Facts

In May 1991, the Yuba County Water Agency and Western Water Company entered into a contract concerning the transportation of water across, and the development of water in, an area commonly called the Goldfields. The contract gave the Agency an easement across the Goldfields in order to operate what was defined in the contract as the Water Delivery System. The Water Delivery System consisted of a series of interconnected ponds and ditches located in the Goldfields. Water entered the Water Delivery System by direct diversion from the Yuba River and by water flowing across the Goldfields and into it. The Agency was required to pay a per acre-foot conveyance fee ("wheeling charge") for surface water which it transported in the Water Delivery System. The contract also called for a separate, higher, per acre-foot fee for groundwater the parties developed in the Goldfields.

The Goldfields is an area of approximately 10,000 acres located in Yuba County. The Yuba River flows through it. The Goldfields consist of large deposits of rock and numerous ponds. The piles of rock and the ponds were created by dredging operations which began in the late 1800's. The mining/dredging operations dug down as deep as 125 feet and separated the rock from the dirt, which created the large piles of rock and numerous ponds. The rock tailings left over from the dredging operations created a porous condition that allows water to flow through it.

From May 1991 until December 2007, the Agency paid the per acre-foot conveyance fee as required by the contract. In early 2009, Western Water claimed that it learned, for the first time, that "additional" water flowed through the porous rocks and into the Water Deliver System. Western Water further asserted that the "additional" water was intended by the parties to be classified as groundwater, therefore subject to the higher per acre-foot charge. The Agency asserted that the water flowing into the Water Delivery System from the Goldfields was an occurrence well known to Western Water, was primarily coming from the Yuba River, as was intended by the contract to be charged at the conveyance fee rate for surface water, not the higher rate for groundwater.

PLAINTIFF'S CONTENTIONS:
Western Water claimed that the agency breached the contract because it did not pay as required by the contract. Western Water alleged that the agency, over a 20-plus-year period, secretly took and transported water intended to be defined as "groundwater" in the contract from the Goldfields. Western Water claimed the agency secretly took water that had a value in excess of $100 million.

DEFENDANT'S CONTENTIONS:
Yuba County Water Agency asserted that it complied with all the terms of the contract, and did not secretly take any water. The contract was carefully negotiated, and the parties were fully aware of what water was being transported, and what charges were due. It was the position of the Yuba County Water Agency that the claim of Western Water was baseless, and constructed based on taking facts out of context and unfounded hydrological opinions.

Result

Western Water asserted 10 causes of action against the Yuba County Water Agency for breach of contract and a variety of equitable claims. The court found in favor of the Agency on all counts.

Other Information

FILING DATE: Oct. 13, 2009.