In California-American Water Co. v. Marina Coast Water District, published December 28, 2022, the First District Court of Appeal, Division 2 reversed summary judgment arising out of a contract dispute. A water utility and a water district, among others, agreed on a plan to develop and construct a regional desalination project. The parties entered into a Water Purchase Agreement, which provided for financing and constructing the facilities. The district hired a person who worked on the draft WPA, but who was also a paid consultant for a participant in the agreement to advocate for the agreement. The conflict in interest was discovered. An attorney opined that the WPA was void as a result of the consultant’s financial interest in the project. The parties engaged in months of negotiation and mediation to attempt to resolve the future of the project. An outside counsel for the district e-mailed the parties, announcing that the parties should be free to pursue their legal remedies, and that the district had no objection to the parties being able to raise in court all issues and legal claims reasonably related to the issues and claims referred to in the parties’ pre-mediation correspondence. The district nevertheless insisted the parties were obligated to comply with the dispute resolution procedure in the WPA. It then refused to agree that the parties’ efforts complied with those procedures. In light of that uncertainty, the utility submitted a Government Claims Act claim to the district. The utility then filed a lawsuit. In the lawsuit, the district argued that causes of action in the lawsuit for negligence under Government Code sections 815.2 and 815.4 were barred because the claim was deficient. The utility filed amended complaints pleading that the WPA and the parties’ mediation agreement set forth alternatives to the Government Claims Act; and that the district had waived its rights under the Act. The trial court granted the utility summary adjudication against Cal-Am on the grounds that the claim presented was insufficient to reflect the tort causes of action; that the district could not have waived its rights under the Act by entering into the WPA because it was void from inception; and that the utility had failed to raise a triable issue of fact on implied or express waiver of the Act.
The appellate court disagreed with the trial court. The trial court erred in ruling that the district could not have impliedly waived the Act, because the utility did not show detrimental reliance since it presented a claim. Detrimental reliance is an element of estoppel, but it is not an element of waiver. The utility also alleged express waiver, based on the district’s attorney’s statements. The trial court ruled that because only the board of the district had the power to waive the district’s right to notice under the Act, the attorney could not do so. But that rule applies only to allegations of waiver by public officials. An attorney for a party has implied authority to enter into procedural waivers. The utility’s evidence created a triable issue of fact on whether the attorney had the authority to waive the utility’s right to statutory notice. In addition, under Government Code sectiond 930.2 and 930.4, a local public entity may include in its contracts a procedural alternative to the statutory claim process; and if it does, that alternative procedure exclusively governs. The WPA contained a detailed pre-litigation procedure. The appellate court rejected the utility’s argument that the WPA was void ab initio, and thus the statutory claims process does not apply. Exempting contracts later declared void ab initio from section 930.4’s exclusive governance clause negates the purpose of the statute. It would also create confusion as to which claims procedure governed. The mediation agreement also contained a dispute resolution procedure, which the utility contended it also complied with. The trial court erred in concluding the tort claims the utility asserted fell outside the scope of the mediation agreement.
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