Central Coast Water Authority et al vs Santa Barbara County Flood Control and Water Conservation District

Case Number

21CV02432

Case Type

Hearing Date / Time

Fri, 09/08/2023 - 10:00

Nature of Proceedings

Demurrer and Motion to Transfer

Tentative Ruling

TENTATIVE RULING:

(1)       For the reasons set forth herein, the motion of Santa Barbara County Flood Control and Water Conservation District and Board of Directors of Santa Barbara County Flood Control and Water Conservation District to transfer venue pursuant to Code of Civil Procedure section 394 is denied.

(2)       The hearing on the demurrer of the cross-defendants to the first amended cross-complaint is continued to October 27, 2023, at 10:00 a.m.

Background:

On June 18, 2021, plaintiffs and petitioners Central Coast Water Authority (CCWA), and plaintiffs and petitioners Carpinteria Valley Water District, the City of Buellton, the City of Guadalupe, the City of Santa Barbara, the City of Santa Maria, the Goleta Water District, the Montecito Water District, and the Santa Ynez River Water Conservation District, Improvement District No. 1 (collectively, petitioners) filed their original petition for writ of mandamus and complaint against defendant and respondent Santa Barbara County Flood Control and Water Conservation District (District) and the Santa Barbara County Board of Supervisors (Supervisors). The original petition asserted five causes of action: (1) reverse validation to determine the invalidity of Resolution No. 21-73; (2) writ of mandate for acting in excess of statutory authority; (3) breach of contract; (4) breach of implied covenant of good faith and fair dealing; and (5) declaratory relief.

On July 8, 2021, counsel for CCWA, Stephanie Osler Hastings, participated in a telephone conference with then-counsel for the District and other counsel for other petitioners in connection with the District’s intention to demur to the original petition. (Hastings decl., ¶ 4.) In that telephone call, counsel discussed both the validation action and transfer of venue pursuant to Code of Civil Procedure section 394. (Hastings decl., ¶ 4.) During that call, Hastings proposed that the parties stipulate to transfer venue pursuant to section 394, subdivision (a). (Hastings decl., ¶ 4.) Counsel for the District, attorney Lina Somait of the Office of the Santa Barbara County Counsel, responded that the validation action precluded transfer of venue, but that even if the validation action was withdrawn or resolved, the District would not stipulate to transfer venue, and the District would oppose any effort to transfer venue. (Hastings decl., ¶ 4; Somait decl., filed Aug. 17, 2021, ¶ 3.)

On July 16, 2021, without any response having been filed, petitioners filed their first amended petition and complaint (FAP) asserting the same causes of action, but adding as an additional defendant and respondent the Board of Directors of the District (District Board).

On August 17, 2021, the District, the Supervisors, and the District Board filed their demurrer to the FAP. These respondents concurrently filed a motion to strike portions of the FAP. Both the demurrer and the motion to strike were opposed by the petitioners.

On October 29, 2021, in a 15-page ruling, the court sustained the demurrer in part and overruled the demurrer in part. The court sustained the demurrer without leave to amend as to the first cause of action (validation action), sustained the demurrer with leave to amend as to the Supervisors as to the second through fifth causes of action, and sustained the demurrer with leave to amend as to the District Board as to the third and fourth causes of action. The demurrer was otherwise overruled. The motion to strike was denied in its entirety.

On November 15, 2021, the petitioners filed their second amended petition and complaint (SAP) asserting four causes of action: (1) writ of mandate for acting in excess of statutory authority; (2) breach of contract; (3) breach of implied covenant of good faith and fair dealing; and (4) declaratory relief. The validation cause of action to which the prior demurrer had been sustained without leave to amend was omitted from the SAP. Also, the SAP omitted the Supervisors as defendants and respondents, leaving only the District and the District Board (collectively, District defendants).

On December 15, 2021, the District defendants filed their answer to the SAP generally denying the allegations thereof and asserting 29 affirmative defenses.

On June 16, 2022, the District filed its motion for leave to file a cross-complaint. The motion was supported by the declaration of attorney Somait in which Somait stated, among other things, that written discovery and document production was ongoing. (Somait decl., filed June 16, 2022, ¶¶ 13-17.) On August 22, 2022, petitioners filed their statement of non-opposition to the motion for leave to file a cross-complaint, reserving their procedural and substantive rights otherwise to object to the cross-complaint. Prior to or in the making of this motion, the District defendants did not request a change of venue. (Hastings decl., ¶ 9.)

On September 2, 2022, the court granted the District’s motion for leave to file a cross-complaint. Later, on September 2, 2022, the District filed its cross-complaint against petitioners asserting two causes of action: (1) breach of contract (duty to defend); and (2) express contractual indemnity. On October 4, 2022, petitioners filed their demurrer to the District’s cross-complaint. On January 13, 2023, the District filed its opposition to the demurrer.

On January 27, 2023, in an 11-page ruling, the court sustained the petitioners’ demurrer to each cause of action of the District’s cross-complaint with leave to amend. In the course of that ruling, the court provided an analysis of contractual provisions as set forth in the pleadings under discussion and concluded that, as then pleaded, the claims for which indemnity was being sought were direct claims not within the scope of the indemnity provisions under the principles explained in Alki Partners, LP v. DB Fund Services, LLC (2016) 4 Cal.App.5th 574. The court’s ruling granted leave to amend, but noted “that while a plaintiff’s or cross-complainant’s allegations of its construction of an ambiguous contract are generally sufficient for pleading purposes, any such allegations must be of a reasonable construction of the contract. Any amendment should address the issue of reasonableness of the District’s construction of the contracts as otherwise discussed herein.” (Minute Order, filed Jan. 27, 2023, at p. 11.)

On February 27, 2023, the District filed its first amended cross-complaint (FACC).

On April 3, 2023, petitioners filed their demurrer to the FACC. The demurrer was originally set for hearing on July 21.

On May 5, 2023, petitioners filed their motion for leave to file a third amended petition and complaint (TAP), which was set for hearing on July 21. On July 10, 2023, the District defendants filed their statement of non-opposition to the motion.

On July 11, 2023, on the stipulation of the parties, the court entered its order continuing the hearing on the demurrer to September 8, but not moving the hearing on the motion for leave.

On July 21, 2023, the court granted the unopposed motion for leave to file the TAP.

On July 25, 2023, the petitioners filed their TAP. The TAP asserts the same causes of action as the SAP, with amended allegations including the District’s rescinding Resolution No. 21-73 on March 23, 2023 (TAP, ¶ 8).

On August 4, 2023, present counsel for the District defendants filed their notice of association as counsel.

On August 11, 2023, the District defendants filed their motion to transfer venue pursuant to Code of Civil Procedure section 394. The motion to transfer venue is set for this hearing.

On August 25, 2023, the petitioners filed their opposition to the motion to transfer venue. Also on August 25, 2023, the District defendants filed their opposition to the demurrer to the FACC. Filed with the opposition is the District defendants’ request for judicial notice and five volumes of exhibits.

On August 28, 2023, the District defendants filed their answer to the TAP, generally denying the allegations thereof and asserting 29 affirmative defenses.

On August 31, 2023, the District defendants filed their reply to the opposition to the motion to transfer venue. Also on August 31, the petitioners filed their reply to the opposition to the demurrer.

Analysis:

(1)       Motion to Transfer

“An action or proceeding against a county, … a city, or local agency, may be tried in the county, … or the county in which the city or local agency is situated, unless the action or proceeding is brought by a county, … a city, or local agency, in which case it may be tried in any county, … not a party thereto and in which the city or local agency is not situated. … Whenever an action or proceeding is brought against a county, city and county, city, or local agency, in any county, …. other than the defendant, if the defendant is a county, … or, if the defendant is a city, or local agency, other than that in which the defendant is situated, the action or proceeding must be, on motion of that defendant, transferred for trial to a county, or city and county, other than that in which the plaintiff, or any of the plaintiffs, resides, or is doing business, or is situated, and other than the plaintiff county, or city and county, or county in which that plaintiff city or local agency is situated, and other than the defendant county, or city and county, or county in which the defendant city or local agency is situated ….” (Code Civ. Proc., § 394, subd. (a).) “For the purposes of this section, ‘local agency’ shall mean any governmental district, board, or agency, or any other local governmental body or corporation, but shall not include the State of California or any of its agencies, departments, commissions, or boards.” (Code Civ. Proc., § 394, subd. (b).)

There is no dispute that the section 394 generally applies to this action. (Opposition, at p. 9.) Instead, petitioners argue that the District has waived its ability to seek such a transfer by its unreasonable delay.

“Although § 394 of the Code of Civil Procedure does not prescribe the time within which a party to an action therein designated may move that it be transferred for trial to a neutral county, such a motion must be made within a reasonable time.” (Adams v. Superior Court (1964) 226 Cal.App.2d 365, 367–368 (Adams); accord, Newman v. Sonoma County (1961) 56 Cal.2d 625, 627–628 (Newman); Ventura Unified School Dist. v. Superior Court (2001) 92 Cal.App.4th 811, 815 [“Irrespective of the mandatory language in the statute, the right to transfer may be waived if there is unreasonable delay.”].)

What constitutes a “reasonable time” is the subject of dispute between the parties. A review of cases cited by the parties addressing this issue is useful.

In the earliest case, Mono Power Co. v. City of Los Angeles (1917) 33 Cal.App. 675, 677 (Mono Power), the plaintiff sought to condemn property of the defendant located in Mono County. (Id. at p. 675.) The complaint was filed on January 13, 1913, and the defendant answered on June 28, 1915. (Ibid.) The defendant then filed a motion for change of venue to be heard on September 1, 1915, pursuant to section 394 (as it existed in 1915). (Ibid.) In opposition, the plaintiff argued that the motion was untimely because it was served after the matter had been set for trial and that the motion was inadequately supported by evidence. (Id. at p. 676.) The trial court denied the motion, together with another motion in a related case, on April 14, 1916. (Ibid.) On appeal, the defendant argued, among other things, that, like some other motions to change venue, the motion must have been made at the time the defendant answer or demurs or waives the right to change venue. (Id. at p. 677.) The Mono Power court instead held that the motion was not untimely in having been made after the answer was filed. (Id. at pp. 681-684.) The Mono Power court did not address the issue of whether the motion was unreasonably delayed when it was set for hearing approximately 60 days after the defendant answered. (See ibid.)

In Newman, the individual plaintiff commenced an action in San Francisco for personal injuries and wrongful death against a railroad company and Sonoma County arising out of an accident occurring in Sonoma County. (Newman, supra, 56 Cal.2d at p. 626.) “The complaint was filed on April 28, 1958; the county answered in July 1958 and demanded a jury trial. In the latter part of June 1959 plaintiffs made a settlement agreement with the railroad company and gave it a covenant not to sue. The trial court approved the settlement agreement, and the county was notified. A pretrial conference was had on October 5, 1959, and December 14 was set as the date for trial. Briefs were prepared by the county as well as by plaintiffs, and the complaint was amended on December 8, 1959. … [T]he trial was not commenced on the date set. On May 17, 1960, Sonoma County made a motion for a change of venue to that county, and, after plaintiffs filed a memorandum of points and authorities in opposition, the court denied the motion.” (Ibid.) On appeal of the denial of that motion, the Supreme Court first determined that section 394 was not jurisdictional. (Id. at pp. 626-628.) The court then concluded:

“Even if it be assumed that the constitutional provision precluded application of section 394 at the outset of the action, the county could have resorted to the statute as of the time of the settlement agreement between plaintiffs and the railroad company. In view of the extent to which the county, after learning of the agreement, participated in the proceedings and delayed in making its motion, the trial court was entitled to determine that the county did not act within a reasonable time. Although section 394 does not specify the time within which a motion thereunder is to be made, we are satisfied that such a motion must be made within a reasonable time. The general rule is that a party seeking a change of venue must act within a reasonable time [citations], and there is no sound basis for concluding that the Legislature intended to depart from this rule in enacting section 394.” (Newman, supra, 56 Cal.2d at p. 628.) The court accordingly affirmed the denial of the motion to change venue under section 394. (Ibid.)

(Note: Both parties have some confusion regarding the procedural result in Newman. The District defendants erroneously suggest that the Supreme Court affirmed a grant of a motion to transfer (Motion, at p. 5), where the Supreme Court actually affirmed the denial of the motion. (Newman, supra, 56 Cal.2d at p. 628.) Petitioners erroneously suggest that the Supreme Court reversed a decision of the Court of Appeal. (Opposition, at p. 11, fn. 24.) In 1961, when Newman was decided, the California Supreme Court did not grant review of a decision of the Court of Appeal—as it does now—but instead granted a petition to hear the appeal from the trial court’s judgment or orders in the Supreme Court. (Cal. Const., former art. VI, § 4d, as adopted Nov. 6, 1956 [“The Supreme Court may order any case in a district court of appeal transferred to it for decision.”], now art. VI, § 12, as adopted Nov. 6, 1984.) The effect was to vacate the decision of the Court of Appeal and set the case “at large” for decision on all issues by an opinion of the Supreme Court. (9 Witkin, Cal. Procedure (6th ed. 2023) Appeal, § 942.) So, the Supreme Court affirmed the trial court directly in Newman.)

In Adams, defendants filed demurrers to the complaint of the plaintiff County of Riverside. (Adams, supra, 226 Cal.App.2d at p. 366.) The trial court heard the demurrers and granted the parties the opportunity to file subsequent papers. (Ibid.) At the same time the defendants filed their reply, the defendants also filed a motion for change of venue under section 394. (Id. at pp. 366-367.) The trial court heard and denied the motion for change of venue but did not rule on the demurrers. (Id. at p. 367.) On writ review of the denial of that motion, the defendants argued that the motion was premature because of the pending undetermined demurrers. (Ibid.) The Adams court framed the primary issue as “whether the transfer to a neutral county should await determination by the trial court of the subject demurrers.” (Id. at p. 368.) The Adams court concluded that the pendency of the motion to change venue did not preclude the trial court from ruling on the demurrers. (Ibid.) The court further stated:

“Insofar as the petition before us solicits such a stay with respect to the pending undetermined demurrers, it will be denied because of the petitioners’ failure to request a change of venue until after the demurrers in question had been heard and submitted for decision. The petitioners, if they had moved within a reasonable time, could have obtained a transfer of the subject action to a neutral county for the trial of the issues of law presented by their demurrers. However, the right to a change of venue may be waived [citations]; a lack of diligence in prosecuting a motion to effect such a change constitutes such a waiver [citations]; and, by analogy, the failure of the petitioners to assert their right to a transfer of the subject action for trial to a neutral county until after their demurrers had been submitted for decision constituted a waiver of that right as it applied to the trial of the issues of law raised by those demurrers.” (Adams, supra, 226 Cal.App.2d at pp. 368–369.)

The Adams court accordingly issued a writ of mandate directing the transfer of the action, but expressly permitting the trial court to rule upon the demurrers before the writ decision became final and the writ issued by the Court of Appeal. (Adams, supra, 226 Cal.App.2d at p. 369.)

In Marin Community College District v. Superior Court (1977) 72 Cal.App.3d 719 (Marin CCD), the plaintiff community college district filed a suit for damages against defendants alleging deficiencies in an air conditioning system. (Id. at p. 721.) After the plaintiff filed a memorandum that the case was at issue, the defendant moved for a change of venue under section 394. (Ibid.) The plaintiff opposed the motion on the grounds that the motion had no application to the district and was untimely. (Ibid.) The trial court granted the motion. (Ibid.)

On writ review of the grant of the motion to transfer in Marin CCD, the court first determined that section 394 applied to the plaintiff district. (Marin CCD, supra, 72 Cal.App.3d at p. 722.) As to timeliness, the Marin CCD court stated:

“Petitioner points out that although section 394 does not contain a specific requirement as to when a motion for change of place of trial must be filed, the appellate courts have held that such a motion must be filed within a reasonable time. (See Adams v. Superior Court (1964) 226 Cal.App.2d 365.) But a motion pursuant to Code of Civil Procedure section 394 is not required to be made at the time of answer to a complaint or cross-complaint; it may be made within a reasonable time thereafter. [Citation.] A motion for change of venue pursuant to section 394 need not be denied on the ground that it is untimely unless it is pursued for dilatory purposes and unless the public agency can show substantial prejudice. Here no compelling showing has been made by petitioner. (Cf. Newman v. County of Sonoma (1961) 56 Cal.2d 625.)” (Marin CCD, supra, 72 Cal.App.3d at pp. 722–723, parallel citations omitted.)

The Marin CCD court then noted that the trial court granted the motion without making a determination as to whether a moving defendant did business in the county to which the trial court had ordered transfer. (Marin CCD, supra, 72 Cal.App.3d at p. 723.) The court granted the writ, ordering the trial court to vacate its order of transfer, to determine whether the moving defendant did business in that county, and thereafter to render a new decision on the motions for change of venue. (Ibid.)

The Marin CCD court did not state when the motion to transfer was filed in the course of the litigation, but some facts can be inferred. The court noted that the “at issue” memorandum was filed on July 29, 1976. (Marin CCD, supra, 72 Cal.App.3d at p. 721.) Under prior practice, an “at issue memorandum” was filed after the last pleading to put the case on the “civil active list” as part of the administrative procedure to bring a case to trial. (Karubian v. Security Pacific Nat. Bank (1984) 152 Cal.App.3d 134, 137; 7 Witkin, Cal. Procedure (6th ed. 2023) Trial, § 35.) The decision in Marin CCD was issued on August 18, 1977, as a full decision on the merits without any indication that the matter was further expedited. The motion would therefore have been made less than a year after the case was “at issue,” perhaps considerably closer to the July 29, 1976, date given that the August 18, 1977, decision could only have occurred after the trial court order was issued, a petition for writ was presented and granted, briefing in the Court of Appeal was completed, argument heard, and the appellate opinion issued. Moreover, the Marin CCD court does not identify any substantive rulings made by the trial court other than the change of venue motion.

To summarize these cases: The Mono Power court affirmed the grant of a motion to transfer holding only that a motion is not untimely when set for hearing approximately 60 days after the moving defendant answered the complaint. The Newman court affirmed the denial of a motion to transfer finding no error in the trial court’s ruling where the motion was filed almost two years after the defendant answered and almost one year after a settlement that unambiguously left only parties subject to section 394. The Adams court granted a writ ordering the trial court to vacate its order denying transfer and ordering transfer where the motion to transfer was asserted to be premature because demurrers were then pending. The Marin CCD court granted a writ ordering the trial court to vacate its order granting transfer and ordered further proceedings, incidentally noting that there was no showing of delay but at the same time not providing any information or discussion of the timing of the motion.

Here, there is both the fact of delay and persuasive evidence that the motion is dilatory. The District defendants first appeared in this action by the filing of their demurrer on August 17, 2021, by which the District defendants succeeded in eliminating the petitioners’ validation action. On November 15, 2021, the petitioners filed their SAC without the validation action. This motion to transfer was filed on August 11, 2023, almost exactly two years after the District defendants’ first appearance and more than a year and a half after the validation action was removed that was originally asserted by the District defendants as a reason why transfer was not proper under section 394. The District defendants could have made this motion at any time but did not.

The evidence demonstrates that the motion is intended as dilatory and for purposes of forum shopping rather than to further the purposes of section 394. The issue of transfer was properly raised in a meet and confer session between counsel even prior to the District defendants’ first appearance. The District defendants took the strong position not only that they did not want to stipulate to transfer but that they would oppose any effort to transfer. The District defendants obtained substantial rulings in their favor in addressing the petitioners’ FAC. It was only after this court’s unfavorable ruling on the District defendants’ cross-complaint and while the petitioner’s demurrer to the District defendants’ FACC was pending that the District defendants sought to transfer this matter to a different court. The inference from the timing of the District defendants’ about-face on the issue of transfer is inescapable.

Based upon the evidence and arguments presented by the parties, the court finds that this motion has not been made within a reasonable time, has been subject to unreasonable delay, is pursued for dilatory purposes to the substantial prejudice of the petitioners. The motion to transfer will therefore be denied.

(2)       Demurrer

As discussed above, the court has determined to deny the motion to transfer. While the court also concludes that it has jurisdiction and authority to resolve the demurrer at this time for the reasons discussed in Adams, supra, 226 Cal.App.2d at pages 368–369, having invested its resources in a thorough examination of the motion to transfer, it is not feasible for the court to address the demurrer at this hearing. The hearing on the demurrer will therefore be continued.