey County

17 18 19 Water Resources Agency (Monterey), and RMC Water and Environment entered into contracts by which the parties would develop, construct and operate regional desalination projects. The parties disagree whether these agreements may be void or voidable as the result of the actions of one Stephen Collins, a member of the Board of Directors of Monterey, who was secretly paid by RMC to advocate for approval of the desalination project and the associated contracts while he was serving as a board member of Monterey. Government Code 1090. Marina asserts that the agreements are valid and enforceable. 25
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Marina filed a motion for summary judgment on its cross-complaint which was heard in February. My decision focused on 52-39 of Annotated Water Code Appendix which sets forth

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a 60 day time limit for actions challenging the validity of any contract entered into by the agency. There is no exemption for lawsuits that attempt to "void" a contract subject to the validations statutes based on a violation of Government Code 1090. (Below, I occasionally

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refer to the these general validation statutes, CCP 860 through 870, as "Chapter 9". 1) I decided Cal-Am was barred under 52-39 from bringing its declaratory relief action. I held that under CCP 869 "no entity except for Monterey can seek to void the contracts in this case on the basis of a I 092 violation." Monterey now seeks leave to file a cross-complaint for declaratory relief that the actions of Stephen Collins renders the RDP Agreements void.

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Discussion
Marina opposes this motion seeking leave to file a cross-complaint under CCP 426.50, arguing that the 60 day statute oflimitations is set forth in 52-39 and that CCP 860 et. seq. provide no exceptions, even for public agencies. If this is true, then the 4 year statute of limitations of Government Code 1090 cannot apply and the action is time barred, making it futile to allow the cross complaint.

19 20 21 Marina makes essentially two arguments. First, Marina notes that the exception relied on by Monterey is in CCP 869, and that the scope of that exception is "within the time and the manner herein specified." The time period
I follow the Supreme Court's usage in City of Ontario v. Superior Court, 2 Cal. 3d 335, 340 (1970). The rationale for Chapter 9 [the General Validation Statutes found at CCP 860 through 870] was explained by the Supreme Court: "By 1961, the California codes contained a patchwork of provisions goveming validation proceedings, with each set of provisions dedicated to a different statutory scheme. In that year, the Legislature sought to replace this patchwork with a general validation procedure. (Stats.l961, ch. 1479, 1-3, pp. 3331-3332.) This procedure, which the Legislature codified as Code of Civil Procedure sections 860 through 870, does not, in itself, authorize any validation actions; rather, it establishes a uniform system that other statutory schemes must activate by reference. At the time the Legislature enacted this general validation procedure, it revised 80 statutory schemes, deleting existing provisions governing validation proceedings and referring instead to the new uniform system." Bonander v. Town of Tiburon, 46 Cal. 4th 646, 656 (2009).
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"herein" specified is that of 860 {60 days} which is not the particular 60 days specified in 52-39; 52-39, in other words, is its own source of limitation, unaffected by the exceptional language of 869, and it bars this cross-complaint. The second argument focusses on the last

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clause of 869 which says that the public agency is not precluded from the chapter's remedies to "to determine the validity of anything or matter" (emphasis supplied) which Marina reads as not encompassing actions designed to void anything or matter. That is, Marina reads 869 as contemplating exceptions to the short statute oflimitations but only for actions that validate contracts, not actions that seek to invalidate them. The same argument is made regarding 863. I turn to the first argument. It is clear that 52-39 triggers the chapter "Validating Proceedings," 860 et seq. It does so with this language: "The action or proceeding shall be

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brought pursuant to Chapter 9 (commencing with Section 860) of Title I 0 of Part 2 of the Code of Civil Procedure." Contrary to Marina's suggestion at argument, the invocation is a general one; it does not select pieces of Chapter 9; it invokes the entirety of it. It thus triggers the 60 day period of 860 (and 863 ), and 869 provides an exemption to this 60 day period. The 60 day period of 52-39 is not a different period; it is the same 60 day period. Marina objects that if this is true, then the recitation in 52-3 9 is surplusage. Perhaps it is; perhaps the recitation of this

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19 20 21 critical time limit was so important that it was again highlighted in 52-39. The alternative, following Marina's argument, is that the triggering language of 52-39 ("The action or proceeding shall be brought pursuant to Chapter 9") only acts to incorporate from Chapter 9 certain portions or certain pieces of that schema which have to do with procedure as opposed to, I suppose, more substantive provisions such as those pertaining to statutes of limitation. This reading places reads the phrase "pursuant to" in 52-39 to act as a selective

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incorporator of provisions, but the same language in a variety of other statutes invoke the panoply of provisions in Chapter 9. 2 There is another untoward consequence of Marina's argument. It is that the Legislature in

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enacting 52-3 9 decided that within Monterey county -but not elsewhere-there would be a 60 day limit for all actions, without the relief valve provided by Chapter 9. Why that should be so remains unexplained. To be sure, the Legislature does not intend to invoke Chapter 9 in some contexts, and so its provisions do not apply, 3 but that does not suggest that the Legislature from time to time determines to invoke only pieces of Chapter 9. I turn to Marina's second argument. Marina argues that even if 869 "provides an

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12 13 14 15 16 17 18 validity of its own action outside the 60-day SOLs stated in CCP Sections 860 and 863." Opp. 19 Briefp. 7:8-10. 20 21 Neither of these cases discusses statute of limitations. Nor do they discuss a situation in which the public agency attempts to use 869 as a "sword to void otherwise 'validated' contracts." Opposition Brief, p. 823-25. In Millbrae, a public agency that challenged the actions of another public agency attempted to avoid compliance with the publication requirements of 861 by arguing that 869 exempted it (as a public agency) from the requirement. The court exception" to the 60-day statute, it only applies to actions to confirm the validity of the agreement and does not apply to actions to challenge the agreement. Marina cites Millbrae

School Dist. v. Superior Court, 209 Cal.App.3d 1494 (1989) and City of Ontario v. Superior Court, 2 Cal. 3d 335 (1970), and describes them as cases in which courts "discuss the idea that
CCP Section 869 may provide an exception which would allow a public agency to litigate the

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Some of these are noted at Kaatz v. City ofSeaside, 143 Cal. App. 4th 13, 31-32 (2006). Bonander v. Town of Tiburon, 46 Cal. 4th 646, 658 (2009).

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ruled that the 869 exception applies to the public agency whose actions are being validated or contested, and does not apply to a third party public agency that is essentially acting as any other individual in contesting the action. Similarly, in Ontario, the trial court excused plaintiffs'

failure to comply with the publication requirement of 861-863. In both cases, the lawsuits challenging the public action were timely filed. Marina also argues that the legislative history of Chapter 9 reveals it was never intended to allow an agency to contest the validity of its contracts, but only to affirm them. Agencies generally do seek to confirm or validate their actions, and "confirm" was indeed used in materials produced by the Judicial Council as the bill was moving through the Senate Judiciary Committee. But resort to this part of the legislative history is not necessary, 4 given the plain meaning of the statute which does not limit agencies' actions to the confirmation of their actions. 5 The statute provides that the "availability to any public agency ... of the remedy provided by this chapter, shall not be construed to preclude the use by such public agency ... of mandamus or any other remedy to determine the validity of any thing or matter." That "determination" may go either way- validation or invalidation. If not, then what point has the legal process? Marina must surely agree that the result of the validation proceeding might be

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that the agency action be found to be invalid (else the proceeding would be a pointless fraud); what reason then to allow everyone except the agency to ask for that result? No, the better reading is that actions to "determine" the validly of action include what is also known as reverse validation actions:
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Indeed, "the validating statute appears to have grown far beyond the scope originally conceived by the Council." City of Ontario v. Superior Court, 2 Cal. 3d 335, 341 (1970). 5 Quarterman v. Kefauver, 55 Cal. App. 4th 1366, 1371 (1997)(" Of course our first step in determining that intent is to scrutinize the actual words of the statute, giving them a plain and commonsense meaning .... When the words are clear and unambiguous, there is no need for statutory construction or resort to other indicia of legislative intent, such as legislative history") (citations omitted).

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More important, the general validation procedure is broad enough to include actions to invalidate public agency matters (sometimes called reverse validation actions). Code of Civil Procedure section 863 permits "any interested person [to] bring an action ... to determine the validity of [the] matter" (italics added), and the phrase "any interested person" might of course include a party contesting the matter in question. 6 Finally, as the Supreme Court noted, agencies need actually do nothing at all to validate

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their actions which are subject Chapter 9. 7 If Marina were right to insist that 869 applies only when the agency seeks to validate its actions, 869's exceptions would be entirely unnecessary.

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Conclusion

The motion for leave to amend is granted. Monterey's cross complaint must be filed within six court days of today' s date.

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Date: April15, 2014 Curtis E.A. Karnow Judge Of The Superior Court

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Bonander v. Town of Tiburon, 46 Cal. 4th 646, 656 (2009). City of Ontario v. Superior Court. 2 Cal. 3d 335, 341 (1970).

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