Klein & Wilson

Water rate lawsuit over contract dispute heads to trial

Contract law can be complicated, but in its most basic terms, it helps ensure that what one person or entity says will be done for a specified amount of compensation will be completed. When one side or the other of the contract doesn't uphold their end of the deal, it can cause difficulties that are often resolved in civil court. Business law attorneys can help protect the interests of the contract dispute participants, but they are also able to review contracts prior to signing.

Currently, there is a trial over a contract dispute that is currently underway between two local agencies: the Metropolitan Water District and the San Diego County Water Authority. The county water authority filed the lawsuit and it started on Dec. 17, with an expected ending date of Dec. 23. It is being heard in the superior court in San Francisco.

The dispute involves the cost the county water district is paying for the movement of water. Imperial Valley farmers sell water to the water district, which in turns delivers it to the county water authority through a series of pipelines, canals and pumping stations.

The county water authority believes that there is a violation of California law in the way the water district charges for the delivery water. Specifically, the water district charges the county water authority for transporting and delivering the water, as well as for the cost of the water. It's the latter that the county water authority has a problem with and believes should not be paid.

Should the county water authority win the business litigation lawsuit, there could be an increase in costs for individual customers of 25 agencies who get their water from the water district. Those agencies could end up paying close to $3 billion if the charges for water are not legal.

Because there was likely a high dollar contract in place between the two agencies, it's surprising this has not been brought forward earlier. The county water authority set its rates already for the period of 2011 to 2014, which is also the time the lawsuit covers.

Source:  The Press-Enterprise, "WATER: Trial begins in Metropolitan rate-setting lawsuit" Janet Zimmerman, Dec. 16, 2013

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