Opinion
B293638
08-03-2020
PRAXEDES E. RUNNING, individually and as Trustee, etc., Plaintiff and Appellant, v. CITY OF AZUSA et al, Defendants and Respondents
Marlene Thomason for Plaintiff and Appellant Praxedes E. Running, in her individual capacity and as trustee of the Praxedes E. Running Trust. Best Best & Krieger, Christopher M. Pisano and Gregg W. Kettles for Defendants and Respondents City of Azusa, Azusa Valley Water Company, George Morrow, Chet Anderson and Fran Delach. Larson O'Brien, Stephen G. Larson, Paul A. Rigali and Lauren S. Wulfe for Defendants and Respondents Canyon Water Company, William L. McIntyre, Jr. and Andrew M. McIntyre.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Los Angeles County Super. Ct. No. BC623542) APPEAL from a judgment of the Superior Court of Los Angeles County, Teresa A. Beaudet, Judge. As to the City of Azusa and Azusa Valley Water Company, the judgment is reversed and remanded with directions. As to George Morrow, Chet Anderson, Fran Delach, Canyon Water Company, Andrew M. McIntyre and William L. McIntyre, Jr. the judgment is affirmed. Marlene Thomason for Plaintiff and Appellant Praxedes E. Running, in her individual capacity and as trustee of the Praxedes E. Running Trust. Best Best & Krieger, Christopher M. Pisano and Gregg W. Kettles for Defendants and Respondents City of Azusa, Azusa Valley Water Company, George Morrow, Chet Anderson and Fran Delach. Larson O'Brien, Stephen G. Larson, Paul A. Rigali and Lauren S. Wulfe for Defendants and Respondents Canyon Water Company, William L. McIntyre, Jr. and Andrew M. McIntyre.
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Praxedes E. Running, individually and as trustee of the Praxedes E. Running Trust, appeals the judgment entered after the trial court sustained without leave to amend the demurrer by the City of Azusa, Azusa Valley Water Company (AVWC), George Morrow, Chet Anderson and Fran Delach (collectively the City defendants) to several tort causes of action alleged in Running's third amended complaint and granted the motions for summary judgment by the City defendants and their codefendants Canyon Water Company (Canyon) and Canyon's directors William L. McIntyre, Jr. and Andrew M. McIntyre (collectively Canyon defendants) on all remaining causes of action. We reverse the judgment as to the City and AVWC because they failed to carry their burden on summary judgment as to Running's causes of action for breach of contract and breach of the implied covenant of good faith and fair dealing based on the diversion of irrigation water and her cause of action for financial elder abuse. In all other respects we affirm.
FACTUAL AND PROCEDURAL BACKGROUND
1. The Operative Third Amended Complaint
Running filed this action in June 2016 against the City defendants, the Canyon defendants, Covina Irrigation Company (CICO) and San Gabriel River Water Committee (SGRWC), alleging a cause of action for financial elder abuse against all of them and against all but the Canyon defendants causes of action for negligence, breach of contract, breach of the implied covenant of good faith and fair dealing and trespass. The gravamen of the complaint was that each defendant, acting in concert with, and/or as the agent of, each other and without notice to Running, diverted water belonging to Running on which she had relied for nearly 60 years to irrigate her seven-acre property in Azusa. As a result, several mature trees on Running's property died; and the land deteriorated.
Running also alleged against the City defendants causes of action for negligent and intentional infliction of emotional distress, fraud, conversion and breach of fiduciary duty. The court sustained the City defendants' demurrer without leave to amend as to those claims, and Running has expressly abandoned them for purposes of this appeal. In addition, despite how they are pleaded in the third amended complaint, "injunction" and "specific performance" are remedies related to the contract and tort claims, not separate causes of action. Accordingly, we do not separately address them. CICO and SGRWC, whose motion for summary judgment was denied, are not parties to this appeal.
a. The parties
Running's revocable living trust holds the property involved in this lawsuit. Running is the trustee; but Patricia Beecham, her daughter and court-appointed guardian ad litem, filed this action on Running's behalf because Running suffers from advanced Alzheimer's disease and lacks the mental capacity to proceed on her own.
According to the third amended complaint, AVWC is a California corporation operating as a publicly regulated water company. The City is the controlling shareholder of AVWC; the City and AVWC "combine and comingle [sic] their activities such that one acts as the agent and alter ego of the other." The City and AVWC are members of SGRWC, a nonprofit unincorporated association established to manage the water rights, or "flow rights," of users of San Gabriel River water. Since its acquisition of AVWC, the City has paid AVWC's share of SGRWC assessments from City's treasury; and City's officials overlap with AVWC's such that City's treasurer is also the treasurer of AVWC.
Delach is the City of Azusa's city manager and supervised operations of AVWC; Morrow is City's director of utilities; and Anderson is City's assistant director of utilities.
Canyon is a private corporation. William McIntyre, Jr. is the president of Canyon, a director of CICO and a board member of SGRWC. Andrew McIntyre is a principal manager at Canyon and a director of CICO.
b. Allegations against the City defendants
As alleged in the third amended complaint, Running and her husband purchased property on North San Gabriel Canyon Road in 1950. They recorded their grant deed in April 1963. A cement-lined canal, part of a system of canals that transported water from the San Gabriel River to the cities of Covina and Azusa, traversed a portion of Running's property and continued through an underground tunnel, part of which ran beneath Running's house. CICO owned the canal; SGRWC members, including CICO and the City, possessed an easement on Running's property to operate and maintain the canal.
For nearly 60 years Running used the water that flowed through the canal to irrigate her property. Running claimed a property right in that water as a successor-in-interest to J.T. and Emma Gordon, the original owners of the property, who had entered into agreements in the late 19th and early 20th centuries that recognized their "old user" rights to a specified amount of water from the San Gabriel River as rights that were appurtenant to, and ran with, the land. Running attached to the third amended complaint three agreements: (1) The Old User Agreement of 1888, (2) the Compromise Agreement of 1889 and (3) the Indenture of 1920. The Indenture, the result of a settlement of a lawsuit between the Gordons and SGRWC, was recorded in 1921 and referred to, and incorporated by reference in, Running's grant deed, which was also attached to the complaint.
In 2009 Running, then 85 years old and suffering from advanced Alzheimer's disease, relocated to Yuba County to be near Beecham. In 2010 the City, AVWC, CICO and SGRWC diverted the water that had flowed through the canal to a newly constructed underground pipeline. While the City, CICO and SCRWC (the complaint failed to distinguish among them) notified other property owners of the plan to divert water from the canal to the underground pipeline, and CICO paid neighboring property owners "to release" them from the maintenance easement, none of the defendants notified Running of the pipeline project, nor did they connect her property to the pipeline. As a result, more than 15 mature trees on Running's property, along with substantial vegetation, died from lack of water.
In 2015 the City posted on Running's property a notice of hearing for abatement of a nuisance—dead trees and brush that riddled the property and made it an eyesore—and warned that failure to remediate the nuisance could result in a lien imposed in the amount of $200,000 for anticipated clean-up costs. Beecham responded to the notice by paying more than $100,000 to clear the property, after which the City cancelled the scheduled hearing. During the cleanup Beecham discovered the diversion of the canal water to the underground pipeline. Beecham also learned the defendants (again failing to distinguish among them) had closed the underground tunnel in 2011 with cement plugs and, when doing so, ignored engineering reports that indicated substantial reinforcement of the structure was required to ensure it remained sound. As a result, the tunnel collapsed and damaged Running's property. Anderson, Delach, and Morrow were alleged to have "approved and ratified" the City's conduct.
In paragraph 60 of the third amended complaint Running alleged all defendants, acting as the agents of one another, failed to maintain the canal in accordance with the terms of the easement granted in the Compromise Agreement and Indenture and wrongfully permitted an uphill property owner to construct a sewer line and septic runoff pipe on her property without her knowledge or consent, all of which "result[ed] in a taking of the equity value" of Running's property.
c. Allegations against the Canyon defendants
Running asserted her first cause of action for elder abuse against "all defendants," including the Canyon defendants, alleging generally that all defendants committed the wrongful conduct alleged in the complaint. As to the McIntyres specifically, the third amended complaint alleged they had abused their roles as CICO directors by using confidential information obtained from CICO to solicit and obtain Running's three CICO shares for themselves and their friends and family members at prices that were detrimental to CICO and to Running as a CICO shareholder.
2. The City Defendants' Demurrer to the Third Amended Complaint
The City defendants jointly demurred to the third amended complaint. (Prior demurrers had been sustained with leave to amend.) The City argued, as to all tort claims with the exception of elder abuse (to which it did not demur), it was immune from liability under the Government Claims Act. Morrow, Anderson and Delach argued the complaint failed to state a cause of action against them; and AVWC argued the complaint failed to allege any wrongdoing by AVWC.
The City and AVWC also argued they were not liable for breach of contract because Running could not establish any contractual obligation on their part to provide water. The court overruled this aspect of the demurrer, which later became the subject of the City and AVWC's motion for summary judgment/summary adjudication.
The trial court sustained the demurrer without leave to amend. The court ruled the City was immune from tort liability under the Government Claims Act. Citing Running's allegations that AVWC and the City were alter egos, the court ruled AVWC was similarly immune. As to Delach, Morrow and Anderson, the court ruled the allegations in the third amended complaint that these individuals "directed, approved and ratified" the City's wrongful conduct, without more, were insufficient as a matter of law to state facts constituting a cause of action against them or subject the City and AVWC to vicarious liability for their employees' torts.
3. The City Defendants' Motion for Summary Judgment/Summary Adjudication
The City defendants moved for summary judgment or, in the alternative, summary adjudication, directed to the remaining claims for breach of contract, breach of the implied covenant of good faith and fair dealing and financial elder abuse. Together with CICO and SGRWC, they filed a joint memorandum of points and authorities that began with a history of the canal and the contracts that are at the heart of Running's claims.
The City defendants, on the one hand, and SGRWC and CICO, on the other hand, filed their own notices of motion and motions for summary judgment/summary adjudication. However, all of them joined together to file a single memorandam of points and authorities to support those motions. In addition, all parties (including Running) provided a joint separate statement of undisputed and disputed material facts after the court ordered the separate statements consolidated to avoid repetition.
a. The "old users'" rights
The history of the canal was detailed in Gordon v. [CICO] (1912) 164 Cal. 88 (Gordon), a case involving Running's predecessors-in-interest. As related in Gordon, prior to the 1880's farmers on the east side of the San Gabriel River, known as the "old users," relied on water from the San Gabriel River to irrigate their properties. In the early 1880's CICO, then known as the Azusa Water Development & Irrigation Company, was formed as a private mutual water company for the purpose of distributing to its stockholders their pro rata share of river water. Any surplus beyond each stockholder's pro rata share was to be sold for the benefit of the stockholders. To facilitate delivery of the water to its stockholders, CICO began construction of a cement ditch (the canal). Many of the old users, including the Gordons, were interested in using CICO's canal to transport river water to their lands and granted CICO easements on their properties to permit the canal to be constructed for that purpose. The cement canal was completed in 1885 or 1886. (Gordon, at p. 90.)
i. The Old User Agreement
In June 1888 CICO and 70 or 80 old users, including the Gordons, entered into the Old User Agreement, which recited the rights of each old user to his or her pro rata share of the water that flowed in the canal. Under that agreement the old users agreed to deliver to the mouth of CICO's canal their pro rata share of water. CICO agreed for a fee to "receive at the mouth of its water [canal]" all the water belonging to the old users and permit that water to flow through its canal to the old users' lands. (Gordon, supra, 164 Cal. at p. 91.) The agreement acknowledged the water delivered by CICO through the canal "belong[ed] in whole" to the old users as "appurtenant to said lands." (Ibid.)
ii. The Compromise Agreement
In January 1889 a number of parties claiming rights to San Gabriel River water signed the Compromise Agreement, which purported to provide for the division of "all" the waters of the San Gabriel Canyon. (Gordon, supra, 164 Cal. 92.) The Compromise Agreement was signed by five distinct groups of parties claiming water rights, including CICO, the City (through its predecessor-in-interest) and most of the old users, but not the Gordons. (Id. at p. 95.) The Compromise Agreement designated the place from which each of the parties could take water belonging to them and required payment to CICO relating to each old user's proportional expenses. In addition, the Compromise Agreement established the Committee of Nine (now called SGRWC) to "represent all the parties and to have full charge" of the distribution and delivery of water from the San Gabriel River through the canal. (Id. at p. 93.)
The City's undisputed predecessor-in-interest, the Azusa Agricultural Water Company, signed the Compromise Agreement. We refer whenever possible to the City's "predecessor-in-interest" to avoid any confusion that might arise due to the similarity in names between that company and others involved in the transaction.
iii. The Gordon litigation
In 1905 the Gordons sued CICO, alleging CICO was obligated under the Compromise Agreement to supply them with water in excess of the amount they were otherwise entitled to under the Old User Agreement. Observing that the Gordons were not parties to the Compromise Agreement, the Supreme Court held they had no standing to enforce it. However, the Court recognized that conclusion also meant the Gordons' rights under the Old User Agreement could not be affected by the Compromise Agreement. (Gordon, supra, 164 Cal. at p. 95.) The Court further explained that CICO's obligation to the Gordons under the Old User Agreement was merely to receive at its canal and deliver, for a fee, the Gordons' pro rata share of old user river water. It remained the obligation of the Gordons, as old users, to ensure that water was delivered to CICO's canal and to pay CICO for its delivery of water from that canal to their land. The Court held there was no obligation for CICO to provide any of its own water to the Gordons. (Id. at p. 97.)
iv. The Indenture
Nearly a decade after the Supreme Court's decision in Gordon, CICO and other members of SGRWC filed a complaint in superior court seeking to enjoin the Gordons from taking more than their allotted amount of water from the canal and from interfering with CICO's easement on their properties to maintain the canal. (A copy of this complaint was attached as Exhibit C to Running's third amended complaint.) The litigation was dismissed after the parties entered into a written settlement agreement, the Indenture (attached as Exhibit D to the third amended complaint).
The Indenture, which was recorded and referred to in Running's grant deed, purported to settle not only the matters at issue in the litigation between the Gordons and members of SGRWC, but also to "settle all matters in dispute with reference to" the canal, whether or not they were part of the litigation, including the amount of water to be taken by the Gordons, or either of them, from the canal, the manner of taking the water and the use of the water. The Indenture granted SGRWC and its members an easement on the Gordons' properties for the canal and its maintenance and operation and identified the amount of water the Gordons could take from the canal for domestic purposes and for irrigation purposes. The parties to the Indenture agreed the water rights "described herein" were "the only water rights" the Gordons had to the water in the canal or to the waters of the San Gabriel River and identified the Gordons' right to "receive and use for irrigating purposes" water from the canal as "appurtenant to," and running with, the land.
b. The City defendants' supporting declarations
Morrow explained in his declaration supporting the City defendants' motion for summary judgment that the City owns and operates a public water system through a network of pipelines and related infrastructure. The City obtains water for that system from multiple sources, including the San Gabriel River. Running's home has always been connected to that public water system. The pipeline did not deprive Running of access to water.
In 1993 the City acquired AVWC, including AVWC's rights to San Gabriel River water. While AVWC continues to exist as a legal entity, a decision the City made to avoid altering numerous contracts involving AVWC, it has not operated independently from the City since 1993. According to Morrow, "The City manages, operates and maintains all of AVWC's past water facility assets and water rights as part of the City's public municipal water system. AVWC does not hold regular meetings, and the Board of Directors is comprised of the members of the City Council. The offices of AVWC are . . . held in conjunction with those in certain City positions at any given time." Morrow's predecessor, Brent Hale, provided a similar explanation of AVWC's relationship with the City.
David DeJesus, President and Chief Executive Officer of CICO and a board member of SGRWC, explained that CICO owns the canal and SGRWC manages it on behalf of SGRWC members, including the City. In 2005 CICO decided to replace the open canal with an underground pipeline because the exposed water flowing through the canal was vulnerable to contamination from a variety of sources and there was a risk of bioterrorism and drowning. After the project was approved by the City's Department of Health, construction on the pipeline began and, according to DeJesus, was visible from Running's home. Construction of the pipeline was completed, and the pipeline began service, "in or about 2010." By that time the canal was no longer being used to transport water, and the absence of water flowing through the canal was open and obvious. In 2011 CICO decided to plug the underground tunnel to address health and safety hazards. DeJesus also explained that CICO continues to hold an easement on Running's property to maintain the canal.
Donald Berry, the administrator and "sole employee" of SGRWC, averred that SGRWC's role is to divert water owned by its member entities to the canal and to maintain the canal and manage the flow of the members' water. According to Berry, the "water that flows through the canal belongs to the members of the SGRWC." Each member of SGRWC pays assessments to SGRWC to manage and operate the canal. The City stopped paying assessments for the canal in 2008, when it no longer diverted its own water through the canal. In the 34 years he has been employed by SGRWC, Berry stated, Running had never been a member of SGRWC, paid assessments to SGRWC or requested that SGRWC divert river water to the canal for her retrieval.
Tara Biddle, CICO's office administrative assistant and the person designated by CICO as most knowledgeable about CICO's administrative operations, provided the articles of incorporation from Contract Water Company of Azusa (Contract Water Company), formed in 1895, a few years after the Compromise Agreement. According to those articles, the purpose of the company was "[t]o hold in trust for the stock-holders of the corporation, all the water rights and waters now belonging to them, and that may hereafter be acquired by them, and to manage and control the distribution of such waters, for irrigation purposes and domestic uses; to acquire, construct and lay down pipes and other conduits, ditches and flumes for the distribution of such additional waters; to acquire by purchase, development, or otherwise, additional water rights and waters for the use and benefit of the stockholders . . . ." The articles list both J.T. Gordon and Emma Gordon as shareholders of the company.
DeJesus explained that in 1964 Contract Water Company conveyed to CICO in exchange for $2,500 "all the assets of Contract, both real and personal," with the exception of its capital stock, "said stock interest to be retained by Contract." Under that agreement, attached to DeJesus's declaration, CICO agreed to continue to deliver water to Contract Water Company shareholders in accordance with the Old User Agreement until December 31, 1979 and after that, "upon demand made therefor, upon the same rates, rules and regulations and terms and conditions applicable to all other users of [CICO] water."
c. The City defendants' arguments
i. Statute of limitations
The City defendants asserted Running should have known about the pipeline plan as early as 2004 when CICO first identified the plan in its 2004-2005 annual report sent to all CICO shareholders, including Running; by 2008 when construction of the pipeline began; and most certainly by 2010 when the pipeline was completed and the canal ran dry. In addition, they argued, Running's son, Steven Running, resided on the property after Running moved in 2009. In September 2010 Steven Running, along with neighboring property owners, signed a letter demanding CICO clear and repair the canal. The letter asserted the "unannounced stoppage of water and thus its use ma[d]e it a dangerous area to both people and animals" and insisted that after restoration of the canal CICO return the easement to all appropriate property owners. Beecham testified in her deposition that she frequently relied on her brother, Steven, to alert her when property matters needed to be addressed.
ii. Contract-based claims
The City and AVWC observed that neither of them or any of their predecessors-in-interest was a party to the Old User Agreement. Accordingly, that agreement could not be enforced against them. Conversely, although City and AVWC were in privity with each other and with parties to the Compromise Agreement, the Gordons were not parties to that agreement. Accordingly, Running, as the Gordons' successor-in-interest, lacked standing to enforce the Compromise Agreement.
The City acknowledged, as successor-in-interest to AVWC and to others who were parties to the Indenture, it was bound by the terms of the Indenture. However, the City and AVWC argued, the Indenture merely clarified and confirmed the rights of the parties under the Compromise Agreement; it did not grant the Gordons any rights other than those they had obtained under the Old User Agreement. More importantly, they argued, in 1895 the Gordons transferred their old user rights to Contract Water Company. Accordingly, by the time of the Indenture, the Gordons did not own any water rights appurtenant to their (now Running's) land.
As for allegations that the City breached the Indenture by failing to maintain the canal, the City argued the maintenance provision of the easement was permissive, not mandatory. Finally, because the claim for breach of the implied covenant of good faith and fair dealing was premised on the same allegations as the breach of contract claim, that claim too, the City argued, failed as a matter of law.
iii. Financial elder abuse
The City defendants characterized the financial elder abuse claim as rooted in allegations the City (including AVWC) and its employees had deceived a mentally incompetent nonagenarian widow by stealing her water. Because Running had no contractual right to water that had flowed through the canal, Running's financial elder abuse claim necessarily failed. In addition, Morrow, Anderson and Delach attested they had never met Running and had no knowledge of her age or mental infirmity.
4. The Canyon Defendants' Motion for Summary Judgment/Summary Adjudication
The Canyon defendants separately moved for summary judgment/summary adjudication. Like their codefendants, the Canyon defendants argued all claims were time-barred, and Running's claim for financial elder abuse against them failed as a matter of law because she had no old user rights to water from the San Gabriel River and hence could not establish any wrongful conduct relating to the alleged diversion of water. As to the allegations they had usurped a corporate opportunity to CICO's detriment in violation of their fiduciary duties to CICO, the Canyon defendants argued that claim belonged to CICO. Running had no standing to assert that claim in a direct action and had not pleaded a derivative action.
5. Running's Opposition to the Summary Judgment/Summary Adjudication Motions
a. Statute of limitations
In her opposition papers Running argued all statutes of limitations were tolled due to her undisputed mental incompetence, which had disabled her since at least 2009. (Code Civ. Proc., § 352, subd. (a) [if a person entitled to bring an action is at the time the cause of action accrued "either under the age of majority or lacking the legal capacity to make decisions, the time of the disability is not part of the time limited for the commencement of the action"].) In addition, although Running's mail was forwarded to Beecham, Beecham never received any annual report from CICO. Moreover, those reports announcing the pipeline project did not alert Running that her water would be diverted without being replaced. Running also provided evidence that Steven Running suffers from schizophrenia and bipolar disorder. At his deposition Steven Running testified he did not read the letter to CICO that his neighbor had given him to sign. He signed the letter because his neighbor told him it was about restoring the broken cement canal to its original condition and protecting animals and he trusted his neighbor. Beecham averred water in the canal was routinely turned off, and the canal dry, due to maintenance. Therefore it would not have been unusual to see the canal dry. Finally, Beecham and her sister stated the canal was obscured from view by several trees and not visible from the house.
b. Financial elder abuse and contract claims
Running asserted all defendants (again without differentiating among them) had limited their arguments to the "wrongful taking of water" and had failed in their motions to address numerous other allegations of wrongful conduct that supported her claim for elder abuse: (1) the diversion of water from the canal to the pipeline without notice to her, resulting in the death of mature trees and vegetation and diminution of the value of her property; (2) the City's issuance of a notice of abatement for a nuisance the City caused; (3) and CICO's refusal to connect Running to the pipeline unless she paid $50,000. Accordingly, she argued, even if she did not have a legal right to the irrigation water under the Indenture or Old User Agreement (a matter she disputed), she was the owner of three shares of CICO stock that entitled her to some water for irrigation purposes; and the diversion of all her irrigation water without any notice was itself a "wrongful act" that supported a cause of action for financial elder abuse.
Running argued the "extraordinary inter-relationship" among the defendants justified treating them collectively as a unit responsible for the wrongs against her.
Running also argued the City had failed to carry its burden to demonstrate she lacked any entitlement to water under the Indenture. According to Running, the Indenture unambiguously granted the Gordons rights to water in the San Gabriel River that ran with the Gordons' land. Running, as successor-in-interest to the Gordons, enjoyed the same appurtenant rights, which were transferred to Contract Water Company to hold in trust only and could not have been sold to CICO in 1964 without her consent. At the very least, she argued, any ambiguity about the effect of the Indenture or the sale of Contract Water Company's assets to CICO raised a triable issue of material fact that precluded summary judgment.
Finally, Running argued the obligation to maintain the canal and tunnel were not permissive; and the defendants (again, without distinguishing among them) failed to comply with those contractual obligations.
As to the Canyon defendants specifically, Running argued they were liable for elder abuse as directors of CICO. Moreover, Andrew McIntyre was a board member of SGRWC and, therefore, responsible for its wrongful conduct.
6. The Court's Ruling on the Summary Judgment/Summary Adjudication Motions
The court granted the City defendants' and the Canyon defendants' motions for summary judgment. Although it found triable issues of material fact as to whether Running's claims were time-barred, the court concluded Running had no contractual right to receive irrigation water from the canal based on old user rights. On this issue the court found the Gordons had transferred their old user rights to Contract Water Company in 1895, which, in turn, sold all water rights it held to CICO in 1964 under an agreement that extinguished old user rights on January 1, 1980. In addition, any right to irrigation water that Running possessed by virtue of her three CICO shares required that Running make a demand for water and payment to CICO for delivery and Running did neither, thereby excusing CICO's performance.
The court continued, because Running "ha[d] no claim to any old user rights," she could not establish a right to the "property allegedly taken from her (her water rights)," which was central to her elder abuse claim. Alternatively, "[a]s to wrongful use, Defendants submit that CICO's decision to take the canal out of service was motivated solely by health and safety concerns and not for any purpose, wrongful or not, related to Plaintiff. Plaintiff presents no evidence that sufficiently refutes that fact. There is also insufficient evidence that Defendants harbored an intent to defraud or unduly influence Plaintiff by any of the other alleged actions taken or not taken by Defendants. . . . Accordingly, the [c]ourt finds that there is no triable issue of material fact as to the elder abuse cause of action, and summary adjudication is therefore granted."
As for Running's claims for breach of contract based on the Indenture's easement requirements, the court ruled the plain language of the Indenture imposed a permissive duty to maintain the canal, not a mandatory one.
The court recognized a statutory duty to maintain an easement exists under Civil Code section 845. For that reason, the court found triable issues of material fact existed as to whether CICO, which undisputably owned the canal, and its agent for maintenace, SGRWC, breached that statutory duty to maintain the canal and tunnel.
The court also ruled the claim against the McIntyres was derivative rather than direct and Running had failed to plead a derivative claim as a CICO shareholder.
The court entered judgment in favor of the City defendants and the Canyon defendants. Running filed a timely notice of appeal.
DISCUSSION
1. The Trial Court Properly Sustained the City Defendants' Demurrer Without Leave To Amend
a. Standard of review
"In reviewing an order sustaining a demurrer, we examine the operative complaint de novo to determine whether it alleges facts sufficient to state a cause of action under any legal theory." (T.H. v. Novartis Pharmaceuticals Corp. (2017) 4 Cal.5th 145, 162.) "In making this determination, we must accept the facts pleaded as true and give the complaint a reasonable interpretation." (Mathews v. Becerra (2019) 8 Cal.5th 756, 762; accord, Summer J. v. United States Baseball Federation (2020) 45 Cal.App.5th 261, 268.) "If the demurrer was sustained without leave to amend, we consider whether there is a 'reasonable possibility' that the defect in the complaint could be cured by amendment." (King v. CompPartners, Inc. (2018) 5 Cal.5th 1039, 1050.) The burden is on the plaintiff to prove that amendment could cure the defect. (Ibid.; Summer J., at p. 268.)
b. Governing law
Under the Government Claims Act a public entity may not be held directly liable for torts "[e]xcept as otherwise provided by statute." (Gov. Code, § 815; see State ex rel. Dept. of California Highway Patrol v. Superior Court (2015) 60 Cal.4th 1002, 1008 (Alvarado) ["[i]f the Legislature has not created a statutory basis for it, there is no government tort liability"].) A public entity may be held vicariously liable for injuries proximately caused by an act or omission of an employee within the scope of employment only when "the act or omission would, apart from this section, have given rise to a cause of action against that employee . . . ." (Gov. Code, § 815.2, subd. (a).)
A public employee is immune from liability for discretionary acts within the course and scope of employment, even when that discretion has been abused. (Gov. Code, § 820.2.) Nonetheless, except as otherwise provided by statute, including Government Code section 820.2, public employees are liable for their torts "to the same extent" as private persons. (Gov. Code, § 820, subd. (a); Alvarado, supra, 60 Cal.4th at p. 1008; see Yee v. Superior Court (2019) 31 Cal.App.5th 26, 39-40.)
c. The City was immune from tort liability; and Running failed to allege facts to support Morrow, Anderson or Delach's direct liability and the City's vicarious liability for their acts
Running argues the court erred in sustaining the City's demurrer, observing Government Code section 815.6 authorizes imposition of liability for the City's violation of a mandatory duty: "Where a public entity is under a mandatory duty imposed by an enactment that is designed to protect against the risk of a particular kind of injury, the public entity is liable for an injury of that kind proximately caused by its failure to discharge the duty unless the public entity establishes that it exercised reasonable diligence to discharge the duty." Because Government Code section 810.6 defines "enactment" as "a constitutional provision, statute, charter provision, ordinance or regulation" and her complaint alleged a violation of a mandatory duty created by the due process clauses of the state and federal Constitutions, Running contends the court erred in finding the City immune from liability for its tortuous conduct.
The elements of liability under Government Code section 815.6 are well established. "'First and foremost, application of section 815.6 requires the enactment at issue be obligatory, rather than merely discretionary or permissive, in its directions to the public entity; it must require, rather than merely authorize or permit, that a particular action be taken or not taken. [Citation.] It is not enough, moreover, that the public entity or officer have been under an obligation to perform a function if the function itself involves the exercise of discretion. [Citation.]' [Citation.] Courts have construed this first prong rather strictly, finding a mandatory duty only if the enactment 'affirmatively imposes the duty and provides implementing guidelines.' [Citations.] [¶] 'Second, but equally important, section 815.6 requires that the mandatory duty be "designed" to protect against the particular kind of injury the plaintiff suffered. The plaintiff must show the injury is "'one of the consequences which the [enacting body] sought to prevent through imposing the mandatory duty.'" [Citation.] Our inquiry in this regard goes to the legislative purpose of imposing the duty. That the enactment "confers some benefit" on the class to which plaintiff belongs is not enough; if the benefit is "incidental" to the enactment's protective purpose, the enactment cannot serve as a predicate for liability under section 815.6.'" (Guzman v. County of Monterey (2009) 46 Cal.4th 887, 898; accord, B.H. v. County of San Bernardino (2015) 62 Cal.4th 168, 179.)
Without question the due process clauses require governmental entities to provide notice and an opportunity to be heard before they deprive a person of property. (Customer Co. v. City of Sacramento (1995) 10 Cal.4th 368, 400.) Had Running alleged a claim for inverse condemnation—the taking by a public entity of private property for a public purpose without just compensation—we would agree the immunity provisions of the Government Claims Act would not apply. (See Baldwin v. State of California (1972) 6 Cal.3d 424, 438 [government immunity does not insulate a public entity from liability for inverse condemnation; the constitutional provisions requiring compensation for property taken or damaged by a public use override the Government Claims Act and its statutory immunities]; Pacific Bell v. City of San Diego (2000) 81 Cal.App.4th 596, 603 [same].)
Running, however, did not attempt to plead a cause of action for inverse condemnation. Any possible ambiguity on this point was resolved when the trial court granted Running leave to amend her second amended complaint specifically to clarify whether she was pleading an inverse condemnation claim and, in response, Running filed her third amended complaint that repeated the negligence and other tort causes of action without adding allegations that would support a cause of action for inverse condemnation. Nor does Running assert on appeal that she has alleged an inverse condemnation claim. The court did not err in sustaining the City's demurrer to the challenged tort claims on immunity grounds. (See Customer Co. v. City of Sacramento, supra, 10 Cal.4th at p. 381 [distinguishing between a cause of action for negligence against a public entity and a claim for inverse condemnation; the former is subject to government immunity while the latter constitutional claim is not].)
None of Running's extensive descriptions of the damage to her property includes an allegation of regulatory action that was the "'functional equivalent' in whole or in part to a direct appropriation of the property or ouster of the owner." (Powell v. County of Humboldt (2014) 222 Cal.App.4th 1424, 1436-1437 [describing elements of an inverse condemnation claim]; accord, Dryden Oaks, LLC v. San Diego County Regional Airport Authority (2017) 16 Cal.App.5th 383, 395.)
To the extent Running claims the City violated a mandatory duty by failing to provide notice before diverting water she relied on for irrigation, Running cites no authority, nor have we found any, for the proposition that the due process clauses of the federal and state Constitutions create a mandatory duty within the meaning of Government Code section 815.6.
Running's alternative contention that the statutory immunity afforded public entities does not apply when the entity engages in proprietary conduct, such as operating a mutual water company, is also without merit. The common law distinction that historically existed between a public entity's governmental and nongovernmental (proprietary) conduct (see, e.g., Sanders v. City of Long Beach (1942) 54 Cal.App.2d 651, 653-654) was eliminated in 1963 with the passage of the Government Claims Act. (Cabell v. State of California (1967) 67 Cal.2d 150, 152, overruled on other grounds in Baldwin v. State of California, supra, 6 Cal.3d at pp. 438-439; see Puskar v. City and County of San Francisco (2015) 239 Cal.App.4th 1248, 1252-1254 ["[u]nder current law, there is no distinction between governmental and proprietary activities in applying the government tort liability statutes"]; Strongman v. County of Kern (1967) 255 Cal.App.2d 308, 310 [same].)
Running also failed to state facts constituting a cause of action based on the City's vicarious liability for the acts of its employees. The third amended complaint alleged only that Morrow, Anderson and Delach "directed, approved, and ratified" the City's conduct. However, neither Running's third amended complaint nor any of her three prior pleadings included allegations that would make any of those individuals liable for negligence, destruction of timber or trespass. Absent allegations supporting these employees' liability, the allegations against the City based on a theory of vicarious liability cannot stand.
Finally, Running contends the court erred in sustaining the demurrer of Morrow and Anderson since they also committed wrongs on behalf of SGRWC, a private, nonprofit entity. Whether SGRWC, which is not a party to this appeal, is vicariously liable for purportedly wrongful acts committed by Morrow and Anderson is not before us. The question here is whether Running's third amended complaint stated a claim against these individuals personally and, as discussed, there are no allegations in the complaint of specific wrongdoing by any of them, whether on behalf of the City or SGRWC.
d. The court did not err in sustaining the demurrer without leave to amend as to AVWC
Emphasizing allegations in the third amended complaint that AVWC was the City's alter ego, the trial court ruled that, if the City were immune, so too was AVWC. Running contends this was error. According to Running, the third amended complaint alleged AVWC is a private mutual water company and thus not subject to government immunity.
Public Utilities Code section 2725 defines a mutual water company as any "private corporation or association organized for the purposes of delivering water to its stockholders and members at cost, including use of works for conserving, treating and reclaiming water."
The alter ego doctrine recognizes that in certain circumstances the corporate form is properly disregarded when it would be inequitable to recognize it. (See Mesler v. Bragg Management Co. (1985) 39 Cal.3d 290, 300 [there are two general requirements that must be satisfied before alter ego liability may be imposed: (1) unity of interest and ownership; and (2) an inequitable result will follow, such as perpetration of a fraud, unless the corporate form is disregarded]; Eleanor Licensing LLC v. Classic Recreations LLC (2018) 21 Cal.App.5th 599, 615 [same].) Typically, the doctrine is employed by plaintiffs to impose liability on a defendant that would otherwise be shielded from liability by the separate corporate form. (See Mesler, at p. 300; Eleanor Licensing, at p. 615.) The doctrine has also been applied, albeit less frequently, as a defense when necessary to avoid a fraud or an inequitable result. (Cf. H.A.S. Loan Service, Inc. v. McColgan (1943) 21 Cal.2d 518, 521-522 [in action by taxpayer to recover taxes it alleged were unlawfully collected, defendant argued, and court found, plaintiff was alter ego of nonparty corporation and the two entities, considered as a unit, engaged in a single business, precluding plaintiff's recovery]; see generally Wenban Estate, Inc. v. Hewlett (1924) 193 Cal. 675, 696.)
The situation in the case at bar is unusual. We are not aware of any case, nor have the parties cited any, in which a private defendant has relied on its status as an alter ego of a public entity to obtain the government immunity protection afforded to that entity. Nevertheless, the allegations of the third amended complaint support that result. The complaint alleges the City engaged in tortious conduct through its alter ego AVWC. It further alleges, and all parties agree, AVWC no longer exists independently from the City. It is owned, operated and run by the City; AVWC employees are City employees; and the City pays all AVWC assessments. (The evidence in connection with the parties' summary judgment motion confirms that AVWC, once a private mutual water company, has existed in name only since the City acquired it in 1993; and for all purposes, AVWC is City.) For their part, the parties also agree that the City and AVWC should be treated similarly; they simply disagree on whether immunity applies. (Running insists neither the City nor AVWC is immune; the City and AVWC assert both are immune). Here, where AVWC and the City are one and the same, holding AVWC liable would circumvent the legislative grant of immunity for what is indisputably alleged to be City conduct. Under these unique circumstances, we have no difficulty concluding the court properly sustained the demurrer as to AVWC.
At oral argument Running's counsel suggested a public entity operating through a private shell company could potentially circumvent a variety of procedural limitations on governmental action, including laws requiring open hearings for conducting the public's business. (See generally Gov. Code, § 54950 et seq. (Ralph M. Brown Act) [requring open hearings for the public's business].) There may indeed be violations of any number of laws intended to benefit the public under the hypothetical scenario Running's counsel poses; but we are not confronted with that issue in this case.
2. The Court Erred in Granting Summary Judgment for the City and AVWC; Summary Judgment Was Proper as to Morrow, Anderson and Delach
a. Standard of review
A motion for summary judgment is properly granted only when "all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." (Code Civ. Proc., § 437c, subd. (c); see Regents of University of California v. Superior Court (2018) 4 Cal.5th 607, 618.) When a defendant moves for summary judgment in a situation in which the plaintiff would have the burden of proof at trial by a preponderance of the evidence, the defendant may, but need not, present evidence that conclusively negates an element of the plaintiff's cause of action. Alternatively, the defendant may present evidence to "'show[] that one or more elements of the cause of action . . . cannot be established' by the plaintiff." (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 853; see Code Civ. Proc., § 437c, subd. (p)(2).) "'"'The moving party bears the burden of showing the court that the plaintiff "has not established, and cannot reasonably expect to establish,"' the elements of his or her cause of action."'" (Ennabe v. Manosa (2014) 58 Cal.4th 697, 705; accord, Wilson v. 21st Century Ins. Co. (2007) 42 Cal.4th 713, 720; Kahn v. East Side Union High School Dist. (2003) 31 Cal.4th 990, 1003 ["the defendant must present evidence that would preclude a reasonable trier of fact from finding that it was more likely than not that the material fact was true [citation], or the defendant must establish that an element of the claim cannot be established, by presenting evidence that the plaintiff 'does not possess and cannot reasonably obtain, needed evidence'"].)
Once the defendant carries its initial burden, the plaintiff must demonstrate, by reference to specific facts, not just allegations in the pleadings, there is a triable issue of material fact as to the cause of action. (Code Civ. Proc., § 437c, subd. (p)(2); Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at p. 850.)
We review a grant of summary judgment de novo and decide independently whether the facts not subject to triable dispute warrant judgment for the moving party as a matter of law. (Hampton v. County of San Diego (2015) 62 Cal.4th 340, 347; Hartford Casualty Ins. Co. v. Swift Distribution, Inc. (2014) 59 Cal.4th 277, 286.) "'"We liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party."'" (Hampton, at p. 347; accord, Ennabe v. Manosa, supra, 58 Cal.4th at p. 703.) "'"[S]ummary judgment cannot be granted when the facts are susceptible to more than one reasonable inference . . . ."'" (Grossman v. Santa Monica-Malibu Unified School Dist. (2019) 33 Cal.App.5th 458, 465; accord, Husman v. Toyota Motor Credit Corp. (2017) 12 Cal.App.5th 1168, 1180.)
b. The City and AVWC did not carry their initial burden on Running's contract claims based on the diversion of irrigation water
Running alleged the Indenture, a settlement agreement between the Gordons, on the one hand, and members of SGRWC, including the City's predecessors in interest, on the other hand, granted the Gordons water rights for irrigation purposes that ran with the land, property rights Running contends she acquired as the Gordons' successor-in-interest. By diverting her irrigation water from the canal to the pipeline without connecting her to the pipeline, the City and AVWC deprived her of those water rights in breach of the Indenture.
The Indenture described the Gordons' flow rights for irrigation purposes as "appurtenant to parcel three," the land Running claimed she acquired when she purchased her property in 1950. The City and AVWC did not address, let alone dispute, this language of the Indenture in their motions for summary judgment/summary adjudication. Rather, insisting the Gordons had transferred their water rights to Contract Water Company in exchange for shares in that company in 1895, the City and AVWC argued the Gordons possessed no water rights they could have ultimately transferred to Running by virtue of the Indenture and her purchase of the Gordon property. At most, the City argued, the Gordons possessed shares in Contract Water Company, giving them a right to receive water, but not a property interest in that water. That right ended when Contract Water Company sold its assets to CICO in 1964 under an agreement that allowed old users to continue to receive water until December 31, 1979 and thereafter only by paying the same prices as other CICO shareholders.
The City and AVWC's argument rests on a faulty premise. The articles of incorporation the City and AVWC relied on to support their argument state the Gordons (and other old users) formed Contract Water Company in 1895 to "hold in trust" for the stockholders of that corporation "all the water rights and waters now belonging to them and that may hereafter be acquired by them" and to manage, control, defend and "promote the interests of the stock-holders in the matter of the ownership, control and management of such water rights and waters." The Gordons did not transfer ownership of their water rights in 1895 to Contract Water Company; they entrusted those rights to Contract Water Company to hold as trustee while they retained beneficial ownership. (See Erwin v. Gage Canal Company (1964) 226 Cal.App.2d 189, 192 [observing the difference between a transfer of title to water to a mutual water company in exchange for the right to receive water from the company, on the one hand, and entrustment of that property right to the water company to hold as trustee for owner, who holds stock; the former transfers title to the water but the latter does not]; see also 63 Cal.Jur.3d, Water, § 781 [when private mutual water company is formed to hold water rights as a trustee only, "its holding does not change the nature of the water right or divest the beneficial interest therein of the landowner"].)
In concluding the City and AVWC failed to carry their initial burden on summary judgment to demonstrate Running had no ownership rights in at least some of the water that had previously flowed through the canal, we do not hold that such rights existed as a matter of law. Running did not move for summary judgment; and the City and AVWC's argument, which was based on the formation of Contract Water Company and the sale of its assets to CICO in 1964, does not require we reach that question.
c. A triable issue of fact exists as to whether Running performed under the Indenture
The City and AVWC alternatively contend Running cannot establish a breach of the Indenture because the Indenture merely capped the amount of water the Gordons could take from the canal. It did not alter the obligations in the Old User Agreement that the Gordons move their water from the river to the mouth of the canal and pay CICO for delivering the water from the canal to their land. Because Running did not arrange to get her water to the mouth of the canal or pay CICO to transport the water from the canal to her land, the City and AVWC argue, she did not perform under the old User Agreement and cannot enforce it. (See Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821 [to establish a breach of contract, the plaintiff must demonstrate not only the defendant's breach of the contract, but also that plaintiff performed under the contract or that such performance was excused]; Darbun Enterprises, Inc. v. San Fernando Community Hospital (2015) 239 Cal.App.4th 399, 409 [same].)
Running, however, does not seek to enforce the Old User Agreement against the City and AVWC, neither of which was a party to that agreement. She seeks to enforce the Indenture. And even if the Indenture contains an implied obligation that the Gordons bring their own water to the canal and pay CICO for it as required under the Old User Agreement, an interpretation of the Indenture that is by no means clear, the City and AVWC provided no evidence that delivery arrangements had not been made. Indeed, the water had flowed through the canal to Running's property for nearly 60 years and had only ceased flowing once the canal was closed. While the City provided declarations attesting that Running had not demanded CICO deliver her irrigation water to her or that SGRWC divert water to her, the City and AVWC failed to present evidence that Running needed to make any additional arrangements for water delivery. Similarly, while CICO provided declarations, which also supported the City and AVWC's motion, that Running had never paid it for the delivery of irrigation water, the City and AVWC did not submit any evidence CICO (or any of the defendants) had ever charged Running for any water that flowed through the canal. For her part, Running provided evidence she had paid every assessment and charge CICO had applied to her. While Running will have to prove at trial she performed under the Indenture, Running has, at the very least, raised a triable issue of material fact on that question sufficient to preclude summary judgment.
City and AVWC argued in their moving papers, and reiterate on appeal, that Running's claims for breach of the implied covenant and good faith and fair dealing fail on the same grounds as her contract claims, reasoning it was similarly premised on a water right that no longer existed. In light of our holding the City failed to carry its burden on the contract claim to the extent that claim was based on Running's right to irrigation water, her claim for breach of the implied covenant of good faith and fair dealing, although duplicative of her express contract claim on this ground, similarly survives summary judgment.
d. The City and AVWC did not direct their motion to the other bases for Running's contract claims; accordingly summary adjudication is improper
Running's causes of action for breach of contract and breach of the implied covenant of good faith and fair dealing were also based on allegations the City, AVWC (and all defendants) failed to maintain the canal and tunnel. Citing language from the Indenture granting the City, AVWC (and others) "the right . . . to maintain, repair, operate and conduct water through the open cement ditch and tunnel across the real property above mentioned," the City and AVWC argued, and the trial court ruled, the Indenture did not mandate maintenance of the canal or the tunnel; it afforded only permissive right to enter the property for that purpose.
Running does not identify any language in the Indenture creating a mandatory duty (rather than a permissive right) of the City and AVWC (and others) to maintain the easement. Rather, she argues the mandatory duty to maintain the canal and the tunnel arise from the Compromise Agreement. The Gordons, however, were not parties to the Compromise Agreement (see Gordon, supra, 164 Cal. at p. 95), leaving Running without standing to enforce that agreement as their successor-in-interest. Accordingly, whatever cause of action may exist against CICO or SGRWC for failing to maintain the canal or tunnel (see, e.g., Civ. Code, § 845 [creating legal duty for private easement holder to maintain easement in safe condition]), Running failed to demonstrate the existence of City or AVWC's contractual obligation to do so.
Nevertheless, the City and AVWC did not direct their notice of motion and motion for summary judgment/summary adjudication to this potentially independent cause of action for breach of contract or breach of the implied covenant. (See Mathieu v. Norrel Corp. (2004) 115 Cal.App.4th 1174, 1188 [two separate and distinct grounds for liability based on distinct primary rights, even though combined in a single cause of action, can be separately addressed in summary adjudication motion pursuant to Code of Civil Procedure section 437c, subdivision (f)(1)]; Lilienthal & Fowler v. Superior Court (1993) 12 Cal.App.4th 1848, 1854 ["the clearly articulated legislative intent of section 437c, subdivision (f), is effectuated by applying the section in a manner which would provide for the determination on the merits of summary adjudication motions involving separate and distinct [primary rights] which are combined in the same cause of action"].) As a result, there is no basis for this court to affirm summary adjudication of the contract and implied covenant claims on this ground. (See Cal. Rules of Court, rule 3.1350(b) [each cause of action that is target of summary adjudication must be stated specifically in notice of motion and separate statement].)
e. Triable issues of material fact exist as to financial elder abuse based on allegations the City and AVWC took, or assisted others in taking, Running's water
The Elder Abuse and Dependent Adult Civil Protection Act (Elder Abuse Act) (Welf. & Inst. Code, § 15600 et seq.) was enacted in 1982 to "protect a particularly vulnerable portion of the population from gross mistreatment in the form of abuse and custodial neglect." (Delaney v. Baker (1999) 20 Cal.4th 23, 33; accord, Covenant Care, Inc. v. Superior Court (2004) 32 Cal.4th 771, 779.) Among other things, the Elder Abuse Act provides that any person who takes, secretes, appropriates, obtains real or personal property of "an elder"—a person residing in this state who is 65 years or older (see Welf & Inst. Code, § 15610.27)—or who assists in taking, secreting, appropriating or retaining real or personal property of the elder for a wrongful use or with the intent to defraud or by undue influence is liable for elder financial abuse. (Welf. & Inst. Code, § 15610.30, subd. (a)(1), (2).) "A person or entity shall be deemed to have taken, secreted, appropriated, obtained, or retained property for a wrongful use if, among other things, the person or entity takes, secrets, appropriates, obtains, or retains the property and the person or entity knew or should have known that this conduct is likely to be harmful to the elder or dependent adult." (Welf. & Inst. Code, § 15610.30, subd. (b).)
In support of her elder abuse cause of action, Running alleged each of the City defendants, acting together with CICO as part of a "joint enterprise," took her property for a wrongful use by (1) diverting her water to the pipeline and destroying mature trees; (2) plugging the underground tunnel beneath her home without reinforcing the structure, causing it to collapse and damage her property; (3) authorizing and allowing sewer and drainage lines to be installed on her property absent her consent; (4) issuing the notice of abatement that resulted in Beecham spending more than $100,000 in clean-up costs for a nuisance the City defendants, together with CICO and SGRWC, created by diverting her water.
Running asserts in her opening brief that she alleged seven separate "takings" to support her claim of financial elder abuse. Because several of the alleged "takings" overlap, we describe them as four distinct allegations.
In seeking summary judgment, the City defendants argued Running could not show she had any property right to water. Even if she had such a property right, they argued, Running could not show the City took, or assisted CICO in taking, her water for a wrongful purpose. The court agreed with both points and granted the City defendants' motion with respect to the financial elder abuse claim. In light of our conclusion regarding Running's contractual right to water in the canal, her purported lack of ownership of any of the water as a matter of law cannot support the court's ruling.
For reasons not evident in the record, the City did not argue, either in its demurrer or its motion for summary judgment, that it was immune from direct liability for elder abuse under the Government Claims Act.
The City's undisputed evidence the canal was closed for health and safety reasons, not to hurt Running, was also insufficient to support judgment on the elder abuse claim as a matter of law. It was not simply the diversion of irrigation water from the canal to the pipeline that Running alleged constituted a taking of her property, but the failure to ensure she continued to receive the irrigation water to which she was entitled, whether by connecting her to the pipeline or making some other arrangement for her irrigation water. The City and AVWC failed to present any evidence to rebut this argument. The fact that Running had access to water if she paid for it did not address her claim to title to the irrigation water.
The City and AVWC contend, as a matter of law, that none of the conduct Running alleged amounts to financial elder abuse because the City and AVWC did not "obtain" any water rights from Running for their own benefit and did not assist CICO or SGRWC in taking that property. That may ultimately prove to be true. But the City and AVWC did not present evidence establishing as a matter of law they did not take Running's property rights to the water or assist others in doing so. Accordingly, the court erred in dismissing this elder abuse claim against the City and AVWC.
Running's financial elder abuse claim against the City was also based on allegations she had to expend funds to clear the canal in response to a notice to abate a nuisance and suffered a diminution in the value of her property due to the City and AVWC's actions: negligent maintenace of the canal, failure to reinforce the tunnel and authorization of the placement of sewer lines on her property. The issuance of the notice of abatement, together with Beecham's remedial actions in lieu of attending the scheduled hearing, hardly seems a taking under the financial elder abuse statute. Nonetheless, while we are doubtful that any of these allegations is sufficient to state a claim for financial elder abuse against the City (see Welf. & Inst. Code, § 15610.30, subd. (a)(1),(2)), the City did not address them in its moving papers. For this additional reason, the dismissal of the elder abuse claim on summary judgment was error. (See generally Mathieu v. Norrell Corp. (2004) 115 Cal.App.4th 1174, 1188 [each wrong constitutes a separate cause of action even if pleaded under single heading]; Scripps Clinic v. Superior Court (2003) 108 Cal.App.4th 917, 929 [summary judgment in favor of defendant improper where defendant failed to address cause of action alleged, albeit not separately pleaded, in complaint].)
f. The court did not err in granting the motion as to Morrow, Anderson and Delach on the elder abuse claim
Morrow, Anderson and Delach argued in their motion for summary judgment that Running could not show any of them had engaged in wrongful conduct amounting to financial elder abuse. In her opposition to the motion, Running reiterated the allegations in her complaint while providing no evidence to support her assertion that any of these individuals took, secreted or otherwise deprived her of a property interest for a wrongful purpose. (See Roman v. BRE Properties, Inc. (2015) 237 Cal.App.4th 1040, 1054 ["[i]t is fundamental that to defeat summary judgment a plaintiff must show 'specific facts' and cannot rely on allegations of the complaint"]; Regional Steel Corp. v. Liberty Surplus Ins. Corp. (2014) 226 Cal.App.4th 1377, 1388 [same].) Accordingly, the court did not err in granting the motion directed to the elder abuse claim against Morrow, Anderson and Delach.
3. Running Has Not Demonstrated the Court Erred in Granting Summary Judgment for the Canyon Defendants
The Canyon defendants moved for summary judgment, asserting they did not take, or assist in taking, Running's water rights and thus Running could not prevail on her elder abuse action as a matter of law. They also argued, even if Running had owned a property right in some of the water that flowed through the canal, none of the Canyon defendants ever met Running. They had no knowledge of her age or mental impairment or that she claimed a right to the water in the canal. The court ruled for the Canyon defendants on the first argument and did not reach the second.
Running does not challenge the order granting the motion as to Canyon. Moreover, apart from asserting in general the court erred in granting summary judgment in favor of the "defendants," she does not identify in her opening brief any error made by the trial court in granting the motion as to the McIntyres. In her reply brief Running belatedly argues summary judgment as to the McIntyres was improper because, as directors of CICO (and, with respect to William, as a member of the board of SGRWC) the McIntyres authorized and participated in the wrongful acts committed by one or both of those entities, including diverting her water without notice and plugging the tunnel despite warnings it could collapse without substantial reinforcement. Because the McIntyres did not address their involvement in these wrongs in their motion for summary judgment, she argues, they failed to carry their initial burden.
In her separate statement Running conceded that "[a]ll defendants in this case except CANYON WATER COMPANY have acted together at times during the period from 2010 to the present date in making decisions regarding the maintenance of the canal" and tunnel.
The third amended complaint alleged a number of tortious acts purportedly committed by CICO and SGRWC. However, as to the McIntyres specifically, the pleading alleged only that, as directors of CICO and members of SGRWC, they were liable for those entities' misconduct. In their motion for summary judgment/summary adjudication, the McIntyres provided evidence CICO made the decision to close the canal and argued they could not be held liable for that decision merely by virtue of their positions as CICO directors. (See Frances T. v. Village Green Owners Assn. (1986) 42 Cal.3d 490, 508 ["[t]o maintain a tort claim against a director in his or her personal capacity, a plaintiff must first show that the director specifically authorized, directed or participated in the allegedly tortious conduct [citation]; or that although they specifically knew or reasonably should have known that some hazardous condition or activity under their control could injure plaintiff, they negligently failed to take or order appropriate action to avoid the harm"]; Balsam v. Trancos, Inc. (2012) 203 Cal.App.4th 1083, 1110 [directors "'"do not incur personal liability for torts of the corporation merely by reason of their official position, unless they participate in the wrong or authorize or direct that it be done"'"].) William's membership on SGRWC's board, without more, is similarly insufficient to impose personal liability on him. (See Corp. Code, § 18605 ["[a] member, director, or agent of a nonprofit association is not liable for a debt, obligation, or liability of the association solely by reason of being a member, director, officer or agent"]; Corp. Code, § 18620, subd. (a)(1), (2) [member, director, officer, or agent of nonprofit association liable if he or she expressly assumes liability or engages in tortuous conduct that causes the injury or harm].) Running presented no evidence in opposition and cites none on appeal to support the McIntyres' liability apart from their status as directors of CICO or William's SGRWC board membership. Accordingly, even if the court erred in granting summary judgment on the ground the Canyon defendants had established Running owned no right to water in the canal as a matter of law, she has not demonstrated, in either argument or with relevant authority, how the order granting them summary judgment was error. (See AMN Healthcare, Inc. v. Aya Healthcare Services, Inc. (2018) 28 Cal.App.5th 923, 934 [appellate court reviews trial court's ruling, not its rationale]; Young v. Horizon West, Inc. (2013) 220 Cal.App.4th 1122, 1127 [same]; see generally People v. Zapien (1993) 4 Cal.4th 929, 976 ["'"a ruling or decision, itself correct in law, will not be disturbed on appeal merely because given for a wrong reason"'"].)
Running does not challenge the court's finding that her claim the McIntyres engaged in a scheme to obtain Running's CICO shares for less than market value, thereby hurting CICO (and Running as a CICO shareholder), should have been pursued as a derivative, rather than a direct, cause of action.
4. Triable Issues of Material Fact Exist as to Whether Running Timely Filed Her Damage Claims with the City
The City urges we affirm the judgment in its favor, even if we reject the trial court's reasoning, because the court erred in finding triable issues of material fact as to whether Running had timely filed her claims for damages as required under the Government Claims Act. (See Gov. Code, § 911.2, subd. (a) [claim seeking damages against public entities must be presented to public entity "not later than one year after the accrual of the cause of action"]; Rubenstein v. Doe No. 1 (2017) 3 Cal.5th 903, 906 ["'[b]efore suing a public entity, the plaintiff must present a timely written claim for damages to the entity'"]; City of San Jose v. Superior Court (1974) 12 Cal.3d 447, 454 ["failure to timely present a claim to the public entity bars the claimant from filing a lawsuit against that public entity"].) Insisting both the breach of contract and financial elder abuse causes of action accrued in 2010 when the canal was closed and canal water diverted to the pipeline, the City contends Running needed to file her claim with the City no later than 2011, several years before she did.
Running has argued the limitations period was tolled under Code of Civil Procedure section 352, subdivision (a), due to her incapacity. However, subdivision (b) of section 352 expressly exempts from that statute's tolling provision "action[s] against a public entity or public employee upon a cause of action for which a claim is required to be presented . . . ."
For purposes of the Government Claims Act, a cause of action accrues on the same date a similar action against a nonpublic entity would be deemed to accrue for purposes of applying the relevant statute of limitations. (Gov. Code, § 901; Rubenstein v. Doe No. 1, supra, 3 Cal.5th at p. 906.) Traditionally, a claim accrues "'"when [it] is complete with all of its elements"—those elements being wrongdoing, harm, and causation.'" (Aryeh v. Canon Business Solutions, Inc. (2013) 55 Cal.4th 1185, 1191; accord, Howard Jarvis Taxpayers Assn. v. City of La Habra (2001) 25 Cal.4th 809, 815.) "This is [known as] the 'last element' accrual rule . . . ." (Aryeh, at p. 1191.)
An exception to the general rule of accrual is the delayed discovery rule, "which postpones accrual of a cause of action until the plaintiff discovers, or has reason to discover, the cause of action." (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 807.) "Under the discovery rule, the statute of limitations begins to run when the plaintiff suspects or should suspect that her injury was caused by wrongdoing, that someone has done something wrong to her." (Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d 1103, 1110.) In other words, the limitations period begins "'once the plaintiff has notice or information of circumstances to put a reasonable person on inquiry. [Citation.] Subjective suspicion is not required. If a person becomes aware of facts which would make a reasonably prudent person suspicious, he or she has a duty to investigate further and is charged with knowledge of matters which would have been revealed by such an investigation.'" (McCoy v. Gustafson (2009) 180 Cal.App.4th 56, 108; accord, Fox, at pp. 807-808 ["plaintiffs are required to conduct a reasonable investigation after becoming aware of an injury, and are charged with knowledge of the information that would have been revealed by such an investigation"]; Alexander v. Exxon Mobil (2013) 219 Cal.App.4th 1236, 1251 [explaining application of delayed discovery rule requires two-part inquiry: whether plaintiff has become aware of facts that would cause a reasonable person to suspect his or her injuries were the result of wrongdoing, thereby triggering duty to investigate and, then, if so, whether such an investigation would have disclosed a factual basis for a cause of action].) "When a plaintiff reasonably should have discovered facts for purposes of the accrual of a cause of action or application of the delayed discovery rule is generally a question of fact, properly decided as a matter of law only if the evidence . . . can support only one reasonable conclusion." (Stella v. Asset Management Consultants, Inc. (2017) 8 Cal.App.5th 181, 193; accord, Broberg v. The Guardian Life Ins. Co. of America (2009) 171 Cal.App.4th 912, 921.)
The City contends the breach of contract and financial elder abuse causes of action, each based on the diversion of water from the canal to the pipeline, accrued no later than September 27, 2010, when Steven Running signed a petition acknowledging water had stopped flowing through the canal. It was Running's obligation (or Beecham's, as the holder of her mother's general power of attorney), the City argues, to maintain the property. Beecham, who did not live on the property, testified she did so by relying on Steven Running to inform her when things on the property needed to be addressed, such as plumbing or maintenance issues. Steven Running lived on the property and must have realized the canal was dry for years before the City issued its notice of abatement of nuisance in 2015. Thus, the City argues, Steven Running knew or should have known at the latest by September 2010 of the diversion of water and, accordingly, so should have Running (or Beecham). Had Running investigated, she would have discovered the canal closure and the plugged tunnel, as well as other wrongs asserted as the bases for her elder abuse action against the City. CICO also mailed annual reports to Running announcing the pipeline project. Because the time to file a claim for damages with the City expired in September 2011, the City argues, the elder abuse and contract-based causes of action against the City are barred.
In response, Running insisted the City had provided no evidence that Steven Running, who suffered from schizophrenia, had told Running or Beecham the canal was dry; both Steven Running and Beecham testified they did not know the canal had run dry; Steven Running explained he had not read or understood the petition he signed in 2010; and Running provided evidence the canal was not visible from Running's house. In addition, CICO's annual reports announcing the pipeline project did not state property owners would be deprived of irrigation water as a result. Moreover, after 2009, Beecham testified, neither she nor Running received any annual reports from CICO, even though Beecham had informed CICO she was trustee and/or held Running's power of attorney. In fact, Beecham claimed, while CICO had contacted her about other matters, including leasing CICO shares, it did not inform her of the pipeline or its effect on her mother's property.
The trial court concluded triable issues of material fact existed as to whether the claim for damages against the City accrued in 2010, when the pipeline was completed and the canal ran dry, or in 2015 when the City issued its notice of abatement of nuisance, prompting investigation and discovery of the water diversion. Liberally construing all the evidence in favor of Running and resolving all doubts in her favor (see Ennabe v. Manosa, supra, 58 Cal.4th at p. 703; Grossman v. Santa Monica-Malibu Unified School Dist., supra, 33 Cal.App.5th at p. 465), the trial court did not err in finding Running had raised a triable issue of material fact as to whether her claims accrued in 2015 or earlier.
DISPOSITION
The judgment in favor of the City and AVWC is reversed. On remand the trial court is directed to vacate its order granting summary judgment for the City and AVWC and enter a new and different order denying their motion for summary judgment/summary adjudication. The order sustaining the City defendants' demurrer without leave to amend is affirmed. Accordingly, as to the City and AVWC, Running's causes of action for breach of written contract, breach of the implied covenant of good faith and fair dealing and Running's cause of action for financial elder abuse are revived. The judgment in favor of Morrow, Anderson, Delach, Canyon Water Company, William McIntyre and Andrew McIntyre is affirmed. Morrow, Anderson, Delach, Canyon Water Company, William McIntyre and Andrew McIntyre are to recover their costs on appeal. All other parties are to bear their own costs on appeal.
PERLUSS, P. J.
We concur:
SEGAL, J.
FEUER, J.