Las Posas Valley Water Rights Coalition, et al., v. Fox Canyon Groundwater Management Agency, et al

Case Number

VENCI00509700

Case Type

Hearing Date / Time

Wed, 10/11/2023 - 10:00

Nature of Proceedings

Motion of Defendants Mahan Ranch, LLC, et al., to Strike or to Tax Costs

Tentative Ruling

For Plaintiffs Las Posas Basin Water Rights Coalition, et al.: Peter A. Goldenring, Mark R.

Pachowicz, Pachowicz Goldenring; Kevin M. O’Brien, Kelly M. Breen, Brian E. Hamilton,

Downey Brand LLP                                  

For Defendants Las Posas Farming Group: Matt Kline, Barton (Buzz) Thompson, Russell McGlothlin, Heather Welles, O’Melveny & Meyers LLP                             

For Defendants Mahan Ranch, LLC, et al.: Jim McDermott, Neal P. Maguire, Jessica M. Wan, Shane M. Maguire, Ferguson Case Orr Paterson LLC

RULING

For the reasons set forth herein, the motion of Defendants Mahan Ranch, LLC, et al., is granted to strike (1) the memorandum of costs filed on August 2, 2023, by the Las Posas Farming Group, and (2) the memorandum of costs filed on August 3, 2023, and supplemented on August 7, 2023, by plaintiffs. Neither the Las Posas Farming Group nor the plaintiffs are awarded costs requested in these memoranda of costs. The Court confirms that each party is to bear its own costs as provided in section 12.4 of the Judgment entered on July 10, 2023.

Background

This comprehensive groundwater adjudication action was filed on March 27, 2018.

On July 10, 2023, following three phases of trial, the court entered its final judgment.

On August 2, 2023, defendants Las Posas Farming Group (also LPFG) filed their memorandum of costs, claiming costs under Code of Civil Procedure section 1032, subdivision (a)(4) in the total amount of $401,740.10. (Note: The “Las Posas Farming Group” is a shorthand term for the parties represented by the law firm of O’Melveny & Meyers LLP in this action as more specifically identified in footnote 1 on page 5 of their brief in support of their memorandum of costs.) The Las Posas Farming Group seek an order for these costs against the FCOP Parties (consisting of Mahan Ranch, LLC, Mahan Development Corporation, Ralph D. Mahan, Trustee of the Ralph D. Mahan Separate Property Trust of June 12, 2003, Ralph D. Mahan and Georgia A. Mahan, as Trustees of the Mahan Family Trust of June 12, 2003, Oro Del Norte, LLC, Leon Scott Stevens, Trustee Of The Leon O. Stevens Trust Dated November 19, 1997, VMB Water System, RBV 2+5 LLC, RBV-Vanoni, LLC, Debra A. Whitson, Thomas E. Olson and Thomas K. Strain, Trustees of the McGonigle Ranch Trust Dated April 1, 2021, Kirschbaum, LLC, and US Horticulture Farmland, LLC), Solano Verde Mutual Water Company (Solano Verde), and Del Norte Water Company (Del Norte). (LPFG Brief in Support of Costs, at p. 5.)

On August 3, 2023, the plaintiffs filed their memorandum of costs, claiming costs under Code of Civil Procedure section 1032, subdivision (a)(4) in the total amount of $119,838.72. On August 7, the plaintiffs filed a supplemental memorandum of costs claiming an additional $120,111.00 in costs. Plaintiffs seek an order for these costs against the FCOP Parties and Del Norte. (Plaintiffs do not seek costs against Solano Verde.)

On August 17, 2023, the FCOP Parties, Del Norte, and Solano Verde (collectively, Moving Parties) filed their motion to strike or to tax costs claimed by the Los Posas Farming Group and plaintiffs (collectively, Requesting Parties). The Moving Parties argue that the court has already determined that each party is to bear its own costs, that the Requesting Parties are not prevailing parties entitled to an award of costs, and that claimed costs are improper, excessive, and not apportioned.

The Requesting Parties oppose the motion.

Analysis:

“ ‘As a general rule the parties to litigation are required to finance their own participation in the litigation.’ [Citation.]” (Carwash of America-PO LLC v. Windswept Ventures No. I (2002) 97 Cal.App.4th 540, 542–543.) “ ‘ “ ‘[C]osts’ of a civil action consist of the expenses of litigation .... The right to recover any such costs is determined entirely by statute.” ’ [Citations.]” (Covert v. FCA USA, LLC (2022) 73 Cal.App.5th 821, 832.)

“Except as otherwise expressly provided by statute, a prevailing party is entitled as a matter of right to recover costs in any action or proceeding.” (Code Civ. Proc., § 1032, subd. (b).) “ ‘Prevailing party’ includes the party with a net monetary recovery, a defendant in whose favor a dismissal is entered, a defendant where neither plaintiff nor defendant obtains any relief, and a defendant as against those plaintiffs who do not recover any relief against that defendant. If any party recovers other than monetary relief and in situations other than as specified, the ‘prevailing party’ shall be as determined by the court, and under those circumstances, the court, in its discretion, may allow costs or not and, if allowed, may apportion costs between the parties on the same or adverse sides pursuant to rules adopted under Section 1034.” (Code Civ. Proc., § 1032, subd. (a)(4).)

The final judgment in this action contains the following provisions:

“Except subject to any existing Court orders and stipulations or separate agreement of one or more Parties, each Party shall bear its own costs and attorneys’ fees arising from the Comprehensive Adjudication.” (Judgment, § 12.4.)

“Plural and singular forms include the other; ‘shall,’ ‘will,’ and ‘must’ are each mandatory; ‘may’ is permissive; ‘or’ is not exclusive; and ‘includes’ and ‘including’ are not limiting.” (Judgment, § 12.1.1.)

“As used in this Judgment, the following terms shall have the meaning set forth

below. [¶] … [¶]

“1.37 Comprehensive Adjudication – This action to comprehensively determine rights to Extract and store Groundwater in the Basin and to implement a physical solution. (Code Civ. Proc., §§ 832(c), 834(b), 849(a).) [¶] … [¶]

“1.81 Party or Parties – Any Person(s) that has (have) been named and served or

otherwise properly joined or has (have) become subject to this Judgment of the Court under the in personam and in rem jurisdiction afforded under Code of Civil Procedure sections 830 et seq. and all persons bound pursuant to Code of Civil Procedure section 851.” (Judgment, §§ 1.37, 1.81, bolding omitted.)

The Moving Parties argue that the court has already determined that each party is to bear its own costs and therefore the court has no discretion to award costs. In response to this argument the Requesting Parties argue that the phrase “each Party” in section 12.4 of the Judgment is a clerical error and that the phrase should have been “each Stipulating Party” so as to exclude the Moving Parties. (LPFG Opposition, at p. 5; Plaintiffs Opposition, at pp. 6-7.)

The Court finds that section 12.4 correctly reflects the intention of the Court as to the application of costs. Phase 3 of trial addressed objections to the judgment that had been stipulated by a substantial majority of the parties to this action. As a consequence, the principal determination in phase 3 was whether to adopt the stipulated judgment as the judgment of the Court and thereby impose the stipulated judgment upon the objecting parties as provided in Code of Civil Procedure section 850:

“The court may enter a judgment in a comprehensive adjudication if the court finds that the judgment meets all of the following criteria:

            “(1)      It is consistent with Section 2 of Article X of the California Constitution.

            “(2)      It is consistent with the water right priorities of all non-stipulating parties and any persons who have claims that are exempted pursuant to Section 833 in the basin.

            “(3)      It treats all objecting parties and any persons who have claims that are exempted pursuant to Section 833 equitably as compared to the stipulating parties.” (Code Civ. Proc., § 850, subd. (a).)

“If a party or group of parties submits a proposed stipulated judgment that is supported by more than 50 percent of all parties who are groundwater extractors in the basin or use the basin for groundwater storage and is supported by groundwater extractors responsible for at least 75 percent of the groundwater extracted in the basin during the five calendar years before the filing of the complaint, the court may adopt the proposed stipulated judgment, as applied to the stipulating parties, if the proposed stipulated judgment meets the criteria described in subdivision (a). A party objecting to a proposed stipulated judgment shall demonstrate, by a preponderance of evidence, that the proposed stipulated judgment does not satisfy one or more criteria described in subdivision (a) or that it substantially violates the water rights of the objecting party. If the objecting party is unable to make this showing, the court may impose the proposed stipulated judgment on the objecting party. An objecting party may be subject to a preliminary injunction issued pursuant to Section 847 while his or her objections are being resolved.” (Code Civ. Proc., § 850, subd. (b).)

The Court ultimately found that the stipulated judgment was appropriate and specifically found that, based upon the text of the stipulated judgment provided by the stipulating parties (which all parties had substantial opportunities to review and revise), the proposed judgment “treats all objecting parties … equitably as compared to the stipulating parties.” (E.g., Statement of Decision, at p. 105; accord, Code Civ. Proc., § 850, subd. (a).)

By adopting the stipulated judgment, including the term that each party would bear its own costs in this action, the Court adopted the Requesting Parties’ own agreement as to costs. The parties may stipulate to alternatives to awards of costs, notwithstanding Code of Civil Procedure section 1032, subdivision (b). (Code Civ. Proc., § 1032, subd. (c).) On this basis, the Court finds that the parties have agreed to bear their own costs and the claims for costs set forth in the memoranda of costs filed with the Court are improper. The motion to strike the memoranda of costs will therefore be granted.

Alternatively, the Court has determined not to award costs. As all parties concede, this is a situation in which the parties have recovered “other than monetary relief” in the nature of the comprehensive groundwater adjudication. “The mandate of cost recovery in section 1032, subdivision (b) is limited by the phrase ‘[e]xcept as otherwise expressly provided by statute.’ Subdivision (a)(4) contains such an express statutory exception when the trial court awards nonmonetary relief. When the Court awards nonmonetary relief, subdivision (a)(4) gives the Court discretion to ‘allow costs or not’ to the prevailing party [citation].” (Hinrichs v. Melton (2017) 11 Cal.App.5th 516, 528.)

As explained in the Court’s Statement of Decision, including its phase 1 and phase 2 statements and orders, this was a complex matter involving many parties and many issues with three phases of trial. Given the Court’s extensive experience with this case, the nature of the issues and positions of the parties, and the outcomes at each of the phases of trial, the Court concludes that no party should be deemed a “prevailing party” for purposes of section 1032 and that, in any event, the Court exercises its discretion not to award costs. The relative success of any particular party or group of parties at one or more phases of trial does not persuade the Court that, under all of the circumstances present here, any party should recover its costs against any other party or parties. Among other things, arriving at the disposition of this complex action is costly enough without the addition of court costs. (See Hinrichs v. Melton, supra, 11 Cal.App.5th at pp. 528–529.)

As the Court stated in its Statement of Decision, the Court would reach the same result no matter which party has the burden of proof and regardless of whether parties stipulated to the Phase 3 Settlement and Stipulated Judgment. (Statement of Decision, at p. 38.) The disposition of costs in section 12.4 of the Judgment correctly reflects the Court’s determination to exercise its discretion not to award costs to any party. The Court will grant the motion to strike the memoranda of costs on this separate and alternative ground.