Antelope Valley Groundwater Cases Antelope Valley—east Kern Water Agency v. L. A. Cnty. Waterworks Dist. No. 40, Cross

30 Cal.App.5th 602

241 Cal.Rptr.3d 692

ANTELOPE VALLEY GROUNDWATER CASES

Antelope Valley—East Kern Water Agency, Cross-complainant and Appellant,

v.Los Angeles County Waterworks District No. 40, Cross-defendant and Respondent.

[And seven other cases.]

F078517

Court of Appeal, Fifth District, California.

Filed December 20, 2018

Banks & Watson and James J. Banks, Sacramento, for Cross-complainant and Appellant Antelope Valley—East Kern Water Agency.

Mary Wickham, County Counsel, Warren R. Wellen, Deputy County Counsel; Best Best & Krieger, Eric L. Garner, Los Angeles, Jeffrey V. Dunn, Irvine, Wendy Y. Wang, Los Angeles; Greines, Martin, Stein & Richland, and Timothy T. Coates, Los Angeles, for Cross-defendant and Respondent Los Angeles County Waterworks District No. 40.

OPINION

PEÑA, Acting P.J.

Nearly 20 years ago, the first of numerous lawsuits was filed which ultimately became this consolidated proceeding known as the Antelope Valley Groundwater Adjudication (AVGA) cases. In 2004, lawyers with the law offices of Best, Best & Krieger, LLP (BB&K), who were representing another public entity interested in the AVGA cases, were asked to also undertake prosecuting the interests of respondent Los Angeles County Water District No. 40 (District No. 40). BB&K agreed and began representing District No. 40 in 2004 and has continued in that role to the present time.

Appellant Antelope Valley—East Kern Water Agency (AVEK)¹ was not a named party in any of the lawsuits in the early years. AVEK had an existing relationship with BB&K: AVEK had retained BB&K in 1987 to act as AVEK’s general counsel, and Michael Riddell, a member of BB&K, acted as general counsel for AVEK from 1987 until January 2016.

Approximately two years after BB&K began representing District No. 40, AVEK became enmeshed in the AVGA cases. AVEK retained separate attorneys to protect its interests in that litigation. Ten years later, after the bulk of the AVGA litigation was completed, AVEK decided to terminate BB&K as its general counsel and, for the first time, demanded that BB&K voluntarily recuse itself from further representing District No. 40 in the AVGA cases. BB&K declined AVEK’s demand and, six months later, AVEK filed its motion seeking an order disqualifying BB&K from further representing either District No. 40 or any other party to the AVGA cases. The trial court denied the motion, and the present appeal challenges the order denying the motion.

AVEK’s argument appears to contend the absence of a written consent by AVEK to BB&K’s representation of District No. 40 is dispositive, and the trial court erred in considering any circumstances beyond that single fact when it evaluated AVEK’s motion. From that predicate, AVEK argues automatic disqualification of BB&K from further representation of District No. 40 was mandatory, and reversal is therefore required.

We conclude there was substantial evidence to support the trial court’s conclusion AVEK effectively consented to BB&K’s representation of District No. 40, and its inordinate delay in seeking disqualification estops AVEK from seeking to disqualify District No. 40’s chosen counsel.

I.FACTUAL BACKGROUND²

The AVGA cases began with lawsuits filed commencing in 1999; the lawsuits named numerous public water suppliers as defendants, including Rosamond Community Services District (RCSD) and District No. 40. AVEK was not named as a defendant in the early years because AVEK is not a public water supplier. AVEK instead is a state water contractor that wholesales state project water to public water suppliers, such as District No. 40, and to a small number of private landowners for their agricultural or industrial operations.

The Simultaneous Representation from 2004 to 2016

BB&K attorneys Eric Garner and Jeffrey Dunn served as counsel to RCSD when the initial lawsuits were filed. BB&K attorney Michael Riddell served as AVEK’s general counsel. AVEK was not involved in the AVGA cases in those early years. District No. 40, the largest of the Antelope Valley public water suppliers, was represented by another law firm in the early years of the AVGA cases.

A "phase 1" trial began in late 2002 seeking to determine the geographic boundary for the parties’ respective groundwater rights claims, but the trial was not completed. Instead, the matters were eventually sent to mediation. However, the mediator determined it would be necessary to have a basin-wide adjudication to achieve a physical solution to the basin’s overdraft problem and to resolve all parties’ groundwater claims to the basin, some of whom had not yet been joined in the litigation. District No. 40 then approached Dunn and Garner about potentially representing District No. 40 in the AVGA cases. After RCSD agreed to have BB&K represent both itself and District No. 40, BB&K filed adjudication complaints in late 2004 on behalf of both District No. 40 and RCSD for declaratory and injunctive relief. Among other things, the complaints alleged District No. 40 and RCSD had pumped water from the basin and thereby acquired prescriptive water rights as against private property owners in the basin, and it sought a physical solution to the basin’s overdraft condition, including a comprehensive adjudication of groundwater rights.

District No. 40’s 2004 adjudication complaints did not name AVEK as a party.³

Riddell advised AVEK of the adjudication complaints shortly before they were filed. Riddell advised AVEK that, while District No. 40 did not intend to name AVEK, it was possible another party to the litigation might file a cross-complaint naming AVEK as a cross-defendant, even though AVEK had never pumped water from the basin nor claimed any right to water in the basin. However, cautioned Riddell, if AVEK were brought into the litigation by another party, BB&K would need a "conflict waiver" before it could appear on AVEK’s behalf in the litigation because BB&K was then representing other parties in the action.

By the end of 2005, the Judicial Council had entered its order requiring all pending actions (including the originally filed lawsuits and District No. 40’s adjudication complaints) be coordinated. The coordinated AVGA cases were then assigned to the Honorable Jack Komar, judge of the Santa Clara County Superior Court. In a cross-complaint in the coordinated proceedings filed in early 2006, District No. 40 (along with the other public water suppliers) alleged that (1) they imported water into the basin via purchases from the State Water Project, (2) they had the right to store such imported water in the basin, and (3) they had the sole right to pump or use such stored State Water Project water as against the named cross-defendants. The public water suppliers also alleged some of the imported State Water Project water returned to or entered the basin as "return flows," which further augmented the basin’s water supply. They further alleged they had the sole right to "recapture" any return flows attributable to such imported State Water Project water as against the named cross-defendants. AVEK was not named as a cross-defendant in this cross-complaint.

At some point thereafter, AVEK was named as a cross-defendant in one of the coordinated actions by another party.⁴ By late February 2006, AVEK had retained the law firm of Brunick, McElhaney & Kennedy (Brunick) to represent AVEK in the AVGA cases, although AVEK decided to keep BB&K as counsel on other matters unrelated to the AVGA cases.⁵ Various parties thereafter filed a series of cross-complaints, and in late August 2006 AVEK (through its Brunick attorneys) filed its own cross-complaint, which included District No. 40 as a cross-defendant. AVEK asserted it imported State Water Project water into the basin, had the right to store such imported water in the basin, and had the sole right to pump or use such stored State Water Project water as against the named cross-defendants. AVEK also alleged some of the imported State Water Project water returned to or entered the basin as return flows, which further augmented the basin’s water supply. As primary importer of water creating such return flows, AVEK alleged it had the sole right to recapture any return flows attributable to such imported State Water Project water.

During the decade of litigation spanning early 2006 and through the entry of judgment at the end of 2015, BB&K represented District No. 40 and Brunick represented AVEK in the AVGA litigation. During this period, the court conducted numerous phases to resolve the competing claims of all of the parties claiming an interest in the basin’s groundwater, and BB&K was the primary counsel shepherding the litigation for the public entities.⁶ At no point did AVEK manifest any objection to BB&K’s simultaneous representation of both District No. 40 (in the AVGA cases) and AVEK (as general counsel on unrelated matters). Indeed, AVEK’s acceptance of this simultaneous representation continued unabated throughout the entire litigation even though AVEK on occasion posited claims inconsistent with those of District No. 40.⁷ The trial on phase 5, which planned to encompass (among other things) resolution of the return flow claims for those parties asserting such claims (including AVEK and District No. 40), commenced in February 2014. However, shortly after trial commenced, Brunick (on behalf of AVEK) and BB&K (on behalf of District No. 40) informed the court that AVEK and District No. 40 had reached a tentative settlement of their issues inter se , which they thought could lead to resolution of all claims in the case. The trial court suspended the phase 5 trial and directed the parties to conduct immediate settlement negotiations.

Those settlement negotiations ultimately produced a global settlement agreement encompassing nearly all the remaining claims.⁸ In early 2015, both District No. 40 and AVEK approved the proposed settlement agreement, which included a resolution of all groundwater disputes between AVEK and District No. 40. During...