SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF SAN FRANCISCO

Transcription

1 Bingham McCutchen LLP JAMES J. DRAGNA (SBN 2) COLIN C. WEST (SBN 0) THOMAS S. HIXSON (SBN ) Three Embarcadero Center San Francisco, California 1-0 Telephone:..00 Facsimile:.. Morrison & Foerster LLP SOMNATH RAJ CHATTERJEE (SBN 1) Market Street San Francisco, CA -22 Telephone: Facsimile:.2. MARCIA SCULLY (SBN 0) SYDNEY B. BENNION (SBN I 0) HEATHER C. BEATTY (SBN 1) JOHN SCHLOTTERBECK (SBN ) The Metropolitan Water District of Southern California 00 North Alameda Street Los Angeles, California 00-2 Telephone:..000 Facsimile:..0 Attorneys for Respondent and Defendant Metropolitan Water District of Southern California 1 SAN DIEGO COUNTY WATER AUTHORITY, Petitioner and Plaintiff, v. METROPOLITAN WATER DISTRICT OF 2 SOUTHERN CALIFORNIA; et al., 2 Respondents and Defendants SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF SAN FRANCISCO EXEMPT FROM FILING FEES [GOVERNMENT CODE ] Case No. CPF-- METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA'S REPLY IN SUPPORT OF SEPARATE STATEMENT OF UNDISPUTED MATERIAL FACTS IN SUPPORT OF MOTION FOR SUMMARY ADJUDICATION Date: December, 1 Time: :0 a.m. Dept.: 0 Judge: Hon. Curtis E. A. Kamow Action Filed: Trial Date: June, December 1, 1

2 1 Metropolitan Water District of Southern California ("MWD") submits this Reply in 2 Support of its-separate Statement of Undisputed Material Facts in Support of its Motion for Summary Adjudication. These uncontroverted facts mandate that summary adjudication be entered in MWD's favor with respect to San Diego County Water Authority's ("SDCWA") Breach of Contract Claim. ISSUE: THE FOURTH CAUSE OF ACTION FOR BREACH OF CONTRACT HAS NO MERIT Moving Party's Undisputed Material Facts and Sunnortine: Evidence 1. SDCW A entered into a contract with MWD--the Amended and Restated Agreement Between the Metropolitan Water District of Southern California and the San Diego County Water Authority for the Exchange of Water ("0 Exchange Agreement"), dated October, 0. (Declaration of Colin West in Support ofmwd's Motion for Summary Adjudication ("West Decl."), Ex. A (0 Exchange Agreement at 1 ); Declaration of June Skillman in Support of MWD's Motion for Summary Adjudication ("Skillman Decl.") ~.) Opposing Party's Response and Supporting Evidence 1. Undisputed. 2. Under the 0 Exchange 2. Undisputed. Agreement, SDCW A makes available water it purchases from the Imperial Irrigation District to MWD at the intake to MWD's Colorado River Aqueduct on Lake Havasu, and MWD delivers an equivalent amount of Exchange Water to SDCW A at various Moving Party's Reply and Supporting Evidence 1. This fact is undisputed. 2. This fact is undisputed.

3 II Moving Pam's Undiseuted Oneosing Pam's Resnonse Moving Pam's Renll: and Material Facts and and Suenorting Evidence Sunnorting Evidence Suooortinf! Evidence delivery points within San Diego County. (Third Amended Petition I Complaint, Case No. CPF- -0 ("TAC") ~ 2; Skillman Decl. ~ ; West Decl., Ex. A (0 Exchange Agreement at.1-.), Ex. C (Deposition of Dennis Cushman ("Cushman Depo.") at 20:-, 2:-).). Exchange Water under the. This is a legal conclusion,. This fact is undisputed. 0 Exchange Agreement not a statement of fact. Section 1.1 ( m) of the 0 means "water that is San Diego does not Exchange Agreement delivered to SDCW A by dispute that section 1.1 (m) defines "Exchange Water" Metropolitan... in a like of the Exchange using the precise language quantity as the quantity of Agreement contains the quoted by MWD. water that SDCW A has quoted language. Accordingly, the definition Made Available to provided, as it pertains to Metropolitan..." the 0 Exchange Agreement, is a fact, not a (Skillman Decl. ~ ; West legal conclusion. Decl., Ex. A (0 Exchange Agreement at 1.1(m)), Ex. C (Cushman Depo. at 20:-).). In payment for the. Disputed. The price. This fact is undisputed. Exchange Water, SDCWA SDCW A pays MWD for SDCWA's own Person pays MWD a Price for each acre-foot of water Most Knowledgeable each acre-foot of Exchange delivered under the ("PMK") witness on the Water MWD delivers- Exchange Agreement is 0 Exchange i.e., a volumetric water not for the water itself, but Agreement, Dennis rate. for the service of Cushman, expressly conveying lid and Canal admitted that SDCW A (Skillman Decl. ~ ; West Lining water through pays a volumetric water Decl., Ex. A (0 MWD's facilities. The rate (i.e. SDCW A pays Exchange Agreement at Exchange Agreement MWD a Price for each Section 1.1(t)), Ex C specifies that, after the acre-foot of Exchange (Cushman Depo. at :- first year, the Price Water MWD delivers). 1, 2:-).) charged for delivery of the water San Diego (West Decl., Ex. C purchased from lid or (Cushman Depo. at acquires from the lining of 2:- ("Q: So the the All-American and way the exchange Coachella Canals shall be agreement works is that "equal to the charge or San Diee:o pays a price as 2

4 IO II I I I Moving ParD::'s Undis[!uted O(!I!Osing Pam's Res[!onse Moving Partv's Rel!l! and Material Facts and and SU(!(!Orting Evidence SU(!(!Orting Evidence Suooortinl! Evidence charges set by defined in the contract Metropolitan's Board of for each acre-foot of Directors pursuant to exchange water [MWD] applicable law and delivers, right? A: regulation and generally Correct.")) (emphasis applicable to the added).) conveyance of water by Metropolitan on behalf of None of the evidence its member agencies." referenced by SDCW A SDCW A acquired water disputes the fact that from third party sources SDCW A pays a volumetric and the only service it water rate. requested and needed from MWD was the wheeling or (See, e.g., TAC, Ex. A conveyance of water to (0 Exchange San Diego. Agreement.1,.2 (confirming "SDCW A TAC Ex. A at Section.1, shall pay the Price for each.2; Braunig Decl. Ex. E acre-foot of Exchange (Thomas Depo.) at, 2- Water... delivered by ; id. Ex. G; id. Ex. H; id. [MWD]" and setting that Ex. 1.; id., Ex. 0 Price)); Braunig Decl., Ex. (Cushman Depo.) at E (Thomas Depo. at, :-1; Cushman Decl. 2- (testifying that the,-r1i. 0 Exchange Agreement relates to water that SDCW A purchased from the Imperial Irrigation District and that under the Agreement SDCW A would pay the rate set by MWD to convey water to its member agencies)), Ex. G ( indicating same), Ex. H (same), Ex. I (same), Ex. 0 (Cushman Depo. at :-1 (testifying that under the 0 Exchange Agreement SDCW A pays a conveyance price and that "exchange water is a mechanism of the water transfer")); Cushman Decl.,-r (pursuant to the 0 Exchange Agreement SDCW A paid MWD for conveyance, not purchase, of water).). Under the 0 Exchange. This is a legal conclusion,. This fact is undisputed. As Agreement, the initial not a statement of fact. SDCW A concedes,

5 Moving Pam's Undis(!uted OI!I!Osing Pam's Res(!onse Moving Party's Rel!ll: and Material Facts and and Sui!I!Orting Evidence SU(!(!Orting Evidence Suooortinl! Evidence Price was set in the San Diego does not Section.2 of the 0 Agreement at $, with dispute that section.2 of Exchange Agreement sets the Price thereafter being the Exchange Agreement the initial Price for each "equal to the charge or set the initial transfer Price acre-foot of Exchange charges set by at $ per acre foot, and Water MWD delivers at Metropolitan's Board of contains the quoted $ and sets the Price Directors pursuant to language. thereafter using the precise applicable law and language quoted by MWD. regulation and generally Accordingly, the definition applicable to the provided, as it pertains to conveyance of water by the 0 Exchange Metropolitan on behalf of Agreement, is a fact, not a its member agencies." legal conclusion. (West Decl., Ex. A (0 Exchange Agreement at.2), Ex. B (Deposition of Scott Slater ("Slater Depo.") at :1-: ), Ex. C (Cushman Depo. at :-2, 1:-2, :- 1).). The Price SDCW A pays. Disputed. The Exchange. This fact is undisputed. for each acre-foot of Agreement specifies that, SDCW A has admitted in Exchange Water under the after the first year, the its discovery responses that 0 Exchange Agreement Price charged for delivery the rate it pays MWD is composed of (1) the of the water San Diego under the 0 Exchange System Access Rate, (2) purchases from IID or Agreement is comprised of the System Power Rate, acquires from the lining of a System Access Rate, and () the Water the All-American and Water Stewardship Rate, Stewardship Rate, each of Coachella Canals shall be and System Power Rate. In which is a component of "equal to the charge or addition, SDCWA's own MWD's volumetric water charges set by PMK witness on the 0 rate. Metropolitan's Board of Exchange Agreement, Directors pursuant to Dennis Cushman, (Skillman Decl. ~ ; West applicable law and expressly admitted that Decl., Ex. C (Cushman regulation and generally SDCW A pays a volumetric Depo. at :-, applicable to the water rate consisting of ( 1) 2:-2: 1), Ex. D conveyance of water by the System Access Rate, (Deposition of Brian Metropolitan on behalf of (2) the System Power Rate, Thomas ("Thomas Depo. ") its member agencies." In and () the Water at :-1), Ex F other words, San Diego Stewardship Rate. (SDCWA's Response to pays a price that is MWD's First Set of equivalent to a lawful (SDCWA's Response to Special Interrogatories, MWD wheeling rate. MWD's First Set of No. 1, at :1-1).) SDCW A acquired water Special Interrogatories, from third party sources No. 1, at :-1 and the only service it (admitting that the rate requested and needed from SDCWA pays MWD MWD was conveyance of under the 0 Exchange

6 II Moving Pam's Undis(!uted O(!(!Osing Partv's Res(!onse Moving Pam's Re(!ly and Material Facts and and SU(!(!Orting Evidence Su(!I!Orting Evidence Suooortine: Evidence water to San Diego. Agreement "is comprised of a System Access Rate, TAC Ex. A Section.2; Water Stewardship Rate, Braunig Dec I. Ex. E and System Power Rate"); (Thomas Depo.) at, 2- West Decl., Ex. C ; id. Ex. G; id. Ex. H; id. (Cushman Depo. at Ex. I; Ex. 0 (Cushman :- ("Q: The price Depo.) at :-1; Cushman Decl. ~. that [SDCW A] pays for water delivered is a certain price per acre-foot of water, correct? A: The price [SDCWA] pays for water under the exchange agreement is the price generally applicable to the conveyance of water that [MWD] charges its member agencies. And it has three components: The system access rate, the system power rate, and the water stewardship rate.")) (emphasis added).) None of the evidence referenced by SDCW A disputes the fact that MWD's volumetric rate consists of (1) the System Access Rate, (2) the System Power Rate, and () the Water Stewardship Rate. SDCWA's claims with respect to the services it requested and needed from MWD are irrelevant on this point. (See, e.g., T AC, Ex. A (0 Exchange Agreement.2 (establishing the Price that SDCW A shall for each acre-foot of Exchange Water delivered by MWD)); Braunig Decl., Ex. E (Thomas Depo. at, 2- (testifying that the 0 Exchange

7 Moving Pam's Undis(!uted O(!(!OSing Partv's Res(!onse Moving Par!):'s Re(!ll: and Material Facts and and Sn(!(!Orting Evidence SU(!(!Orting Evidence Supportin2 Evidence Agreement relates to water that SDCW A purchased from the Imperial Irrigation District and that under the Agreement SDCW A would pay the rate set by MWD to convey water to its member agencies)), Ex. G ( indicating same), Ex. H (same), Ex. I (same), Ex. 0 (Cushman Depo. at :-1 (testifying that under the 0 Exchange Agreement SDCW A pays a conveyance price and that "exchange water is a mechanism of the water transfer")); Cushman Decl. ~ (pursuant to the 0 Exchange Agreement SDCW A paid MWD for conveyance, not purchase, of water).). In October 01, MWD. Undisputed. Not material.. This fact is undisputed and adopted its current water material to SDCWA's rate structure, effective as inability to establish of January 0, which breach of contract, for the unbundled its rates into the reasons stated in MWD' s Tier 1 and Tier 2 Supply Memorandum of Points Rate; the System Access and Authorities in Support Rate; the System Power of Motion for Summary Rate; the Water Adjudication and MWD's Stewardship Rate; and a Reply Brief in Support of Treatment Surcharge MWD's Motion for (when MWD delivers Summary Adjudication. treated water). (Memorandum of Points (Skillman Decl., ~ ; West and Authorities in Support Decl., Ex. C (Cushman ofmwd's Motion for Depo. at 2:-2:1, Summary Adjudication :1-: ).) ("OB") at 1:-,2:-1, :-: 1; Reply Brief in Support ofmwd's Motion for Summary Adjudication ("RB") at 1:-:1.). MWD has not changed the. Disputed. MWD's PMQ. This fact is undisputed. method by which it witnesses concerning The manager of MWD' s calculates the rates that MWD's Financial Budget and Financial

8 Moving Partv's Undis);!uted OJ:!J:!Osing Partv's ResJ:!onse Moving Pam's ReJ:!II and Material Facts and and SUJ:!);!Orting Evidence SUJ:!);!orting Evidence Suooortine: Evidence comprise the Price, nor the Planning Model testified Planning Section, June allocation ofmwd's costs that some ofmwd's cost Skillman, declared that the rates recover, since allocations, including costs unequivocally that MWD implementing its related to the State Water has not changed the rate unbundled rate structure in Project, may have changed structure at issue in this 0. since 0. case since the 0 Exchange Agreement's (Skillman Decl., ~.) Braunig Decl., Ex. P (Van inception in 0, and den Berg Depo.) at SDCWA's own PMK :1-2:; Ex. Q witnesses, Scott Slater and (Kostopoulos Depo.) at Dennis Cushman, agreed :-2:. with Ms. Skillman on this issue. Moreover, SDCWA's complaint admits that MWD set its current rate structure in January 0. (Skillman Decl., ~ ; West Decl., Ex. B (Slater Depo. at 1:- ("Q: Did MWD bill [SDCWA] using the rate structure that was in effect at the time of execution in 0? A: My understanding is they did.")) (emphasis added), Ex. C (Cushman Depo. at :2- ("Q:... [W]as there anything different in 0 as opposed to prior years with regard to how MWD allocated the costs it incurred by virtue of its state water project contract with DWR? A: Not that I'm aware of.")) (emphasis added); T AC ~ ("[MWD]'s current rate structure, first implemented in January 0, includes three [MWD] -created components-a 'System Access Rate,' a 'System Power Rate,' and a 'Water Stewardship Rate'") (emphasis added).)

9 Moving Parn:'s UndisJ!uted OJ!J!Osing Partv's ResJ!onse Moving Pam's ReJ!I~ and Material Facts and and SUJ!J!Orting Evidence SUJ!J!Orting Evidence Suooortine Evidence Neither of the witnesses whose testimony SDCW A cites-stathis Kostopoulos and Am out Van den Berg-was designated as a PMK witness on MWD's rate structure. Moreover, neither Mr. Kostopoulos nor Mr. Van den Berg testified that they knew either way whether MWD' s rate structure has changed since 0. The testimony to which SDCWA cites demonstrates merely that MWD updates its Financial Planning Model regularly to account for the allocation of new costs. To the extent that the testimony of Mr. Kostopoulos or Mr. Van den Berg even bears on whether MWD' s rate structure was the same since 0, their testimony supports the fact that it has been the same. (See, e.g., SDCWA's Response to MWD' s Separate Statement of Undisputed Facts in Support of Motion for Summary Adjudication ("SDCWA's Response to U.F."), (Mr. Kostopoulos and Mr. Van den Berg were PMK witnesses concerning MWD' s Financial Planning Model); Braunig Decl., Ex. P (Van den Berg Depo. at :1-2: (testifying that "allocation of the State Water Project was already predetermined by the Raftelis study, so that's been kent the same"

10 Moving ParD::'s UndisJ!uted OJ!J!Osing Pam's ResJ!onse Moving Partv's ReJ!lY and Material Facts and and SUJ!J!Orting Evidence SUJ!J!Orting Evidence Suooortinl! Evidence while, on the other hand, new line item costs were evaluated to determine how they should be categorized)) (emphasis added), Ex. Q (Kostopoulos Depo. at :-2: (testifying that "most of the existing line items typically stayed in the functional allocation that they were in the first original cost of service" and that and generally any updates consisted of reviewing new cost items in order to determine to which cost function each belonged but that he was unaware of any specific changes to MWD' s cost allocations over time)) (emphasis added).). During discovery,. Undisputed. Not material.. This fact is undisputed and SDCW A put forth material to SDCWA's "Persons Most inability to establish Knowledgeable" witnesses breach of contract, for the on several issues relevant reasons stated in MWD' s to its claim for breach of Memorandum of Points the 0 Exchange and Authorities in Support Agreement, including (1) of Motion for Summary SDCW A's interpretation Adjudication and MWD's of that Agreement, (2) the Reply Brief in Support of parties' obligations under MWD's Motion for it and performance of it, Summary Adjudication. and () the alleged breaches of it. (OB at 1:-,2:-1, :-:1; RB at 1:-:1.) (West Decl., Ex. E (MWD's Amended Notice of Deposition of Person Most Knowledgeable for SDCW A (Exchange Agreement)), Ex. B (Slater Depo. at :-:), Ex. C (Cushman Depo. at 2:-:).). The initial $ Price. Disputed. The evidence. This fact is undisputed. SDCW A paid under the cited by MWD does not SDCWA's own PMK

11 Moving Party's Undis(!uted O(!(!Osing Pam's Res(!onse Moving Party's Re(!l;y and Material Facts and and SU(!(!Orting Evidence SU(!(!Orting Evidence Suooortin!! Evidence 0 Exchange Agreement support the conclusion witness on the 0 was a legal rate. MWD seeks to draw. Mr. Exchange Agreement, Slater did not testify that Scott Slater, expressly (West Decl., Ex. B (Slater the initial price was a legal admitted, in response to Depo. at :1-:).) rate, merely that it was direct questioning, that the procedurally properly initial $ Price SDCW A adopted in accordance paid under the 0 withmwd's Exchange Agreement was Administrative Code. Mr. a legal rate. That Mr. Slater repeatedly testified Slater went on to testify that the "applicable law that the rate was pro peri y and regulation" language adopted by MWD's in section.2 of the Administrative Code does Exchange Agreement not change the fact that he requires much more than admitted MWD's initial compliance with the rate was legal. MWD Administrative Code, and that he (West Decl., Ex. B (Slater communicated that to Depo. at :-: ("Q: MWD on multiple The 0 agreement, occasions during contract there was a price negotiations. Moreover, provision for roughly both parties understood $... [t]o your that San Diego could not understanding, was that challenge MWD's rates in a legal rate? A: Yeah.")) 0, that San Diego was (emphasis added).) precluded from challenging MWD's rates None of the evidence in litigation for five years referenced by SDCW A following the execution of disputes the fact that this the Exchange Agreement, initial Price was legal. and that to do so would SDCWA's claims that have constituted a breach SDCW A was precluded of contract by San Diego. from challenging MWD's The Exchange Agreement rates in litigation for five expressly contemplated years following the that San Diego could execution of the 0 challenge MWD's rates, Exchange Agreement and and the Price charged that the Agreement under the Exchange expressly contemplated Agreement, after five that SDCW A could years. challenge MWD' s rates after five years are Braunig Decl., Ex. F irrelevant on this point. (Exchange Agreement),.2,.1; id. Ex. K (See, e.g., Braunig Decl., (Slater Depo.) at :- Ex. F (0 Exchange :,:-:, 1:2-, Agreement.2,.1 :-, 1:-2:, (preventing SDCW A from :1-1, 1:1-:; bringing suit for any id. Ex. E (Thomas Depo.) breach of the 0

12 Moving Pam's Undis~uted O~~osing Pam's Res~onse Moving Partv's Re~ly and Material Facts and and Su~~orting Evidence Su~~orting Evidence Supportin!Z Evidence at 1:-:1, :- Exchange Agreement until :2, :-,1:- 0)), Ex. K (Slater 2, 1:-1:, Depo. at :-: :1-:; id. Exs. A, (admitting that MWD' s L,M,N. initial rate under the 0 Exchange Agreement was legal and that SDCW A agreed to pay it), :- : (indicating only that Mr. Slater did not understand "applicable law and regulation" to refer to justmwd's Administrative Code), 1:2- (in Mr. Slater's opinion, "there were some laws that would touch the subject of' MWD's rates and that "whatever [MWD] did would have to be consistent with that"), :- (testifying that MWD would set its rates in accordance with applicable law and that during the first five years of the 0 Exchange Agreement "there was a peace treaty" to which SDCW A consented, preventing any lawsuit with respect to MWD's rates), 1:-2: (indicating that SDCWA's negotiating team intended the 0 Exchange Agreement to provide SDCW A the opportunity to avail itself of legal remedies ifmwd's rates were unlawful), :1-1 (testifying that, for SDCWA's protection, MWD's rates must be set "in accordance with whatever administrative procedures are established uniformly pursuant to its code" and that SDCW A would have the right to challenge MWD's rates if

13 Moving Par!l:'s Undisf!uted OJ:!J:!Osing Pam's ResJ:!onse Moving Par!l:'s ReJ:!l: and Material Facts and and SUJ:!J:!Orting Evidence Suf!J:!Orting Evidence Suooortinl! Evidence "the law evolved"), 1:1-: (suggesting that Mr. Slater was uncertain what laws applied to the 0 Exchange Agreement but that he did not want to "negotiate a deal that didn't account for change in circumstance" or violation of law)), Ex. E (Thomas Depo. at 1:- : 1 (testifying that, at the conclusion of five years, the 0 Exchange Agreement afforded SDCW A the opportunity to challenge MWD' s rates by filing suit), :- :2 (testifying that, during negotiation of the 0 Exchange Agreement, MWD sought a longer time period barring legal challenges to MWD's rates and SDCWA sought a shorter time bar), :- (indicating that the understanding of the parties was that applicable laws or regulations "included all laws affecting [MWD]'s rates and charges"), 1:-2 (testifying merely that SDCW A had "raised a concern" about MWD's rates), 1:-1: (same), :1-: (stating, in Mr. Thomas' opinion, that a rate challenge prior to 0 would have violated the 0 Exchange Agreement)), Exs. A, L, M, N (indicating SDCW A raised concerns about MWD's rate structure).). In 0, SDCWA saw no. Disputed. The evidence. This fact is undisputed. violation of the law in cited by MWD does not SDCWA's own PMK

14 II I2 1 I I Moving Pam's Undis(!uted Ol!l!osing Pam's Resl!onse Moving Par:U:'s Rel!ll: and Material Facts and and Sui!I!Orting Evidence Su(!(!orting Evidence Suooortin2: Evidence MWD' s rates for the support the conclusion witness on the 0 conveyance of water. MWD seeks to draw. Mr. Exchange Agreement, Slater did not testify that Scott Slater, expressly (West Decl., Ex. B (Slater San Diego saw no admitted that SDCW A did Depo. at 2:-:).) violation of the law in not see a violation of law MWD' s rates for the in MWD' s rates at the time conveyance of water in it entered into the 0 0. In fact, Mr. Slater Exchange Agreement. testified that San Diego consented under the (West Decl., Ex. B (Slater Exchange Agreement to Depo. at : I- ("Q: So at pay that rate in the first this point in time, in 0, year and not to challenge you had not identified any the rate MWD established particular law or reg--- for five years. Mr. Slater law or regulation that also repeatedly testified [MWD]'s then-existing that the "applicable law rate structure might be in and regulation" language violation of? A: We did -- in section.2 of the we knew that there were Exchange Agreement laws that could be requires much more than pertinent, but we did not compliance with the see a violation.")) MWD Administrative (emphasis added).) Code, and that he communicated that to None ofthe evidence MWD on multiple referenced by SDCW A occasions during contract disputes this admission. negotiations. Moreover, SDCWA's claims that the both parties understood 0 Exchange Agreement that San Diego could not requires much more than challenge MWD' s rates in compliance with the MWD 0, that San Diego was Administrative Code, that precluded from SDCW A was precluded challenging MWD' s rates from challenging MWD's in litigation for five years rates in litigation for five following the execution of years following the the Exchange Agreement, execution of the and that to do so would Agreement, and that the have constituted a breach Agreement expressly of contract by San Diego. contemplated that SDCW A The Exchange Agreement could challenge MWD's expressly contemplated rates after five years are that San Diego could irrelevant on this point. challenge MWD' s rates, and the Price charged (See, e.g., Braunig Dec I., under the Exchange Ex. F (0 Exchange Agreement, after five Agreement at.2,.i years. (preventing SDCW A from bringing suit for any Braunig Decl., Ex. F breach of the 0 (ExchanJ:?;e AJ:?;reement), ExchanJ:?;e AJ:?;reement until 1

15 IO II 1 I I Moving Par!Y's UndisRuted 0RROsing Pam's Resllonse Moving Par!Y's ReRll: and Material Facts and and SuRROrting Evidence SURROrting Evidence Supportine: Evidence.2,.1; id. Ex. K (Slater 0)), Ex. K (Slater Depo.) at :-:, Depo. at :-: :-:,1:2-,1:- (admitting that MWD's :,:-, 1:- initial rate under the 0 2:, :1-1, 1:1- Exchange Agreement was :; id. Ex. E (Thomas legal and that SDCW A Depo.) at 1:-:1, agreed to pay it), :- :-:2, :-, : (indicating only that 1:-1:,:1- Mr. Slater did not :; id Exs. A, L, M, N. understand "applicable law and regulation" to refer to justmwd's Administrative Code), 1:2- (in Mr. Slater's opinion, ''there were some laws that would touch the subject of' MWD's rates and that "whatever [MWD] did would have to be consistent with that"), 1:-: (indicating that SDCW A consented to paying MWD' s initial rate, at least in part because it relied upon MWD's Administrative Code and did not see a violation of law), :- (testifying that MWD would set its rates in accordance with applicable law and that during the first five years of the 0 Exchange Agreement "there was a peace treaty" to which SDCW A consented, preventing any lawsuit with respect to MWD's rates), 1:-2: (indicating that SDCWA's negotiating team intended the 0 Exchange Agreement to provide SDCW A the opportunity to avail itself of legal remedies ifmwd's rates were unlawful), :1-1 (testifying that, for SDCWA's protection, MWD's rates must be set "in accordance with

16 II I2 I Moving ParD:'s Undis(!uted O(!(!OSing Partv's Res(!onse Moving Partv's Re(!ly and Material Facts and and SU(!(!Orting Evidence SU(!(!Orting Evidence Suooortin!! Evidence whatever administrative procedures are established uniformly pursuant to its code" and that SDCW A would have the right to challenge MWD's rates if "the law evolved"), 1: I-: (suggesting that Mr. Slater was uncertain what laws applied to the 0 Exchange Agreement but that he did not want to "negotiate a deal that didn't account for change in circumstance" or violation oflaw)), Ex. E (Thomas Depo. at 1:- : 1 (testifying that, at the conclusion of five years, the 0 Exchange Agreement afforded SDCW A the opportunity to challenge MWD's rates by filing suit), :- :2 (testifying that, during negotiation of the 0 Exchange Agreement, MWD sought a longer time period barring legal challenges to MWD's rates and SDCWA sought a shorter time bar), :- (indicating that the understanding of the parties was that applicable laws or regulations "included all laws affecting [MWD]'s rates and charges"), 1:- I: (same), I:1- : (stating, in Mr. Thomas' opinion, that a rate challenge prior to 0 would have violated the 0 Exchange Agreement)), Exs. A, L, M, N (indicating SDCW A raised concerns about MWD's rate structure).)

17 II I Moving Pam's Undis(!uted O(!(!Osing Partv's Res(!onse Moving Pam's Re(!ll: and Material Facts and and SU,I!(!Orting Evidence SU,I!,I!Orting Evidence Suooortine Evidence. After the 0 Exchange. Disputed as to whether the. This fact is undisputed. Agreement's execution in "rate structure" and how The manager of MWD' s 0, continuously each costs were allocated by Budget and Financial year MWD billed SDCW A MWD remained the same Planning Section, June using the same rate after 0. MWD's PMQ Skillman, declared structure that was in effect witnesses concerning unequivocally that MWD at the time the 0 MWD's Financial has not changed the rate Exchange Agreement was Planning Model testified structure at issue in this executed, and SDCW A that some ofmwd's cost case since the 0 paid those bills. allocations, including costs Exchange Agreement's related to the State Water inception in 0, and (West Decl., Ex. B (Slater Project, may have changed SDCWA's own PMK Depo. at 1:-1:), since 0. Undisputed witnesses, Scott Slater and Ex. C (Cushman Depo. at that SDCW A has paid all Dennis Cushman, agreed :1-:,2:2- MWD billings since 0, with Ms. Skillman on this :); Skillman Decl., some under protest and issue. Moreover, ~.) with a request that the SDCW A's 1 0 complaint funds be placed into a admits that MWD set its separate interest bearing current rate structure in account as required by the January 0. Exchange Agreement. (Skillman Decl., ~ ; West Braunig Decl., Ex. P (Van Dec I., Ex. B (Slater Depo. den Berg Depo.) at at 1:- ("Q: Did :1-2:; Ex. Q MWD bill [SDCWA] (Kostopoulos Depo.) at using the rate structure :-2:. that was in effect at the time of execution in 0? A: My understanding is they did.")) (emphasis added), Ex. C (Cushman Depo. at :2- ("Q:... [W]as there anything different in 0 as opposed to prior years with regard to how MWD allocated the costs it incurred by virtue of its state water project contract with DWR? A: Not that I'm aware of.")) (emphasis added); T AC ~ ("[MWD]'s current rate structure, first implemented in January 0, includes three [MWD]-created components-a 'System Access Rate,' a 'System Power Rate,' and a 1

18 Moving Par!Y's Undis(!uted OI!I!Osing Pam's Resl!onse Moving Par!Y's Re(!ly and Material Facts and and SU(!(!Orting Evidence SUI!(!Orting Evidence Supportine: Evidence 'Water Stewardship Rate'") (emphasis added).) Neither of the witnesses whose testimony SDCW A cites-stathis Kostopoulos and Am out Van den Berg-was designated as a PMK witness on MWD's rate structure. Moreover, neither Mr. Kostopoulos nor Mr. Van den Berg testified that they knew either way whether MWD' s rate structure has changed since 0. The testimony to which SDCWA cites demonstrates merely that MWD updates its Financial Planning Model regularly to account for the allocation of new costs. To the extent that the testimony of Mr. Kostopoulos or Mr. Van den Berg even bears on whether MWD' s rate structure was the same since 0, their testimony supports the fact that it has been the same. (See, e.g., SDCWA's Response to U.F., (Mr. Kostopoulos and Mr. Van den Berg were PMK witnesses concerning MWD's Financial Planning Model); Braunig Decl., Ex. P (Van den Berg Depo. at:1-2: (testifying that "allocation of the State Water Project was already predetermined by the Raftelis study, so that's been kept the same" while, on the other hand, new line item costs were evaluated to determine 1

19 Moving Pam's Undis(!uted O(!l!Osing Pam's Res(!onse Moving Pam's Re(!ly and Material Facts and and SU(!(!Orting Evidence SU(!(!Orting Evidence Suooortine: Evidence how they should be categorized)) (emphasis added), Ex. Q (Kostopoulos Depo. at :-2: (testifying that "most of the existing line items typically stayed in the functional allocation that they were in the first original cost of service" and that and generally any updates consisted of reviewing new cost items in order to determine to which cost function each belonged but that he was unaware of any specific changes to MWD' s cost allocations over time)) (emphasis added).) 1. SDCWA contends that 1. This is a statement of San 1. This fact is undisputed. As MWD first breached the Diego's legal contentions SDCW A concedes, it 0 Exchange Agreement in the case, not a statement contends that MWD first when it adopted, in the of fact. San Diego does breached the 0 spring of 0, the water not dispute that MWD first Exchange Agreement in rates for 0. committed an actionable 0. Moreover, breach of contract in 0, SDCWA's own PMK (West Decl., Ex. C because prior to January 1, witness on the 0 (Cushman Depo. at :1-0, San Diego was Exchange Agreement, 0:2).) legally precluded from Dennis Cushman, testified, challenging MWD's rates in response to direct in Court until the questioning, that MWD expiration of the five-year first breached the 0 litigation timeout Exchange Agreement following the Exchange Agreement. when it adopted, in the spring of 0, the water rates for 0. Braunig Dec I., Ex. F (Exchange Agreement), (West Decl., Ex. C.2,.1; id. Ex. E (Cushman Depo. at :- (Thomas Depo.) at 1:- ("Q:... [H]ow did :1, :-:2, MWD breach the 0 :-, 1:-1:, exchange agreement, to :1-:; id. Exs. A, your understanding? A: L,M,N. MWD first breached the 0 exchange agreement when it adopted in the spring of 0 water rates for 0... ")) (emphasis added).) 1

20 Moving Par!!_'s Undisnuted Onnosing Pam's Resnonse Moving Pam's Renll: and Material Facts and and Sunl!orting Evidence Sunnorting Evidence Sunnortinf! Evidence SDCWA's claim that it was legally precluded from challenging MWD's rates until five years following the 0 Exchange Agreement is irrelevant on this point. SDCW A's inability to sue for breach of the 0 Exchange Agreement until 0 does not mean that there could not have been a breach of that Agreement until 0. Thus, none of the evidence referenced by SDCW A disputes the fact that SDCW A contends that this breach first occurred in 0. (See, e.g., Braunig Decl., Ex. F (0 Exchange Agreement at.2,.1 (preventing SDCW A from bringing suit for any breach of the 0 Exchange Agreement until 0)), Ex. E (Thomas Depo. at 1:-:1 (testifying that, at the conclusion of five years, the 0 Exchange Agreement afforded SDCW A the opportunity to challenge MWD' s rates by filing suit), :- :2 (testifying that, during negotiation of the 0 Exchange Agreement, MWD sought a longer time period barring legal challenges to MWD's rates and SDCWA sought a shorter time bar), :- (indicating that the understanding of the parties was that applicable laws or regulations "included all laws affecting fmwd]'s rates 1

21 Moving Party's Undisputed Material Facts and Suooortin!Z Evidence Opposing Partv's Response and Supporting Evidence Moving Partv's Reply and Supporting Evidence and charges"), 1:-2 (testifying merely that SDCW A had "raised a concern" about MWD's rates), 1:-1: (same), :1-: (stating, in Mr. Thomas' opinion, that a rate challenge prior to 0 would have violated the 0 Exchange Agreement)), Exs. A, L, M, N (indicating SDCW A raised concerns about MWD's rate structure).) Dated: November, 1 BINGHAM MCCUTCHEN LLP By:~ Attorneys for Respondent and Defendant METRO PO LIT AN WATER DISTRICT OF SOUTHERN CALIFORNIA

22 San Diego County Water Authority v. Metropolitan Water District of Southern California, et al., San Francisco County Superior Court Case Nos. CPF--0 & CPF-- PROOF OF SERVICE I am over eighteen years of age, not a party in this action, and employed in San Francisco County, California at Three Embarcadero Center, San Francisco, California 1-0. I am readily familiar with the practice of this office for collection and processing of correspondence for mail/fax/hand delivery/next business day Federal Express delivery, and they are deposited that same day in the ordinary course of business. On November, 1, I served the attached: METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA'S REPLY IN SUPPORT OF SEPARATE STATEMENT OF UNDISPUTED MATERIAL FACTS IN SUPPORT OF MOTION FOR SUMMARY ADJUDICATION (VIA LEXISNEXIS) by causing a true and correct copy of the document(s) listed above to be sent via electronic transmission through LexisNexis File & Serve to the person(s) at the address(es) set forth below. as indicated on the following Service List. I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct and that this declaration was executed on November, 1, at San Francisco, California PROOF OF SERVICE N.1

23 1 SERVICE LIST 2 VIAE-SERVICE John W. Keker, Esq. Daniel Purcell, Esq. Dan Jackson, Esq. Warren A. Braunig, Esq. Keker & Van Nest LLP Battery Street San Francisco, CA 1- Telephone: () 1-00 Facsimile: () -1 jkeker@kvn.com dpurcell@kvn.com djackson@kvn.com wbraunig@kvn.com Counsel for Petitioner and Plaintiff San Diego County Water Authority VIA E-SERVICE 1 Dorine Martirosian, Deputy City Attorney Glendale City Attorney's Office 1 E. Broadway, Suite 2 Glendale, CA 1 Telephone: (1) -0 1 Facsimile: (1) DMartirosian@ci.glendale.ca.us 1 Counsel for City of Glendale VIA E-SERVICE Steven M. Kennedy, Esq. Brunick, McElhaney & Kennedy, Professional Law Corporation P.O. Box 1 San Bernardino, CA 22- Telephone: (0) -01 Facsimile: (0) -1 skennedy@bmblawoffice.com Counsel/or Three Valleys Municipal Water District VIA E-SERVICE DanielS. Hentschke, Esq. San Diego County Water Authority Overland A venue San Diego, CA 2- Telephone: () -0 Facsimile: () - dhentschke@sdcwa.org Counsel for Petitioner and Plaintiff San Diego County Water Authority VIA E-SERVICE John L. Fellows III, City Attorney Patrick Q. Sullivan, Assistant City Attorney Office of the City Attorney 01 Torrance Blvd. Torrance, CA 00 Telephone: (1 0) 1-1 Facsimile: () PSullivan@TorranceCA.Gov JFellows@TorranceCA. Gov Counsel for the City of Torrance VIA E-SERVICE Patricia J. Quilizapa, Esq. Aleshire & Wynder, LLP Von Karman A venue, Suite 0 Irvine, CA 2 Telephone: () -1 Facsimile: () -1 pquilizapa@awattorneys.com Counsel for Municipal Water District of Orange County 2 2 A/.1 2 PROOF OF SERVICE

24 1 SERVICE LIST (Continued) VIA E-SERVICE Michael N. Feuer, City Attorney Richard M. Brown, General Counsel Julie Conboy Riley, Deputy City Attorney Tina P. Shim, Deputy City Attorney City of Los Angeles Ill North Hope Street, Room 0 Los Angeles, CA 00 Telephone: () - Facsimile: () -0 tina.shim@ladwp.com julie.riley@lawp.com Counsel for The City of Los Angeles, Acting by and Through The Los Angeles Department of Water and Power VIAE-SERVICE Steven P. O'Neill, Esq. Michael Silander, Esq. Christine M. Carson, Esq. Lemieux and O'Neill 1 E. Thousand Oaks Blvd., Suite 0 Westlake Village, CA Telephone: (0) -0 Facsimile: (0) -2 steve@lemieux -oneill.com michael@lemieux-oneill.com christine@lemieux -oneill.com kathi@lemieux-oneill.com Counsel for Eastern Municipal Water District, Foothill Municipal Water District, Las Virgenes Municipal Water District, West Basin Municipal Water District, and Western Municipal Water District VIA E-SERVICE Amrit S. Kulkarni, Esq. Julia L. Bond, Esq. Dawn A. Mcintosh, Esq. Edward Grutzmacher, Esq. Meyers, Nave, Riback, Silver & Wilson th Street, Suite 00 Oakland, CA 0 Telephone: () 0-00 Facsimile: () -1 akulkarni@meyersnave.com jbond@meyersnave.com dmcintosh@meyersnave.com egrutzmacher@meyersnave.com Counsel for The City of Los Angeles, Acting by and Through The Los Angeles Department of Water and Power VIAE-SERVICE (Case No. -0 only) Donald Kelly, Esq. Utility Consumers' Action Network 0 Kenyon Street, Suite 01 San Diego, CA 1 0 Telephone: (1) - Facsimile: (1) - dkelly@ucan.org Counsel for Utility Consumers' Action Network PROOF OF SERVICE N.1