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Court upholds some pre-trial claims by Metropolitan Water

The Superior Court for the County of San Francisco sustained Wednesday a demurrer by the Metropolitan Water District of Southern California to a breach of fiduciary duty claim by the San Diego County Water Authority in the water-rate case that began in June 2010, according to a statement released late Wednesday by MWD.

The court also sustained MWD’s demurrer to SDCWA's cause of action for breach of the covenant of good faith and fair dealing in the exchange agreement involving San Diego’s water transfer with Imperial Irrigation District.

A demurrer is a request for dismissal because the allegations are not sufficient to state a claim, even if they are accepted as true.

“This eliminates from the case SDCWA’s allegations that Metropolitan and its member agencies engaged in any improper procedures in adopting rates or taking other board actions,” said interim MWD General Counsel Marcia Scully in a memo to the district’s Board of Directors Wednesday afternoon.

The Water Authority claims MWD is violating the state constitution, state law and common practice by improperly overcharging for the transportation of water and using that money to subsidize the cost of MWD water. SDCWA has complained that the overcharging equates to around $30 million for 2011 and will total around $34 million in 2012.

While the court upheld MWD’s demurrer, it denied MWD’s motion to completely strike the fiduciary duty claim. But Scully added that the ruling on the demurrer makes the denial irrelevant.

The hearing is scheduled to continue Friday at 2 p.m., when the court is expected to consider Imperial Irrigation District’s motion to obtain discovery relating to the original action challenging the rates and Metropolitan’s motion to bifurcate the initial rate challenge from the remaining causes of action.

Neither representatives of the Water Authority, nor the Water Authority’s lawyers, returned calls for comment.

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