Carl Fessenden and Chad Tapp Obtain Defense Verdict in Favor of Yuba County Water Agency in Dispute with Western Water Company

“Western Water attempted to combine the passage of time with the use of expert witnesses to recreate history. After considering the substantial evidence presented at trial, the Judge overwhelmingly rejected all of Western Water’s claims. It is very satisfying to know that the Yuba County Water Agency can now get back to focusing all of its attention and resources on fulfilling its very important mission to Yuba County citizens.”

In May 1991, the Yuba County Water Agency and Western Water Company entered into a contract concerning the transportation of water from and 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 enters the Water Delivery System by direct diversion from the Yuba River and water flowing across the Goldfields and into the System. The Agency was required to pay a per acre foot conveyance fee for surface water which it transported in the Water Delivery System. The contract also called for a separate, higher, per acre foot fee for any groundwater the parties may develop in the Goldfields.

The Goldfields is an area of approximately 10,000 acres located in the foothills of Yuba County where mining has occurred for many years. The Yuba River flows through it. In the late 1800’s dredging operations began. The dredgers dug down as deep as 125 feet and separated the rock from the dirt, which created large piles of rock and numerous ponds. The large piles of rock created a porous condition that allows water to flow more readily under the surface of the Goldfields.

From May 1991 until December 2007, the Agency paid the per acre foot conveyance fee. In early 2009, Western Water claimed that it learned, for the first time that “additional” water, that is, water other than directly diverted from the Yuba River, 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.

In October of 2009, Western Water filed a lawsuit against the Yuba County Water Agency. It asserted ten causes of action. Generally, Western Water claimed that the Agency secretly took water from the Goldfields for the last twenty years. Western Water claimed the value of the water exceeded $100,000,000. Following the filing of its lawsuit, Western Water pursued extensive discovery, and retained experts to support its position.

Beginning in January of 2012 in Sacramento County, a trial before the Honorable Raymond Cadei began and continued over the next five weeks. The focus of the trial was how the contract between the parties was to be interpreted; specifically, whether the parties intended the water which entered the Water Delivery System by flowing through the porous materials and into its ponds was considered “groundwater” and, therefore, subject to the higher charge.

In June 2012, Judge Cadei issued his final ruling. The court completely rejected all of Western Water’s claims. The court concluded that the water flowing through the porous rocks and into the Water Delivery System was intended by the parties to be defined as surface water, not groundwater. The court found Western Water was not entitled to any monetary or equitable relief that it demanded. As the Yuba County Water Agency completely prevailed on all of its claims, it became entitled to recover all of the attorneys’ fees and costs incurred in defending the claims against it. Curt Aikens, the Yuba County Water Agency General Manager commented following the lawsuit that“Western Water’s lawsuit and claims for damages against YCWA were an extraordinary departure from what the parties agreed to more than two decades ago. It is reassuring that the court agreed with YCWA that the contract should be interpreted just as it was written and has been performed by the parties for the last twenty years.”