1 EDMUND G. BROWN JR.

( l\ •- -• — ,
ORIGINAL
Attorney (General of California f?lSo7lHOORSED
2 W n i i A M l r CARTFR y . / r *••**** ** ,
Supervising Deputy Attorney General ( 11
3 GEORGE S. SPANOS " .. . « _ o 2010
Deputy Attorney General ^ """
4 AMY j. WINN
Deputy AUomey Geiieial pyv- L,jdWitDV_
5 State Bar No. 142421 ^DEPUTY CLERK _
1300 1 Street, Suite 125 ' '
6 P.O. Box 944255
Sacramento, CA 94244-2550
7 Telephone: (916)322-1673
Fax: (916)327-2247
8 E-mail: amy.winn@doj.ca.gov
Attorneys for Defendants California High-Speed
9 Rail Authority and Executive Director Mehdi
Morshed
10
SUPERIOR COURT OF THE STATE OF CALIFORNIA
11
COUNTY OF SARAMENTO
12 1

13
14
15 RUSSELL J. PETERSON and HALSTEAD Case No. 34-2010-00069687 .
NURSERY INC., (DBA ROGER
16 REYNOLDS NURSERY & CARRIAGE (Formerly San Mateo County Superior Court
STOP), Case No. CIV 486749)
17
Plaintiff, NOTICE OF HEARING ON
18 DEMURRER; DEMURRER AND
v. MEMORANDUM OF POINTS AND
19 AUTHORITIES IN SUPPORT
20 CALIFORNIA HIGH SPEED RAIL
AUTHORITY, EXECUTIVE DIRECTOR
21 MEHDI MORSHED, PENINSULA Date: May 20, 20 10
CORRIDOR JOINT POWERS BOARD, Time: 2:00 P.M.
22 CHAIRMAN DON GAGE, and DOES 1 Dept: 53
through 5 Inclusive, Reservation Number: 1337935
23 Trial Date: TBA
Defendants. Action Filed: August 28, 2009
24 Date Transferred: February 3, 2010
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 1 TO ALL PARTIES AND THEIR COUNSEL OF RECORD:
2 PLEASE TAKE NOTICE that on May 20, 2010 at 2:00 P.M., or as soon thereafter
3 as the matter may be heard, in Department 53 of the above-entitled court, located at 800
4 Ninth Street, Sacramento, California, Defendants California High Speed Rail Authority
5 ("HSRA") and Excutive Director Mehdi Morshed will demur to each and every cause of
6 action in the First Amended Complaint of plaintiffs Russell J. Peterson and Halstead
7 Nursery, Inc.
8 This demurrer is supported by this notice, demurrer and memorandum of points and
9 authorities in support (served and filed herewith), all pleadings and papers on file herein
10 (of which judicial notice is herein sought), matters of which the court may take judicial
11 notice, the arguments of counsel and such other matter as may be presented in connection
12 with the hearing.
13 Pursuant to Local Rule 3.04, the court will make a tentative ruling on the
14 merits of this matter by 2:00 p.m., the court day before the hearing. You may access
15 and download the court's ruling from the court's website at http://www.saccourt.
16 ca.gov. If you do not have online access, you may obtain the tentative ruling over the
17 telephone by calling (916) 874-8142 and a deputy clerk will read the ruling to you. If
18 you wish to request oral argument, you must contact the courtroom clerk at (916)
19 874-7858 (Department 53) and the opposing party before 4:00 p.m. the court day
20 before the hearing. If you do not call the court and the opposing party by 4:00 p.m.
21 on the court day before the hearing, no hearing will be held.
22
Dated: March 6, 2010 Respectfully Sufe^nitted,

24 B

25
AMYJ.'WINN
Deputy Attorney General
Attorney for Defendants
26 California High-Speed Rail Authority
and Executive Director Mehdi Morshed
27
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 1 DEMURRER
2 Defendants High Speed Rail Authority ("HSRA") and Executive Director Mehdi
3 Morshed demur to the First Amended Complaint of plaintiffs Russell J. Peterson and
4 Halstead Nursery, Inc., and to each cause of action contained therein, pursuant to Code of
5 Civil Procedure ("CCP") section 430.10, subd. (e).
6 Defendants demur to the declaratory relief cause of action on the ground that it fails
7 to state a cause of action against defendants
8 Although not separately denominated, defendants also demur to the cause of action
9 for waste, on the grounds that it fails to state a cause of action against them.
10 Defendants demur to the First Amended Complaint in its entirety for failure to state
11 a cause of action against them.
12 WHEREFORE, Defendants pray as follows:
13 1. That this demurrer be sustained without leave to amend and
14 2. For such other and further relief as the Court deems just and proper.
15
16 „
Dated: March 6, 2010 Respectfully.Submitted,
UA TV"-/ KxT
AMY L^INN
18 Deputy Attorney General
Attorneys for Defendants
19 California High-Speed Rail A uthority
and Executive Director Mehdi Morshed
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 1 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF
2 DEMURRER

Plaintiffs Russell J. Peterson and Halstead Nursery, Inc. are taxpayers residing in
San Mateo County. (First Amended Complaint ["FAC"] at pars. 1-2.) They seek, via a
suit for declaratory relief, to prevent defendants High Speed Rail Authority ("HSRA") and
the Peninsula Corridor Joint Powers Board ("JPB"), both public entities, from entering
into any agreement "for the construction of a high speed rail facility" along a certain
segment of rail line "unless and until" said public entities obtain "the express written
9
consent" of Union Pacific Railroad ("UPRR"). (FAC at p. 8, Prayer at par. 1.) Plaintiffs
contend that any such agreement between defendants would be illegal because UPRR is a
1
1 party to another agreement which controls the the right of way ("ROW") over which a
12 future high speed rail train would likely run and, under that agreement, the Trackage
13
Agreement ("TRACKAGE AGREEMENT, Exhibit A to the FAC), Union Pacific must
give permission before construction can begin. (FAC at par. 8.) Plaintiffs also ask the
Court to prohibit any construction along the ROW until UPRR's consent is given. (Id. at
p. 8, Prayer at par. 1.)
Plaintiffs assert an interest because, according to the FAC, there is "evidence" that
defendants intend to enter into an agreement without UPRR's prior consent. (FAC at par.
12, p. 6:26-27.)! Therefore, unless this Court intervenes, defendants will enter into an
20 illegal agreement "with the resulting waste of public assets, resources and funds" (FAC at
21 par. 13, p. 7:13-14).2
22 Although seeking declaratory relief, plaintiffs' action sounds as one for waste under
23 Code of Civil Procedure ("CCP") section 526a. (FAC at par. 1, p. 1:23-26.) In order to
24
state a valid claim against defendants plaintiffs must establish both that they have met the
25

26 ' Similar allegations regarding evidence of defendants' intent to act illegally appear at
FAC par. 8, p. 4:02-06; par, 10, p. 4:21-25 and par. 12, p. 06-08.
2
27 Similar allegations regarding waste of public funds occur at FAC par. 8, pp. 3:23-4:09
and par. 13, p. 7:12-14.
28
 1 elements of a cause of action for waste under CCP section 526a and that declaratory relief
2 is "necessary and proper" under the circumstances. (CCP 1061.) They can do neither.
3 Not only is the purported evidence of defendants' "intent" to act illegally speculative
4 -and the likelihood of any resulting loss to the public fisc even more so- the lawsuit is
5 improper because it trespasses upon the discretion of the HSRA to carry out its statutory
6 mandate to develop and implement a high speed rail system. (See, e.g., Public Utilities
7 Code section 185034.) (Zetterberg v. California State Department of Health (1975) 43
8 Cal.App.3d 657, 662 and 663 ["It is the prerogative of the Legislature to prescribe the
9 powers and authority of an executive agency created to deal with a specific problem . . . .
10 It would violate the doctrine of separation of powers if the courts . . . under the guise of
11 declaratory relief, made pronouncements in [a] field reserved to legislative or executive
12 discretion"].)
13 ARGUMENT
14 I. LEGAL STANDARD

15 A. Demurrer
16 A demurrer tests the legal sufficiency of the challenged pleading by raising only
17 questions of law. (Lopez v. City ofOxnard(\9%9) 207 Cal.App.3d 1, 6.) All facts
18 properly pleaded are deemed admitted. (White v. Davis (1975) 13 Cal.Sd 757, 765.) The
19 grounds for the demurrer must appear from the face of the pleadings or from matter
20 properly subject to judicial notice. (CCP section 430.30, subd. (a).) Defendants accept,
21 for purposes of this demurrer, the factual allegations of the First Amended Complaint as
22 true.3
23 B. Declaratory Relief
24 A court has broad discretion in determining whether or not to entertain an action for
25 declaratory relief; its decision is reviewable on appeal for abuse of discretion. (Meyer v.
3
26 it should be noted that the FAC does not allege that defendants intend to violate the
TRACKAGE AGREEMENT; it alleges only that there is "evidence" to that effect. (See n. 1,
27 supra.) HSRA does not challenge the authenticity of the Exhibits to the FAC for purposes of this
demurrer but interpretation of those documents is a matter for the Court. See note 4, infra.
 1 Sprint Spectrum (2009) 45 Cal.4th 634, 647 [denying declaratory relief to class of
2 plaintiffs challenging contractual provisions in cell phone service agreements].)
3 Code of Civil Procedure section 1060, which provides that a court "may make
a binding declaration" of a litigant's rights or duties must be read together with
4 section 1061, which states: "The court may refuse [to grant declaratory relief]
in any case where its declaration or determination is not necessary or proper at
5 the time under all the circumstances."
6 (Id., emphasis in original. Accord Silva v. City and County of San Francisco (1948) 87
7 Cal.App.2d 784, 789 [refusing to entertain declaratory relief action to value property in
8 future condemnation proceeding]; and Trovers v. Louden (1967) 254 Cal.App.2d 926,
9 932 ["Undeserving cases should be disposed of in a summary manner, as upon
10 demurrer"].)
11 Declaratory relief actions are limited to "cases of actual controversy." (CCP section
12 1060.) "The controversy must be of a character which admits of specific and conclusive
13 relief by judgment within the field of judicial determination, as distinguished from an
14 advisory opinion upon a particular or hypothetical state of facts." (Zetterberg, 43
15 Cal.App.3d at p. 661.) Disputes may not be "abstract or academic." (Connerly v.
16 Schwarzenegger (2007) 146 Cal.App.4th 739, 746, quoting Newland v. Kizer (1989) 209
17 Cal.App.3d 647, 657; and see Fiske v. Gillespie (1988) 200 Cal.App.3d 1243, 1247
18 [discussing "the difficulty of rendering an opinion in a factual vacuum"].)
19 C, Waste (Code of Civil Procedure Section 526a)
20 Code of Civil Procedure section 526a provides that:
21 An action to obtain a judgment, restraining and preventing any illegal
expenditure of, waste of, or injury to, the estate, funds, or other property of a
22 county, town, city or city and county of the state, may be maintained against
any officer thereof, or any agent, or other person, acting in its behalf, either by
23 a citizen resident therein, or by a corporation, who is assessed for and is liable
to pay, or, within one year before the commencement of the action, has paid, a
24 tax therein.
0C
^ Case law establishes that a waste cause of action may be brought against any
26 governmental entity, including the State (Los Altos Property Owners Association v.
27 Hutcheon (1977) 69 Cal.App.3d 22, 26), and that a taxpayer may seek declaratory,
28 ///
 1 as well as injuncitve, relief (Gates v. Caliafornia Gambling Control Commission
2 (2007) 154 Cal.App.4th 1302, 1308).

In order to state a waste cause of action, plaintiff must allege "an illegal or wasteful
expenditure of public funds or damage to public property." (Waste Management of
5
Alameda County, Inc. v. County ofAlameda (2000) 79 Cal.App.4th 1223, 1240.) In
addition, the requested relief may not "trespass into the domain of legislative or executive
discretion." (Harman v. City and County of San Francisco (1972) 7 Cal.3d 150, 161.)
g
To hold otherwise would invite constant harassment of city and county officers
9 by disgruntled citizens and could seriously hamper our representative form of
government.
10
(Daily Journal Corporation v. County of Los Angeles (2009) 172 Cal.App.4th 1550, 1558.)
Finally, "[a] taxpayer waste cause of action will not lie where the challenged
12
governmental action is legal." (In re Red Light Photo Enforcement Cases (2008) 163
Cal.App.4th 1314, 1326.) For instance, should the State decide to take the property at
issue via eminent domain, it would be acting legally but outside the terms of the
15
TRACKAGE AGREEMENT; no waste cause of action would lie. (Cf. Prayer of FAC at
16
P-8.) 4
17
II. PLAINTIFFS' "EVIDENCE" OF DEFENDANTS' INTENT TO ACT ILLEGALLY IS
1g SPECULATIVE AND CONTRADICTORY; IT DOES NOT SUPPORT A CAUSE OF
ACTION FOR WASTE AND DECLARATORY RELIEF IS IMPROPER
19
Plaintiffs suit is predicated on the assumptions that 1) defendants will breach (or
20
cause a breach of) the TRACKAGE AGREEMENT (FAC at pars. 8, 10 and 12 and 13),
1l
2) that UPRR will enforce its rights under the TRACKAGE AGREEMENT (FAC at par.
97
12), 3) that defendants will defend their illegal conduct (FAC at par. 6) and 3) that this
23
will result in waste of public funds because state and local entities will expend resources
24
unsuccessfully litigating and/or will waste resources on construction activities that will be
25
negated by a subsequent legal determination that construction was illegal without UPRR's
26
4
Plaintiffs ask for a declaration that no "construction [be] undertaken related to the
27 project on the ROW, unless and until the express written consent of UPRR has been obtained . . ."
This is plainly improper.
 1 prior consent (FAC at pars. 8 and 14). These assumptions are speculative. (Cf. Waste
2 Management ofAlameda County, Inc. v. County ofAlameda (2000) 79 Cal.App.4th 1223,
3 1240 ["General allegations, innuendo, and legal conclusions are not sufficient" to state a
4 waste cause of action].) First, agency actions "come before the court with a presumption
5 of correctness and regularity." (California Association of Nursing Homes, Inc. v.
6 Williams (1970) 4 Cal.App.3d 800, 810, [citing Evidence Code section 664].) Second,
7 plaintiffs' "evidence" of defendants' "imminent intent" to breach the TRACKAGE
8 AGREEMENT does not bear scrutiny.
9 Plaintiffs assert that a Memorandum of Understanding ("MOU") (Ex. B to FAC)
10 entered into between defendants constitutes "evidence" of their intent to breach the
11 TRACKAGE AGREEMENT because the MOU fails to mention UPRR' s rights in the
12 ROW (FAC at par. 12, pp. 6:23-7:08 and par. 10, pp. 4:24-5:01). This interpretation is
13 strained, to say the least. The MOU "establishes an initial organizational framework
14 whereby CHSRA and PCJPB [defendants] engage as partners in the planning, design and
15 construction of improvements in the Caltrain Rail Corridor." (MOU, Ex. B at p. 2, Section
16 1 ["Purpose of Agreement"].) The MOU is preliminary in nature, "an agreement to agree"
17 (FAC at par. 10, p. 4:21-24); there is no reason for it to address UPRR's contractual
18 rights.
19 In fact, the evidence cited in the FAC contradicts plaintiffs' allegations of an
20 "imminent" breach of the TRACKAGE AGREEMENT. Exhibit C to the FAC, a letter
21 from UPRR which plaintiffs hold up as evidence of .defendants' knowledge of UPRR's
22 "strong reservations . . . concerning the contemplated activities of the defendants" (FAC at
23 par. 12, p. 7:01-03), ends with the following sentence: "Union Pacific is confident that its
24 concerns will be fully addressed and mitigated by the Authority and the FRA [Federal
25 Railroad Administration] during the EIR/EIS [Environmental Impact Report/Environmen-
26 tal Impact Statement] process." (Ex. C. to FAC.)5
5
27 It is appropriate for this Court to interpret the Exhibits to the FAC on demurrer unless
plaintiffs ascribe a special meaning to the quoted terms. See Fremont Indemnity Co. v. Fremont
(continued...)
 1 Plaintiffs seek an advisory opinion under a hypothetical set of facts which they have
2 failed to demonstrate is ever likely to occur. (Cf. Meyer, supra, 45 Cal.4th at p. 648,
3 sustaining demurrer to declaratory relief action instituted to determine the enforceability
4 of certain contractual provisions because "[n]o dispute has arisen that would cause these
5 remedial provisions to come into play.") No waste claim is stated and declaratory relief is
6 neither necessary nor proper under these circumstances.
7
III. EVEN IF PLAINTIFFS COULD ESTABLISH THAT A BREACH OF THE TRACKAGE
AGREEMENT WERE IMMINENT, THEY CANNOT SHOW THAT THE PUBLIC FISC
8 WOULD SUFFER THEREBY; A WASTE CAUSE OF ACTION WILL NOT LIE
9 Plaintiffs contend that, should defendants contract to construct a high speed rail
10 facility without UPRR's consent, and in violation of the TRACKAGE AGREEEMENT, it
11 would "expose the property and funds of the counties and the State to legal action and
12 waste of all public resources devoted to planning and construction on the ROW." (FAC at
13 par. 8, p. 4:08-09.) Thus, they ask "that the Court declare the rights and obligations of the
14 parties to the TRACKAGE AGREEMENT with respect to the construction of high speed
15 rail over the ROW so that the imminent damage to public property and a corresponding
16 waste of public funds can be avoided." (FAC at par. 8, p. 4:09-12..)
17 Even if plaintiffs could establish, which they have not, that a breach of the
18 TRACKAGE AGREEMENT were imminent, they could still not allege, except as a
19 remote hypothetical, that the public fisc would suffer as a result. Thus they cannot state
20 an essential element of their waste claim. (Waste Management, supra, 79 Cal.App.4th at p
21 1240.)
22 Contracts are breached everyday but it is relatively rare for legal action and resulting
23 damages to ensue. Parties re-negotiate and positions change during negotiations. (Cf.
24 Rowland School District v. State Board of Education (1968) 264 Cal.App.2d 589, 595

25 (...continued)
General Corporation (2007) 148 Cal.App.4th 97, 118 (discussing "the rule that if the plaintiff
26 fails to allege a document attached to the complaint has a special meaning, a court ruling on a
demurrer will interpret the document on its face to determine as a matter of law whether it is
27 reasonably susceptible of an interpretation that would support a cause of action") (citing Beck v
American Health Group, Intl. (1989) 211 Cal.App.3d 1555, 1561).
28
 1 ["the uncertainties of the future may be taken into consideration by a court asked to
2 declare the rights in question . . . and a denial of a declaratory judgment be a proper
3 exercise of the court's discretion"].) Many factors can affect contract negotiations,
4 including, whether or not one of the other contracting parties is in breach, the financial
5 wherewithal of the contracting parties, the actions of third parties, changes in law, and the
6 availability of extra-contractual remedies. The possibility of a future lawsuit that might
7 result in damages to the State does not support a waste cause of action. (Cf. In re Red
8 Light Photo Enforcement Cases (2008) 163 Cal.App.4th 1314, 1326 ["absurd
9 consequences would result if taxpayers could readily get the courts to enjoin
10 governmental agencies from spending any money in connection with any project or
11 program that might arguably involve a component that was inconsistent with the law"].)
1
2 IV. THE DECLARATION PLAINTIFFS SEEK IMPERMISSIBLY INTERFERES WITH
THE HSRA'S ADMINISTRATIVE DISCRETION TO CARRY OUT ITS STATUTORY
13 MANDATE

14
15 In Public Utilities Code section 155034 the Legislature explicitly authorized the
16 HSRA, among other things, to:

17 [c]onduct engineering and other studies related to the selection and acquisition
of rights-of-way . . . .[s]elect a proposed . . . route . . . [and] [e]nter into
18 contracts with public and private entities for the preparation of the plan [for a
high speed rail system].

20 (Public Utilities Code section 185034, subds. [1], [5] and [6].) This provision shows that
21 the Legislature intended that the HSRA exercise considerable discretion in performing its
22 statutory duties. (Cf. Sklar v. Franchise Tax Board (1986) 185 Cal.App.3d 616, 623
23 [breadth of statutory language and legislative silence as to the methods by which an
24 agency should exercise its discretion to pursue a particular statutory goal "necessarily
25 imports . . . discretion in selecting and taking administrative action pursuant to the
26 statutes"]; and cf. Lucas v. Santa Maria Public Airport District (1995) 39 Cal.App.4th
27 1017, 1027 [determination as to which contractual option to pursue "is a decision which
28 lies within the sound discretion of the agency"].) "A court may not interfere with state
 1 officials in the exercise of their discretionary acts." (Elliott v. Superior Court (1960) 180
2 Cal.App.2d 894, 897.)
3 The principle that courts will not interfere with agency discretion rests on the
4 separation of powers doctrine. (Zetterberg, 43 Cal.App.3d at p. 663.) In administering
5 and negotiating contracts for a high speed rail system, HSRA, pursuant to the delegated
6 authority of Public Utilities Code section 185034, engages in legislative acts. "[J]udicial
7 power relative to legislative acts is severely circumscribed." (Sklar, 185 Cal.App.3d at p.
8 624.)

9 It is the prerogative of the Legislature to prescribe the powers and authority of

an executive agency created to deal with a specific public problem . . . . The
10 manner in which this authority is exercised is a matter of administrative
discretion. The wisdom or effectiveness of the exercise of either legislative or
11 administrative discretion is judged essentially by the political process.
12 In short, the judicial branch of government is not the overseer of the other two.
13 (Zetterberg, 43 Cal.App.3d at p. 662.)
14 CONCLUSION
15
For all the foregoing reasons, HSRA asks that this Court sustain its demurrer to the
16 First Amended Complaint without leave to amend.
17
Dated: March 6, 2010 Respectfully Submitted,
18 "
19 ..
Deputy Attorney General
20 Attorneys for Defendants
California High-Speed Rail Authority
21 SA2009102055/10536550.doc

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 DECLARATION OF SERVICE BY U.S. MAIL

Case Name: Peterson, et al. vs. California High Speed Rail Authority, et al.
Sacramento County Superior Court Case No.: 34-2010-00069687

I declare:

I am employed in the Office of the Attorney General, which is the office of a member of the
California State Bar, at which member's direction this service is made. I am 18 years of age or
older and not a party to this matter. I am familiar with the business practice at the Office of the
Attorney General for collection and processing of correspondence for mailing with the United
States Postal Service. In accordance with that practice, correspondence placed in the internal
mail collection system at the Office of the Attorney General is deposited with the United States
Postal Service that same day in the ordinary course of business.

On March 8, 2010,1 served the attached NOTICE OF HEARING ON DEMURRER;

DEMURRER AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT
by placing a true copy thereof enclosed in a sealed envelope with postage thereon fully prepaid,
in the internal mail collection system at the Office of the Attorney General at 1300 I Street, Suite
125, P.O. Box 944255, Sacramento, CA 94244-2550, addressed as follows:

Michael J. Brady Zachary Tyson

1001 Marshall Street, Suite 300 800 West El Camino Real, Suite 180
Redwood City, CA 94063 Mountain View, CA 94040
Attorney for Plaintiffs Attorney for Plaintiffs

Kimon Manolius
Adam Hofmann
Hanson Bridgett LLP
425 Market Street, 26th Floor
San Francisco, CA 94105-2173
Attorneys for Defendant Peninsula
Corridor Joint Powers Board

I declare under penalty of perjury under the laws of the State of California the foregoing is true
and correct and that this declaration was executed on March 8, 2010, at Sacramento, California.
c wz
- Declarant
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_ P..
Signature
VAA/h
SA2009I02055
10542395 doc