1

Hon . Oliver W. Wanger (Ret. )

265 E. River Park Circle, Suite 310
2 Fresno, California 93720
Telephone: (559) 233-4800
3 Facsimile: (559) 233-9330

4

5
6 Arbitrator

7
AMERICAN ARBITRATION ASSOCIATION

8

COMMERCIAL ARBTRATION TRIBUNAL

9
10

11

SAN DIEGO COUNTY WATER AUTHORITY,

Claimant,

12
13

Case No. 01-18 - 0000-9314
REASONED DECISION ON MOTION FOR
SUMMARY JUDGMENT

v.

14

SAN LUIS REY INDIAN WATER
AUTHORITY, CITY OF ESCONDIDO and
15 VISTA IRRIGATION DISTRICT,

16

Respondents.

17
18
19

20
21

22
23

24
25

26
27

28
(9000/ 141/00945249.DOCX)
REASONED DECISION ON MOTION FOR SUMMARY JUDGMENT

 TABLE OF CONTENTS

2
3
A.

STIPULATIONS

2

B.

ADDITIONAL UNDISPUTED FACTS

4

C.

SDCWA RIGHT TO PAYMENT FOR CONVEYING

························································································································

4
5
6

SUPPLEMENTAL WATER

6

D.

PROTOCOLS

8

E.

INTEREST

10

F.

FORCE MAJEURE.......................................................................................................................10

G.

GOVERNING LAW

7

································································································································

8
9

10

11

11

, LAW AND ANALYSIS

11

12

H.

BRIEF HISTORY

11

I.

STATUTORY PURPOSE

11

J.

CONDITIONS PRECEDENT

13

K.

SDCWA RESERVATION OF RIGHTS

15

L.

IPA AGREEMENT

17

M.

DISPUTE RESOLUTION PROCESS

18

N.

LAW RE: DISPOSITIVE MOTIONS

18

0.

NO RESTITUTION

20

P.

CONTRACT INTERPRETATION

20

Q.

RESTATEMENT 3d CONTRACTS

21

R.

SDCWA RIGHTS

22

s.

LIMITS ON SUPPLEMENTAL WATER CHARGES

23

T.

LEGISLATIVE PRICING POLICY

25

u.

CONDITION PRECEDENT JURISPRUDENCE

13

14
15
16
17

18
19

20
21
22
23
24
25
26
DOES NOT PREVAIL

27

CONDITION PRECEDENT THEORY

29

27
V.

28
(9000/141 /00945249.DOCX}

2

REASONED DECISION ON MOTION FOR SUMMARY JUDGMENT

 l

W.

2 X.
3
4
5

IMPOSSIBILITY

30

ALLEGED CONTRACT

32

1.

32

MATERIALITY OF BREACH

CONCLUSION............... ............................................................................................................................34

6

7

8
9
10

11
12

13

14
15
16
17

18
19
20
21

22
23
24

25

26
27

28
{9000/141/00945249.DOCX}

3
REASONED DECISION ON MOTION FOR SUMMARY JUDGMENT

 1 Hon. Oliver W. Wanger (Ret . )
265 E. River Park Circle , Suite 310
2 Fresno, California 93720
Telephone: (559) 233-4800
3 Facsimile: (559) 233-9330
4

5
6 Arbitrator

7
AMERICAN ARBITRATION ASSOCIATION

8

COMMERCIAL ARBITRATION TRIBUNAL

9

10
11

SAN DIEGO COUNTY WATER AUTHORITY,

Case No . 01-18 - 0000-9314

Claimant ,

12

REASONED DECISION ON MOTION FOR
SUMMARY JUDGMENT

v.

13
14

SAN LUIS REY INDIAN WATER
AUTHORITY, CITY OF ESCONDIDO and
15 VISTA IRRIGATION DISTRICT,
16

Respondents.

17
18
Before the Arbitrator are Cross-Motions for Summary Judgment

19
20 arising

out

of

Respondents'

San

Luis

Rey

Indian

Water

Authority

21

("IWA"),

City

22

District

("Vista")

23

San Diego County Water Authority ("SDCWA") over Supplemental Water .

24

25

of

Escondido

("Escondido"),

(collectively Respondents)

As the parties agree,

2017

demand

by

and

Respondents

Vista

Irrigation

dispute with Claimant

this dispute arises from a May 22,

that

Claimant

San

Diego

County Water

26 Authority ("SDCWA") deliver Supplemental Water made available by the

27 enactment and implementation of Public Law 100-675 , the San Luis Rey

28 Indian Water Rights Settlement Act (the "Settlement Act" or "SA") ,
{9000/14 I/00942923.DOCX)
REASONED DECISION ON MOTION POR SUMMARY JUDGMENT

 1 that resulted from years of federal litigation determining the rights

2 of the (Settlement Parties: IWA, Escondido and Vista), that in part
3 caused Public Law 100-675 to be enacted November 17, 1998, whereby the
4 United States was authorized to arrange for a Supplemental Water supply
5 to the Settlement Parties of not more than 16,000 acre feet (AF) per
6 year from designated sources to implement providing Supplemental Water

7 to achieve the purpose of that legislation, to compensate for years
8 of improper appropriation of San Luis Rey River water to the detriment

9 of the IWA and Indian Bands, and to

help supply the water needs of

10 both the Indian Bands and local entities ,

Escondido,

and Vista.

11 Settlement Act§ 103(a), p . 2, 1-7, and (b) 1-4, p. 3 .
12 A.

STIPULATIONS

13
The following stipulations, among others, are agreed to by

14
the parties and "are true for all purposes in this Arbitration . "

15
16

1 . Escondido and VID are required by con tract to pay the

17

Indian Water Authority (IWA) for Supplemental Water.

18

the

19

20
21
22
23
24
25
26
27
28

9,383

acre-feet

of

Supplemental

Water

were

If
not

delivered as demanded in 2017, and if Escondido and VID
did not pay the Indian Water Authority for that water,
then the Indian Water Authority asserted that it would
have suffered an actual loss of more than $7 million .
2 . Escondido and VID as member agencies of the County Water
Authority, pay the County Water Authority for water they
obtained from the County Water Authority.

The County

Water Authority asserted that for 2017 it would suffer a
loss of more than $2 million in reduced revenues if it
delivered Supplemental Water as demanded, and Escondido

{9000/14 1/00942923.DOCX)

2
REASONED DECISION ON MOTION FOR SUMMARY JUDGMENT

 1

and VID were to receive 9,383 acre-feet of Supplemental

2

Water

3

Authority rather

4

obtain as members from the County Water Authority.

5

3. In

from

2017,

the

9,383

United
than

States

and

the water

acre-feet

of

the

Indian

Water

they would otherwise

Supplemental

Water

were

6

delivered to Escondido and VID under the terms of the

7

Agreement Regarding Invoicing and Payment Dispute (IPA).

8

Escondido and VID, pursuant to their contract with the

9

Indian Water Authority, paid the Indian Water Authority

IO

for

11

potential $7+ million claimed loss by the Indian Water

12

Authority .

13

4. The

that

Supplemental

(IPA)

Agreement

water,

provides

thereby

for

eliminating

the

County

the

Water

14

Authority to pursue its claim for more than $2 million

15

against the Indian Water Authority.

16

Authority submitted its claim by way of its (February 11]

17

2018

18

Arbitration Association.

19

for "$2,175,260.89 in damages, plus interest, and a 50 %

20

split of arbitration fees."

21

two components of that claim, damages attributable to its

22

reduced revenues from lower transportation charges and

23

from sales of less water.

24

briefed

25

supporting its demand in its opposition to the Summary

26

Judgment Motion filed by the Indian Water Authority .

(timely)

the

Demand for

Arbitration

The County Water

to

the American

That Demand includes a

claim

The Demand described the

The County Water Authority has

contract/restitutionary

legal

authority

27

5. The Motion for Summary Judgment filed by the Indian Water

28

Authority is intended by that party to be dispositive of
{9000/141/00942923.DOCX}

3
REASONED DECISION ON MOTION FOR SUMMARY JUDGMENT

 all potential damage claims presented in this action.

So

2

as to accommodate that motion and so as to allay any

3

concerns that the County Water Authority is seeking relief

4

other than as

5

Authority hereby agrees that it is only pursuing the two

6

components of damages sought in its Demand and described

7

in~ 6 above, and that no other claims for damages will

8

be sought in this action by amendment or otherwise .

9 B.
10

stated in its Demand,

the County Water

ADDITIONAL UNDISPUTED FACTS

6 . Although

not

a

subject

of

the

Stipulation ,

it

is

11

undisputed that the completion of related Federal Energy

12

Regulatory

13

concluded

14

dismissing the consolidated actions with prejudice was

15

entered in the District Court,

16

continuing jurisdiction.

17

7 . In a

Commission
until

Proceedings

April

21,

2017,

(FERC)

when

were

final

not

judgment

subject to the Court's

letter from Vista dated May 22 ,

2017,

SDCWA was

18

notified that the CA was absolutely final and effective.

19

At

20

representatives from SDCWA, Escondido, VID, and the IWA

21

was held to discuss final conclusion of the FERC matter

22

and the commencement of Supplemental Water deliveries by

23

June 1, 2017.

24

VID's

request,

a

May

16 ,

meeting

2017

of

8. The Agreement for The Conveyance of Water Among The San

25

Diego County Water Authority,

26

Settlement Parties, and The United State s

27

the

28

Agreement), resulted from the SA, authorizing the United
{9000/14 1/00942923. DOCX}

Settlement

Parties)

The San Luis Rey Indian

(the

"CA"

4
REASONED DECISION ON MOTION FOR SUMMARY JUDGM ENT

(collectively

or

Conveyance

 I

States to arrange for a supplemental water supply fo r the

2

Se ttlement Parties for every year following the effective

3

performance

4

Supplemental Water of not more than 16,000 AF per year .

5

The United States Secretary of the Interior was authorized

6

to

7

Agreement . "

8

not a party, the Settlement Parties and the United States

9

intended

make

date

water

to

for

commencement

available

pursuant

of

to

the

the

delivery of

"Allocation

Under the terms of the SA to which SDCWA was

provide

the

SDCWA

with

"equitable

and

10

sustainable consideration for its role in providing for

11

the timely utilization of the Supplemental Water by the

12

Settlement Parties."

13

This compensation was foundationally quantified by the

14

CA.

15

SA EXPLANATORY RECITALS, K, p. 4.

9 . According to the Allocation Agreement and the Agreement

16

Relating

17

Water District Southern California (the Met), the United

18

States agreed to furnish Metropolitan with up to 16,000

19

AF of Supplemental Water per year, some or all of whi ch

20

the Met agreed to exchange for a like quantity of water

21

to be delivered to the United States for the benefit of

22

the Settlement Parties, at the delivery point or points

23

for delivery of water from the Met to SDCWA for conveyance

24

to the Settlement Parties .

25

10 .

to

Supplemental Water among the Metropol i tan

The term of the Agreement is indefinite and exists "for

26

so long as Supplemental Water is available for use by the

27

Settlement Parties."

28

5.
{9000/14 1/00942923.DOCX)

CA TERMS AND CONDITIONS, No. 1, p.

Under the CA, TERMS AND CONDITIONS, Nos . 2 and 3, p .
5
REASONED DECISION ON MOTION FOR SUMMARY JUDGMENT

 1

5, the United States furnishes all Supplemental Water to

2

be conveyed by SDCWA at the delivery point or points from

3

the Met

4

mutually agreed by the parties .

5

No . 3, p . 5, a sole statutory exception excuses the annual

6

delivery of Supplemental Water to the Settlement Parties,

7

otherwise,

8

furnished

9

Settlement

to

SDCWA,

or at

"SDCWA
to

such

shall

i t by

Parties,

other

locations as

Under TERMS AND CONDITION

convey

Supplemental

the United States
except

are

at

times

for
when

Water

use by

the

all

the

of

10

available capacity in that por tion of its facilities which

11

is needed to convey the Supplemental Water is being used

12

for the delivery of SDCWA's water to its member public

13

agencies."

14

of capacity shall be determined by SDCWA at its reasonable

15

discretion . "

16

capacity of its relevant facilities were being used in

17

2017.

18

C.

(Emphasis added . )

Noteworthy, "Availability

SDCWA offered no evidence that all available

SDCWA RIGHT TO PAYMENT FOR CONVEYING SUPPLEMENTAL WATER

19

Under CA TERM AND CONDITION No . 4, p . 5, subsections a and

20
b, SDCWA has no authority to impose any charges on Supplemental Water

21
delivered to

the Settlement Parties directly from the Met' s

water

distribution

system

SDCWA' s

water

subsection b. ,

each

22
without

use

of

any

portion

of

23

distribution system.
24

Under TERMS AND CONDITIONS No .

25
26 month,

the

Settlement Parties

4.,

shall pay SDCWA the

27

following amounts for conveying Supplemental Water

28

SDCWA's water distribution system :
{9000/141/00942923.DOCX}

6

REASONED DECISION ON MOTION FOR SUMMARY JUDGMENT

lesser of "the

to any portion of

 A transportation charge of $55.00 for each acre - foot

i .

2

of Supplemental Water conveyed by SDCWA for use by the

3

Settlement

4

transportation charge will increase at the rate of one

5

and fifty-hundredths percent (1.55 %) per year for as

6

long as this Agreement is in effect .

7

Or
ii .

8

SDCWA' s

Parties

in

thereafter,

2004,

the

transportation rate in effect for conveying

water through the SDCWA facilities .

9

10

CA No. 4., subsection c., p. 5, limits the imposition of any

11

rates or charges other than those set forth in subsection b . , for, or

12 based on,
13

"SDCWA shall not impose any rates or charges other than

those set forth in subsection b., for , or based on, any Supplemental

14 Water

delivered

to

the

IWA or

the

Indian

15 reservations either directly or indirectly,

Bands

for

on

the

including Supplemental

16 Water received by Escondido or Vista in exchange for
17

use

Local Water

delivered by or allocated by them for use on the reservations.

This

18 unambiguously prevents SDCWA from charging a non - Supplemental Water

19 price for

Supplemental Water or a

non-Supplemental

transportation

20 charge for conveyance, except as set forth by the SA and CA .
21

However, under subsections of CA No . 4., p . 6 , subsections

22

d. and e., except for Supplemental Water delivered or exchanged for

23

the

sole benefit of

SDCWA or

the

Indian Bands

for

use on

their

24 reservations referred to in subsection c . , Supplemental Water conveyed
25

to Escondido or Vista for use within the service areas

26 entities

may

be

included

within

SDCWA' s

calculation

of those
of

water

27

deliveries to Escondido and Vista for the purpose of determining any

28

SDCWA rates

or

{9000/14 1/00942923. DOCX}

charges

that are calculated based on

7
REASONED DECISION ON MOTION FOR SUMMARY JUDGMENT

total water

 1 deliveries to SDCWA's member public agencies using SDCWA facilities
2

to the same extent that such rates and charges are imposed on SDCWA' s

3 member public

agencies .

Further,

under

subsection

e. ,

if

SDCWA

4 establishes a charge for t reated water, "then on a monthly basis, the
5 Settlement Parties shall pay SDCWA's treatment charges applicable for
6

treated water delivered to the local Entities for SDCWA' s member public

7 agencies in the immediate vicinity of the reservations."

CA §§ d and

8 e appear to create a carve- out for Supplemental Water delivered to and
9 used within the service area of those specific members' areas at SDCWA
10 members' water and transportation prices.
11

CA No . 4 . Subsection f . , p . 7, prevents any other fees or

12 charges ,
13

including but not limited to taxes in lieu or annexation

fees, from being assessed or imposed by SDCWA on the United States or

14 the Settlement Parties in return for conveying Supplemental Water.

Under CA No.

15

4,

subsection g. , p . 7 . ,

nothing in the CA

16 precludes SDCWA from imposing fees or charges including but not limited
17

to taxes, in lieu taxes, or annexation fees for provision of services

18 other than those provided by the CA, or as the result of inclusion of
19 land within the service terr itory o f SDCWA or a member public agency
20 of SDCWA.
CA Subsection h., p. 7 . , expresses the Parties' intent that,

21

22 notwithstanding any future modifications to SCDWA's rate structure,
23 the benefits

set forth

in subsections

24

impaired and the burdens

shall

25

exception that subsections b . through f.

a

through f,

not be increased.

shall not be
Subject to an

do not excuse Escondido or

26 Vista from any obligations of member public agencies o f the SDCWA (to
27 which

they

are

members) ,

except

as

those

obligations

relate

28 specifically to Supplemental Water as addressed in those subsections .
{9000/ 141/00942923 .DOCX}

8

REASONED DECISION ON MOTION FOR SUMMARY JUDGMENT

 This section is a carve-out and reinforces that Supplemental
2 Water is not subject to member public agency SDCWA rates .
3 D.

PROTOCOLS

4

CA No. 4 . , subsection i. , p . 7 . , provides: "Before deli very

5 of Supplemental Water, SDCWA and the Settlement Parties will develop
6

a protocol for determining the actual monthly quantity and flow rates

7 of Supplemental Water delivered or exchanged to the IWA or the Indian
8 Bands for use on the reservations and the actual monthly quantity of
9
IO

Supplemental Water delivered or exchanged for the use of the Local
Entities."
Subsection i . ,

11

further provides

that the protocol

shall

12 "subject Supplemental Water delivered by [Met] into SDCWA facilities

13

for conveyance to the Settlement Parties but not taken, or rejected,

14 by the Settlement Parties, to provisions which are comparable to those
15

applicable to other water ordered by SDCWA's member public agencies

16

and delivered into SDCWA' s facilities but not taken or rejected by

17

them.

There is no evidence this was not done.
Additionally, the CA No . 4 . , subsection 1., p . 7 protocol

18

19 was

required to include provisions for invoices to the Settlement

20

Parties and payments to the SDCWA.

21

be coordinated through the IWA . "

The protocol shall be consistent

22 with section 5 of this Agreement .

There is no disagreement that the

23

"All invoices and payments shall

2017 Supplemental Water was used on Local Entities service areas and

24 paid for at preferred non-member rates .
25

Provisions concerning failure to make payments and/or to
CA No. 5., subsection c . ,

26

terminate deliveries are not in dispute.

27

i . and ii. , p . 8, provide the manner of making requests for conveyance

28 by SDCWA for which there is no dispute.
(9000/ l4 l/00942923 .DOCX}

9
REASONED DECISION ON MOTION FOR SUMMARY JUDGMENT

 1

To its credit, SDCWA complied with the Settlement Parties'

2

requests

for actual

conveyance of Supplemental Water for

3

water year ,

4

d i spute over the substance o f

5

for Supplemental Water,

6

timeliness of requests and protocols.

subject to SDCWA' s

reservation of rights .

the 2017

There is no

the Settlement Parties' 2017 requests

rather the dispute is over

alleged lack of

Under CA No . 12, Dispute Resolution Mediation : Arbitration

7

8 - the parties have stipulated and agreed that pursuant to section 12b,
9

this

dispute

10 mediation .

could not be
As

a

result,

settled
CA No .

t h r ough
13,

p.

negotiation
11,

calling

or

through

for

Dispute

11

Resolution by Arbitration applies .

12

single

13

submitted, recognizing the Arbitrator "shall not re-write, change, or

arbitrator

should

preside

The parties further agreed that a
over

and

resolve

the

issue(s)

14 amend" the CA.
15

E.

INTEREST

16
17

Under

CA

No .

13,

subsection

c.,

11,

p.

any

payment

adjustments "shall accrue interest monthly at the average rate earned

18 by SDCWA on its funds from the date the adjusted payment should have
19 been paid until paid in full."

20

time limits of CA No .

13. ,

21

Decision

writing

shall

be

in

22 submission of the case.
its

own

counsel,

The parties have agreed to waive the

subsection d. ,
rendered

p.

12, and the Reasoned

within

30

days

f ollowing

Under the CA, each party bears the expense

23

of

experts,

witnesses,

and

24

presentation of evidence.

25

the Arbitrator ' s fees are borne 50 % by SDCWA and 50 % by the IWA, Vista,

F.

FORCE MAJEURE

28
{9000/141/00942923.DOCX}

and

The administrative fees of arbitration and

26 and Escondido, jointly, to which the parties agree.
27

preparation

ID
REASONED DECISION ON MOTION FOR SUMMARY JUDGMENT

 1

CA

No .

21 . ,

p.

13 ,

"Uncontrollable

forces,"

has

no

2 application to this a r bitration as proper notice of any uncontrollable
3 force was not given by Respondents nor was the Uncontrollable For ce
4 provision invoked as an affirmative defense in this arbitration.

5 G.

GOVERNING LAW

6

CA No . 22 . , p . 14, p r ovides, "the CA shall be interpreted,

7 governed by, and construed under applicable federal law and the laws

8 of the State of California to the extent such state laws are not
9 inconsistent with any applicable federal law."

(Emphasis added.)

More

10 specific federal laws other than the Settlement Act, Title I of Public
11

Law

100 - 675

as

amended,

the

allocation

agreement ,

the

Conveyance

12 Agreement, and California substantive law apply.
LAW AND ANALYSIS

13
14 H .

BRIEF HISTORY
The November 17,

15

16 Settlement Act

defined

17 limited to the LaJolla,

the

1988 San Luis Rey Indian Water Rights
Settlement

Rincon,

Parties

San Pasqual ,

including but

Palma,

not

Pala Bands of

18 Mission Indians (the "Bands"), and the Indian Water Authority (IWA) ,
19 meaning the San Luis Rey River Indian Water Authority and intertribal
20

Indian entity established by the Bands .

Additional Settlement Parties

21 include two local entities, the City of Escondido, the Escondido Mutual
22 Water Company and the Vista Irrigation District.
23

subsection 1 and 2, p. 3 .

24 I.

STATUTORY PURPOSE
Congressional Findings supporting the SA legislation include

25
26

SA Section 102,

that the Settlement Parties need a reliable source of water.

The San

27 Luis Rey River i s inadequate to supply the needs of both the Bands and
28

local

en ti ties ,

{9000/ l4 1/00942923.DOCX}

giving

rise

to

the

extended

II

REASONED DEC ISION ON MOTION FOR SUMMARY JUDGMENT

litigation

over

 1 entitlement to San Luis Rey River water.

Congressional Findings (a)l -

2 3, p . 2 .
For many years, the Bands were unable to obtain sufficient

3

4 water, which created adverse circumstances and conditions.

5 § 103 (a) 3 - 4, 1-1, p . 2 .
6

Findings

The purpose of the Indian Water Rights SA

was to provide for settlement of the reserved water rights claims of

7 all

the Bands

to provide the Bands with a

reliable water supply

8 sufficient to meet their present and future needs.

Congressional

9 Findings

the SA is to

(b) ,

1-4, pp.

1-2 .

An important result of

10 satisfy the Federal Government's "trust responsibility" to the Bands,
11

consistent with its fiduciary duty, and to protect the local entities,

12

premised on the concept the Bands and local entities would make fair

13

and reasonable contributions.

Congressional Finding§ 103(a)6, p. 2.

14

The United States' contribution to the settlement included

15

funding and delivery of water from a supplemental source; i.e., water

16

developed through conjunctive use of ground water on public lands in

17

Southern California or water to be reclaimed from lining the previously

18 unlined portions of the All American Canal and its Coachella Branch.
19

Congressional Finding§ 103(a)7, p . 2 and CA Recital E, p. 3 .
As

20
21

specifically,

a matter of

legislative interpretation,

Public Law 100-675,

Federal

law,

takes precedence over California

22 contract law to the extent state law is inconsistent and it would
23

defeat the overriding Federal statutory purpose of the SA to provide

24 Supplemental Water to the Settlement Parties at the lower statutory
25

26

prices.

CA No. 22, p. 14 .
Under SA§ 106(a), p.

4,

specifying duties of the United

27 States for development of Supplemental Water,
28

the Secretary of the

Interior is authorized and directed to arrange for the development of
{9000/14 1/00942923.DOCX}

12
REASONED DECISION ON MOTION FOR SUMMARY JUDGMENT

 1

not more than a total of 16,000 AF per year of Supplemental Water from

2 designated sources excluding the Central Valley Project and the cost
3

of delivering and developing Supplemental Water shall not be borne by

4

the United States, and no Federal appropriations are authorized for

5 this purpose.
6

The

Id . , SA § 106 (b) , p. 4.

terms

and conditions

of water deliveries

to provide

7 Supplemental Water at locations, on a schedule, and under terms and
8 conditions were to be agreed upon by the Secretary of the Interior,

9 the IWA ,

the local entities and any agencies participating in the

10 delivery of the water .

SA§ 106(c), p . 4 .

Section 105 of the Public

11

Law 100-675 following its initial passage created a $30MM San Luis Rey

12

fund.

13

that the United States, its applicable administrative agencies ,

The SA and the Conveyance Agreement make categorically true
and

14 the parties to the SA and Conveyance Agreement are bound to perform
15

their statutory and contractual obligations to assure that 16,000 AF

16

of annual Supplemental Water are delivered to the Settlement Parties

17

in accordance with the terms and conditions of the Settlement Act and

18

related agreements .

19

this federal law.

20

contractual obligations

21

statutory purpose and trust obligation of the United States to the

22

Indian Bands, cannot be interpreted to permit the SDCWA to interfere

This is a preemptive and overriding purpose of
That the SDCWA is a facilitator by and through its
to convey water as part of the overriding

23 with, obstruct, or hold hostage Supplemental Wager, from any party
24 entitled thereto under the SA.

25

SDCWA is an important participant, but

a subordinate party to the ultimate goal of the federal government

26 providing Supplemental Water under the SA .
27

J.

CONDITIONS PRECEDENT

28
{9000/141 /00942923.DOCX}

13
REASONED DECISION ON MOTION FOR SUMMARY JUDGMENT

 1

SDCWA objected that the requirements of the CA,

section

2 5.e. , excused it from conveying Supplemental Water in 2017, because
3 conditions precedent to any duty to convey Supplemental Water were not
4

satisfied .

5 SDCWA

These include that "the Settlement Parties shall provide

with

an

estimate

of

the

schedule

of

the

conveyance

of

6 Supplemental Water before April 1 of each year in a form provided by
7 the SDCWA, with an estimate of the amounts of Supplemental Water to
8 be conveyed through
9

any direct connection to SDCWA' s

distributi on

system which also included the r equirement that:

10

16

"Each estimate shall contain, at a minimum,
for each direct connection to SDCWA' s
distribution system and for each month of the
year beginning with the succeeding July 1 ,
estimates for the succeeding four years, the
quantity of Supplemental Water to be conveyed
directly by SDCWA to the United States for
the use of Settlement Parties . The estimate
shall constitute the Settlement Parties'
initial request for deliveries for the first
of the five years covered therein . "

17

SDCWA argues that failure to meet the April 1 deadline is a

18

condition precedent that excused any duty of counter-performance on

19

its part to provide Supplemental Water for 2017, as it was impossible

11
12

13

14
15

20 to do so .
21

There is no legal authority to create "conditions precedent"

inconsistent with the purposes of the SA.

22

In addition to the inability of the Settlement Parties to

2 3 provide

an

estimate

of

the

quantity,

a

conveyance

schedule

of

24 Supplemental Water , invoices and payments by April 1, 2017, CA No. 4.,
25

26
27

28

subsection i .

(§4i), called for:

"Before deli very of Supplemental Water,
SDCWA and the Settlement Parties will develop
a protocol for determining the actual monthly
quantity and flow rates of Supplemental Water
{9000/141/00942923.DOCX}

14
REASONED DECISION ON MOTION FOR SUMMARY JUDGMENT

 delivered or exchanged to the Indian Water
Authority or the Indian Bands for use on
their reservations and the actual month l y
quantity of Supplemental Water delivered or
exchanged for the use of the Local Entities.
[The 2017 Supplemental Water was to be used
by Escondido and Vista, the Local Entities.]
The protocol shall subject Supplemental
Water delivered by the Metropolitan into
SDCWA' s facilities for _ conveyance to the
Settlement
Parties
but
not
taken,
or
rejected, by the Settlement Parties to
provisions which are comparable to those
applicable to other water ordered by SDCWA's
member public agencies and delivered into
SDCWA's facilities, but not taken or rejected
by them.
The protocol shall also include
provisions for invoices to the Settlement
Parties and payments to the SDCWA.
All
i nvoices and payments shall be coordinated
through the Indian Water Authority .
The
protocol shall be consistent with section 5
of this Agreement.
(Emphasis added.)

2
3
4

5
6

7
8
9

10

11

12
13
14

Despite continuing negotiations that started in the summer

15
of 2017, the parties did not reach agreement on the protocols and the
16

IPA until December 11, 2017 .

No party has claimed bad faith in these

17

negotiations on either side .
18

K.

SDCWA RESERVATION OF RIGHTS

19

In a May 30, 2017 letter response from SDCWA, its general

20
manager,

Ms .

Stapleton,

notified

Escondido

and

Vista

that

the

21
authority's position was

that

the failure

to place an order for

22
delivery of Supplemental Water by April 1,

2017 ,

violated the CA

23
section 5. e . ,

and prevented SDCWA from delivering any supplemental

24

water by June 1, 2017 .

The Settlement Parties were required to provide

25

the

Authority

wi th

an

estimate

of

a

schedule

for

conveyance

of

26

Supplemental Water before April 1 of each year in form provided by
27

SDCWA, with an estimate of amounts of Supplemental Water to be conveyed

28
{9000/ 141 /00942923. DOCX}

15
REASONED DECIS!ON ON MOTION FOR SUMMARY JUDGMENT

 1

through any direct connection to SDCWA' s distribution system.

This

2 included an estimate for each direct connection to the Authority's
3

distribution and for

each month of

the year beginning with each

4 succeeding July 1 and for all service connections collectively for
5 each month of the succeeding four years through 2022 of the quantity
6

of the Supplemental Water to be conveyed directly by the Authority to

7

the United States for the use of the Settlement Parties.

8

The Settlement Parties in their May 22, 2017 letter to Ms.

9 Stapleton,

rejoined:

"their

late

start

would

not

materially

10

inconvenience SDCWA because:

(1) there would not be a change in the

11

scheduling, ordering, or delivering of wet water to any party resulting

12

from implementing the Conveyance Agreement in 2017 ; and (2) only the

13

accounting and billing for the delivery of both the Supplemental and

14 non-Supplemental Water would be affected in 2017."

The Settlement

15

Parties anticipated billings under the CA would initially be in arrears

16

and may require correction to the June and possibly July invoices to

17

the City of Escondido and Vista .

18

deliver an initial draft of accounting procedures within the next

19

couple of weeks after May 22, 2017 .

The Settlement Parties promised to

This is interpreted as invoking

20 an immaterial breach.
Following SDCWA' s

21

22 letter,

SDCWA

noted

objection in its May 30,

mutual

development

of

a

2017 response

joint protocol

for

23

deliveries was required under CA sections 4.i . , and 5 . e., in addition

24

to the April 1st Schedule Notice requirement.

25

coordination with the Met,

26 Authority.

Next, the CA requires

the agency delivering the water to the

CA Recitals J, p . 4, and N, p. 5 , and Nos. 2, 4(i) and

27 5(e), p . 5, also were impacted by a pending dispute with the Met over
28 unilateral

allocation

(9000/ 14 1/00942923.DOCX}

of

water

earlier

in

2017

16

REASONED DECISION ON MOTION FOR SUMMARY JUDGMENT

to

the

Exchange

 1 Agreement deliveries.

Coordination issues remained to be worked out.

2 Finally, fiscal issues needed to be addressed with respect to
3

treated water, and how payment would be made.

4 water is at issue .

In fact,

SDCWA

no treated

SDCWA stated delivery by June 1,

2017

"was

5 impossible, but could be worked out for delivery commencing before

6 July 1."
7 L.

IPA AGREEMENT

Meetings were held between the parties which resulted in the

8

9 Agreement Regarding
10 December

11,

2017 .

Invoicing
In

the

and
IPA,

Payment Dispute
the

parties

executed

(IPA)

acknowledged

their

11

participation in the CA and effectuated a settlement and compromise

12

for

the

conveyance,

delivery,

invoicing,

and

payment

of

the

13 Supplemental Water as requested by the Settlement Parties for the
14 period

from

June

1,

2017

through

December

31,

2018,

expressly

15 preserving an option for SDCWA to claim damages for 2017 Supplemental
16 Water deliveries under the dispute resolution provisions of the CA.
17

The IPA effectuated a partial resolution of certain invoicing and

18 payment issues under the CA subject to SDCWA' s
19

rights to claim:

reservation of all

(1) It was not obligated to deliver the 9,383 AF of

20 Supplemental Water to the Settlement Parties during calendar year
21

2017; and (2) had the right to seek a monetary recovery from the IWA

22

for

23

complying with the requested June 1, 2017 start date.

any alleged 2017 monetary losses

attributable

to

the

SDCWA' s

SDCWA validly

24 reserved all rights and waived no claims concerning its alleged 2017
25 monetary losses and the parties agree nothing in the IPA can be used

26 against SDCWA to seek to void SDCWA's claims .
27

28
(9000/ 14 I/00942923. DOCX}

17

REASONED DECISION ON MOTION FOR SUMMARY JUDGMENT

 A reservation and non- waiver of any claims unrelated to the
2 dispute of SDCWA's right to recover for alleged 2017 losses remained

3 intact.
4 M.

DISPUTE RESOLUTION PROCESS

5

The parties agreed to a dispute resolution process, to wit ;

6 arbitration, which they have undertaken and is now in its final stages.

7 This Arbitration is limited to the sole issue of the SDCWA's alleged
8 monetary losses for 2017 Supplemental Water deliveries .

IPA section

9 7 . b . , p. 7
10

In the event the Authority is awarded damages arising from

11

the 2017 Supplemental Water deliveries, the IWA is solely responsible

12

for such payment.

13 N.

IPA Section 7 . c., p. 7.

LAW RE: DISPOSITIVE MOTIONS

14

"A trial court properly grants a motion for summary judgment

15 only if no issues of triable fact appear and the moving party is
16 entitled to judgment as a matter of law.

The moving party bears the

17 burden of showing the court that the plaintiff 'has not established
18 and cannot reasonably expect to establish a prima facie case .
19

[Citation.] '

[Citation.]

"

'[O] nee a moving defendant has "shown that

20 one or more elements of the cause of action, even if not separately
21

pleaded cannot be established," the burden shifts to the plaintiff to

22

show

23

plaintiff "may not rely upon the mere allegations or denials of its

the

existence

of

a

triable

issue;

to meet

the burden,

the

but , instead shall set forth the specific facts showing

24 pleadings

25 that a triable issue of material fact exists as to that cause of action

",

26
27

Coy1e v . Historic Mission , Inc.

(2018) 24 Cal.App.5th 627,

634; see also , Sakai v. Massco Investments, LLC (2018) 20 Cal.App . 5th

28 1178.
{9000/ 14 1/00942923 .DOCX)

18

REASONED DEC1SION ON MOTION FOR SUMMARY JUDGMENT

 1

A defendant moving for summary judgme nt must show "that one

2 or more elements of the cause of action
3

. cannot be established,

or that there is a complete defense to the cause of action."

4 Civ. Proc. § 4 37c, subd.

(p)(2) . )

(Code

Here, the issue of whether SDCWA

5 had the right to defeat the entire statutory scheme mandating that
6 Supplemental

Water

be

delivered

to

the

Settlement

7 available, presents a pure question of law.

Parties

when

The determination of duty

8 and of contract, including statutory purpose present questions of law .
9

Sakai, 20 Cal.App.5th at p . 1184.

(2018)

25 Cal . App. 5th 398,

See, La££erty v . weiis Fargo Bank ,
409.

The final responsibility for

10

N.A.

11

interpreting a

12

regulations

13

ascertain the intent of the lawmaker so as to effectuate the purpose

and

14 of the law . "

15

statute

or

statutes,

regulati on rests
the

court's

with

guiding

the

court .

pri nciple

"is

For
to

Singh v. Superior Court (2006) 140 Cal .App. 4th 387, 392.

"It is a judicial function to interpret a contract or written

16

document unless

the

17

extrinsic evidence . "

interpretation

turns

upon

the

credibility of

Citizens £or Amending Proposition L v.

City 0£

18 Pomona (2018) 28 Cal . App.5th 1159; 239 Cal.Rptr . 3d 750 , 775.
19

There is no ambiguity nor dispute in the plain language of

20 either the SA statute or the CA contract, when i t comes to the duty
21 of the United States to provide Supplemental Water and the duty of

22

SDCWA to convey Supplemental Water at the prescribed rate to achieve

23

the statutory objectives to provide the Bands a reliable water supply ;

24

and to establish the basis for a mutually benef icial,

lasting , and

25 cooperative partnership among the Bands and the local enti ties to
26 replace the adversary relationships t hat have existed for

several

27 decades ; and fosters the development of an independent economic base
28 for the Bands.
(9000/14 1/00942923. DOCX)

SA § 103(b) 1-4, pp. 2 - 3 .
19

REASONED DEC ISION ON MOTTON FOR SUMMARY JUDGMENT

 1 0.

NO RESTITUTION

2

SDCWA relies on Restatements of the Law 3d, Restitution and

3 Unjust Enrichment § 35 Performance of Disputed Obligation and Cal .

4 Commercial Code§ 1308 (formerly§ 1207) .

Uzye1 v. Kadisha (2010) 188

5 Cal .App . 4th 866, 894 .

6

SDCWA validly reserved its rights to preserve a claim for

7 restitution to recover the value of the "benefit conferred" in excess
8 of the recipient's contractual entitlement .

The party on whom demand

9 was made and rendered performance under a full reservation of rights
10 must act in good faith and reasonable protection of SDCWA's interest .

11

There is no basis for restitution as the Supplemental Water cannot be

12

returned nor should the payments therefor be returned .
The

13
14

conscious

and

essence

of

allegedly

SDCWA's

performance

justifiable

15 performance that was not in fact due . ''

was

resistance

to

based
"a

on

its

demand

for

SDCWA in effect contends that

16

it was unreasonably compelled by circumstances to render a performance

17

to which the Settlement Parties were not entitled , to avoid a greater

18

risk of loss to the IWA.

Further, that it was impossible to comply

19 with the April 1 deadline due to the FERC matter.
20

P.

CONTRACT INTERPRETATION

The goal of contractual interpretation is to determine and

21

22 give effect to the mutual intent of the parties.
23 Robert S .

24 an

(2001) 26 Cal . 4th 758 , 763 .

interpretation

as

will

make

it

Sa£eco Inc . Co. v.

A contract must receive such
lawful ,

operative,

definite,

25 reasonable, and capable of being carried into effect, if it can be
26 done without violating the intention of the parties.

27 1643 and 1644.

If possible, the court should give effect to every

28
{9000/ l 4 l/00942923.DOCX}

Cal . Civ . C . §§

20
REASONED DECISION ON MOTION FOR SUMMARY JUDGMENT

 1 provision of the contract.

Nationa1 City Po1ice 0££icers ' Assn. v.

2

City 0£ Nationa1 (2001) 87 Cal . App.4th 1274, 1279.

3

Q.

RESTATEMENT 3d CONTRACTS

4

Under the Rest. 3d, SDCWA further contends that its risk of

5

liability for non-performance outweighed the amount in controversy

6

(over $2 million versus over $7 million potential liability to the

7

IWA).

SDCWA contends i t lacked any meaningful opportunity to have a

8 disputed
9

claim

adjudicated prior

Settlement Parties'

to

performance

in

light

of

the

demand that delivery of Supplemental Water for

10

2017 start within approximately 14 days following the formal demand

11

for such deli very.
SDCWA relies on the "voluntary payment rule" discussed in

12

13

Rest.

14

of further loss or liability beyond the amount already in controversy,

15

i t had no practical alternative, but to submit by delivering water.

3d providing that when the cost of resistance includes a risk

16 This compulsion made its performance "not voluntary" because the IWA
17

demand of over $7 million far exceeded the over $2 million alleged

18

SDCWA stood to lose.

19

preemptive statutory purpose to provide the Settlement Parties with

20

up to 16,000 AF of Supplemental Water each year.

This contention is misplaced.

There was a

Further, Supplemental

21 Water could not be charged to the Settlement Parties for any price in

22

23

excess of the lower statutory price.
SDCWA has

constructively

admitted

that

the

9,383

AF

of

24

Supplemental Water was not SDCWA water,

25

"Supplemental Water" provided by the United States.

26

right to char ge its prevailing member price or market price for such

27

Supplemental Water .

28

use its own water,
(9000/ 14 1/00942923 .DOCX}

by its admission this was
SDCWA had no

There is no evidence that SDCWA was required to
i t did not.

Rather ,

the undisputed evidence is

21

REASONED DECISION ON MOTION FOR SUMMARY JUDGMENT

 1

that the 9,383 AF of Supplemental Water was provided by the United

2 States thr ough the Met for conveyance by SDCWA through its conveyance
3

system .

4

It is the Department of Interior's Bureau of Reclamation

5 that is legally required to provide Supplemental Water,
6 under the terms of Public Law 100-675.

not SDCWA,

SDCWA acknowledged as much at

7

the hearing and in its opening brief at pp . 21-22 .

8

required to use its own water, for which it claims to be entitled to

9

charge

its

"regular"

member

price.

The

water

SDCWA was not

in

dispute

was

10

"Supplemental Water," for which no more than the statutory price under

11

the SA and the CA could be charged as well as for transportation cost .

12

This ends the claim of the SDCWA that the alleged breaches of the CA

13

caused it to lose water sales of its own water.
SDCWA never had to furnish Supplemental Water at a higher

14
15

price than the Settlement Parties were required to pay.

16

separate damages

consisting of part of the claimed $2,175,260.89,

17 include alleged damages for reduced transport charges,
18

To the extent

there is no

legal authority that would allow SDCWA to change higher market rate

19 or member transport charges.

SDCWA also admits the Met gave it credit

20

against Met billings for the 9,383 AF that were Supplemental Water.

21

R.

SDCWA RIGHTS
SDCWA has misinterpreted its rights and duties under the CA .

22
23

CA No.

3, p . 5, mandates that SDCWA "shall convey the Supplemental

24 Water furnished to it by the United States for use by the Settlement
25

Parties,

"

SA Section 106(a), p. 4, of the Indian Water Rights

26 Settlement Act, 102 Stat. 4000, as implemented by the CA, directs the
27

Secretary of the Interior to arrange for the development of not more

28

than 16,000 AF per year for Respondents and the Bands.
{9000/ 141 /00942923.DOCX)

22

REASONED DECISION ON MOTION FOR SUMMARY JUDGMENT

 1

2

In terms of which party is ignoring the law,
ignored that the enabling statutes,

the SA,

SDCWA has

and the CA, absolutely

3 direct the United States to provide for development of and arrange for
4 annual delivery of 16,000 AF of Supplemental Water.

SDCWA also does

5 not address that i t was impossible to develop or convey Supplemental

6 Water before May 17, 2017, although the United States was willing to
7 make Supplemental Water available since 2003 .

It was not SDCWA' s

8 prerogative to override the law to withhold Supplemental Water until
9

2018.

10

11

Since, under the CA, water deliveries were not to commence
before July 1 of any year,

there is no evidence that Supplemental

12 Water, as required by law, was not available for delivery in water
13 year 2017, nor that SDCWA had any legal right to transmute the 2017
14 Supplemental

Water

into

SDCWA water

which

it

could

sell

at

its

15 prevailing or member rates.
16

SDCWA admits that Supplemental Water was available for use

17 by the Settlement Parties when the San Luis Rey Indian Water Rights

18 Settlement could be physically implemented on May 17,
19

2017.

The

contention that SDCWA is entitled to be paid member rates for that

20 Supplemental Water is simply wrong.
21

s.

LIMITS ON SUPPLEMENTAL WATER CHARGES

22

Under CA No. 4., subsection d., p. 6, if Supplemental Water

23

is conveyed to Escondido or Vista for use within the service areas of

24

those entities, such water may be included within SDCWA's calculation

25

of

water

delivered

to

Escondido

and

Vista

for

the

purpose

of

26 determining any SDCWA rates or charges that are calculated based on
27

total water deliveries to SDCWA's member public agencies using SDCWA

28
(9000/141/00942923.DOCX}

23
REASONED DECISION ON MOTION FOR SUMMARY JUDGMENT

 1 facilities, to the same extent that such rates and charges are imposed
2 on SDCWA' s member public agencies.
Beyond that, pursuant to CA No. 4, subsection (f), p. 7, "No

3

4 other fees or charges including, but not limited to taxes,
5

taxes, or annexation fees,

in lieu

shall be assessed by SDCWA on the United

6 States or the Settlement Parties in return for conveying Supplemental

7 Water. "

CA No . 4 . , subsection h. , p . 7 , makes clear that in the event

8

of any SDCWA future modifications to its rate structure, the benefits

9

to the Settlement Parties provided by subsections a-f shall not be

10 impaired and the burden shall not be increased.
11

Nonetheless, nothing

in subsections b-f is intended to excuse Escondido or Vista from any

12 of the obligations of member public agencies of the SDCWA except as
13

those

obligations

relate

specifically

14 addressed in those subsections .
15

to

Supplemental

Water

as

This makes clear that SDCWA had no

legal right to treat 2017 Supplemental Water as member water to impose

16 higher charges

to create monetary damages.

There is no evidence

17 whatsoever that SDCWA has sustained monetary damage in carrying out
18

its absolute legal duty to convey Supplemental Water when it was made

19

available.

20

CA.

SDCWA' s proposed "damages" violate federal law, the SA and

Although there was a total reservation of rights by SDCWA,

21
22

the

unique

factual

circumstances

of

the

later

availability

of

23

Supplemental Water for 2017 postponed development of any protocols,

24 which the Settlement Parties, Escondido and Vista, offered to do within
25

two weeks.

The evidence that i t took longer to do so was not a cause

26 of monetary damages as appropriate adjustments were made for delivery,
27

invoicing, and payment.

CA No. 4, subsection i . , p 7,

28
(9000/14 1/00942923.DOCX}

24
REASONED DECISION ON MOTION FOR SUMMARY JUDGMENT

 1

There

is

no

evidence

that

SDCWA

suffered

any monetary

2 damages in excess of what the law authorized it to charge Escondido,
3 Vista,

and IWA,

the responsible payor .

SDCWA suffered no monetary

4 damages for alleged misappropriation of water, which it was unable to
5 sell on the market, because it was never legally entitled to change
6

the legal character of what was Supplemental Water.

7 is

no evidence

that any

transportation charges

Further, there

in excess

of

the

8 statutory rate provided for by the CA in Nos . 4. a., b., and c . , were
9 charged, and as previously discussed, could not be charged.

SDCWA has

10

never contended that it was legally entitled to charge Vista and

11

Escondido prevailing member rates or mar.k et rates for transportation

12 of Supplemental Water.
13

T.

LEGISLATIVE PRICING POLICY

It is true that CA No . 3, p . 5, explicitly provides:

14
15

SDCWA did not legally suffer monetary damages .

SDCWA

"shall convey the Supplemental Water furnished to i t by the United

16 States for use by the Settlement Parties" except "at times when all
17 of the available capacity in that portion of its facilities needed to
18 convey

the

Supplemental Water

is

being used for

the delivery of

19

[SDCWA's] water to its member public agencies."

There is no evidence

20

all of SDCWA' s facilities were needed to deliver water to member public

2 1 agencies in 2017.
22
23

The purpose of the CA is to effectuate Congressional intent
that Supplemental water be provided to the Settlement Parties.

24 is not disputed.

This

Supplemental Water could not be available prior to

25 May of 2017 when the final settlement with FERC was concluded.

The

26 overriding objective of the Supplemental Water statute is to provide
27 annually up to 16,000 AF of Supplemental Water to the Settlement
28 Parties .

The CA had a subordinate purpose to assure that SDCWA was

{9000/14 1/00942923.DOCX}

25
REASONED DEClS ION ON MOTION FOR SUMMARY JUDGMENT

 1 to be compensated for conveyance of such Supplemental Water; however,

2

this purpose was to see that SDCWA was equitably compensated at a rate

3 lower than its member conveyance and prevailing transportation rates,
4 because the price of Supplemental Water was intentionally reduced to
5 achieve

Congressional

intent

that

Supplemental

Water

was

to

be

6 furnished at a preferred price .

7

Simply put, the SA's legislative purpose was not to assure

8 SDCWA was paid full price .

As a matter of contract interpretation,

9 the CA did not empower SDCWA to determine whether Supplemental Water
10 existed,

to refuse to deliver it when it was available, nor, itself

11

to declare whether the Supplemental Water was or was not available in

12

any year, nor whether Supplemental Water would or would not be conveyed

13

to the Settlement Parties.

Instead, only one specific exception to

14 excuse conveyance of Supplemental Water to the Settlement Parties was
15 expressly included in the Conveyance Agreement .

SDCWA was not a party

16

to the Settlement Agreement and had no statutory authority whatsoever

17

to

18

Supplemental Water to the Settlement Parties,

interfere

with

or

abrogate

the

Government's

furnishing

of

up to 16,000 AF per

19 year, when Supplemental Water was available , as it was in 2017.

20

There is no dispute that as of May 2017, Supplemental Water

2 1 from the United States was available.

It is true that the provisions

22 of CA No. 4 . , subsection i . , and No. 5 . , subsection e., were operative
23

to

coordinate

Supplemental

Water

conveyances,

protocol

24

including invoicing and payments and related issues.

25

had no legal authority to declare that based on the first

details,

However, SDCWA
(later)

26 availability of Supplemental Water in May 2017, after April 1st , the

27 contractually

scheduled

Notice

Date,

that

it

28
{9000/ 141/00942923.DOCX)

26

REASONED DECISION ON MOTION FOR SUMMARY JUDGMENT

could

declare

no

 1 Supplemental Water existed and could not be conveyed to Respondents.
2

This is in effect an example of "the tail wagging the dog."

3

The statutory objective of the SA involved the United States

4 as provider of Supplemental Water, Metropolitan Water Authority of
5 Southern

California,

Department

6 Reclamation, and SDCWA as conveyor.
7

of

the

Interior,

Bureau

of

However, SDCWA was simply a link

in the chain to effectuate the statutory purpose and to be compensated,

8 albeit at less than its members' rate.

9

The Respondents have correctly argued that SDCWA's claim to

10

recover monetary damages of over $2.2 million have not been legally

11

or logically established for the following reasons .

12

SDCWA has ignored the history, statutory purpose, and

1.

13

its role in the coordinated responsibilities of all participants in

14

the SA to effectuate the conveyance and receipt of Supplemental Water

15

by the Settlement Parties .

2.

16
17

SDCWA has provided no legal or logical authority that

gave i t the ability to usurp and unilaterally defeat the Supplemental

18 Water statute

(SA) and its purpose, by insisting that the statutory

19

language in the CA (No. 4., subsection i . , and No . 5., subsection e . )

20

gave i t the authority to unilaterally refuse to convey Supplemental

21

Water when

22

September 2017.

23

u.

legally and actually available

through

CONDITION PRECEDENT JURISPRUDENCE DOES NOT PREVAIL
The SDCWA's foundational contract law establishes a court's

24
25

such water was

duty

to

interpret

a

declaration

of

covenants,

conditions,

26 restrictions, and other contractual provisions in a way that is both
27

reasonable and carries out the intended purpose of the contract and

28

the law.

Dieclaneyer v. Redeve.lopment Agency 0£ Huntington Beach (2005)

{9000/141 /00942923. DOCX}

27
REASONED DECISION ON MOTION FOR SUMMARY JUDGMENT

 1 127 Cal . App.4th 248,

2 Assn .

259

(citing Battrim v.

(1984) 157 Cal . App. 3d 1184, 1189.)

Emerald Bay Community

Here, contrary to SDCWA's

3 insertion of itself to in effect become the arbiter of the availability

4 of Supplemental Water for 2017, by taking the position that CA No. 5.,
5

subsection e . ,

excused it from dealing with Supplemental Water in

6

2017, the court's primary task is to give effect to the Legislature's

7 in tended purpose in enacting the law .

People v . Hubbard (2016)

63

8 Cal.4th 378, 386 (citing, People v . Zambia (2011) 51 Cal.4th 965, 976 9

977.)

SDCWA's interpretation defeats the seminal purpose of the SA

10 and is proof of No . 5., subsection e.'s obvious inconsistency with the
11

federal law, the SA .

12

This means the court begins with the statute's text, assigns

13

relevant terms their ordinary meaning, while also taking account of

14 any related provisions in the overall structure of the statutory
15 scheme.

Hubbard,

id .

at p.

386 ;

see,

People v .

Cottle

(2006)

39

16 Cal . 4th 246, 254 .

Most

17

18 interpretation ,

importantly

here ,

as

the

well

as

"essential
consequences

19 advances the Legislature's intended purpose.

20

admits

of more

is

flowing

therefrom ,

the court may

including the Legislati ve history

22

- - to the extent they are helpful , in illuminating that purpose.

23

Corp. v. Superior Court (2015) 61 Cal . 4th 1175 , 1198.

24 unilaterally declar ing

it had the

our

Where the statutory text

than one reasonable interpretati on,

2 1 consider various extrinsic aids - -

whether

Flour

SDCWA has , by

right to not deliver the 2017

25

Supplemental Water , demonstrated there is more than one interpretation

26

of No. 5 . , subsection e . , which in effect elevated SDCWA' s purported

27

stature to do so and for SDCWA to be paid at its "regular rates."

28 This is inconsistent with and affords no respect to the United States
{9000/14 l/00942923 .DOCX)

28
REASONED DECISION ON MOTION FOR SUMMARY JUDGMENT

 1 Congressional purpose of
2 destroys
3

the

the

SA to convey Supplemental Water and

statutory objective of providing annual

Water at a preferred price when it is available .

Supplemental

The undisputed and

4 unambiguous purpose of the Settlement Act was to in part compensate
5 the Settlement Parties for years of deprivation of their San Luis Rey
6

water rights.

7 V.

CONDITION PRECEDENT THEORY

8

It is unnecessary to further analyze the SDCWA's contractual

9 condition precedent theory as

the Respondents have provided valid

10 argwnen ts that overcome the "condition precedent" theory, which SDCWA
11

seeks to utilize to destroy the purpose and effect of the SA.

The

12 parties agreed in the IPA, recital 2., p. 2, and 3., p. 3., that 2017
13

Supplemental Water deliveries were made in the amount of 9,383 AF and

14 SDCWA
15

reserved

Supplemental

only

Water

two

were

claims,
"not

that

SDCWA

required"

and

deliveries
it

of

2017

suffered monetary

16 damages based on the reduced prices i t was paid for 1) Supplemental
17 Water and 2) the cost of its transportation of such water through the
18

SDCWA system.
Respondents'

19

second

contention

is

that

SDCWA

had

no

20 authority to exalt its own monetary interests, over the Settlement Act
21

by deciding what was or was not Supplemental Water, and when it was

22

or was not available .

23

States, the party statutorily responsible for providing Supplemental

24 Water under the SA .
25

That authority is solely vested in the United

The third contention that SDCWA stipulated that

it would not pursue claims

that were "allowed under

the Reasoned

26 Decision" need not be addressed as claims for contractual monetary
27 damages

were validly

reserved under

the

auspices

28 Restatement 3d jurisprudence.
{9000/l 4 I/00942923.DOCX )

29
REASONED DECISION ON MOTION FOR SUMMARY JUDGMENT

of

the

IPA and

 Coincidentally, in Cape Concord Homeowners A s sn . v. City of
2 Escondido
3

(2017)

7

Cal . App. 5th

180,

190,

in

applying

statutory

interpretation to determine whether a 180-day limitation period in

4 Cal .

Government

Code

§

53082 (b)

concerning

whether

a

homeowners

5 association was entitled to a refund of sewer fees , for which claims
6 had to be filed within 180 days from the date of payment, resulting

7 in a limitation of 180 days to recover service fees paid within that

8 period ; discussing People v. Hubbard, supra, 63 Cal.4th at 386; the
9 Cape Concord court recognized : "The meaning of a statute may not be
10

determined from a single word or sentence ; the words must be construed

11

in context and provisions relating to the same subject matter must be

12 harmonized to the extent possible."
13

Devel.opment at North Star, Inc . v . Pl.acer County (2004) 122 Cal.App.4th

14 1289, 1295.)
15 because
16

(Citing, Association for Sensible

sewer

The Cape Concord court held that § 53082 did not apply
service was provided at the premises,

Concord's petition for a

writ of mandate .

Here,

denying Cape

it categorically

17 cannot be denied that the purpose of the Supplemental Water Legislation
18

(SA)

is for the United States to provide Supplemental Water to the

19 Settlement Parties.

20

Nothing in that statute or any of the agreements

that follow i t vests legal or actual authority in SDCWA to declare

21 what water is Supplemental Water nor when

(Supplemental Water)

is

22

available, nor to deny for SDCWA' s economic benefit that available

23

Supplemental Water does not have to be provided if it is not available ,

24 April 1, but becomes available 47 days later .
25

26

w.

IMPOSSIBILITY

Impossibility

of

performance

is

defined

as

strict

27 impossibility and impracticability because of e x treme and unreasonable

28 difficulty, expense, injury, or loss .
{9000/14 1/00942923.DOCX)

Autry v. Republ.ic Productions ,

30
REASONED DECISION ON MOTION FOR SUMMARY JUDGMENT

 (1947)

30 Cal.2d 144, 149 .

1

Inc.

2

impossibility exists in a given case . )

3

defense of impossibility is on the party asserting it, SDCWA.

4

v. City of Los Angeles (1954) 124 Cal .App.2d 71, 83 .

5
6

7

8
9

10
11
12

(It is a question of law whether
The burden of proving the
Hensler

Temporary impossibility suspends the duty until it no longer
exists .

Autry, at p . 149; Madlin v. Pacific Decision Sciences (2006)

137 Cal . App.4th 1001, 1017 (the obligation to perform is not excused
or discharged by temporary impossibility, it is only suspended) .

In

order for there to be a "legal impossibility," the things to be done
must

be

impossible

under

all

circumstances.

Conditions

making

performance unprofitable and more difficult or expensive do not extend
to performance of a contractual obligation.
25 Cal. 2d 48,

53 .

Here,

Lioyd v . Murphy (1940)

the best evidence is that no more than

13

temporary

"impossibility"

existed;

and

that

performance

was

14

achievable, and in fact achieved.
15
16
17
18
19

Impossibility
interpreting

the

does

statute

not

and

authorize
simply

a

court

invalidate

to
it

go

beyond

altogether .

Impossibility, as an aid to statutory interpretation, is akin to the
absurdity canon,

which counsels

courts

to

"avoid any

construction that would produce absurd consequences."

20 Prentice (2001) 26 Cal.4th 572, 578.

[statutory]
Flannery v .

Where strict compliance with the

21

terms of a statute is impossible , compliance as near as can be has

22

been

23

impossibility.

24

Impossibility does not authorize judicial invalidation of a statute

25

on the ground that compliance is impossible.

26 at
27

p.

permitted

434,

on

the

McMahon ,

citing,

Cal .App . 3d 286,

300

28 impossibilities.") . )
(9000/ 14 1/00942923.DOCX}

principle

Board

that

infra,

of

the

219

§

3531

Impossibility

does

Cal . App . 3d

Supervisors

(Cal . Civ . C.

law

not
at

require
300 .

p.

National Shooting, id.,
v.

McMahon

(1990)

219

("the law never requires

means

not

31

REASONED DECISION ON MOTION FOR SUMMARY JUDGMENT

only

strict

 1 impossibility but impracticability because of extreme and unr easonable

2 difficulty, expense, injury, or loss involved.
3

Even,

arguendo,

4

compliance

5

cannot be ignored or invalidated.

6

434.

was

if as of April 1,
actually

then

McMahon, at p . 300 .

the evidence demonstrates that

temporarily

impossible,

Nationai Shooting,

the

statute

supra,

at p .

Here, Supplemental Water was available wi thin 47 days following

7 April 1, SDCWA confirmed and admitted in writing that it was capable
of and ready to convey this Supplemental Water by July 1, 2017, and

8
9
10
11

12

it

in fact did so .

This overcame any alleged impossibility.

No

impossibility to justify ignoring the statute and its purpose here
exists .

Whether i mpossibility existed is a question of law.

v . Ceazan Tires , Ltd .

Mitcheii

(1944) 25 Cal.2d 45, 48 .

In this case, any impossibility was eliminated by the May
13

17th final settlement of the FEHA case.

The statutory purpose of

14
providing Supplemental Water takes precedence over any payment rights

15
16

17
18
19
20

of SDCWA under the CA .

As discussed, it was not the prerogative of

nor was SDCWA responsible to determine that no Supplemental Water
would be

available

in

2017,

because April

1

had come

and gone.

Deliveries did not have to start before July 1 , 2017 and SDCWA had
from May 22 , 2017 and all of June for its Board to address the issue
of how

to deliver and manage payment for

21 Supplemental Water delivery.
22 with

a

$900

million

less

than 10 , 000 AF of

It is beyond comprehension that SDCWA,

budget,

competent

management,

and

skilled

23

attorneys, asserts SDCWA could not, although they did in fact, possess

24

the ability to convey Supplemental Water to Respondents.

25

26

X.

ALLEGED CONTRACT

1.

MATERIALITY OF BREACH

27
28
(9000/141/00942923.DOCX}

32
REASONED DECISION ON MOTION ['QR SUMMARY JU DGMENT

 The

law distinguishes

2 breaches of contract.

between material

and non-material

In contract law, only a material breach excuses

3 further performance by the innocent party.

See generally, 1 Witkin,

4 Summary of Cal. Law (10th ed. 2005) Contracts,

813, p. 906.

§

5 a breach is material is generally a question of fact.

6 Arthur Murray,

Inc.

(1967)

249

Cal.App . 2d

410,

Whether

(Porter v.

421-422.)

The

7 determination of the materiality of the breach often depends upon the
intent of the parties as well as the particular circumstances of the
8
case.
(Id. at p. 422 . )
9
Here, it is not susceptible to dispute that the overriding
10
purpose of the SA Legislation and Congressional intent was to provide
11
the Settlement Parties with Supplemental Water .
This was the
12

culmination of decades-long water disputes and litigation over the San
13

Luis Rey River waters, including the federal government's breaches of
14

fiduciary duty to the Indian Tribes were proved.
15
16

17

18
19

20
21

that Indian water rights, were ignored or misappropriated through the
years, giving rise to enactment of the SA remedial statute .

Although

the timing of the original scheduling notice by April 1 of each year
was

intended

to

implementation

facilitate

of

water

the

conveyor's

deliveries,

(SDCWA)

including

planning

adopting

and

agreed- to

protocols concerning schedules, invoicing, and payment; all of these
provisions

22 legislative
23

The SA case held

are

subordinate

purpose

that

and

incidental

Supplemental

to

Water

Respondents, who were entitled to the water.

be

the

over-arching

provided

to

the

Despite the contentious

24 differences among the parties over the delivery date,

agreeing to

25

protocols, and actually delivering Supplemental Water for 2017, all

26

of these disputes were incidental to the primary statutory purpose

27

that Supplemental Water was to be provided by the United States under

28

federal law.
{9000/ 141/00942923.DOCX}

It was.

To interpret such incidental and subordinate

33
REASONED DECISION ON MOTION FOR SUMMARY JUDGMENT

 1 provisions of the CA by exalting CA No. 4. , subsection i . , and No . 5. ,

2

subsection e . , as conditions precedent to block providing Supplemental

3 Water,

4 would

is totally inconsistent with the SA' s
invalidate

that

law .

SDCWA

had

no

statutory purpose and
unilateral

right

and

5 authority, as a facilitating conveyor, to thwart and destroy the entire
6
7

8

statutory purpose of providing Supplemental Water at preferred prices.
SDCWA had no such right to be paid on its terms for doing so, as a
matter of law.
Even, arguendo, if the untimely but earliest feasible Notice

9

10
11

of Schedules after April 1st, in May of 2017, and extended negotiations
to arrive at agreed- upon protocols by December 11, 2017, are viewed
as breaches, they are immaterial given the overall statutory scheme

12

and purpose to which SDCWA, was only one of the facilitating parties .
13

Such breaches were immaterial and did not give rise to an excuse of
14

either party's duty of counter-performance, nor did they entitle SDCWA

15
16

to recover monetary damages at non-preferred rates, as there was no
lawful entitlement to or proof of such damages .

17

CONCLUSION

18

This ends

19

20 because

no

SDCWA' s

Supplemental

contentions

Water

was

that the CA was breached,

available

despite

the

FERC

21

settlement in May of 2017 .

At that time, Respondents requested that

22

SDCWA convey the 2017 Supplemental Water.

23

for acting responsibly by conveying the 2017 Supplemental Water, while

24

reserving all rights of dispute, and preventing much greater harm to

SDCWA is entitled to credit

25 Respondents by not interfering with the duties of the United States,
26

the Met, and the Bureau of Reclamation .

27

It is noteworthy that the Met granted credit to SDCWA based

28

in part on SDCWA's recognition and admission that the disputed water
(9000/14 1/00942923.DOCX}

34
REASONED DECISION ON MOTION FOR SUMMARY JUDGMENT

 1 i t provided was Supplemental Water for 2017, not SDCWA's water .

This

2 in part mitigated SDCWA' s "alleged loss . "
3

All

of

the

arguments

and

contentions

4 Respondents have been fully considered.

of

Claimant

and

There is no need for further

5 analysis or discussion of any other arguments and contentions.
Having considered the briefs of the parties, all exhibits

6

7 submitted,

8 2018,

oral arguments of the parties provided on November 15,

based

on

this

Reasoned Decision,

the

following

orders

are

9 entered .

10
11

ORDERS

12

Claimant SDCWA shall take nothing by its Demand for

l .

13 Arbitration.

2.

14

15

SDCWA has also requested that i t "at least be awarded

transportation costs" at its general member rate and not the reduced

16 statutory rate under the Act .

For all the reasons stated above, there

17

is no basis in law or fact to permit such an increased transportation

18

cost to be imposed which would constitute a violation of the Act and

19 Conveyance Agreement .

20
21

3.

The Respondents' Motion for Summary Judgment is granted

as to each and every claim of SDCWA's demand.

22

Respectful

4.

23

entered

24

accordance

25

jurisdiction.

26

in

favor
with

5.

of
this

request is made

Respondents
Reasoned

and

against

Decision

Pursuant to the parties'

that

by

a

judgment should be
Claimant,
court

of

SDCWA,

in

competent

Arbitration Agreement,

each

27 party shall bear the expense of its own counsel, experts, witnesses,
28

and preparation and presentation of evidence .
(9000/l 4 l/00942923.DOCX}

35

REASONED DECISION ON MOTION FOR SUMMARY JUDGMENT

 1

6.

The Administrative fees and expenses of the American

2 Arbitration Association totaling $14,700.00 are to be borne $7,350 . 00
3 by San Diego County Water Authority; $7,350.00 by San Luis Rey Indian
4 Water Authority.

5 $58,013 . 55 are
6 Authority;

The Compensation and expenses of Arbitrator totaling
to be borne

$29,006.78

by

$29,006 . 78 by San Diego County Water

San

Luis

Rey

Indian

Water

Authority .

7 Therefore, San Luis Rey Indian Water Authority shall pay San Diego
8 County Water Authority, an amount of $7,350.01.
9

7.

Based on the uniqueness of the issues presented by the

10

Arbitration, i t is fair and reasonable that each side bear its own

11

recoverable costs, that each side pay one-half of the court reporter ' s

12

fees and costs of the transcript.

13

14

SO ORDERED .

15

DATED : December 14, 2018 .

16
17
Hon.~~

18

U . S. District Judge (Ret . )
Arbitrator

19
20
21

22
23

24
25

26
27
28
{9000/l 4 l/00942923 .DOCX}

36
REASONED DECISION ON MOTION FOR SUMMARY JUDGMENT