1

Filed 3/12/24 Chino Basin M unicip al Water Dist rict v. City of Chino CA4/2

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION TWO

CHINO BASIN MUNICIPAL WATER DISTRICT, Plaint iff,

v. CITY OF CHINO , et al ., Defendants and Appellants;
CHINO BASIN APPROPRIATIVE POOL , et al. , Defendants and Respondents; CHINO BASIN WATERMASTER, Objector and Respondent. E079052 (Super.Ct.No. RCVRS51010)
OPINION

APPEAL from the Superior Court of San Bernardino County. Stanford E. Reichert, Judge. Affirmed. Colantuono, Highsmith & Whatley, Michael G. Colantuono, Michael D. Campion and Conor W. Harkins , for Defendant and Appellant City of Chino.2

Nossaman, Freder ic A. Fudacz, Jennifer L. Meeker and Gina R. Nicholls , for Defendants and Appellants, City of Ontario, Monte Vista Water District and Monte Vista Irrigation Company. Horvitz & Levy, Lisa Perrochet, Mitchell C. Tilner; and John J. Schatz for
Defendant and Respondent, Appropriative Pool. Egoscue Law Group, Tracy J. Egoscue and Tarren A. Torres, for Defendant and Respondent, Chino Basin Overlying (Agricultural) Pool Committee. Brownstein Hyatt Farber Schreck, Scott S. Slater, Bradley J. Herrema, Matthew L. Hofer and Laura K. Yraceburu, for Objector and Respondent, Chino Basin Watermaster. In 1978, d efendants and appellants City of Chino (Chino), City of Ontario (Ontario), Monte Vista Water District and Monte Vista Irrigation Company ( collectively, Monte Vista ) , along with several other parties, stipulated to a judgment (Judgment) , which manages competing water rights in the Chino Groundwater Basin (Basin). The
J udgment establishe d the Basin’s governance structure , provide d judicial ov ersight via continuing jurisdiction provisions , and created the Watermaster. The J udgment further organized the parties into three “Pools” ( Overlying (Agricultural or Ag ) Pool , Overlying (Non

- agricultural or Non

- Ag ) Pool , and Appropriative (Ap or App ) Poo l) to administer and allocate responsibility for various aspects of the J udgment and the adopted physical solution to groundwater management

. Appellants are members of the Ap Pool. In 2000, the Ap Pool and the Ag Pool executed the Peace Agreement (sometimes referred to as the Agreement) which governs, inter alia , responsibility for certain Basin

related expenses. Subsequently, a dispute arose between these two Pools over the extent3

of the Ap Pool’s obligation to pay for the Ag Pool’s legal expense s. Following the Ag Pool ’s unsuccessful attempt to obtain a court order requiring the Ap Pool to pay, appellants filed motions seeking reimbursement of the legal expenses paid for fiscal years 2019

- 2020 and 2020

- 2021. Simultaneously, the Pools sought res olution of their dispute , and over appellants’ objection, t he y entered into a settlement agreement (Terms of Agreement or TOA) which committed the Ap Pool members to pay a portion of the legal expenses they were contesting

. Appellants’ motions were heard on April 22, 2022 ; the superior court denied the m as moot based on the TOA. The court found that the Pools had authority under the J udgment to settle their inter

- Pool disputes (here through the
TOA ) and appellants are bound by th e Pools’ action. On app eal, a ppellants challenge the superior court’s denial of their reimbursement motions via separate briefing. Ontario and Monte Vista contend the “central question in this appeal is whether a committee of parties with appropriative water rights formed under the Judgment, specifically, the [Ap Pool], holds the power to bind individual members of the [Ap Pool] to a contract without the consent or approval of the parties purportedly bound.” In particular, they argue the court erred by (1) determining the TOA moots the monetary claims asserted by individual appellants, and (2) misreading the
J udgment and Peace Agreement. Separately, Chino contends the court’s order “holds Chino to an implied contract forbidden by controlling authority, established by
unspe cified evidence.” It argues this appeal raises a question of law, namely, whether the court “properly conclude[d] a majority of the [Ap Pool] Committee could settle Chino’s [reimbursement] motion over Chino’s objections.”4

As we explain, we conclude the s uperior court correctly interpreted the J udgment and the Peace Agreement in denying appellants’ motions for reimbursement on the grounds the TOA resolved the dispute between the two Pools

.

I. PROCEDURAL BACKGROUND AND FACTS In 1975, Chino Basin Municipal Water District (CBMWD) initiated this action against several parties to adjudicate the ir rights and obligations with respect to
g round water in the B asin. Three years later, the parties stipulated to the J udgment which established a “physical solution” an d allow ed the superior court to retain and exercise jurisdiction. The J udgment, including all amendments, was restated and reentered in 2012; this restated judgment is “the official and legally operative copy of the Judgment in [this] case.” 1 Appellants are signatories to the J udgment.
The Judgment established the rights of three “ Pools ” of parties with water interests
in the Basin : They include (1) the Ag Pool ( the State of California and all overlying producers who produce water for other t han industrial or commercial purposes ) ; (2) the
Non

- A g Pool ( overlying producers who produce water for industrial or commercial
purposes ) ; and (3) the Ap Pool ( owners of appropriative water rights not appurtenant to land ownership, principally public entities and water companies who pump water for municipal customer uses ) . Each Pool has a c ommittee that administers its internal affairs , employs its own separate counsel, may seek judicial review of any Watermaster action or

1 Unless otherwise indicated, all further references and citations to the judgment are to the 2012 restated judgment.5

failure to act, and

— along wi th an Advisory Committee

— provides advice and assistance

to Watermaster on the administration of the Judgment

. Each Pool has a Pooling Plan that control s its respective operations. Under the Ap Pool’s Pooling Plan, “[a]ffirmative action of the [Pool] Comm ittee shall require a majority of the voting power of members in attendance, provided that it includes concurrence by at least one

- third of its total members.” 2
Watermaster administer s and enforce s the Judgment and any subsequent instructions or orders o f the superior court. Watermaster is authorized to assess the Pools for its general administrative expenses, as defined, and to assess a specific Pool for its

s pecial p roject e xpenses, as defined, if certain conditions are satisfied. Initially, plaintiff
CBMWD was appointed as Watermaster; however, in 1998, the superior court replaced
C BMWD with a nine

- member Board , comprised of representatives of the parties to the Judgment , including at least one representative from each Pool

. Also in 1998, the court directed Watermaster to prepare an Optimum Basin Management Program (OBMP) to address water quality issues

. The OBMP was divided into two phases : Phase I (the report) was adopted in 1999, and Phase II (implementation plan) was submitted to the court for approval in 2000. The OBMP was subject to intensive settlement negotiations that led to various

2 The “voting power” of the Pool Committee consists of 1,00 0 total votes. Of that total, 500 votes are allocated to members proportionally to their percentage shares in the B asin’s water, as specified elsewhere in the Judgment, and 500 votes are allocated to members “proportionally on the basis of assessments pai d to Watermaster during the preceding year

. ” “Action by affirmative vote of a majority of the entire voting power of any Pool Committee . . . shall constitute action by such committee.”6

parties to the Judgment (including appellants ) executing the Peace Agreement in June
2000

. The Peace Agreement resolved the pa rties’ disputes regarding “a number of matters pertaining to the power and authority of the Court and Watermaster under the Judgment . . . .” It addresses implementation of the OBMP for the Basin and allows Watermaster to administer transfers, recharge, a nd storage/recovery of water. On July 13, 2000, the superior court accepted t he Peace Agreement and ordered Watermaster to proceed in accordance with its terms.
To avoid overtaxing the Basin, the Judgment set its initial safe yield at 140,000

acre - feet p er year (AFY). The “safe yield” is “‘the maximum quantity of water which can be withdrawn annually from a ground water supply under a given set of conditions without causing an undesirable result.’ The phrase ‘undesirable result’ is understood to
refer t o a gradual lowering of the ground water levels resulting eventually in depletion of the supply.” ( City of Los Angeles v. City of San Fernando (1975) 14 Cal.3d 199, 278, disapproved on other grounds in City of Barstow v. Mojave Water Agency (2000) 23 Cal.4th 1224, 1248.) In 2017, the superior court reset it to 135,000 AFY. Pursuant to the Judgment , unproduced Ag Pool water is made available fo r reallocation to members of the Ap Pool on a five

- year schedule. According to Traci Stewart, a former Chief of Watermaster Services for the Basin, the Peace Agreement
accelerated this schedule by making unproduced Ag Pool water available for reallocation

to members of the Ap Pool on an annual basis (Early Transfer). Because members of the Ap Pool are only entitled to share in the remaining s afe y iel d of water after satisfaction of overlying rights and the rights of the State of California, a reduction in the s afe y ield7

means a reduction only in the remaining share of the s afe y ield of water that the members of the Ap Pool are entitled to. Th e Early Transfer of the Ag Pool’s unproduced share of

s afe y ield is an economic benefit to the Ap Pool and the cons ideration for its agreement to pay the Ag Pool’s expenses

. This arrangement was formalized in the Peace Agreement. Significant to the issue presented in this appeal is the language in section 5.4(a) of the Peace Agreement wherein the Ap Pool agree s to pay “all assessments and expenses of the Agricultural Pool Committee . . .[, including but not] limited to OBMP Assessments, assessments pursuant to Paragraphs 20, 21, 22, 30, 42, 51, 53, 54 both General Administrative Expenses and Special Project Expe nses, 55, and Exhibit F (Overlying Agricultural Pool Pooling Plan) of the Judgment. . .

. ” 3 Stewart explains this language formalized the Ap Pool’s practice of paying the Ag Pool’s assessments and expenses ,

3 Th is same language was the subject of a prior dispute that was res olved via a Special Joint Pool Committee

. According to that resolution, documented in the 2009 Memorandum of the Joint Special Pool Committee (the “2009 Memo”) , “ [T]he Agricultural Pool agrees to participate in the regular Watermaster Budget Process and p resent an annual budget in the same form and fashion as the other Pools. This will include: legal fees, consultant fees, meeting fees and projects. All of the budgets will be reviewed through the Pool process, approved and submitted by the Advisory Comm ittee to the Watermaster. [¶] Only Watermaster is authorized to undertake Special Project expense under Judgment Section 54 and Section 27. Such expense can only be allocated to a specific Pool if the Pool agrees or the court so orders, but this is not an authorization for the Pool to undertake such expense on its own initiative. (See e.g. Judgment section 54 and Peace Agreement Section 5.4(a).) Under Section 38 (a) Pool Committees are limited to ‘developing policy recommendations for administration of its particular Pool.’ Special Project expense necessarily must be part of the Physical Solution which is under the control of the Court and its Court appointed Watermaster. While the Pool Committees are there to provide advice and assistance to Watermas ter they may not supplant Watermaster’s Physical Solution authority under Section 41. ”8

including legal fees

. According to Joseph S. J oswiak, Watermaster’s Chief Financial Officer, th is practice continued uninterrupted and without controversy , and the Ap Pool members

— including appellants

— were assessed to cover those costs. Between 2010 and 2017, the Ag Pool’s annual legal expenses never exceeded $300,000; however, for fiscal year 2019

- 2020, its expenses increased to $529,009. In September 2020, the Ag Pool increased its 2020

- 2021 budget for legal expenses to $500,000. Th is increase prompted certain Ap Pool members, including appellants , to file a motion seeking a judicial determination to limit the expenses the Ap Pool will be required to pay on behalf of the Ag Pool under the Peace Agreement . The moving parties also sought a refund of legal expenses previously paid relating to an acti on initiated by the Ag Pool to challenge certain Ap Pool members’ applications for local water storage (Storage Contests)

. On May 28, 2021, the superior court ruled that section 5.4(a) of the Peace Agreement does not oblig ate the Ap Pool to pay unlimited Ag Pool expenses “without knowledge of the nature of the expenses.” Instead, the court establish ed a default procedure (when the parties could not agree on the payment of the legal expenses) that the Ag Pool had to follow to recoup its legal expenses. Specifically, the Ag Pool had to demonstrate the legal expenses incurred were for services that benefitted it and were not adverse to the Ap Pool , and the Ag Pool could not redact its attorney’s bills so as to make them meaningl ess for review by opposing counsel and determination by the court

. The May 28, 2021 order did not rule out settlement as another procedure or method of accomplishing payment of the Ag Pool’s legal expenses

. Further, t he court deferred9

ruling on the movin g parties’ claim for refund of Storage Contests payments to allow the Ag Pool the opportunity to seek recovery of those expenses using the sanctioned legal procedure. Subsequently, principals of both the Ag Pool and the Ap Pool held a series of five meetings wherein they were unsuccessful in resolving the Ag Pool ’s request for payment of its legal expenses . Thus, in August 2021, the Ag Pool filed a motion to require the Ap Pool to reimburse the Ag Pool’s legal expenses exceeding $563,000. 4 Appellan ts and other Ap Pool members opposed the motion , arguing it failed to comply with the requir ements set forth by the superior court

. They also sought reimbursement of $746,830 previously paid in the preceding two fiscal years. The Ag Pool’s motion was
den ied on December 3 , 2021 , on the grounds it had not satisfied the default procedure established by the May 2021 order. Also, the court authorized Chino to file “a motion as to the procedure for reimbursement of any assessments . . . that may be due to the paying party.” The Ag Pool appealed the court’s order

. In January 2022, appellants (separately) moved for reimbursement of $483,202.55 in legal expenses the Ap Pool paid to the Ag Pool in fiscal years 2019

- 2020 and 2020

- 2021 (reimbursement motion)

. Appellants argued the conditions established in the May

4 The Ag Pool claimed the Ap Pool was required to pay legal expenses of $460,723.63 directly to the Ag Pool and $102,557.12 to the Watermaster Administrative Reserve Account (the fees related to the Storage Contests incurred in fiscal year 2020

- 2021)

. According to Robert Feenstra, chair of the Ag Pool, the increase in the Ag Pool’s legal fees started in 2014 and was a “direct result of the actio ns of the [Ap] Pool that were adverse to the Basin and Watermaster’s efforts towards safe Basin management

– starting with the Safe Yield Reset process in 2014.”10

2021 order applied retroactively and the Ag Pool had no t satisfied them in fiscal years 2019

- 2020 and 2020

- 2021. Also, appellants asserted the Ag Pool should reimburse Watermaster the sum of $102,557.12 that it advanced in fiscal year 2020

- 2021 for the Ag Pool ’s legal expenses

. In response, the Ag Pool argue d appellants ha ve waived, or were estopped to assert, any right to reimbursement of legal expenses previously paid without objection or reservation. The Ap Pool also weighed in to indicate it supported the superior court’s determination of the issues raised by appellants

. Watermaster ’s reply sought “to clarify and provide context to certain issues raised” to assist the court in reaching a ruling. Before the superior court could hear the appellants’ motion s , principals of the Ap Pool and the Ag Pool reached a settlement , the TOA. A majority of the Ap Pool’s voting power (59.363%) approved the TOA , which was signed by the Ap Pool’s chair. According to the TOA, the two Pools agreed to abide by the court’s May 2021 order imp osing conditions on the Ag Pool’s right to recoup legal expenses. Toward that end, the Ag Pool agreed to submit all attorney’s invoices for which it sought payment to Watermaster in a form that would allow the Ap Pool to determine whether the invoiced
exp enses benefitted the Ag Pool and were not adverse to the Ap Pool. The Ag Pool also agreed (1) to dismiss its appeal from the December 3, 2021 order denying its motion for legal expenses ( case No. E078377 ) , and (2) to dismiss its Storage Contests. In return, the Ap Pool agreed

— as authorized by a majority vote of its members

— to pay the Ag Pool $370,000 as a compromise of the disputed legal expenses. The Ag Pool would, in turn, use some of that money to repay Watermaster the disputed $102,557.12 previou sly11

advanced from its administrative reserves. The Ag Pool’s agreement to repay that sum

was one of the principal demands in appellants ’ m otion. Th e Ap Pool also agreed to pay specified Ag Pool expenses from fiscal year 2021

- 2022 through the end of the i nitial 30

- year term of the Peace Agreement. On March 24, 2022, representatives of the two settling Pools submitted the “Joint Statement Regarding Settlement Agreement Between Appropriative Pool and Agricultural Pool Regarding Peace Agreement 5.4(a),” whic h notified the superior court of the settlement and included a copy of the TOA. At the court’s request, the settling Pools refiled the document on April 11, 2022. A ll interested parties thereafter filed supplemental briefs , along with supporting declarat ions, addressing the impact of the
TOA on appellants’ pending m otion and related issues. Watermaster’s general manager, Peter Kavounas, declared that each P ool “has acted in a representative capacity in accordance with its respective Pooling plan, where it has been necessary or convenient.” Examples of the type of P ool activity sanctioned via representative capacity include: retention of legal counsel and d irection to Watermaster in the proper way to invoice members for paying such counsel, direction on the manner in which members fund recharge improvement projects, and entering into agreements with other P ools or parties to the Judgment

. On April 22, 2022, the superior court denied appellants’ reimbursement motion s on multiple grounds, including (1) the TOA settlement is valid; (2) the doctrines of waiver and laches apply because the Ap Pool previously paid the Ag Pool’s legal expenses without objecti on; an d (3) there is an implied

- in

- fact contract under which the12

Ap Pool members agreed to be bound by a majority decision of the voting power. On appeal, a ppellants challenge the court’s denial of their motion s , along with its finding that the y are bound by th e TOA.
II. DISCUSSION According to appellants, the superior court’s April 2022 order approving the TOA gives power to other groundwater appropriators, and carte blanche authority to the Ap Pool, to impose its agreements on public entities and to spend th eir ratepayers’ money. They contend the TOA is not valid and binding on all members of the Ap Pool because (1) the Ap Pool lacked authority to execute the TOA , and (2) the TOA is inconsistent with the Judgment , the Peace Agreement, and the court’s May 28 and December 3, 2021 order s . Appellants further assert the court’s affirmance of the TOA holds them to an implied contract forbidden by controlling authority. We are not persuaded.
A

. The Ap Pool was Author ized to Execute the TOA

. Citing the Judgment , appellants maintain the functions of the Pool s are limited to advising and assisting Watermaster in the “administration of, and for the allocation of responsibility for, and payment of, costs of replenishment water and other aspects of [the] Physical Solution.” The y add the Judgment incorporates a “pooling plan” for each P ool which control s the Pool’s operation s and may be modified only by amend ing the Judgment “ pursuant to the Court’s continuing jurisdiction.” Accordingly, appellants argue the Ap Pool is not authorized to usurp the power and authority held by individual members

— such as government entities

— and enter into contracts such as the TOA

.13

1 . The Judgment establishes a collective decision

- making governance structure.

“ When interpreting the stipulated judgment, we use ordin ary contract principles and, in the absence of extrinsic evidence, we may interpret it as a matter of law. [Citation.]” ( Needelman v. DeWolf Realty Co., Inc . (2015) 239 Cal.App.4th 750, 758.) “‘[T]he primary object of all interpretation is to ascertain and carry out the intention of the parties.’” ( City of Manhattan Beach v. Superior Court (1996) 13 Cal.4th 232, 238.) Here the Judgmen t directs Watermaster to “cause committees of producer representatives to be organized to act as Pool Committees for eac h of the several pools created under the Physical Solution.” Paragraph 43 establishe d three separate Pools as entit ies with rights and obligations separate from their members. Each Pool has a committee of representatives (the Pool Committee ) that acts on its behalf. Contrary to appellants’ assertion, the functions of the Pool Committees are not limited to “ developing policy recommendations for administration of its particular pool ,” seeking trial court orders, challenging Wat ermaster action, and employing counsel for litigation. Rather, they include the power to take action. (See Robings v. Santa Monica Mountains Conservancy (2010) 188 Cal.App.4th 952, 964 [“ in the absence of express restrictions, implied powers may arise as well from the purposes for which the agency was created ”]; see also id . at p. 966 [affirming trial court finding that recognized entity’s status is separate from its constituent members].) P aragraph 38(a) of the Judgment provides, “ All
actions and recomm endations of any Pool Committee which require Watermaster implementation shall first be noticed to the other two pools.”14

Additionally, Pool Committees pay Watermaster’s assessments of the costs of water replenishment or supplementation

. According to paragraph 54 , the expenses of administration of the physical solution are categorized as either g eneral Watermaster

a dministrative expenses, or s pecial p roject expenses . Special p roject expenses include litigation expense s and must “be allocated to a spec ific pool, or any portion thereof, only upon the basis of prior express assent and finding of benefit by the Pool Committee, or pursuant to written order of the Court.” As the Ap Pool notes, the Judgment granted each Pool a measure of control over its obl igation to pay litigation expenses incurred by other Pools or Watermaster (see p aragraph 54(b) ), the power and responsibility to pay the costs of replenishment water and other enumerated expenses (see paragraph 43), and the power to seek judicial review (s ee paragraph 15).
Pool C ommittees are composed as specified in their respective pooling plans , which also dictate their voting power ; each Pool’s pooling plan is attached to the Judgment

. According to p aragraph 35 , “[a] majority of the voting power” of a Pool Committee constitutes a quorum for transaction of the Pool Committee’s affairs, and “[a]ction by affirmative vote of a majority of the entire voting power of any Pool Committee or the Advisory Committee shall constitute action by such committee.”
Mo reover, “ [a] ny action . . . of a Pool Committee .

. . shall be transmitted to Watermaster in writing, together with a report of any dissenting vote or opinion.” As relevant here, t he pooling plan for the Ap Pool authorizes the Ap Pool Committee to take action on behalf of its members pursuant to a “majority of the voting power of members in attendance, provided that it includes concurrence by at least one

-15

third of its total members.” By agreeing to the Judgment, member s of each Pool accepted the possibility that implementation of the O BM P through the collective decision

- making of their Pool may result in taking action they (individually) do not support. As the superior court observed, “chaos would ensue” if the Pools employed a decision

- making process untethered to the majority rule voting system. Similarly , the Peac e Agreement acknowledged and affirmed the Ap Pool’s power
to resolve disputes over the Pool’s obligations via a majority vote. In executing the
A gr eement, a ppellants stated their desire “to resolve issues by consent under [its] express terms and conditions

. ” Section 1.1(gg) defines “[p]arty or [p]arties” as a party to the Judgment and/or a party to the Agreement ; appellants are parties to the Judgme nt , and Chino, Ontario, Monte Vista Water District, and the Ap Pool are part ies to the Agreement . Section 1.2(a)(v) defin es “includes” and “including” as “ not limiting

. ” Section 5.4(a) identifies the Ap Pool as the sole party responsible for paying the A g Pool’s expenses: “ During the term of this Agreement, all assessments and expenses of the Agricultural Pool including those of the Agricultural Pool Committee shall be paid by the Appropriative Pool .” Because section 5.4(a) did not specify any othe r payor, the superior court correctly concluded that the “App Pool, qua pool,” bore the obligation. Also, section 8.4 provides the Ap or Ag Pool “ (as a Pool only and not the individual members of either Pool) ” each with the unilateral right to extend the term of the Peace Agreement for an additional 30 years, prior to the end of the 25th year. Consequently, the Ap Pool possessed the authority, with a majority of its members’ consent, to take action such as extending the term of the Agreement or resolving disputes over its16

contractual obligations, including payment of the Ag Pool’s legal expenses. Such resolution could be via non

- binding mediation or settlement negotiations. ( Robings v. Santa Monica Mountains Conservancy , supra , 188 Cal.App.4th at p. 964 [“in the absence of express restrictions, implied powers may arise as well from the purposes for which the agency was created”] .) In short, the governance structure embodied within the Judgment , coupled with the Peace Agreement, enables administration of the Judgment through collective decision making by each Pool.
2. The Pools’ l ongstanding p ractice r ecognized t heir a bility to t ake b inding

r epresentative a ction

. For more than 40 years, the Pools have taken actions in a representative capacity

on behalf of their members. Watermaster notes the following examples of such actions: (1) ret aining of counsel and consultants; (2) directing Watermaster in the proper way to invoice Pool members for paying legal counsel; (3) directing refinancing of Waterm aster debt; (4) determin ing of manner in which members fund groundwater recharge improvement projects in the Basin; (5) determining representatives on the Advisory Committee and Watermaster Board; (6) appealing superior court orders; and (7) initiating

sto rage contests. The parties’ conduct and extensive course of dealing clarify any uncertainty in whether the Pools may act in a representative capacity. ( Alameda County Flood Control & Water Conservation Dist. v. Department of Water Resources (2013) 213
Ca l.App.4th 1163, 1202

- 1203 [“ assuming plaintiffs have tendered an ambiguity regarding allocation of the proceeds or value of system power pool sales or trades, the17

long course of dealing between the parties clarifies that ambiguity against them ”] ; Orange Co ve Irrigation Dist. v. Los Molinos Mutual Water Co . (2018) 30 Cal.App.5th 1,
12

- 13 [“‘ The mutual intention to which the courts give effect is determined by objective manifestations of the parties’ intent, including the words used in the agreement, as well as extrinsic evidence of such objective matters as the surrounding circumstances under which the parties negotiated or entered into the contract; the object, nature and subject matter of the contract; and the subsequent conduct of the parties. ’”] ; see Moreno Mut ual Irrigation Co. v. Beaumont Irrigation Dist. (1949) 94 Cal.App.2d 766, 783

- 784 [passage of time and course of dealing bar subsequent assertion of public policy and constitutional claims under a contract for stipulated judgment]. ) Moreover, t h e Peace Agreement was specifically approved and executed by the Pools acting in their representative capacity.
In the resolution approving the Agreement, the Ap Pool “ authorize [ d ] the Chairman to

execute the Peace Agreement on behalf of the Appropriative Pool.”
Given the 40

- plus year history of representative actions by the Pools, coupled with appellants’ consent or acquiescence, we reject appellants’ characterization of its Pool ’ s role as a powerless “ administrative and advisory” body. As Watermaster ap tly notes, a single representative voice from each Pool is “wise, balanced, and useful in optimizing the efficient use of water in the Basin, facilitates compromise, and affords all individual parties a voice in the process while preserving their remedy to challenge Watermaster actions.”18

B. The TOA is Consistent with the Judgment, the Peace Agreement, and the Superior Court’s Orders. Appellants contend the TOA is incon s istent with the Judgment, the Peace Agreement, and the court’s May 28 and December 3 , 2021 orders because it alters the extent of the Ap Pool members’ obligation under section 5.4(a) of the Agreement and the methodology for ascertaining the amount of that obligation

. As previously noted, the Judgment, the Peac e Agreement, and the parties r epeated acquiescence in the representative actions by the Pools, acknowledged each Pool’s right to act upon the consent of a majority of its members. The Peace Agreement established the Ap Pool’s commitment to pay the Ag Pool’s legal expenses. As parties to the Agreement, appellants consented to such commitment. For decades, they fulfilled this commitment, spending public funds to do so. However, when the Ag Pool’s legal expenses nearly doubled, appellants challenged the amount requested via judicial
in tervention. On May 28, 2021, the superior court found merit in their challenge and ruled that section 5.4(a) of the Peace Agreement does not obligate the Ap Pool to pay unlimited Ag Pool expenses “without knowledge of the nature of the expenses.” Rather, when challenged, the Ag Pool must demonstrate that the expenses were for services t hat benefitted it and w ere not adverse to the Ap Pool

. However, n othing in the May 28 , 2021 order proscribed settlement of the disputed amount as a means of resolution. Nonetheless, Ontario argues the TOA violates due process as determined in the May 28, 2021 order by committing the Ap Pool to pay legal expenses that may not have complied with the procedure prescribed by the superior court. Not so. As the Ap Pool19

notes, this procedure applies only “[i]f the parties cannot come to an agreement
themselves (as the court states they may do in paragraph 7 ) .” Paragraph 7, in relevant part, provides, “Judgment ¶54 and Peace I § 5.4(a) mean that, of course, the Ag Pool and the [Ap] Pool can agree to a determination to [ sic ] about payment of ‘litigation
expense. ’” In reaching the TOA, the parties employed the procedure contemplated by the court in its May 28 order. The TOA states that it is “in furtherance of and without abrogation of the provisions of the May 28, 2021, San Bernardino Superior Court Order (the Order)[,]” and that it is “made for purposes of settlement within the interpretational parameters of the Order. These Terms of Agreement and the Order shall be construed together.” Moreover, the TOA included the same conditions on payment the court had
d escribed in its May 28 order. Thus, the TOA is consistent with the May 28, 2021 order. Likewise, the TOA is not inconsistent with the superior court’s December 3, 2021 order denying the Ag Pool’s motion for attorney fees. The court denied the motion “in its entirety, on the basis that all fees sought by the [Ag] Pool are either for activities that were adversarial to the [Ap] Pool or, in the alternative , the Court could not determine whether the claimed fees were fair, reasonable, appropriate, and consis tent with the Court’s May 28, 2021 Order, due to the level of redaction of the invoices supporting such claimed fees.” Specifically, the court “found redactions to be so extensive to make most of the bills meaningless for review by the opposing counsel an d a determination by The Court.” Like the May 2 8 , 2021 order, nothing in the December 3, 3021 order proscribed settlement of the disputed amount as a means of resolution. Again, the TOA manifests the agreement between the two Pools regarding the amount o f 2020

- 2021 legal expenses20

the Ap Pool was obligated to pay the Ag Pool according to the terms of the Peace Agreement. It does not impose any additional obligation on appellants, or require them to pay any expenses they had not already agreed to pursuant to the Peace Agreement.
C

. Appellants’ Remaining Arguments are Nothing More Than Red Herrings. Appellants’ remaining arguments challenging the superior court’s denial of their
motions for reimbursement include: (1) A majority of the Ap Pool may not bind a public agency; (2) T here is no implied contract authorizing the Ap Pool to bind appellants 5 ; (3) T he equities do not support a quasi

- contract; (4) I mposition of the TOA violates public policy and denies appellants their right to seek judicial review ; and (5) T he court erroneously relied on equitable doctrines to preclude appellants’ reimbursement motion s. As we explain, these arguments amount to nothing more than red herrings. Appellants are parties to the Judgment and the Peace Agreement, both of which set forth their rights and obligations. Nothing in the TOA imposed any additi onal financial obligation on any public agency that it had not already agreed the Ap Pool would pay (funded by its members) according to the Peac e Agreement. However, since the annual amount of this obligation was not specified nor limited in the Peace Ag reement, appellants rightly sought judicial intervention when the Ag Pool sought $563,000 in fees (including more than $102,000 to reimburse Watermaster’s administrative reserves). In

5 Having found the TOA to be c onsistent with the Judgment, the Peace Agreement, and the s uper ior c ourt’s prior o rders , w e reject appellants’ challenge t o the finding of an implied contract that authorizes the Ap Pool to bind them by the majority vote on its decisions. Moreover, as the Ap Pool points out, the implied contract theory was an alterna tive ground cited by the court in support of its ruling.21

response, on May 28, 2021, the superior court ruled that section 5.4(a) of the Peace Agreement does not obligate the Ap Pool to pay unlimited Ag Pool expenses “without knowledge of the nature of the expenses.” Rather, the Ag Pool must show that the claimed fees are fair, reasonable, and appropriate. If the Ag Pool satisfies this showing, the Ap Pool pays the amount requested. If not, the two Pools may negotiate an acceptable amount. If negotiations are unsuccessful, then the Ap Pool may seek judicial intervention where the Ag Pool will have to prove to the court its right to the requested fees. Here, a lthough the two Pools engaged in settlement discussions throughout 2021, 6 when no settlement was reached, the Ag Pool sought judicial intervention. The superior court denied the Ag Pool’s request for fees, and it appealed . In response, the Pool s continued to seek a resolution of their dispute . Simultaneously, appellants filed their motions for reimbursement. By the time their motions were heard by the court, the Pools had reached a compromise. According to the TOA

— whic h was approved by a majority vote of each Pool’s membership according to the Judgment

— the Ap Pool agreed to pay $370,000 of the disputed $563,000. Of the $370,000, the Ag Pool would pay $102,557.12 to reimburse Watermaster’s administrative reserves. In e xchange for the Ap Pool’s agreement to pay $370,000, the Ag Pool agreed to dismiss its appeal.

6 According to John Bosler, General Manager of the Cucamonga Valley Water District (a member of the Ap Pool) and Chair of the Ap Pool in 2021, the Ap Pool, the Ag Pool, and other representatives (in cluding from Ontario) met several times from May through September 2021, to engage in good faith discussions regarding potential terms and conditions of a comprehensive settlement agreement to resolve the Ag Pool’s disputed expenses.22

Additionally, the TOA clarified t he Peace Agreement

— specifically the Ap Pool’s obligation to pay for the Ag Pool’s legal expenses

— by defining the procedures for processing the Ag Pool’s requests going forward. Contrary to Chino’s assertion, the TOA has not denied them their right to judicial review. In denying appellants’ reimbursement motions, the superior court reviewed the relevant documents and considered appellants’ argument s . Nonetheless, it concluded the
TOA was valid, binding on all Ap Pool members, and resolved all issues raised

. Appellants have appealed the court’s order, and, after reviewing the record and considering the parties’ argume nts, we conclude the superior court correctly denied their motions. There has been no denial of any party’s right to judicial review. Likewise, we do not agree the TOA violates public policy or rises to an unlawful gift of public funds. Appellants are l iable for their share of the Ag Pool’s expenses as members of the Ap Pool. The issue was not whether the Ap Pool must pay the Ag Pool’s request of $563,000, but how much it must pay . Facing the Ag Pool’s appeal of the superior court’s order denying its r equest for payment, the Ap Pool engaged in settlement discussions and was able to resolve the good faith dispute via the TOA. As the Ap Pool

notes: “The settlement of a good faith dispute between the State and a private party is an appropriate use of pub lic funds and not a gift because the relinquishment of a colorable legal claim in return for settlement funds is good consideration and establishes a valid public purpose .” ( Jordan v. Department of Motor Vehicles (2002) 100 Cal.App.4th 431,
450 ; id . at pp . 450

- 451 [unlawful gift where attorneys had no colorable claim to fees in excess of $18 million ] ; see Orange County Foundation v. Irvine Co . (1983) 13923

Cal.App.3d 195, 200

- 201 [ holding that, when state funds are used to satisfy “ wholly invalid claim[s] ” “ no ‘ public purpose ’ is achieved ] .) Finally, the superior court did not erroneously rely on equitable doctrines to preclude appellants’ reimbursement motions. As respondents aptly note, it is not the delay in the filing of appellants’ reimbursement motions that give s rise to laches. Rather, it is the late change in their position regarding their responsibility for paying the Ag Pool’s legal expenses (which they have done for 20 years), along with their acquiescence in the representative structure of the Pools for more than 40 years. As the superior court stated, “the length of time that the parties/dissenters have failed to raise their qualitatively legal objec tions in court to the [Ap] Pool’s payment of the Ag Pool’s legal expenses has the following consequences: [¶] a. They are barred by laches. [¶] b. They are waived.” ( In re Marriage of F

ogarty & Rasbeary (2000) 78 Cal.App.4t h 1353, 1359 [“Laches is an equitable defense to the enforcement of stale claims. It may be applied where the complaining party has unreasonably delayed in the enforcement of a right, and where that party has either acquiesced in the adverse party ’ s conduct or where the adverse part y has suffered prejudice thereby that makes the granting of relief unfair or inequitable. ”].) Similarly, appellants may not challenge the amount of any p rior payment (2019

- 2020) by the Ap Pool to the Ag Pool, which was assessed, reviewed, approved, and pa id without objection

. Since appellants failed to raise a timely objection, the court correctly found that they had waived any challenge.24

D

. Conclusion

. For more than 40 years, disputes over Watermaster decisions , Pool actions, and party actions have fallen within the superior court’s continuing jurisdiction , and they continue to do so

. Here , appellants have used their dispute over the propriety of the Ag Pool’s invoices

— sanctioned by the Peace Agreement

— to challenge the Ap Pool’s authority to act in a representative capacity under the Judgment. In denying the ir reimbursement motions based on a finding that the Pools executed a valid settlement, the TOA, t he superior court correctly concluded that neither th e Judgment nor the Peace Agreement requires the Ap Pool to obtain unanimous consent of its members to act

. To hold otherwise would disrupt the efficient management of the Basin as provided for in the Judgment

. III. DISPOSITION The order is affirmed. Re spondents are to recover costs on appeal.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS

McKINSTER Acting P. J.

We concur:

MILLER J.

CODRINGTON J.