California-American Water Co. v. Marina Coast Water Dist.

Filed 12/28/22

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION TWO

CALIFORNIA-AMERICAN

WATER COMPANY et al.,

Plaintiffs and Appellants, A160662

v. (San Francisco County

MARINA COAST WATER Super. Ct. No. CGC-15-

DISTRICT, 546632)

Defendant and Respondent.

Here, the third and fourth appeals in this case, we address two

separate appeals by two separate plaintiffs from a summary judgment

emanating from two separate summary adjudications against them. The first

summary adjudication was based on the two-year statute of limitations, the

second on the failure to comply with the claim-filing requirement in the

Government Claims Act. The summary adjudications were entered in 2019,

seven years after the first lawsuit among the parties was filed—and eight

years after the parties spent some six months in formal and informal efforts

attempting to resolve the issues between and among them.

Our de novo review leads to the conclusion that both summary

adjudications were errors and, therefore, so was the judgment. We thus

reverse.

1

BACKGROUND 1

The Parties and the General Setting

The appeals here involve two separate appellants: Monterey County

Water Resources Agency (Monterey) and California-American Water

Company (Cal-Am). Both appeals have the same respondent: Marina Coast

Water Company (Marina).

Appellant Monterey is an independent public agency created by the

Monterey Coast Water Resources Act (MCWRA ) (Water Code, Appendix,

Chapter 52), responsible for analyzing water resources in Monterey County.

Monterey has a dual governing board structure consisting of the elected

Monterey County Board of Supervisors and a Board of Directors appointed by

the Board of Supervisors. The appointed Board is responsible for the actual

operation of the agency, approving and executing contracts and formulating

recommendations to the Board of Supervisors on matters within the scope of

the Supervisors’ duties. It also has final authority on most operational and

administrative matters.

Appellant Cal-Am is an investor-owned water utility regulated by the

California PUC, providing water to over 100,000 residents on the Monterey

Peninsula, including Carmel-by the-Sea, Monterey, Pacific Grove, Seaside,

1 Much of the background is taken from the opinion of Division One of

this court in the first appeal in this case: California-American Water Co. v.

Marina Coast Water District (2016) 2 Cal.App.5th 748 (Cal-Am One). Other

facts are from decision No. 10-12-016 by the Public Utilities Commission

(PUC) in proceeding No. 04-09-019. (See In the Matter of the Application of

California-American Water Company (U210W) for a Certificate of Public

Convenience and Necessity to Construct and Operate its Coastal Water Project

to Resolve the Long-Term Water Supply Deficit in its Monterey District and to

Recover All Present and Future Costs in Connection Therewith in Rates, 2010

Cal. PUC LEXIS 548 (Dec. 2, 2010).

2

Del Rey Oaks, and Sand City, as well as various unincorporated areas of

Monterey County.

Respondent Marina is a public agency formed in 1960 under the

County Water District law to provide water for the City of Marina and

neighboring communities on the Monterey Peninsula.

A fourth entity involved, though not a party in either appeal, is RMC

Water and Environment (RMC).

For many years, an adequate and sustainable source of potable water

was a problem on the Monterey Peninsula. And in 1995 the State Water

Resources Control Board (SWRCB) issued an Order (No. WR 95-10) to Cal-

Am to stop drawing water from the Carmel River and develop an alternate

water supply. The Order led to years of discussions, and culminated in late

2009 when Marina, Monterey, and Cal-Am reached agreement on a plan to

develop and construct a regional desalinization project designed to extract

brackish water from beneath Monterey Bay, purify it, and deliver it to

consumers (“RDP” or “the project”).

The project was to replace the Carmel River as a water supply, and in

furtherance of the project, the parties entered into five interrelated

agreements that came to be referred to as the RDP Agreements, specifically:

(1) A “Reimbursement Agreement,” entered into in February and

March 2010, under which Cal-Am agreed to reimburse Marina and Monterey

their costs in pursuing the RDP, subject to later repayments or forgiveness.

(2) A “Water Purchase Agreement” (WPA), entered into on April 6,

2010, which provided for the financing and construction of the various

facilities.

3

(3) A “Settlement Agreement,” also entered into on April 6, which

established a process for proposing the desalination project to the PUC for

approval.

(4) A “Project Management Agreement,” entered into on January 11,

2011, under which RMC was selected as the project manager; and

(5) A “Credit-Line Agreement,” also entered into on January 11,

which established a line of credit to Monterey and Marina to minimize their

project-related finances.

Meanwhile, while some of the above agreements were still being

negotiated and executed, in December 2010, the PUC approved the project,

(Cal-Am One, supra, 2 Cal.App.5th at p. 753), approval that was a condition

precedent to it. 2

Meanwhile, in January 2010, Marina hired Stephen Collins who sought

to facilitate approval of the project by the PUC, including by working on the

draft WPA. Our colleagues described Collins’s involvement in more detail:

“Stephen Collins was a member of Monterey’s appointed board of

directors when the RDP agreements were being negotiated and, in some

cases, entered into. Starting in January 2010, he also was a paid consultant

for RMC to advocate for the agreements through a contract he had with

Marina. RMC ultimately paid Collins $160,000 for his work. At a February

2011 meeting of Monterey’s board of directors, Collins exposed his potential

conflict of interest by recusing himself from a vote on the selection of RMC as

the manager of the desalination project. Local media began reporting on the

possible conflict of interest, and an investigation followed. Collins resigned

2The project was never built, and to this day a replacement water

supply has not been completed.

4

from Monterey’s board of directors on April 1, 2011.” (Cal-Am One, supra,

2 Cal.App.5th at p. 753.) 3

On July 7, 2011, Monterey’s outside counsel, Kevin O’Brien, sent a

letter to Marina and Cal-Am expressing the opinion the RDP Agreements

were void as a consequence of Collins’s financial interest in the Project. Cal-

Am then gave notice the RDP Agreements were terminated.

Marina, Monterey, and Cal-Am thereafter engaged in months of

negotiation and mediation in an attempt to resolve the future of the project,

efforts that included several mediation sessions at JAMS and with an

Administrative Law Judge at the PUC, and various private sessions. These

efforts continued, off and on, for several months, finally ending on January

16, 2012 without resolution.

On January 25, Mark Fogelman, Marina’s outside counsel, e-mailed the

parties noting “[t]he mediation is over” and declaring “the parties should be

free to pursue their legal remedies.” And in a later e-mail, Mr. Fogelman

further represented that Marina had “no objection” to the parties being able

to raise in court any and all “issues and legal claims” referred to in the

parties’ pre-mediation correspondence or other issues “reasonably related” to

such issues and claims.

Despite that, uncertainty surrounded the parties’ pre-lawsuit

discussions: Marina insisted the parties were obligated to comply with the

dispute resolution procedure in the WPA; Monterey disagreed, but

3 In November 2011, the Monterey County District Attorney filed a

criminal complaint against Collins, charging him with two felony violations of

Government Code section 1090 arising from Marina’s and RMC’s secret

payments to him and multiple felonies for stealing money from his employer.

And on March 18, 2014, Collins pleaded “no contest” and was convicted of the

felony violation of Government Code section 1090 and grand theft from his

employer.

5

nevertheless followed the contractual procedure. Marina then injected more

uncertainty into the setting by refusing to agree that the parties’ efforts were

in fact compliant with the terms of the WPA, noting, for example, that

“[W]hile it is true that representatives of the parties met on July 13, 2011, in

a non-confidential meeting, [Marina] does not admit that the July 13, 2011,

meeting was conducted pursuant to Article 19 of the WPA or that it

constituted an ‘attempt in good faith to resolve the dispute.’ ”

In light of this uncertainty, on September 18, 2012, Cal-Am submitted

a claim “pursuant to the California Government Claims Act, Government

Code sections 810 et seq” (Claims Act). It was four-pages in length, single-

spaced, and in it Cal-Am alleged that the SWRCB had ordered it to come up

with an alternative to the Carmel River as a source of water for the Monterey

Peninsula. The RDP was that alternative and, Cal-Am alleged, Marina was

responsible for causing the project’s failure, thereby forcing Cal-Am “to apply

to the CPUC for authority to pursue another water supply project. . . .” In

short, the claim was based on harm incurred from the RDP’s collapse, caused

by Marina.

With respect to the specific cause of the project’s collapse, the claim

alleged Marina failed to obtain financing for its portion of the project.

However, the claim also asserted that Marina had taken the position that the

RDP’s implementing agreements “were void pursuant to Government Code

section 1090 4 due to the conduct of a former MCWRA director,” Collins. The

claim identified, by date, the letters in which Marina took that position. And

it further alleged that Marina’s actions led to Monterey’s assertion that the

RDP agreements are void under Government Code section 1090, which led to

the termination of the RDP agreements.

4 All undesignated statutory references are to the Government Code.

6

Cal-Am filed then a lawsuit.

The Lawsuit and the Appeals

On October 4, 2012, Cal-Am filed a complaint naming as defendants

Marina and Monterey. It alleged two causes of action, both for declaratory

relief: the first, whether the RDP Agreements were void as a consequence of

Marina’s payments to Collins; the second, whether Cal-Am had the right to

terminate the Agreements regardless of any conflict of interest, as a result of

Monterey’s anticipatory repudiation. (Cal-Am One, supra, 2 Cal.App.5th at

p. 753.)

On November 19, Marina filed an answer. Marina also filed a cross-

complaint against Cal-Am and Monterey seeking a declaration barring any

challenges to the RDP Agreements. The cross-complaint alleged seven causes

of action, three of which were based on the statute of limitations and four of

which were based on the Public Utilities Code. (Cal-Am One, supra,

2 Cal.App.5th at pp. 754−754.)

At an April 2013 case management conference, the court ordered the

action bifurcated into two phases: Phase One would involve resolution of

(a) Cal-Am’s first cause of action, whether the RDP Agreements were void,

and (b) Marina’s cross-complaint. Phase Two would deal with any damage

claims.

On April 16, 2014, Monterey filed a cross-complaint of its own, alleging

a single claim for declaratory relief that the RDP Agreements were void as a

result of the payments Collins had received in violation of Government Code

section 1090. (Cal-Am One, supra, 2 Cal.App.5th at p. 756.) This cross-

complaint was included in Phase One.

Phase One was tried in early December 2014, a four-day bench trial,

following which the trial court issued its statement of decision finding the

7

payments Collins received from Marina and RMC had given him a financial

interest in the RDP Agreements in violation of Government Code section

1090. And the court found four of the five RDP Agreements (all but the

Credit Line Agreement) void. Judgment was entered in favor of Monterey

and Cal-Am. Marina appealed, and Division One of this court affirmed. That

was Cal-Am One.

The trial court also issued post-judgment orders awarding Monterey

and Cal-Am costs and attorney fees as prevailing parties pursuant to the

terms of the WPA. As pertinent to an issue here, despite having declared the

WPA void, the court applied the attorney fee provision in it. Marina appealed

these orders as well, which Division One also affirmed, in California-

American Water Company v. Marina Coast Water District (2017)

18 Cal.App.5th 571. That was Cal-Am Two.

The Post-Appeal Lawsuits

On July 1, 2015, Cal-Am and Monterey jointly filed a complaint naming

two defendants, Marina and RMC. It was followed shortly by a first amended

complaint alleging nine causes of action, for: intentional interference with

prospective economic relations; negligent interference with prospective

economic relations; concealment; breach of contract; accounting and return;

money lent; unjust enrichment; unfair competition law; and False Claims

Act.

On July 30, Marina filed its own complaint, naming as defendants Cal-

Am and Monterey. It alleged five causes of action, for: breach of warranties

and representations; breach of contract; promissory estoppel; unjust

enrichment; and violation of law or PUC orders.

On December 9, 2016, Cal-Am and Monterey filed a second amended

complaint, adding a new second cause of action, for negligence. There were

8

now 10 causes of action pled, two of which, the first and the tenth, were

against only RMC, not Marina. Of the other eight causes of action, only three

are pertinent to the issues on appeal: the second, for negligence, and the

third and fourth, for interference. And it is these causes of action that are

the focus of this opinion.

Marina filed a demurrer, and by order entered February 14, 2017, the

trial court sustained it in part and overruled in part, holding that the

negligence claim lacked a statutory basis.

Cal-Am and Monterey filed a third amended complaint, alleging

vicarious liability under Government Code sections 815.2 and 815.4. Marina

challenged the third amended complaint by a motion for judgment on the

pleadings. Among other things, Marina argued—for the first time—that the

causes of action were barred because Cal-Am’s claim was deficient. By order

dated February 5, 2018, the court agreed. And despite that this was the first

time Marina had alleged this defect, the court denied Cal-Am’s request for

leave to amend to plead it was not obligated to comply with the Claims Act,

giving two reasons: (1) the WPA could not provide an alternative to the claim

presentation requirement because it was void from inception; 5 and (2) Cal-

Am’s reference to a confidential Mediation Agreement was made for the first

time at oral argument and the Mediation Agreement appeared to have been

pursuant to the void WPA.

Cal-Am sought writ review. We issued an alternative writ of mandate

directing the court to vacate the portion of its order denying Cal-Am leave to

amend or to show cause why a peremptory writ of mandate should not be

5 This reason for the ruling is quizzical. As noted, in Cal-Am Two,

supra, 18 Cal.App.5th 571, the trial court—the same trial court as here—

made an award of attorney fees based on the agreement that court had

earlier declared void.

9

granted. The court responded by vacating its order insofar as Cal-Am was

denied leave to amend, and the writ petition was dismissed as moot.

Cal-Am and Monterey filed a fourth amended complaint, alleging

among other things that the WPA and the Mediation Agreement set forth

alternatives to the Claims Act.

Marina filed a demurrer to the fourth amended complaint. The court

overruled it, as barred by Code of Civil Procedure section 430.41,

subdivision (b).

Cal-Am and Monterey filed a fifth amended complaint that among

other things realleged alternative claims procedures under the WPA and the

Mediation Agreement. It also alleged that by entering into the WPA, Marina

had waived its right under the Claims Act.

Marina filed another motion for judgment on the pleadings against Cal-

Am, based on the claimed failure to comply with the Claims Act. The motion

argued that the tort causes of action failed to comply with the Claims Act,

and that neither the WPA nor the Mediation Agreement excused Cal-Am’s

failure to comply with the Act.

Cal-Am filed opposition and following Marina’s reply and oral

argument, the court entered its order granting the motion with leave to

amend. The court first upheld its prior ruling that the tort causes of action

failed to comply. The court next concluded that Marina could not have

waived its rights under the Claims Act by entering into the WPA because it

was void from inception. Finally, the court concluded that the Mediation

Agreement could not supply a claims procedure for alleged torts that existed

when the agreement was entered into; that the Mediation Agreement failed

to supply a claims procedure that superseded the Claims Act; and that in any

event Cal-Am failed to comply with the procedure in the Mediation

10

Agreement. The trial court nevertheless granted leave to plead waiver or

estoppel based on the Mediation Agreement, the Credit Line Agreement, or

Marina’s “broader course of conduct.”

Cal-Am and Monterey filed their sixth amended complaint. It was

24 pages long, containing 113 paragraphs. And as to the negligence cause of

action, after incorporating the prior 63 paragraphs, it alleged as follows:

“65. The RDP was a massive, multi-million dollar project and entailed

a substantial investment of time, energy, and money on the part of Cal-Am

and Monterey. Accordingly, Marina and RMC owed a duty of care to Cal-Am

and Monterey to, among other things, refrain from taking any action that

posed a risk to the project’s completion and fully and truthfully disclose any

facts within their knowledge that created risk to the project, including the

conflict of interest created by Collins’[s] work on the RDP agreements. In

particular, RMC had a duty to ensure that any retention of consultants by

them in connection with the RDP complied with applicable laws, including

section 1090 of the Government Code. In addition, all employees and

independent contractors of Marina owed Cal-Am and Monterey the same

duties described above.

“66. One of Marina’s employees, i.e., Marina’s former General

Manager Jim Heitzman, breached the foregoing duties by, among other

things, retaining Collins to work on the RDP, arranging for Collins to be paid

some $160,000 by RMC for his work, and failing to properly supervise the

scope of Collins’[s] work—even though he knew, or reasonably should have

known, that Collins’[s] role constituted an illegal conflict of interest.

Heitzman’s negligent misconduct with respect to the hiring, payment, and

supervision of Collins fell within the scope of his employment as Marina’s

General Manager. Heitzman’s negligent misconduct played a vital role in

11

precipitating Collins’[s] violation of section 1090 of the Government Code—

which posed a risk to the entire project. Pursuant to Government Code

section 815.2(a), Marina is vicariously liable for Heitzman’s negligence.

“67. Monterey is informed and believes and on that basis alleges that

employees of Marina other than Heitzman whose identities are as yet

unknown also breached the foregoing duties, and Monterey reserves the

right, pending further discovery, to hold Marina vicariously liable for such

misconduct too.

“68. Further, Marina is also vicariously liable for any torts committed

by its independent contractors pursuant to Government Code section 815.4.

In or about January/February 2010, at least three independent contractors

were performing services for Marina relating to the RDP, i.e., RMC, Lyndel

Melton (an executive at RMC), and Collins. RMC and Melton breached their

duty of care by, among other things, retaining Collins to work on the RDP,

arranging for Collins to be paid some $160,000 for his work, and failing to

properly supervise the scope of Collins’[s] work. Collins breached his duty of

care by performing consulting work that constituted an illegal conflict of

interest in violation of Government Code section 1090. Marina is vicariously

liable for the negligence of its independent contractors.”

The sixth amended complaint also included a new theory that the

Credit Line Agreement contained an alternative dispute resolution procedure

that superseded the Claims Act; that certain actions and statements of

Marina’s counsel waived Marina’s rights under the Claims Act; and that

Marina’s conduct estopped it from requiring compliance with the Claims Act.

Marina again sought judgment on the pleadings against Cal-Am

reasserting its earlier arguments and also challenging Cal-Am’s new waiver

and estoppel theories. By order dated February 22, 2019, the trial court

12

adopted its earlier rulings, but nevertheless found that waiver and estoppel

had been sufficiently pled.

The Motions For Summary Judgment/Summary Adjudication

On December 7, 2018, Marina filed a motion for summary judgment or,

in the alternative, summary adjudication, as against Monterey, arguing, as

relevant here, that the negligence cause of action was barred by the two-year

statute of limitations in Code of Civil Procedure section 339, subdivision (1).

The motion was scheduled for hearing on February 20, 2019. And quite a

motion it was.

The motion began with the notice of motion, the memorandum of points

and authorities, and a declaration of attorney Kyle Brochard, which

combined totaled 41 pages. There was also a 31-page separate statement.

And then there was a request for judicial notice, of 37 exhibits, totaling 922

more pages.

On February 6, 2019, Monterey filed its opposition, which included

among other things its own request for judicial notice of 21 exhibits. The

opposition totaled 618 pages.

On February 15, Marina filed its reply, including objections to evidence.

So, what was before the trial court was over 1500 pages of material, a

trial court that was new to the case, it having been reassigned effective

January 2, 2019.

Marina’s motion came on for hearing as scheduled. And on February

22, the trial court filed its 26-page order granting the motion, going on at

length in its effort to justify its holding, an order described in detail below.

A week later, on March 1, Marina filed a motion for summary

judgment/summary adjudication against Cal-Am, with moving papers more

voluminous than in the motion against Monterey. In addition to the

13

memorandum and a 25-page separate statement, there were eight

declarations, one of which had 18 exhibits, totaling 580 pages, and a request

for judicial notice for 65 exhibits, totaling 749 more pages—almost 1400

pages of material.

On May 15, Cal-Am filed its opposition, totaling over 300 pages. And

on May 24, Marina filed its reply, totaling 135 pages. 6

To prevail on any cause of action subject to the claim-presentation

requirement, a plaintiff must demonstrate it either substantially complied

with that requirement or was excused from compliance. Thus, a claim-

presentation requirement constitutes an element of any cause of action

subject to the act. (State of California v. Superior Court (2004) 32 Cal.4th

1234, 1243.) Marina sought to demonstrate that Cal-Am could not establish

that element, either through the substantial compliance doctrine or any of

the theories pled, including implied waiver, express waiver, estoppel, or

Government Code section 930.2. 7

With respect to implied waiver, Marina argued that whatever actions

Marina took that constituted implied waiver, Cal-Am did not detrimentally

6 In Nazir v. United Airlines (2009) 178 Cal.App.4th 243, 253 (Nazir),

we quoted from an article co-authored by an experienced Superior Court

judge describing the problems he had “ ‘encountered’ ” in connection with

summary judgment motions, at the very top of which are motions “ ‘that

attempt to “hide” triable issues of material fact.’ (Brenner & March, Use and

Abuse of MSJs: A View From the Bench (2007) 49 Orange County Law, 34,

37, boldface omitted.)” And, we added, the 1,056-page motion with the pages

it generated “may well be the most oppressive motion ever presented to a

superior court.” (Nazir, supra, 178 Cal.App.4th at p. 248.)

7 As pertinent here, Government Code section 930.2 allows local public

entities like Marina to include in their contracts a procedural alternative to

the statutory process.

14

rely on those actions, because it did submit a claim. Cal-Am responded by

pointing out that reliance is not an element of waiver.

As to express waiver, Marina submitted 33 months of its meeting

minutes (from January 2010 through September 2012) and declarations of

two past or present General Managers (James Heitzman and Keith Van Der

Maaten), and Mr. Fogelman, the attorney Cal-Am contended made the

statements constituting express waiver. Marina argued that only its Board

had the authority to waive any obligation to submit a claim; that the Board

acts only through passage of ordinance, resolution, or motion; and that the

Board never took such “formal action” expressly waiving Cal-Am’s obligation.

Moreover, Marina added, the Board did not specifically authorize any agent,

including Mr. Fogelman, to waive its right to receive a claim. Thus, to the

extent Mr. Fogelman “purported to waive a right on behalf of Marina, it does

not amount to an express waiver because the individual did not have the

authority to take that action.”

In opposition, Cal-Am submitted the engagement agreement between

Marina and its counsel and numerous letters and e-mails, including e-mails

from attorney Fogelman containing the statements constituting the express

waiver. Cal-Am argued that Marina, like any entity, acts through agents,

including outside counsel, and Marina’s engagement of counsel constituted a

general delegation of authority to negotiate with Cal-Am, which included the

authority to waive Marina’s procedural right to notice under the Act.

With respect to section 930.4, Marina argued that the WPA’s procedure

could not supplant the statutory procedure because the WPA was declared

void. Cal-Am responded that the void status of the WPA was irrelevant, that

what mattered was the fact that Marina entered into a contract containing

an alternative procedure, and the parties complied with it.

15

As to the Mediation Agreement, Marina argued that it likewise did not

supplant the statutory procedure because the tort causes of action were based

on Collins’s actions in 2010, which pre-dated the formation of the Agreement,

and that claims arising before a contract’s formation could not, as a matter of

law, meet the “arising out of or related to” limitation in Government Code

section 930.2.

Finally, with respect to substantial compliance, Marina argued Cal-

Am’s claim did not disclose the factual circumstances giving rise to the tort

causes of action, i.e., Marina’s “hiring and supervision” of Collins.

Hearing on the motion was held on May 29, prior to which the trial

court issued a tentative ruling denying the motion. The tentative ruling

observed that Marina failed to meet its initial burden on the express waiver

issue because its evidence of Board votes was limited to January 2010 to

September 2012, noting that “the record is silent as to whether Marina’s

Board of Directors delegated authority . . . to waive compliance with the act,

to any employees or agents . . . in the time period before January 2010.”

Following argument, on June 20, the trial court filed its order granting

the motion, this one, 26 pages long, also described in detail below. The only

explanation provided for the court’s change-of-heart was the following

statement: “During oral argument, Marina clarified that the Board could not

have waived Cal-Am’s compliance earlier than January 2010 because no

claims had accrued. In other words, there can be no waiver of a right until

the Board of Directors knew Cal-Am had a tort claim, which did not arise

until after January 2010.” Nothing was cited to support that statement.

Cal-Am filed a petition in this court to reverse the order immediately,

before the parties proceeded to trial on the remaining claims, to prevent the

possibility of having to conduct a duplicative, second trial in the event this

16

court reversed the order in an appeal from the final judgment. (California-

American Water Company v. Superior Court for the City and County of San

Francisco, A157849.) We denied the petition.

On January 22, 2020, trial began on the remaining damage claims by

Monterey and Cal-Am against Marina and RMC. A jury was empaneled, but

on January 27, before testimony began, the parties entered into a settlement

agreement under which all claims against RMC were settled, as were some of

Cal-Am’s claims against Marina. The settlement agreement expressly

preserved Monterey’s and Cal-Am’s right to appeal the judgment based on

the summary adjudication orders.

Judgment in accordance with the settlement agreement was entered on

June 9. And on July 10, Monterey and Cal-Am filed notices of appeal.

DISCUSSION

The Law of Summary Judgment/Summary Adjudication

“A party may move for summary judgment in an action or proceeding if

it is contended that the action has no merit or that there is no defense to the

action or proceeding.” (Code Civ. Proc., § 437c, subd. (a)(1).) “A party may

move for summary adjudication as to one or more causes of action within an

action, one or more affirmative defenses, one or more claims for

damages, . . . . A motion for summary adjudication shall be granted only if it

completely disposes of a cause of action, an affirmative defense, a claim for

damages, or an issue of duty.” (Id., § 437c, subd. (f)(1).) In short, to prevail, a

defendant must show that one or more elements of the challenged cause of

action cannot be established or that there is a complete defense to it.

(Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 476−477; Aguilar v. Atlantic

Richfield Co. (2001) 25 Cal.4th 826, 849 (Aguilar).)

17

Our review is under well-settled principles, as we confirmed in Nazir:

“On appeal ‘[w]e review a grant of summary judgment de novo; we must

decide independently whether the facts not subject to triable dispute warrant

judgment for the moving party as a matter of law. [Citations.]’ (Intel Corp. v.

Hamidi (2003) 30 Cal.4th 1342, 1348.) Put another way, we exercise our

independent judgment, and decide whether undisputed facts have been

established that negate plaintiff’s claims. (Romano v. Rockwell Internat., Inc.

[(1996)]14 Cal.4th [479,] 487.) As we put it in Fisherman’s Wharf Bay Cruise

Corp. v. Superior Court (2003) 114 Cal.App.4th 309, 320: ‘[W]e exercise an

independent review to determine if the defendant moving for summary

judgment met its burden of establishing a complete defense or of negating

each of the plaintiff’s theories and establishing that the action was without

merit.’ (Accord, Certain Underwriters at Lloyd’s of London v. Superior

Court (2001) 24 Cal.4th 945, 972.)

“But other principles guide us as well, including that ‘[w]e accept as

true the facts . . . in the evidence of the party opposing summary judgment

and the reasonable inferences that can be drawn from them.’ (Morgan v.

Regents of University of California (2000) 88 Cal.App.4th 52, 67.) And we

must ‘ “view the evidence in the light most favorable to plaintiff[] as the

losing part[y]” and “liberally construe plaintiff[’s] evidentiary submissions

and strictly scrutinize defendant[’s] own evidence, in order to resolve any

evidentiary doubts or ambiguities in plaintiff[’s] favor.” ’ (McDonald v.

Antelope Valley Community College Dist. (2008) 45 Cal.4th 88, 96–97.)”

(Nazir, supra, 178 Cal.App.4th at pp. 253−254.)

Against that background, we turn to the two appeals before us,

beginning with that of the first-named appellant, Cal-Am.

18

Cal-Am’s Appeal Has Merit: The Summary Adjudication Was

Error

The Law of Government Claims

Government Code section 945.4 provides that “no suit for money or

damages may be brought against a public entity on a cause of action for

which a claim is required to be presented in accordance with . . . section

910 . . . until a written claim therefor has been presented to the public entity

and has been acted upon by the board, or has been deemed to have been

rejected by the board . . . .” And the referenced section 910 requires that the

claim state the “date, place, and other circumstances of the occurrence or

transaction which gave rise to the claim asserted” and provides “[a] general

description of the . . . injury, damage or loss incurred so far as it may be

known at the time of presentation of the claim.”

The public policies underlying the claims presentation requirement

include that the claim affords the entity an opportunity to promptly remedy

the condition giving rise to the inquiry, thus minimizing the risk of similar

harm to others, and permits the entity to investigate while tangible evidence

is still available, memories are fresh, and witnesses can be located. The

requirement also permits early assessment by the public entity, allows its

governing board to settle meritorious disputes without incurring the added

cost of litigation, and gives it time to engage in appropriate budgetary

planning. (See generally DiCampli-Mintz v. County of Santa Clara (2012)

55 Cal.4th 983, 991; City of Stockton v. Superior Court (2007) 42 Cal.4th 730,

738; Perez v. Golden Empire Transit Dist. (2012) 209 Cal.App.4th 1228, 1234

[summarizing policy considerations].)

Our Supreme Court expounded on the purposes of the law in Stockett v.

Association of California Water Agencies Joint Powers Ins. Authority (2004)

34 Cal.4th 441, 446 (Stockett): “The purpose of these statutes is ‘to provide

19

the public entity sufficient information to enable it to adequately investigate

claims and to settle them, if appropriate, without the expense of litigation.’

(City of San Jose v. Superior Court (1974) 12 Cal.3d 447, 455.) Consequently,

a claim need not contain the detail and specificity required of a pleading, but

need only ‘fairly describe what [the] entity is alleged to have done.’

(Shoemaker v. Myers (1992) 2 Cal.App.4th 1407, 1426; Turner v. State of

California (1991) 232 Cal.App.3d 883, 888.) As the purpose of the claim is to

give the government entity notice sufficient for it to investigate and evaluate

the claim, not to eliminate meritorious actions (Blair v. Superior Court (1990)

218 Cal.App.3d 221, 225), the claims statute ‘should not be applied to snare

the unwary where its purpose has been satisfied’ (Elias v. San Bernardino

County Flood Control Dist. (1977) 68 Cal.App.3d 70, 74.)”

On the next page the Court elaborated, noting that “The claim,

however, need not specify each particular act or omission later proven to have

caused the injury. (Blair v. Superior Court, supra, 218 Cal.App.3d at p. 225.)

A complaint’s fuller exposition of the factual basis beyond that given in the

claim is not fatal, so long as the complaint is not based on an ‘entirely

different set of facts.’ (Stevenson v. San Francisco Housing Authority (1994)

24 Cal.App.4th 269, 278.) Only where there has been a ‘complete shift in

allegations, usually involving an effort to premise civil liability on acts or

omissions committed at different times or by different persons than those

described in the claim,’ have courts generally found the complaint barred.

(Blair v. Superior Court, supra, at p. 226.) Where the complaint merely

elaborates or adds further detail to a claim, but is predicated on the same

fundamental actions or failures to act by the defendants, courts have

generally found the claim fairly reflects the facts pled in the complaint.

20

(White v. Superior Court (1990) 225 Cal.App.3d 1505, 1510−1511.” (Stockett,

supra, 34 Cal.4th at p. 447.)

Applying these, and other principles, our de novo review leads to the

conclusion that the trial court erred in granting summary adjudication

against Cal-Am. There are several reasons why, beginning with the fact the

trial court erred in applying the law of waiver.

Implied Waiver

As noted, Cal-Am pled various theories excusing compliance with the

Claims Act, one of which was implied waiver. As also noted, Marina argued

there could not be a waiver unless Cal-Am showed detrimental reliance, that

is, unless Marina’s actions caused Cal-Am to not submit a claim. And since

Cal-Am did submit a claim, there was no reliance. The trial court agreed.

The court first recognized that Cal-Am “relies on a handful of cases,”

going on to list five. Never taking issue with, or distinguishing, any of the

five cases, the trial court made this one-paragraph conclusion:

“The question here is narrow—whether a plaintiff can show that a

public entity impliedly waived compliance with the Government Claims Act

without demonstrating reliance. Estoppel and waiver doctrines have been

read into the Government Claims Act to prevent public entities from using

the claims statues as traps for the unwary. (Hill v. Newkirk (1994)

26 Cal.App.4th 1047, 1059.) The Court is not aware of cases finding an

implied waiver of the claim requirement in the absence of reliance in the form

of a failure to submit a timely claim. (Compare Castaneda v. Department of

Corrections & Rehabilitation (2013) 212 Cal.App.4th 1051, 1064; City of

Stockton v. Superior Court[, supra,] 42 Cal.4th [at pp.] 743−746 [rejecting

estoppel argument because conduct could not have deterred plaintiff from

presenting a claim after the defendants failed to keep their promises;

21

rejecting waiver argument that was raised based only on a ground found in

the statute itself].) Cal-Am has not directed the Court to any such authority.

Accordingly, the Court concludes that Cal-Am cannot prevail on an implied

waiver argument because it submitted a timely claim.”

This was wrong.

Waiver means “the intentional relinquishment or abandonment of a

known right.” (Bickel v. City of Piedmont (1997) 16 Cal.4th 1040, 1048

(Bickel), superseded by statute on another ground as noted in DeBerard

Properties, Ltd. v. Lim (1999) 20 Cal.4th 659, 668; see Waller v. Truck Ins.

Exchange, Inc. (1995) 11 Cal.4th 1, 31 (Waller).) And whether there has been

waiver is a question of fact. (Bickel, supra, 16 Cal.4th at p. 1052.) Waiver “

‘always rests upon intent.’ ” (City of Ukiah v. Fones (1966) 64 Cal.2d 104,

107.) The intention may be express, based on the waiving party’s words, or

implied, based on conduct that is “ ‘so inconsistent with an intent to enforce

the right as to induce a reasonable belief that such right has been

relinquished.’ ” (Savaglio v. Wal-Mart Stores, Inc. (2007) 149 Cal.App.4th

588, 598; see Waller, supra, 11 Cal.4th at pp. 31, 33–34.)

As numerous cases have held, “Waiver differs from estoppel, which

generally requires a showing that a party’s words or acts have induced

detrimental reliance by the opposing party.” (Lynch v. California Coastal

Com. (2017) 3 Cal.5th 470, 475−476; Rubin v. Los Angeles Federal Savings &

Loan Assn. (1984) 159 Cal.App.3d 292, 298 [“detrimental reliance is not a

necessary element of waiver, only of estoppel”]; City of Hollister v. Monterey

Ins. Co. (2008) 165 Cal.App.4th 455, 487 [same]; DuBeck v. California

Physicians’ Service (2015) 234 Cal.App.4th 1254, 1265 [“ ‘ “The party who has

the right may waive it without reliance by another” ’ ”].)

22

As Witkin distills it, citing numerous cases and authorities, “Waiver is

the intentional relinquishment of a known right. [Citations.] [¶]

Technically, therefore, waiver is the affirmative act of one party and does not

require an act or conduct by the other party. [Citations.]” (13 Witkin,

Summary of California Law (11th ed., Supp. May 2022 update) Equity, § 215,

p. 569.) 8

The cases cited by Marina below, and adopted without analysis by the

trial court, provide no support for the court’s ruling. Castaneda v.

Department of Corrections & Rehabilitation, supra, 212 Cal.App.4th at

pp. 1064−1065 addressed only estoppel, not waiver; and in City of Stockton v.

Superior Court, supra, 42 Cal.4th 730, the Supreme Court analyzed the

estoppel and waiver defenses separately, rejecting the estoppel argument for

lack of reliance and then rejecting the waiver defense for other reasons,

without any mention of reliance. (Id. at pp. 744−745.)

For this reason alone, summary adjudication was wrong, as there was a

triable issue of fact as to implied waiver. Likewise as to express waiver.

In light of all this, we reject Marina’s statement that the law of

8

whether reliance is necessary for waiver is “not uniform,” as the cases it cites

are easily distinguishable. Marina cites, for example, Applera Corp. v. MP

Biomedicals, LLC (2009) 173 Cal.App.4th 769, 791, which suggested, without

analysis, that there can be no waiver unless “it has ripened into an estoppel

by reason of prejudice to the adverse party.” The only case cited for that

proposition, however, is an old insurance coverage case, McDanels v. General

Insurance Co. of America (1934) 1 Cal.App.2d 454, which, most improperly,

used “waiver” and “estoppel” interchangeably. As to this, Witkin is again apt

which, citing to McDanels, says this: “The doctrine [of waiver] is, however,

frequently confused with that of estoppel.” (13 Witkin, Summary of

California Law, supra, Equity, § 215, p. 569.)

23

Express Waiver

Cal-Am also alleged express waiver based on the representations by

Marina’s attorney Fogelman at the conclusion of the many months devoted to

possible resolution of the issues among the parties. Marina did not contend

that Mr. Fogelman’s statements did not support waiver, but rather argued

that as a matter of law only its Board had the power to waive Marina’s right

to notice under the Claims Act and did not do so. Again, the trial court

agreed. This, too, was error. For several reasons.

To begin with, Cal-Am pled detailed facts, including by quoting the

statements constituting the waiver, demonstrating that the express waiver

argument was predicated on statement made by Marina’s attorney—not

votes cast by the Board—at the end of the unsuccessful pre-lawsuit dispute

resolution process. Marina’s focus on the Board’s actions addressed

allegations not pled in the complaint, and thus failed to negate the express

allegations pled in the complaint. Thus, summary adjudication was error.

(See Laabs v. Victorville (2008) 163 Cal.App.4th 1242, 1258 [“It is the

allegations in the complaint to which the summary judgment motion must

respond”].)

Indeed, Marina addressed the allegations in the complaint only insofar

as to dismiss them out of hand as inconsistent with Marina’s late in the

game—Cal-Am describes it as “made up”—Board-waiver theory. Citing

Horsemen’s Benevolent & Protective Assn. v. Valley Racing Assn. (1992)

4 Cal.App.4th 1538 (Horsemen’s) and Burchett v. City of Newport Beach

(1995) 33 Cal.App.4th 1472 (Burchett), Marina simply stated: “To the extent

an officer or agent purported to waive a right on behalf of Marina, it does not

amount to an express waiver because the individual did not have the

authority to take that action.” The trial court cited both cases. But neither is

24

pertinent, as they applied a rule limited to public officers. (See Horsemen’s,

supra, 4 Cal.App.4th at p. 1564 [“any act of an officer to be valid must find

express authority in the law or be necessarily incidental to a power expressly

granted”]; Burchett, supra, 33 Cal.App.4th at p. 1479.) That rule has no

application here, as attorney Fogelman was not a public officer. In short, by

failing to negate the express waiver theory as pled, Marina failed to meet its

initial burden.

But even assuming Marina had met its initial burden, Cal-Am

demonstrated triable issues of fact. Cal-Am based its express waiver theory

on representations made by an attorney retained by Marina who was at the

time he made them engaging in pre-lawsuit negotiations with Cal-Am as

precedent to legal action. And there was a triable issue whether Cal-Am

could rely on them.

“As a general proposition, the attorney-client relationship, insofar as it

concerns the authority of the attorney to bind his client by agreement or

stipulation, is governed by the principles of agency. [Citation.] Hence, ‘the

client as principal is bound by the acts of the attorney-agent within the scope

of his actual authority (express or implied) or his apparent or ostensible

authority . . . .’ [Citations.] [¶] . . . [¶] An attorney retained to represent a

client in litigation is clothed with certain authority by reason of that

relationship. ‘The attorney is authorized by virtue of his employment to bind

the client in procedural matters arising during the course of the action. . . .’

[Citation.] [¶] The authority thus conferred upon an attorney is in part

apparent authority—i.e., the authority to do that which attorneys are

normally authorized to do in the course of litigation manifested by the client’s

act of hiring an attorney—and in part actual authority implied in law.”

(Blanton v. Womancare, Inc. (1985) 38 Cal.3d 396, 403−404 (Blanton).)

25

As Witkin distills the rule, “The attorney’s apparent authority covers

all the ordinary procedural steps in the prosecution of a legal proceeding,

such as pleadings, remedies, trial, etc., and the attorney’s actions in these

matters will bind the client. [¶] A typical statement of the rule appears in

Redsted v. Weiss (1945) 71 Cal.App.2d 660: An attorney has ‘the general

implied or apparent authority to enter into or make such agreements or

stipulations, with respect to procedural or remedial matters, as appear, in the

progress of the cause, to be necessary or expedient for the advancement of his

client’s interests or to accomplishment of the purpose for which the attorney

was employed.’ ([Redsted v. Weiss, supra,] 71 Cal.App.2d [at p.] 663.)”

(1 Witkin, Cal. Procedure (6th ed. 2021) Attorneys, § 263, p. 326.)

Cal-Am’s evidence—liberally construed, as it must be—and the

reasonable inferences from all that evidence demonstrated a triable issue of

fact whether Mr. Fogelman had the authority to waive Marina’s right to

statutory notice. That evidence included the 2009 Board minutes approving

the retention of Mr. Fogelman, and letters, e-mails, and other evidence

demonstrating his interactions and negotiations with Cal-Am’s attorneys

throughout the pre-lawsuit resolution process regarding Cal-Am’s potential

claims against Marina. A factfinder could reasonably infer that Marina’s

counsel, who had received abundant information regarding Cal-Am’s

potential claims, had the apparent authority to waive Marina’s statutory

right to receive a formal claim. It is reasonable to infer that the attorney put

in a position by Marina’s Board to negotiate the substance of Cal-Am’s

potential claims against Marina also had the authority to waive Marina’s

right merely to receive formal notice of those claims. (See Blanton, supra,

38 Cal.3d at p. 406 [“apparent authority is created, and its scope defined, by

26

the acts of the principal in placing the agent in such a position that he

appears to have the authority which he claims or exercises”].)

Not only that, two Marina Board members (Dan Burns and Ken Nishi)

were copied on one of the e-mails sent by Mr. Fogelman in which he made

some of the statements on which Cal-Am’s express waiver theory was

premised. Neither objected to the statements.

The trial court ignored almost all of Cal-Am’s evidence and failed to

draw all reasonable inferences from other evidence in Cal-Am’s favor. The

trial court ignored all of the letters, e-mails, and other evidence of Mr.

Fogelman’s interactions with Cal-Am, distilling Cal-Am’s evidentiary

showing to essentially one thing—the engagement agreement. The court

then determined that the agreement did not constitute any evidence of Mr.

Fogelman’s authority because it “does not expressly authorize” counsel “to

waive compliance” with the Act.

Certainly any such non-authorization was not known to Cal-Am.

In any event, the court’s conclusion ran afoul of the principle that a

court cannot grant summary judgment based on inferences that are

contradicted by other inferences or evidence. And a triable issue of fact exists

when the evidence permits a reasonable trier of fact to find a contested fact in

favor of the party opposing the motion. (Aguilar, supra, 25 Cal.4th at pp.

856−857.) Put slightly differently, a summary judgment may not be granted

unless the evidence is incapable of supporting a judgment for the losing

party. As one court put it, “ ‘even though it may appear that a trial court

took a “reasonable” view of the evidence, a summary judgment cannot

properly be affirmed unless a contrary view would be unreasonable as a

matter of law in the circumstances presented.’ ” (Faust v. California

27

Portland Cement Co. (2007) 150 Cal.App.4th 864, 877, citing Binder v. Aetna

Life Ins. Co. (1999) 75 Cal.App.4th 832, 838.)

The trial court rejected Cal-Am’s express waiver argument, in part,

because it believed that accepting Cal-Am’s argument would require it “to

make the unreasonable inference that each of the declarations of Marina’s

Board of Directors were [sic] crafted to be misleading.” Preliminarily, we do

not understand the comment about “unreasonable inference,” as Marina

submitted two declarations, both of which contained the identical—not to

mention, narrowly phrased—testimony that the Board did not formally vote

to either waive Cal-Am’s compliance with the Act or grant anyone else that

specific power. But an attorney has more authority than what a client

specifically authorizes, and the declaration testimony did not address that

issue at all, such as by attesting to the limits of the scope of the engagement.

Cal-Am’s argument therefore suggested nothing more than that the

declarants’ testimony was incomplete—not misleading. 9

Finally on this issue, we note another fundamental principle of

summary judgment law that was disregarded—that the procedural rules

required by statute must be strictly applied. (Brantley v. Pisaro (1996)

42 Cal.App.4th 1591, 1607; see generally Weil & Brown, Cal. Practice Guide:

Civil Procedure Before Trial (The Rutter Group, 2022) ¶ 10:279, p. 10-139.)

9 Perhaps more improper in the summary adjudication setting was the

trial court’s refusal to infer the declarations were “misleading,” as it meant

the court deemed that testimony to be sufficiently credible to outweigh

competing inferences from Cal-Am’s evidence. This was wrong. (See

Binder v. Aetna Life Ins. Co., supra, 75 Cal.App.4th at p. 840 [“The trial court

may not weigh the evidence in the manner of a fact finder to determine whose

version is more likely true. [Citation.] Nor may the trial court grant

summary judgment based on the court’s evaluation of credibility”].)

28

Here, Marina’s separate statement violated the so-called “golden rule” of

summary judgment, which is this: “[I]f it is not set forth in the separate

statement, it does not exist.” (United Community Church v. Garcin (1991)

231 Cal.App.3d 327, 337, superseded by statute on another ground as stated

in Certain Underwriters at Lloyd’s of London v. Superior Court (1997) 56

Cal.App.4th 952, 957, fn. 4; Weil & Brown, Civil Procedure Before Trial,

supra, ¶ 10:94, p. 10-37.)

“Both the court and the opposing party are entitled to have all the facts

upon which the moving party bases its motion plainly set forth in the

separate statement.” (United Community Church v. Garcin, supra,

231 Cal.App.3d at p. 337.) And if the separate statement does not contain all

material facts on which the motion is based, the moving party has failed to

meet its initial burden of production and is “not entitled to summary

adjudication as a matter of law.” (Troyk v. Farmers Group, Inc. (2009)

171 Cal.App.4th 1305, 1350; Roger H. Proulx & Co. v. Crest-Liners, Inc.

(2002) 98 Cal.App.4th 182, 201 [“Without facts set forth in a separate

statement to support a ground for summary judgment, summary judgment

cannot be granted on that ground”].)

Marina’s attempt to negate Cal-Am’s express waiver theory was based

on facts that included that Marina has a Board; that the Board acts by voting

to pass a resolution, ordinance, and/or motion; that any actions are recorded

in the Board minutes; that from January 2010 to September 2012, its Board

did not vote to pass any resolution, ordinance, or motion waiving Cal-Am’s

obligation to submit a claim; and that the Board did not vote to delegate the

authority to waive that obligation to anyone else.

Marina’s declarants attested to additional purportedly material facts.

Two of Marina’s former General Managers attested to facts regarding the

29

scope of their authority, an essential factual component of Marina’s argument

that only its Board had authority to waive its rights. Marina’s outside

counsel Fogelman similarly declared that the Board did not specifically

authorize him or “any other agent” to waive Cal-Am’s obligation to present a

claim during the time period in which he represented Marina.

All of these facts were material to Marina’s express waiver argument.

Not one of them appears in Marina’s separate statement. 10 In short,

Marina’s separate statement flouted the requirements of Code of Civil

Procedure section 437c, subdivision (b)(1). Regardless, the trial court swept

this aside, declaring that this “is not a case where the moving party failed to

cite evidence in its separate statement,” and affirming its “discretion to

consider evidence not set forth in the separate statement where the opposing

party has had notice of the evidence and an opportunity to respond.” This

misses the point. The “golden rule” applies to the absence of the fact from the

separate statement, “not the underlying evidence supporting the fact.”

(Parkview Villas Assn. Inc. v. State Farm Fire & Casualty Co. (2005)

133 Cal.App.4th 1197, 1214; see North Coast Business Park v. Nielsen

Construction Co. (1993) 17 Cal.App.4th 22, 31 [“when the ‘fact’ is not

mentioned in the separate statement, it is irrelevant that such fact might be

buried in the mound of paperwork filed with the court”].)

10The only “fact” relevant to the express waiver issue that Marina

included in the separate statement was that “Marina did not intentionally

waive the right to receive written notice of Cal-Am’s tort theories pursuant to

the Government Claims Act.” But waiver is a legal conclusion made by a

factfinder based on the facts; it is not a fact itself. (See CACI No. 336.) It

does not belong in a separate statement. (See Masonite Corp. v. Superior

Court (1994) 25 Cal.App.4th 1045, 1050.)

30

In sum, there was a triable issue of fact as to express waiver. And

another, as to the applicability of alternatives to the Claims Act.

The WPA

As noted, section 930.2 allows local public entities like Marina to

include in their contracts a procedural alternative to the statutory process.

And if an entity enters into an agreement containing such an alternative

procedure, that procedure “exclusively governs. . . .” (§ 930.4.) As we put it

in Arntz Builders v. City of Berkeley (2008) 166 Cal.App.4th 276, 289 (Arntz),

“We detect no legislative intent, nor any practical need, to require

presentation of a statutory claim after a claimant has complied with a local

entity’s contractual claims procedure.”

Here, the WPA contained a detailed pre-litigation procedure; the

parties also entered into the separate Mediation Agreement. And in its

complaint, Cal-Am detailed at length—some 29 paragraphs—its efforts to

fulfill the requirements of the dispute resolution provisions in those

agreements.

As also noted, in 2012, before any lawsuit was filed, Marina took the

position that Monterey had to comply with the WPA. But in its motion

Marina argued that the dispute resolution procedure in the WPA did not

“exclusively govern[]” within the meaning of section 930.4, because the

agreement was declared void in Cal-Am One. Thus, Marina argued, section

930.4 could not apply because such application “would treat the WPA as in

effect.” The trial court agreed, but provided no analysis, instead referring to

a previous order that had been entered on a motion for judgment on the

pleadings and stating it “does not modify the prior legal analysis.”

Passing over whether a ruling on a judgment on the pleadings should—

or even can—govern determination of a motion for summary adjudication,

and the strict scrutiny required, such incorporation by reference was error. A

31

trial court must “state its reasons” for any determination made in a summary

judgment order. (Code Civ. Proc., § 437c, subd. (g); Santa Barbara Pistachio

Ranch v. Chowchilla Water Dist. (2001) 88 Cal.App.4th 439, 448−449.) What

the court did here did not comply: the “statement of reasons-by-reference

was noncompliant.” (Ruoff v. Harbor Creek Community Assn. (1992)

10 Cal.App.4th 1624, 1627.)

Highlighting the impropriety of relying on a prior ruling is this

observation in Cal-Am One: “Although the court had concluded in its first

summary judgment order that California-American’s cause of action under

Government Code section 1090 was barred by the short statute of limitations

governing validation actions, it revisited and rejected this conclusion in the

statement of decision.” (Cal-Am One, supra, 2 Cal.App.5th at p. 757.) In

other words, the trial court there—the same judge who made the earlier

ruling here— recognized its earlier decision was wrong, and reversed it.

In any event, the trial court’s decision was error. It is probably enough

to note that Cal-Am Two affirmed the award of attorney fees based on a

provision in the void contract. The Court of Appeal held “[t]he award of

attorney fees did not violate public policy because the trial court’s

determination that the parties’ agreements were void ab initio did not render

illegal the subject matter of the agreements, which set forth the parties’

relationships and rights in connection with a lawful project, and thus the

illegality exception to the rule of mutuality of remedies did not apply.”

Reaching that conclusion, the court noted among other things that a

“determination that the agreements were void ab initio . . .” did not render

the agreements illegal. (Cal-Am Two, supra, 18 Cal.App.5th at pp. 571, 579.)

In its opening brief here, Cal-Am made a four-part argument regarding

why the void ab initio status of the WPA did not retroactively render the

32

dispute resolution procedure in that agreement inapplicable. Marina chose

not to respond to any of Cal-Am’s arguments except for the analogy Cal-Am

drew to Civil Code section 1717. And on that issue, Marina offers only a

conclusion, not an argument: “There is no similar statutory purpose negated

here by enforcing the Claims Act in the wake of the void WPA claims

procedure.” This is inadequate.

The purpose of section 930.4 is to make clear that the statutory claims

process does not apply if the parties entered into a contract containing an

alternate procedure. (Arntz, supra, 166 Cal.App.4th at p. 290.) Exempting

contracts later declared void ab initio from section 930.4’s “exclusive

governance” clause—as the trial court did here—negates the purpose of the

statute. The trial court’s conclusion would also cause confusion as to which

claims procedure governed, undermining the related statutory goal of

“eliminating uncertainty in the claims-presentation requirements.”

(DiCampli-Mintz v. County of Santa Clara, supra, 55 Cal.4th at p. 997.)

Finally, in what can only be called an inconsistent position, Marina

suggests that “in lieu of submitting a claim,” Cal-Am should have provided

“notice of alleged tort causes of action” pursuant to the WPA’s procedure,

which supposedly would have “avoided the consequences” of the WPA’s void

status. Yet, according to Marina’s own argument, any such notice under the

WPA would have been a nullity given the void status of that agreement.

Marina cannot have it both ways.

The Mediation Agreement

In addition to the WPA, the parties entered into a second agreement

with a dispute resolution procedure, i.e., the Mediation Agreement, which

Cal-Am contended also applied and was complied with. In a tortuous, three-

page argument, Marina essentially contends that Cal-Am’s claims “fall

outside the Mediation Agreement’s claims procedure,” which, it asserts,

33

refers to agreements containing “provisions governing the presentation . . . of

any or all claims arising out of or related to the agreement . . . .” (§ 930.2.)

According to Marina, the tort causes of action are not such claims because

they “arise out of the hiring and supervision of Collins and his violation of

Government Code section 1090 in 2010, more than a year before the

Mediation Agreement was executed.” In other words, Marina construes

“claims arising out of or related to the agreement” to have a temporal

limitation, including only claims accruing after formation of the agreement.

But section 930.2 refers to claims “related to the agreement. . . .” Cal-

Am’s tort causes of action are “related to” the Mediation Agreement because

it was formed for the purpose of enabling the parties “to negotiate and

discuss all RDP-related disputes.” And the tort causes of action are premised

on these allegations, as detailed in the complaint.

Superimposed on all the above is the fact that, in light of the extensive

settlement discussions in 2011 through 2012, all the policy reasons that

underlie the claim-filing requirement were met here: opportunity to the

entity to promptly remedy the condition giving rise to the inquiry; allowing

the entity to investigate while tangible evidence is still available, memories

are fresh, and witnesses can be located; and early assessment by the entity,

allowing it to settle meritorious disputes without incurring the added cost of

litigation.

We close with the observation that the claimed absence of any

government claim was such a non-issue for Marina that it actively litigated

the tort causes of action for nearly two-and-a-half-years, raising the claim-

presentation procedure as a defense for the first time in its December 2017

motion for judgment on the pleadings—a non-issue made more apparent by

the fact Marina counter-sued Cal-Am for its own damages stemming from the

34

collapse of the RDP. (See People ex rel. Dept. of Parks & Recreation v. West-A-

Rama, Inc. (1973) 35 Cal.App.3d 786, 794 [“Presumably, [the State] has

already made the decision that the claim should not be settled, since State

itself decided to litigate”].)

Monterey’s Appeal Has Merit: The Summary Adjudication Was

Error

Introduction

Monterey’s sixth amended complaint alleged a negligence claim against

Marina based on respondeat superior and vicarious liability under sections

815.2 and 815.4, liability under the former section predicated on an

employment relationship, under the latter an independent contractor

relationship. In short, Monterey alleged Marina failed to supervise

Heitzman, and Heitzman failed to supervise Collins.

Marina’s motion for summary adjudication against the claim for

negligence was based on the two-year statute of limitations in Code of Civil

Procedure section 339, subdivision (1). 11 The introduction section of Marina’s

memorandum of points and authorities asserted that Monterey’s negligence

claim “arises from the Government Code Section 1090 violation committed”

by Collins, and that the harm caused by this violation “occurred by April 6,

2010, at the latest, when Monterey entered into the contracts tainted by

Collins’s violation.” The argument section went on to assert that Monterey’s

“causes of action accrued no later than April 6, 2010,” as “by then, the

Reimbursement Agreement, Settlement Agreement, and WPA had been

made in violation of section 1090.”

11 Marina also moved for summary adjudication of the two interference

claims, which the court granted on different grounds. Monterey does not

contest these rulings on appeal.

35

Following its description—however erroneous—that Monterey’s claim

is “predicated on Collins’s violation of section 1090,” Marina’s moving papers

focused entirely on Collins’s conduct, when Monterey supposedly knew about

it, and when a cause of action for violation of section 1090 accrued. And

Marina’s separate statement is focused almost entirely on Collins’s violation

of section 1090.

Collins’s violation of section 1090 was established in Phase One. It is

not being litigated again. Marina did not violate section 1090 and Monterey

is not suing Marina for violating section 1090. Indeed, as Marina itself

writes, it could not have violated section 1090 itself because it is a public

agency and not a public official. Monterey is suing Marina for breaching its

duty of care to Monterey by negligently supervising its employee Heitzman

and its subcontractors RMC and Collins. That claim did not accrue in 2010.

The Governing Law

Our Supreme Court distilled the general principles in Norgart v.

Upjohn Co. (1999) 21 Cal.4th 383, 397 (Norgart): “Under the statute of

limitations, a plaintiff must bring a cause of action within the limitations

period applicable thereto after accrual of the cause of action. (Code Civ.

Proc., § 312; see generally, 3 Witkin, Cal. Procedure, supra, Actions, § 459,

pp. 580−581.)

“The general rule for defining the accrual of a cause of action sets the

date as the time, ‘when, under the substantive law, the wrongful act is done,’

or the wrongful result occurs, and the consequent ‘liability arises.’ [Citation.]

In other words, it sets the date as the time when the cause of action is

complete with all of its elements (see Neel v. Magana, Olney, Levy, Cathcart

& Gelfand (1971) 6 Cal.3d 176, 187 [stating that ‘[i]n ordinary . . . actions, the

statute of limitations . . . begins to run upon the occurrence of the last

36

element essential to the cause of action’]; [citation] . . .—the elements being

generically referred to by sets of terms such as ‘wrongdoing’ or ‘wrongful

conduct,’ ‘cause’ or ‘causation,’ and ‘harm’ or ‘injury.’ [Citations.]

“An exception to the general rule for defining the accrual of a cause of

action—indeed, the ‘most important’ one—is the discovery rule. [Citation.] It

may be expressed by the Legislature or implied by the courts. [Citation.] It

postpones accrual of a cause of action until the plaintiff discovers, or has

reason to discover, the cause of action. ([Citation]; see Neel v. Magana,

Olney, Levy, Cathcart & Gelfand, supra, 6 Cal.3d at p. 179 [postponing

accrual ‘until the [plaintiff] discovers, or should discover, his cause of

action’].)”

The date of accrual of a cause of action is a question of fact.

(Jefferson v. County of Kern (2002) 98 Cal.App.4th 606, 611.)

Whether a statute of limitations is viewed as “favored” or “disfavored,”

(Norgart, supra, 21 Cal.4th at 396), the competing policies underlying such

statutes are well-recognized: “One purpose is to give defendants reasonable

repose, thereby protecting parties from ‘defending stale claims, where factual

obscurity through the loss of time, memory or supporting documentation may

present unfair handicaps.’ [Citations.] A statute of limitations also

stimulates plaintiffs to pursue their claims diligently. [Citations.] A

countervailing factor, of course, is the policy favoring disposition of cases on

the merits rather than on procedural grounds. [Citations.]” (Fox v. Ethicon

Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 806 (Fox).)

Here, of course, the two policies favoring the defense—guarding against

stale claims and diligent pursuit by plaintiff—were present, again because of

the extensive negotiations in 2011 through 2012.

37

The Motion and the Trial Court’s Order Did Not Address the

Pleading

Marina’s motion, and the trial court’s order, focused exclusively on

Collins’s conduct and when Monterey might have learned of it. But Collins’s

conduct, standing alone, is insufficient to support a negligence claim against

Marina under section 815.4 without evidence that Monterey knew he was

acting as an independent contractor to Marina. And Collins’s role as an

independent contractor is only part of the vicarious liability cause of action

Monterey pled. The other part deals with the negligence of Marina’s

employee Heitzman. Monterey’s vicarious liability claim against Marina

could not accrue unless and until Monterey knew Heitzman, in his capacity

as an employee, and Collins, in his capacity as an independent contractor,

caused Monterey to suffer harm. And without knowledge of Heitzman’s

negligence as to Collins, no cause of action under section 815.2 could accrue.

In sum, in order for Monterey’s negligence claim against Marina to have

accrued by April 6, 2010, Monterey needed to know at least two things before

that date: first, that it had suffered “harm” as the result of some wrongdoing;

and second, that it had a cause of action against Marina for the harm based

on conduct by an employee or an independent contractor or both. Marina’s

motion failed to establish either of these elements.

Marina’s motion for summary adjudication was silent on this. Nothing

in Marina’s motion addressed Marina’s conduct or the actual negligence

claim Monterey pled against Marina. Indeed, aside from a few references

identifying Marina as a public agency and as a party to the RDP, Marina’s

separate statement contains no references to Marina’s operation, its

employees, or its representatives. Marina’s motion was directed at a claim

Monterey had not pled—and was devoid of any facts relevant to the claim it

had. Again, summary adjudication was error. (See Laabs v. Victorville,

38

supra, 163 Cal.App.4th at p. 1258 [“It is the allegations in the complaint to

which the summary judgment motion must respond”].)

Much as it did in its decision against Cal-Am, the trial court noted

Monterey’s position on this, and then dismissed it, with this discussion:

“Monterey argues that the motion should be denied because the notice

of motion and the separate statement do not match. [Citation.] Marina

replies that (1) the deficiency does not impact Marina’s request for summary

judgment; and (2) the court has and should exercise discretion to overlook

any deficiency in the notice. [Citation.]” Then, after quoting California Rules

of Court, rule 3.1350(b) and rule 3.1350(d), the trial court went on:

“Marina points to Truong v. Glasser (2009) 181 Cal.App.4th 112, 118.

[Citation.] There, the court began by holding that the moving party was not

required to separately list issues because the moving party was seeking

summary judgment. (Truong, 181 Cal.App.4th at [p.] 118.) The court

proceeded to state, in the alternative, that even if additional headings had

been required, the facts critical to the ruling were adequately identified and

the plaintiffs had not identified any defect that impacted their ability to

marshal evidence in opposition. (Ibid.) Accordingly, the trial court properly

exercised its discretion to overlook and infirmity in the document.

“Here, the separate statement is clearly adequate to provide notice of

the issues as to: (1) the statute of limitations challenge to the negligence

claim; and (2) the challenge to the economic interest element of each of the

interference torts. . . .” The court then noted its conclusion: “summary

adjudication is granted as to the negligence claim on the basis of the statute

of limitations.”

There followed a brief recitation of background law, which included this

observation: “[r]esolution of the statute of limitations issue is normally a

39

question of fact. (Nguyen v. Western Digital Corp. (2014) 229 Cal.App.4th

1522, 1552; Stella v. Asset Management Consultants, Inc. (2017)

8 Cal.App.5th 181, 193.) However, summary judgment is proper if the court

can draw only one legitimate inference from uncontradicted evidence about

the limitations issue. (Choi v. Sagemark Consulting (2017) 18 Cal.App.5th

308, 323−[3]24.)”

The trial court’s order then had a section entitled “Marina’s Burden”

where, under the heading “Accrual,” the court recited for some six lines

Collins’s conduct in 2010. And then the order said this: “Because Collins was

financially interested in the Reimbursement Agreement, WPA, and

Settlement Agreement—i.e., as a paid consultant on the RDP, Collins could

expect, and did receive, additional work as a result of those contracts being

approved—at a time when he was a public official, Collins’s making of those

contracts violated Government Code § 1090 and rendered those contracts

void ab initio. [Citation.] The WPA was the principal agreement among

Marina, Monterey, and Cal-Am regarding the construction and operation of

the RDP. [Citation.] The parties executed the WPA on April 6, 2010,

although it was not approved by the California Public Utilities Commission

(‘PUC’) until December 3, 2010. [Citation.] RMC was a consultant to Marina

on the RDP for all of 2010. [Citation.]

“These undisputed facts satisfy Marina’s initial burden on the

wrongdoing element by showing that Marina’s wrongdoing occurred by at

least the end of April 2010. The wrongdoing preceded the execution of the

WPA on April 6, 2010.

“With respect to the causation and harm elements, Marina argues that

harm occurred on or before either March 30, 2010 or April 6, 2010, the dates

on which the Reimbursement Agreement and WPA were executed.

40

[Citation.] In support, Marina cites two cases for the proposition that the

harm from a Government Code § 1090 violation occurs when the tainted

contract is executed. ([]; Marin Healthcare [Dist. v. Sutter Health (2002)]

103 Cal.App.4th [861] at [p.] 879; Santa Clarita Org. for Planning and the

Environment (SCOPE) v. Abercrombie (2015) 240 Cal.App.4th 300, 310.)

Marina produces Monterey’s discovery responses to show that Monterey

would have had to incur costs to mitigate any damages caused by the

invalidity of the RDP Agreements. [Citation.] [¶] . . . [¶]

“Marina’s evidence is sufficient to carry its initial burden of

establishing that causation and harm occurred by April 6, 2010. Focusing on

the WPA because it was the principal agreement between the parties, the

Government Code § 1090 violation was intractable on April 6, 2010. Even if

PUC approval would still have been necessary to ratify the WPA, the WPA,

as executed by the parties, could not be ratified because Collins had

participated in making the contract while he had an impermissible conflict of

interest. (See, e.g., SCOPE, 240 Cal.App.4th at [p.] 311.) Accordingly,

Monterey had suffered harm on April 6, 2010 because it had invested

resources in obtaining a contract that was void. [Citation.]

“Monterey counters that this does not suffice to satisfy Marina’s initial

burden because it does not establish the date that the project irrevocably

collapsed and because this is not an action pursuant to Government Code

§ 1090. [Citation.] First, Marina’s evidence is sufficient to require the

inference that there was harm as of April 6, 2010. While it may have

remained possible that Monterey could have mitigated most of its damages

by salvaging the project, there was appreciable and actual harm on April 6,

2010. Second, the fact that this is not a direct Government Code § 1090 claim

does not change the foregoing analysis.”

41

This, we conclude, was wrong for several reasons.

To begin with, we do not understand how the court’s final sentence can

withstand the scrutiny required in a court’s determination of a summary

adjudication motion. It is the complaint that frames the motion, the

complaint that must frame the analysis. How could the fact that the

complaint was not based on a section 1090 claim not change the analysis?

We also do not understand the court’s focus on the April 6 execution of

what the court termed the “principal agreement,” as the reality of the

situation here involved a series of agreements—five to be exact—none of

which was designated “principal.” The court’s focus also ignores the fact that

two of the RDP Agreements, the Credit Line Agreement and Project

Management Agreement, were not even executed until 2011. As the Court of

Appeal described in Cal-Am One, it agreed “with the trial court that ‘the

contracts were not made in a day.’ ” (Cal-Am One, supra, 2 Cal.App.5th at

p. 766.)

Moreover, the Settlement Agreement provided that “no Party assumes

any liability under the Implementing Agreements solely by reason of such

Party entering into the Implementing Agreements and this Settlement

Agreement.” The WPA was one of the Implementing Agreements.

In addition, the WPA provided that approval by the PUC was a

condition precedent to it becoming effective. That did not happen until

December 2010. And because the PUC approval was an express condition

precedent to the agreements becoming effective, and the agreements

expressly provided that no liability attached to any party’s preliminary

approval before final PUC approval was obtained, Monterey’s preliminary

approval of the agreements on April 6, 2010 was not a legally significant

42

event in terms of “investing resources” or sustaining “harm.” The contracts

were not in effect.

The trial court dismissed the importance of the condition precedent by

stating, without citation to anything, the WPA “could not be ratified [by the

PUC] because Collins had participated in making the contract while he had

an impermissible conflict of interest.” But no one knew in 2010 that Collins

had violated section 1090. And the contracts were not actually declared void

until years later—and then only after overcoming years of Marina’s

aggressive arguments that the contracts were valid. (Cal-Am One, supra,

2 Cal.App.5th at pp. 758−762.) The court’s statement was also in disregard

of the fact that Monterey did not know in April 2010 it had “invested

resources in obtaining a contract that was void,” because neither the WPA

nor the Settlement Agreement had been approved by the PUC by that date.

In dismissing the importance of the PUC’s subsequent approval of the

contracts, the trial court wrote they “could not be ratified” by the PUC

because of Collins’s conflict of interest. Certainly the PUC did not know it

could not “ratify” the Settlement Agreement and WPA, because it did so on

December 2, 2010. The Credit Line Agreement and Project Management

Agreement were not approved until January 2011. And Collins’s violation of

section 1090 was not established until the Phase One trial in 2015. The trial

court’s conclusion is at odds with these facts.

The trial court’s conclusion that Monterey suffered “harm” on April 6,

2010 because of its preliminary approval of two agreements that were

expressly not in effect on that date is not supported by the record. But even if

Monterey’s preliminary approval of those agreements could be considered a

type of “harm,” there was no evidence in 2010 it had been caused by Marina’s

negligent supervision of anyone.

43

The trial court also violated the fundamental principle that it must

liberally construe the evidence in favor of Monterey and resolve all doubts in

its favor. (Lonicki v. Sutter Health Central (2008) 43 Cal.4th 201, 206; Nazir,

supra, 178 Cal.App.4th at p. 254.) It did not, but simply dismissed

Monterey’s contrary evidence, writing this: “Monterey’s evidence that there

was ongoing uncertainty [in 2010] regarding whether the contracts were void

as a result of the conflict and whether the project could be salvaged does not

create a triable issue of fact as to the accrual of the harm . . . .”

The trial court cited deposition testimony from Monterey lawyers Dan

Carroll and Kevin O’Brien about a telephone conversation they had with

Collins on June 4, 2010, which call was in response to a vague message from

Marina lawyer Fogelman that “Lloyd [Lowrey] began to wonder whether

Steve Collins might face any [section] 1090 issues as a witness or otherwise.”

Carrol and O’Brien took the initiative to inquire and arranged a

telephone conference with Collins. As to it, O’Brien testified that Collins said

he was “working as a sub for RMC” and helping with financing for the

project. And, O’Brien added, “Collins didn’t tell us very much about the

nature of the relationship with RMC. In fact, he was pretty vague,” and

concluded “[w]e don’t know if there had been a [section] 1090 violation.” The

call left O’Brien wondering whether Collins “had some financial interest in

the project that might or might not be a [section] 1090 violation,” adding that

he “thought it was a serious issue as to whether there was a [section] 1090

violation.” O’Brien also testified that the “key question, which was still

unanswered, . . . what was this relationship? And that was very fuzzy as a

result of the call.” And he added, “we tried to understand what was going on

here. And all we really were told was that, ‘I’m helping with the financing.’ ”

Finally, Carroll testified he thought Collins’s “work” for RMC consisted in

44

doing “some consulting with Lyndel [Melton],” and, indeed, was not sure

Collins was actually working for RMC.

The most that can be said of this testimony is that it was inconclusive

as to whether Collins had a conflict. Neither Carroll nor O’Brien came away

from their conversation with Collins with an understanding that he had

violated section 1090. Significantly, there was no mention, at all, of Marina

or of any fact that would have put Carroll or O’Brien on notice of a

relationship between Collins and Marina.

Despite all that, the court dismissed the conflicts in the evidence in two

footnotes, footnotes Monterey describes as “stunning.” These are those

footnotes:

(1) “Monterey’s evidence that there was ongoing uncertainty

regarding whether the contracts were void as a result of the conflict and

whether the project could be salvaged does not create a triable issue of fact as

to the accrual of the harm. [Citation.]”

(2) “Monterey also argues that there are inconsistencies within the

deposition testimony supplied by Marina that show material factual disputes.

[Citation.] As discussed in the previous section, the deposition testimony

supplied by Marina is susceptible to only one legitimate inference. To the

extent there are inconsistencies on particulars, those particulars are

immaterial.”

The trial court was obligated to resolve the inferences in favor of

Monterey, but did not. It should not have relied on ambiguous evidence, but

did. It should not have imputed to Monterey, in 2010, knowledge of facts that

were not established until 2015. And it should not have attributed the

assumed “harm” from Collins’s as-yet unestablished violation of section 1090

to a tort claim against Marina that Monterey did not know it had.

45

Regardless, whether Carroll and O’Brien believed Collins was violating

section 1090 in June 2010 is not the issue. The issue was tortious conduct by

Marina, and there was no reason to suspect that in 2010 Monterey had

knowledge that Marina had retained Collins and failed to supervise him—no

notice of any cause of action.

After holding that Monterey had been “harmed” by its approval of

contracts, the court wrote, it “may have remained possible that Monterey

could have mitigated most of its damages.” “May,” “possible,” “could,” and

“most” are hardly words one would expect in granting summary

adjudication—not to mention words that reveal the speculative and

unsupported nature of the court’s conclusion. And the “harm” the court

concluded that flowed from the as-then unproved violation of section 1090

flies in the face of the Supreme Court’s admonition that “The mere breach

of . . . duty, causing only nominal damages, speculative harm, or the threat of

future harm—not yet realized—does not suffice to create a cause of action for

negligence.” (Budd v. Nixen (1971) 6 Cal.3d 195, 200, italics added,

superseded by statute on other grounds as stated in Adams v. Paul (1995) 11

Cal.4th 583, 588–589 & fn. 2; see also, Davies v. Krasna (1975) 14 Cal.3d 502,

514.)

No “actual harm” had been inflicted on Monterey in April 2010. Not

only was Collins’s violation of section 1090 not proven until the Phase One

trial, the parties continued to proceed with the project after June 2010, which

included the 2011 approval of the Credit Line Agreement and Project

Management Agreement, and Marina (and RMC) publicly distributing

announcements of the project’s continuing viability and progress into 2012. 12

12 Illustrations of such announcements include these:

46

The court’s conclusion there was “harm as of April 6, 2010” is wrong for

another reason—the court misapplied the concept of void ab initio. The RDP

Agreements had not been adjudicated void in 2010, only when the superior

court rendered its Phase One statement of decision in April 2015. And no one

knew in April 2010 that the contracts would be declared void five years later.

No authority supports such a retroactive application of void ab initio to

extinguish a cause of action without notice. And no authority suggests the

finding that a contract is void ab initio can be wielded offensively to

extinguish independent torts outside the contractual relationship in question.

According to the trial court’s analysis, the two-year statute of

limitations on Monterey’s tort claim expired before the RDP Agreements

were declared void. The court interpreted the 2015 adjudications of Collins’s

section 1090 violation to mean the contracts were actually void in 2010. But

the court took it a step further and held that Monterey was harmed in 2010

by a future determination of voidness made years later—a determination, we

hasten to repeat, made over Marina’s vigorous opposition.

Not only did the court misapply the concept of void ab initio, its

conclusion eliminated the concept of notice. A plaintiff has to know about a

cause of action before it can accrue. (Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d

1103, 1110.) In 2010, Monterey did not know Collins was violating section

1090; did not know Marina had orchestrated Collins’s retention to work on

the project; did not know Marina had negligently supervised Collins; and did

• July 1, 2011: Marina will “[p]roceed with the [RDP]” and “[w]ork

with its [RDP] partners to ensure that the project moves forward”;

• December 6, 2011: RMC is “still on board” and Monterey may

“revote on the agreements”;

• January 12, 2012: “work was still going on on the project” and

RMC was still getting paid.

47

not know Collins had been allowed to work outside the scope of his intended

assignment. Monterey did not discover what Marina had done until

Heitzman testified in November 2014 that, despite Collins’s assignment had

been limited, he had been allowed to perform unauthorized work—“scope

creep,” he called it—outside that limited assignment.

In light of all this, just what causes of action was Monterey to allege in

early 2010? And how it would play out alongside Phase One—and Marina’s

vigorous position that the agreements were not void? Finally, given Marina’s

apparently litigious nature, what would have happened if Marina had in fact

filed a lawsuit and then Marina succeeded in Phase One and the contracts

were upheld? A malicious prosecution claim perhaps? Another observation

in Fox is apt: “It would be contrary to public policy to require plaintiffs to file

a lawsuit ‘at a time when the evidence available to them failed to indicate a

cause of action.’ (Leaf v. City of San Mateo (1980) 104 Cal.App.3d 398, 408;

see also Enfield v. Hunt (1979) 91 Cal.App.3d 417, 424.) Were plaintiffs

required to file all causes of action when one cause of action accrued, as they

would be under the Bristol-Myers Squibb [Co. v. Superior Court (1995)

32 Cal.App.4th 959] rule, they would run the risk of sanctions for filing a

cause of action without any factual support. (Code Civ. Proc., § 128.5; see

Finnie v. Town of Tiburon (1988) 199 Cal.App.3d 1, 14 [holding lack of factual

basis for claim to be grounds for imposing sanctions].) Indeed, it would be

difficult to describe a cause of action filed by a plaintiff, before that plaintiff

reasonable suspects that the cause of action is a meritorious one, as anything

but frivolous.” (Fox, supra, 35 Cal.4th at p. 815.)

DISPOSITION

The judgment is reversed and the matter is remanded with instructions

to the trial court to vacate the orders dated February 22, 2019 and June 20,

48

2019 granting the motions for summary adjudication and to enter new orders

denying the motions. Monterey and Cal-Am shall recover their costs on

appeal.

49

_________________________

Richman, J.

We concur:

_________________________

Stewart, P.J.

_________________________

Miller, J.

California-American Water Company et al. v. Marina Coast Water

District (A160662)

50

Trial Court: San Francisco County

Superior Court

Trial Judge: Honorable Anne-Christine

Massullo

Attorney for Plaintiff and Allen Matkins Leck Gamble

Appellant, California Mallory & Natsis, LLP, Robert

American Water Company: R. Moore, Michael J. Betz,

Alexander J. Doherty

Attorney for Plaintiff and Law Offices of Mark A.

Appellant, Monterey County Wasser, Mark A. Wasser;

Water Resources Agency County of Monterey, Leslie J.

Girard, County Counsel, Kelly

L. Donlon, Deputy County

Counsel

Attorney for Defendant and Richards, Watson & Gershon,

Respondent, Marina Coast Saskia T. Asamura, T. Peter

Water District Pierce, Kyle H. Brochard;

Friedman & Springwater LLP,

Ruth Muzzin

51