1 RUTAN & TUCKER, LLP

John A. Ramirez (State Bar No. 184151)

2 jramirez@rutan.com ELECTRONICALLY
Douglas J. Dennington (State Bar No. 173447) FILED
3 ddennington @rutan.com 9/21/2018 9:03 AM
Peter J. Howell (State Bar No. 227636)
4 phowell@rutan.com
611 Anton Boulevard, Suite 1400
5 Costa Mesa, California 92626-1931
Telephone: 714-641-5100
6 Facsimile: 714-546-9035

7 CARMEL & NACCASHA, LLP

Timothy J. Carmel (State Bar No. 122695)
8 tcarmel@carnaclaw.com
Michael M. McMahon (State Bar No. 157556)
9 mmcmahon@carnaclaw.com
1410 Marsh Street
10 San Luis Obispo, CA 93401
Telephone: (805) 546 8785
11 Facsimile: (805) 546 8015

12 Attorneys for Plaintiff EXEMPT FROM FEE PER GOV’T

Cambria Community Services District CODE SEC 6103
13

14 SUPERIOR COURT OF THE STATE OF CALIFORNIA

15 FOR THE COUNTY OF SAN LUIS OBISPO

16

17 CAMBRIA COMMUNITY SERVICES Case No. 18CVP-0318

DISTRICT, a California Independent Special
18 Services District,
COMPLAINT FOR: 1) BREACH OF
19 Plaintiff, CONTRACT; AND 2) PROFESSIONAL
NEGLIGENCE
20 v.
Date Action Filed:
21 CDM SMITH, INC., a Massachusetts Trial Date:
corporation, and DOES 1 through 25, inclusive,
22
Defendants.
23

24 Plaintiff CAMBRIA COMMUNITY SERVICES DISTRICT (“Plaintiff” or the “District”),

25 hereby alleges as follows:

26 THE PARTIES
27 1. Plaintiff is, and at all relevant times herein was, a community services district
28 organized and existing under the laws of the State of California.

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 1 2. Defendant CDM SMITH, INC. (“CDM”) is, and at all relevant times herein was, a

2 corporation organized and existing under the laws of the State of Massachusetts.

3 3. Plaintiff is unaware of the true names and capacities of Defendants named herein as

4 Does 1 through 25, inclusive, and for that reason has sued such Defendants by such fictitious

5 names pursuant to Code of Civil Procedure section 474. Plaintiff is informed and believes and, on

6 that basis alleges, that each fictitiously-named Defendant is responsible or liable in some manner

7 for the events referred to herein. Plaintiff will amend this Complaint to show the true names and

8 capacities of such Defendants when the same have been ascertained.

9 4. For purposes of this Complaint, CDM and DOES 1 through 25, inclusive, are

10 hereafter collectively referred to as “Defendants.”

11 5. Plaintiff is informed and believes, and based thereon alleges, that Defendants, and

12 each of them, are responsible, in whole or in part, for each of the acts or omissions alleged herein,

13 and that, at all times herein mentioned, Defendants, and each of them, were acting as agents,

14 servants, and/or employees of each other, and were acting within the course and scope of their

15 agency and employment with the full knowledge and consent, either express or implied, of each of

16 the other Defendants. As such, Defendants, and each of them, were and are jointly and severally

17 responsible with each of the other named Defendants herein for those acts or omissions alleged

18 herein.

19 VENUE
20 6. The San Luis Obispo County Superior Court is the proper venue for this action

21 pursuant to Section 6.06 of the Engineering Services Agreement at issue in this case, and because

22 the contract, property and nexus of facts arose in the County of San Luis Obispo.

23 FACTUAL BACKGROUND
24 7. Plaintiff is an independent community services district that provides water,

25 wastewater, fire protection and other community services to its customers within its jurisdictional

26 boundaries in San Luis Obispo County. Plaintiff provides water service to approximately 6,200

27 residents in the unincorporated area of Cambria, and draws from the San Simeon and Santa Rosa

28 Creek aquifers (“Aquifers”) as its sole source of water supply.

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 1 8. By January 2014, drought conditions which had ravaged the State of California

2 (and in particular the Central Coast) since 2011 had severely reduced the availability of water

3 from the Aquifers. Despite the fact that the District had already imposed stringent conservation

4 measures on its customers, the District was in danger of running out of water. On January 30,

5 2014, the District declared a “Stage 3 Water Shortage Emergency,” and imposed even more

6 stringent conservation measures, including surcharges on excessive water use and a complete

7 prohibition on outdoor use of potable water. On the same date, the District’s Board of Directors

8 authorized the District’s General Manager to enter into any necessary agreements to develop and

9 implement an emergency water supply project.

10 9. Because the District did not have the in-house expertise to develop such a project

11 on its own, Plaintiff looked to and relied on Defendants to investigate, design and construct a

12 water treatment facility that could address Plaintiff’s emergency water supply crisis. On or about

13 February 7, 2014, the District entered into an Engineering Services Agreement (“Agreement”)

14 with CDM for the design and construction of an emergency water supply project intended to

15 produce an additional 400,000 to 600,000 gallons per day of potable water (the “Project”). The

16 Agreement is attached as Exhibit “A” and is incorporated herein by this reference.

17 10. The District intended that the Project—which ultimately cost in excess of $10

18 million—would not only address the immediate emergency, but would provide a reliable

19 emergency source of water going forward, to insulate the District against anticipated continued

20 water shortages and drought conditions in the coming years. Due, in part, to climate change

21 impacts, the District anticipated it was likely to need use of the emergency water supply facilities

22 in 8 to 10 of the next 20 years.

23 11. The Project called for the extraction and treatment of a mixture of deep brackish

24 water from a saltwater wedge, treated wastewater, and lost aquifer underflow, while avoiding or

25 mitigating potential impacts to the nearby San Simeon and Van Gordon Creeks (as well as a

26 downstream lagoon area). Defendants, who asserted expertise in the services required to design

27 and construct the Project, were tasked with undertaking the “hydrogeological modeling, design,

28 environmental analyses, permitting, and construction” of the Project.

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 1 12. As mandated by Section 1.02 of the Agreement, the specific services to be

2 performed by Defendants under the Agreement were to be set forth in “Task Orders” identifying

3 and defining each phase and activity contemplated under the Project. Among other things,

4 Defendants were to “confer with regulatory agencies, resource agencies, and [the District] to

5 complete the necessary studies and design,” and were to “construct the Project services.”

6 Defendants were to “apply professional judgment in determining the method, details and means of

7 completing the Project.”

8 13. At the time the parties entered into the Agreement on February 7, 2014, the Parties

9 also executed the initial Task Order (“Task Order 1”), which called for the preparation of a geo-

10 hydrological model to support the environmental analyses and design needs for the Project. The

11 results from the Task Order 1 analyses would then allow for the refinement of the Project

12 description, with an emphasis on mitigating potential impacts to the nearby creeks and

13 downstream lagoon.

14 14. In connection with CDM’s initial modeling and analyses, CDM proposed the

15 construction of an “evaporation pond” for the Project, which could be used to store and dispose of

16 the brine and related material generated from the water treatment facility. On or about May 2,

17 2014, the District and CDM executed Task Order 3, which, among other things, called for

18 technical reports supporting the design, permitting, and construction of the evaporation pond.

19 Task Order 3 is attached hereto as Exhibit “B” and is incorporated herein by this reference.

20 15. Critical to the feasibility of the evaporation pond was whether it could be designed

21 in a manner that satisfied the legal prerequisites for such “surface impoundments.” The California

22 Code of Regulations and the Regional Water Quality Control Board for the Central Coast Region

23 (“Regional Board”) impose strict requirements for such facilities. As relevant here, any surface

24 impoundment like the evaporation pond, must be “operated to ensure that wastes will be a

25 minimum of five feet (5 ft.) above the highest anticipated elevation of underlying ground water.”

26 (27 CCR § 20240(c) [emph. add.].) That is, a minimum five-foot separation would have to be

27 maintained at all times between the bottom of the proposed evaporation pond and the “highest

28 anticipated” groundwater elevation underlying the pond floor. In addition, to ensure that water

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 1 within the evaporation pond would never escape, the Regional Board required the pond to be

2 designed such that during a 1,000-year storm over a 24-hour period, water inside the pond would

3 not reach an elevation higher than 2 feet below the lowest point of the berm enclosing the pond

4 (i.e., during a 1,000-year storm over the course of 24 hours, the pond would need to maintain a

5 minimum 2-foot “freeboard” at all times). Because a 1,000-year storm over a 24-hour period

6 would increase the water level in the pond by 10.2-inches (without any inundation of storm runoff

7 from outside the pond), the Regional Board required a minimum 34.2-inch freeboard to be

8 maintained at all times (2 feet of freeboard plus a 10.2-inch rise in water level during 1,000-year

9 storm = 34.2-inch freeboard). To maintain this requirement, the Regional Board prohibited any

10 inundation of the pond by stormwater runoff from outside the pond.

11 16. In order to properly evaluate whether the proposed evaporation pond could meet

12 these strict requirements, Task Order 3 required CDM to thoroughly investigate the existing

13 available data and field conditions needed to design a compliant pond or to determine that a

14 compliant pond would not be feasible. This included data compilation and geo-hydrological and

15 hydraulic analyses, as well as field investigations needed to determine the highest anticipated

16 elevation of groundwater underlying the pond, and the extent to which the relevant watersheds in

17 the area would generate storm flows that might overtop and inundate the pond during a 1,000-year

18 storm event over a 24-hour period. Because the 34.2-inch “freeboard” requirement was based on

19 the assumption that no stormwater runoff from outside the pond would inundate the pond,

20 CDM’s hydrologic and hydraulic analyses of the relevant watersheds was critically important to

21 provide the assurance that the massive stormwater runoff generated by a “worst case scenario”

22 storm would never inundate the evaporation pond proposed by CDM. The analyses undertaken by

23 CDM were presented in technical reports ultimately used to obtain the necessary permitting for the

24 Project and the Regional Board’s Waste Discharge Requirements Order for CDM’s proposed

25 evaporation pond (“WDR Order No. R3-2014-0047”).

26 17. To evaluate the requirement that the bottom of the pond remain at least five feet

27 above the highest anticipated elevation of groundwater, CDM drilled a few wells in the area to

28 determine the actual groundwater level that existed at the time, and determined that existing

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 1 groundwater levels were approximately 20 feet below the bottom of the pond. Because those

2 wells were “new” and there was no historical reporting on groundwater levels from those wells,

3 however, CDM’s analysis of the extent to which groundwater levels beneath the pond were likely

4 to fluctuate relied solely on historical data from a pre-existing well located approximately 1,200

5 feet south of the proposed pond (“Well 16D-1”). Data from Well 16D-1 showed a water level

6 fluctuation of only 6 feet. Looking only at the historical measurements from Well 16D-1, CDM

7 asserted that groundwater beneath the proposed pond would similarly fluctuate no more than 6

8 feet, i.e., would never rise to more than approximately 14 feet below bottom of the pond. CDM

9 thus concluded the “regulation criteria of a separation of a minimum of 5 feet between the base of

10 the reservoir and the high water table” would easily be met.

11 18. Reliance solely on data from Well 16D-1 was problematic for a number of reasons,

12 including, but not limited to, the fact the geologic conditions of the area in which Well 16D-1 is

13 located are vastly different than the area where the pond is located. For example, Well 16D-1 is

14 located right next to San Simeon Creek, in soil composed mostly of sand and gravel, while the

15 pond is located at a higher elevation, away from the creek, in an area where the soil has a much

16 higher concentration of silts and clays. Accordingly, CDM’s assumption that data from Well

17 16D-1 indicated the extent to which groundwater beneath the proposed pond would fluctuate was

18 deeply flawed.

19 19. In addition, CDM’s analysis ignored red flags that should have reinforced the folly

20 of relying on a single well located 1,200 feet away from the proposed pond in dissimilar

21 conditions. Other reports prepared by CDM before the assessment described above included

22 historical groundwater data from numerous other wells in the vicinity showing much greater

23 fluctuations in groundwater levels. Indeed, the data available to CDM showed Well 16D-1 was an

24 outlier in that its levels fluctuated much less than nearly all of the other wells for which data was

25 available. Thus, CDM inexplicably either ignored or improperly discounted the historical

26 measurements of other wells nearby that showed much higher fluctuations in groundwater

27 elevations and that did not support CDM’s conclusion regarding the “highest anticipated”

28 groundwater elevation underlying the evaporation pond.

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 1 20. With regard to the requirement that a 2-foot freeboard be maintained during a

2 1000-year storm event over a 24-hour period, CDM conducted hydrological and hydraulic

3 analyses to determine whether surface waters from outside the pond would overtop the pond

4 during a 1000-year flood. Although CDM recognized a high risk that storm flows from the

5 applicable watershed might not be diverted by the culvert at the nearby San Simeon Creek Road,

6 and could find “a path” to the pond, CDM provided assurance that such a result would not occur.

7 In reaching this conclusion, CDM improperly and without basis assumed that no stormwater

8 would flow across San Simeon Road. As a result of that assumption, CDM’s calculations of

9 potential stormwater flows were based on an artificially small watershed, and ignored potential

10 flows from a vast area north of the road that sloped upward from the Project site.

11 21. Based on CDM’s analyses, CDM provided assurances in its technical reports that:

12 1) a 5-foot separation between the bottom of the pond and the “highest anticipated” groundwater

13 level would be maintained; and 2) there would be “no anticipated” stormwater inundation in the

14 pond and that the pond could maintain the 2-foot freeboard requirement during a 1,000-year storm

15 event.

16 22. Based on CDM’s analyses and assurances, the Regional Board ultimately issued its

17 WDR Order No. R3-2014-0047 (“WDR Order”) authorizing the construction and operation of the

18 evaporation pond. The WDR Order contained numerous prohibitions and conditions, including

19 the requirement that surface waters not overtop the pond enclosure, that a minimum 2-foot

20 freeboard be maintained during a 1,000-year storm event over a 24-hour period, and that a 5-foot

21 separation be maintained between the bottom of the pond and the highest groundwater elevation.

22 23. In January 2017, the region experienced a relatively heavy rain event for the first

23 time since construction of the evaporation pond and implementation of the Project, and the flaws

24 in CDM’s analyses and conclusions quickly became apparent. Significantly, it became apparent

25 that CDM erroneously determined that stormwater would not flow from surrounding areas into the

26 pond, and massively underestimated the extent to which groundwater levels in the vicinity of the

27 pond would rise after rain events.

28 24. On or about January 9, 2017, during its routine daily inspection, Plaintiff’s staff

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 1 discovered that storm flows from the north side of San Simeon Road had “overtopped” the road

2 and entered District property. As a result of CDM’s flawed design, the District had to take

3 emergency action to prevent the evaporation pond from overflowing. This action required

4 hundreds of man-hours and included extensive hand trenching and sandbagging around the pond

5 to divert stormwater, followed by the construction of a more permanent emergency drainage

6 channel. But for the emergency action taken by the District’s staff, the pond would not only have

7 further violated the freeboard requirements, but would have overflowed and allowed water to

8 escape the pond.

9 25. Unfortunately, although immediate action was taken upon discovery of the

10 problem, the emergency measures taken by the District’s staff could not prevent all storm runoff

11 from entering the pond. District staff found that the surface elevation of the pond had risen by

12 two-feet between the January 8 and January 9 inspections, indicating that surface water from

13 outside the pond had in fact inundated the pond, in contravention of the WDR Order which

14 prohibited all stormwater runoff from entering the pond. As a result, on February 9, 2017, the

15 Regional Board issued a Notice of Violation of Waste Discharge Requirements to Plaintiff,

16 detailing the basis for the violation and the District’s liability for its failure “to construct and

17 maintain the surface impoundment and related containment structures to prevent inundation,

18 erosion, slope failure, washout, and overtopping under 1,000-year, 24-hour precipitation

19 conditions.”

20 26. Notwithstanding CDM’s assurance that no stormwater would inundate or enter the

21 evaporation pond during the worst case 1,000-year storm, the Regional Board determined that

22 stormwater flowed across San Simeon Creek Road and entered the pond in January 2017. The

23 January 2017 rain event did not come close to reaching the intensities associated with a 1,000-year

24 storm; nevertheless, stormwater did penetrate the pond, increasing the water elevation to well

25 above the 34.2-inch freeboard needed to maintain the required 2-foot freeboard in the event of a

26 1,000-year storm.

27 27. In order to bring the pond into compliance, Plaintiff retained Terrain Group LLC to

28 survey and oversee completion of an impermeably lined drainage channel on District property that

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 1 would handle storm flows from a 1,000-year storm in the event stormwater runoff escaped the

2 culvert and overtopped San Simeon Road in the future.

3 28. Unfortunately, the District soon discovered that CDM had committed even more

4 significant errors in the analysis it conducted to satisfy the requirement that a 5-foot separation

5 between the bottom of the pond and the “highest anticipated” groundwater elevation be

6 maintained at all times. Beginning on January 30, 2017, the District observed groundwater

7 elevations that were within five feet of the bottom of the pond at two of the three monitoring wells

8 that were constructed in connection with the evaporation pond. At one of the monitoring wells, on

9 February 27, 2017, groundwater was observed at an elevation two feet higher than the bottom of

10 the pond, indicating that the groundwater had actually breached the pond.

11 29. In July 2017, the Regional Board issued a cease and desist order detailing

12 numerous violations of the WDR Order. Based on the groundwater measurements from the

13 monitoring wells in March and April 2017, the Regional Board determined that the 5-foot

14 separation requirement had been violated, and that groundwater had actually breached the bottom

15 of the pond in some places:

16 The March 14, 2017 and April 11, 2017 reported groundwater elevations

17 demonstrate that the Discharger failed to estimate the rise of the groundwater

18 surface effectively during site evaluation and impoundment design processes, which

19 resulted in the continued failure to maintain 5 feet of separation between the bottom

20 of the impoundment and the groundwater surface elevation as required by WDR

21 Order No. R3-2014-0047 and Title 27.

22 30. The Regional Board emphasized the inadequacy of the analyses and conclusions

23 CDM presented in an effort to obtain the authorization from the Regional Board to construct the

24 pond:

25 The failure to anticipate and maintain 5 feet of separation from the bottom of the

26 surface impoundment to the top of the groundwater surface highlights a flaw in the

27 surface impoundment design and the hydrogeological assessments contained in

28 “Technical Memorandum 2: Physical Setting and Waste Characterization” dated

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 1 July 15, 2014 and in “Technical Memorandum: Evaluation of Brine Evaporation

2 Pond for Inundation from the 0.1- Percent Annual Exceedance Probability Storm

3 Event” dated November 11, 2014, which were submitted as part of the ROWD

4 development process. (Emph. add.)

5 31. The cease and desist order required the District to either correct the design of the

6 pond to accommodate the discharge requirements and conditions of the WDR Order or

7 discontinue use of the evaporation pond for its intended purpose. Although the District has

8 explored potential methods for salvaging the pond, in order to mitigate its damages, the remedial

9 efforts needed to bring the pond into compliance with the WDR Order are not feasible, as there is

10 no cost-effective way to ensure compliance with the 5-foot separation requirement, given the

11 geologic conditions in the vicinity of the pond.

12 32. The District would not have proceeded with the Project in the same form, but for

13 CDM’s analyses and assurances. Had CDM accurately predicted the extent to which groundwater

14 levels would rise, the Project would have been designed from the start to utilize another means of

15 disposing of waste brine, e.g., to discharge such waste into Baker tanks. Instead, as a direct result

16 of CDM’s flawed reports, the District spent in excess of $2.5 million constructing a pond that is

17 now unusable for its intended purpose and which now must be emptied and decommissioned at

18 great expense to the District.

19 FIRST CAUSE OF ACTION

20 (Breach of Contract Against All Defendants)

21 33. Plaintiff repeats, re-alleges, and hereby incorporates by reference each and every

22 allegation contained in Paragraphs 1 through 32 above, as though fully set forth herein.

23 34. Plaintiff has fully performed each and every covenant and condition of the

24 Agreement.

25 35. The Agreement required Defendants to, inter alia, (a) conduct the appropriate

26 analyses, investigations, and research to ensure that their proposed Project would meet certain

27 requirements, and (b) to otherwise indemnify, protect, defend and/or hold harmless District for any

28 damages flowing from Defendants’ breach of the Agreement or failure to meet its standard of care.

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 1 36. The Agreement also expressly requires CDM to, among other applicable

2 indemnities, “indemnify, protect, defend and hold harmless District . . . from and against any and

3 all losses, liabilities, damages, costs and expenses, including attorney’s fees and costs to the extent

4 same are caused in whole or in part by any negligent or wrongful act, error or omission of

5 Consultant . . . in the performance of professional services under this agreement.”

6 37. CDM was required to properly investigate and analyze the potential conversion of

7 an existing percolation pond into a brine evaporation pond that would receive waste brine from a

8 water treatment plant, and was also required to conduct the investigation and analysis necessary to

9 demonstrate that the proposed evaporation pond would satisfy the stringent technical requirements

10 for such a pond. The Agreement also required CDM to provide the necessary technical

11 information required in support of the permit needed from the Regional Board to operate the

12 Project, including the evaporation pond.

13 38. CDM breached the Agreement by failing to properly investigate, analyze and

14 research whether the proposed evaporation pond would maintain a 5-foot separation between the

15 bottom of the pond and highest anticipated groundwater level, and whether the pond would be

16 inundated with outside stormwater flows, thereby intruding on the 34.2-inch freeboard

17 requirement.

18 39. In reaching its conclusion that the 5-foot minimum separation between the bottom

19 of pond and highest anticipated groundwater level would be maintained, CDM improperly relied

20 on the historical readings from one well located 1,200 feet away from the proposed pond in

21 dissimilar conditions that showed relatively small fluctuations in groundwater levels. That data

22 could not and did not support CDM’s conclusion that the groundwater underlying the proposed

23 pond would not fluctuate significantly. Further, CDM ignored historical groundwater readings

24 from other nearby wells that showed dramatic fluctuations in groundwater levels. CDM’s reliance

25 on insufficient data, as well as its failure to consider other available data (including data CDM

26 itself had already compiled) constitutes a breach of the Agreement and a clear failure to meet its

27 standard of care.

28 40. In reaching its conclusion that no stormwater runoff would inundate the

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 1 evaporation pond, CDM improperly assumed that the massive amount of water within the

2 watershed during a 1,000-year storm would somehow be barricaded by San Simeon Road. The

3 District is informed and believes, and based thereon alleges, that CDM did not verify the

4 assumptions underlying its stormwater flow projections were supported by actual conditions in the

5 field and incorrectly failed to account for changes in flow patterns upstream from the culvert at

6 San Simeon Road. On information and belief, the District further alleges CDM also incorrectly

7 assumed the existence of a ditch along San Simeon Road that would collect excess water in the

8 event stormwater runoff escaped the San Simeon Road culvert, when no such ditch existed.

9 CDM’s incorrect analyses and assumptions, along with its failure to conduct an adequate field

10 inspection to verify the assumptions it made concerning flow patterns, constitute a breach of the

11 Agreement and a failure to meet its standard of care.

12 41. CDM’s conclusions were proven false by actual conditions after the rains began in

13 January 2017. Groundwater levels in March not only intruded into the required 5 feet of

14 separation, but rose above the bottom of the evaporation pond liner—a full 16 feet higher than

15 predicted by CDM. Had CDM accurately gauged the extent to which groundwater levels would

16 rise, the pond would have never been a part of the Project, since it does not appear that any viable

17 (remotely cost-effective) way to maintain the required 5-foot separation exists, now that the true

18 conditions are known.

19 42. As a result of Defendants’ aforementioned contractual breaches, the District

20 expended in excess of $2,500,000 constructing an evaporation pond that cannot be used for its

21 intended purpose. The District has also incurred its own response costs, as well as costs related to

22 responding to the Notices of Violation and Cease and Desist Order issued by the Regional Board.

23 The District is also required to expend resources to empty and decommission the pond.

24 43. As a proximate result of Defendants’ contractual breaches, the District has been

25 damaged in an amount according to proof at the time of trial. To date, District has incurred

26 approximately $3,500,000 in damages as a result of Defendants’ breaches as set forth herein.

27 44. Pursuant to Section 6.04 of the Agreement, the District is entitled to recover its

28 reasonable attorney’s fees and expert witness fees incurred herein.

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 1 SECOND CAUSE OF ACTION
2 (Professional Negligence Against All Defendants)

3 45. Plaintiff hereby repeats, re-alleges, and incorporates by reference each and every

4 allegation contained in Paragraphs 1 through 44 above, as though fully set forth herein.

5 46. Defendants engaged in acts and/or omissions amounting to professional negligence,

6 because Defendants had a duty to use the “skill, prudence and diligence” expected from members

7 of their profession when performing their obligations under the Agreement.

8 47. Specifically, Defendants engaged in acts and/or omissions amounting to

9 professional negligence, because Defendants had a duty to, inter alia, (a) competently, and with

10 the usual “skill, prudence and diligence” expected from members of their profession, perform their

11 obligations under the Agreement, including making the appropriate investigations, analyses, and

12 calculations, (b) competently ensure that the designed and completed Project, and evaporation

13 pond, would meet the requirements of the Agreement, including all requirements imposed by the

14 Regional Board, and (c) otherwise ensure that their calculations, conclusions, investigations, and

15 reports were correct. Defendants, however, failed to comply with these and other duties.

16 48. In reaching its conclusion that the 5-foot minimum separation between the bottom

17 of pond and highest anticipated groundwater level would be maintained, CDM improperly relied

18 on the historical readings from one well located 1,200 feet away from the proposed pond in

19 dissimilar conditions that showed relatively small fluctuations in groundwater levels. That data

20 could not and did not support CDM’s conclusion that the groundwater underlying the proposed

21 pond would not fluctuate significantly. Further, CDM completely ignored historical groundwater

22 readings from other nearby wells that showed dramatic fluctuations in groundwater levels.

23 CDM’s reliance on insufficient data, as well as its failure to consider other available data

24 (including data CDM itself had already compiled) constitutes a breach of CDM’s duty to use

25 “skill, prudence and diligence” in its performance under the Agreement.

26 49. In reaching its conclusion that no stormwater runoff would inundate the

27 evaporation pond, CDM improperly assumed that the massive amount of water within the

28 applicable watershed during a 1,000-year storm would somehow be barricaded by San Simeon

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 1 Road. The District is informed and believes, and based thereon alleges, that CDM did not verify

2 the assumptions underlying its stormwater flow projections were supported by actual conditions in

3 the field and incorrectly failed to account for changes in flow patterns upstream from the culvert at

4 San Simeon Road. On information and belief, CDM also incorrectly assumed the existence of a

5 ditch along San Simeon Road that would collect excess water in the event storm flows overtopped

6 the San Simeon Road culvert, when no such ditch existed. CDM’s incorrect analyses and

7 assumptions, along with its failure to conduct an adequate field inspection to verify the

8 assumptions it made concerning flow patterns, constitute a breach of CDM’s duty to use “skill,

9 prudence and diligence” in its performance under the Agreement.

10 50. Based on these failures, the District has received Notices of Violation and a Cease

11 and Desist Order from the Regional Board due to the failure of the evaporation pond, and

12 therefore the Project, to operate in accordance with the WDR issued by the Regional Board.

13 51. As a proximate result of Defendants’ breaches, Plaintiff has been damaged in an

14 amount according to proof at the time of trial. Among other things, the District expended in

15 excess of $2,500,000 constructing an evaporation pond that cannot be used for its intended

16 purpose. The District has also incurred its own response costs, as well as costs related to

17 responding to the Notices of Violation and Cease and Desist Order issued by the Regional Board.

18 The District is also required to expend resources to empty and decommission the pond. To date,

19 District has incurred approximately $3,500,000 in damages as a result of Defendants’ breaches

20 and incidents of negligence as set forth herein.

21 52. Plaintiff’s counsel has executed the appropriate certificate of merit pursuant to

22 Code of Civil Procedure section 411.35, which is filed concurrently herewith.

23 PRAYER FOR RELIEF

24 WHEREFORE, Plaintiff prays for judgment against Defendants as follows:

25 1. For compensatory and consequential damages in an amount subject to proof at trial;

26 2. For interest on the foregoing at the legal rate, including prejudgment interest, from

27 the time allowed by law;

28 3. For attorneys’ fees and expert witness fees as allowed by the Agreement and/or law;

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 1 4. For costs of suit; and

2 5. For such other and further relief as the Court deems just and proper.

4 Dated: September 20, 2018 RUTAN & TUCKER, LLP

JOHN A. RAMIREZ
5 DOUGLAS J. DENNINGTON
PETER J. HOWELL
6

7 By: s/ Peter J. Howell

Peter J. Howell
8 Attorneys for Plaintiff
Cambria Community Services District
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2091/031966-0002
12522442.3 a09/20/18 COMPLAINT
EXHIBIT “A”
Exhibit A, page 16
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EXHIBIT “B”
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