1 Michael J. Aguirre, Esq.

, SBN 060402
Maria C. Severson, Esq., SBN 173967
2 Elijah T. Gaglio, Esq., SBN 324799
AGUIRRE & SEVERSON, LLP
3 501 West Broadway, Suite 1050
San Diego, CA 92101
4 Telephone: (619) 876-5364
Facsimile: (619) 876-5368
5
Attorney for Plaintiff
6

8 SUPERIOR COURT OF THE STATE OF CALIFORNIA

9 FOR THE COUNTY OF SAN DIEGO

10

11 JOHN STUMP, an individual, Case No. 37-2020-00046212-CU-NP-CTL

Assigned for All Purposes to
12 Plaintiff, Hon. Richard E.LStrauss, Dept. C-75

13 v. FIRST AMENDED COMPLAINT

FOR WASTE AND DISGORGEMENT
14 CITY OF SAN DIEGO, a municipal OF PUBLIC FUNDS, AND
corporation; SAN DIEGO GAS & DECLARATORY RELIEF
15 ELECTRIC, a California corporation;
and DOES 1 to 50, Inclusive, Complaint filed: December 16, 2020
16
Defendants. IMAGED FILE
17

18

19 PARTIES AND KEY PLAYERS

20 1. Plaintiff John Stump, from on and before January 2018, had paid property and sales
21 taxes as a resident of the City of San Diego. Plaintiff also pays water and wastewater rates to the
22 City of San Diego.
23 2. Defendant City of San Diego (City) is a California State municipal corporation.
24 3. San Diego Gas & Electric (SDG&E) is a subsidiary of the Sempra Energy holding
25 company (Sempra) located at 488 8th Avenue San Diego, California. Sempra is a Fortune 500
26 multinational corporation. In 2018, SDG&E had revenues exceeding $4 billion compared to $3.6
27 billion for the City.
28 ///
1
FIRST AMENDED COMPLAINT CASE NO. 37-2020-00046212-CU-NP-CTL
 1 4. Defendant City and Defendant SDG&E had in effect at all relevant times Franchise

2 Agreements, one for electricity and one for gas (collectively Franchise Agreement), which

3 included a requirement that SDG&E – at no expense to the City -- change the location of its

4 facilities that conflict with City’s exercise of its right to construct improvements under or over the

5 City streets. In connection with its use of undue influence to pressure City officials to not enforce

6 Section 8 of the Franchise Agreement to require SDG&E to pay Pure Water Project relocation

7 costs, SDG&E engaged in direct and indirect lobbying activities at the City of San Diego.

8 5. In November 2018, SDG&E could draw upon 10 lobbyists to pressure and directly

9 influence City officials to give into SDG&E demands the City pay SDG&E PWP relocation costs.
10 These lobbyists included Claudia Valenzuela, David Grier, Dinah Willer, Estela De Llanos,

11 Eugene Mitchell, Francisco Urtasum, Todd Vorchees, Vanessa Manual Garcia, Warren Ruis, and

12 Falcon Strategies LLC. Leading up to the 2018 City elections, Sempra contributed over $16,700

13 in 77 separate contributions to various City candidates and City official-supported propositions.

14 6. Andy Renger is Defendant SDG&E’s project manager for the Pure Water Project –

15 an equipment relocation project (at times referred to as “Project” of “PWP”).

16 7. Brittany Applestein Syz is Sempra’s Senior Real Estate Counsel who, on June 21,

17 2018, demanded the City make an unlawful payment of City funds to pay for relocating the

18 subject utility equipment.

19 8. The true names and capacities of those Defendants sued herein as DOES 1 through

20 50, inclusive, whether individual, corporate, associate or otherwise, are unknown to Plaintiff, who

21 sues those Defendants by such fictitious names. When the DOE parties’ true names and capacities

22 and their actual involvement in the matters alleged herein are ascertained, Plaintiff will amend this

23 complaint to accurately reflect the same.

24 9. Plaintiff is informed and believes and thereon alleges that each of the fictitiously

25 named defendants designated hereunder as a DOE is responsible in some manner for the

26 occurrences alleged herein, and that Plaintiff’s damages as herein alleged were proximately caused

27 or contributed to by their conduct.

28 ///

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FIRST AMENDED COMPLAINT CASE NO. 37-2020-00046212-CU-NP-CTL
 1 10. Plaintiff is informed and believes and thereon alleges that at all relevant times

2 herein, each of the Defendants was the agent, employee, partner, joint venture, alter ego, and/or

3 co-conspirator of one or more of the remaining defendants and in doing the acts alleged herein,

4 was acting within the purpose, course and scope of such agency, employment joint venture or

5 conspiracy, and with the consent, permission or ratification of one or more remaining Defendants.

6 11. Plaintiff is informed and believes and thereon alleges that at all relevant times

7 herein, DOE DEFENDANTS 1-50, acted together on behalf of defendant SDG&E to obtain the

8 unlawful expenditure of City funds to pay to relocate the utility equipment that SDG&E is

9 required to pay.
10 JURISDICTION AND VENUE

11 12. This Court has jurisdiction over the action because this is a civil action wherein the

12 matter in controversy exceeds the jurisdictional minimum of the Court.

13 13. The acts and omissions complained of in this action took place in San Diego,

14 California. Venue is proper because the acts and/or omissions complained of took place, in whole

15 or in part, within the venue of this Court.

16 PURE WATER PROJECT (“PWP”)

17 14. Section 3 of the City Charter grants the City “prepare and adopt such rules and

18 regulations as it may deem necessary for the regulation, use and government of the water system

19 of the City of San Diego, both within and without the territorial limits of said City, and such rules

20 and regulations having been adopted by Ordinance, shall have the force and effect of law.”

21 15. Under Municipal Code Section § 67.0201, the City exercised its right and power

22 under Section 3 of the Charter of the City of San Diego to establish the City’s Water Department

23 (Department). The Department reserved the right to determine the size of the service connection,

24 the service pipe and the water meter, and shall also have the right to determine kind and size of

25 back flow protection and all appurtenances to the service.

26 16. The PWP is a necessary exercise of the City’s construction rights under the

27 Franchise Agreement that conflicts with SDG&E poles, wires, conduits, and appurtenances

28 (collectively “Equipment”). SDG&E is required to relocate its Equipment that conflict with the

3
FIRST AMENDED COMPLAINT CASE NO. 37-2020-00046212-CU-NP-CTL
 1 PWP at SDG&E’s, and not the City’s, expense. (Franchise Agreement ¶8)

2 17. As of November 2018, the City placed the total PWP costs at $1.4 billion,

3 consisting of the following:

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11

12

13

14

15

16

17

18 18. The PWP consists of the following constructions and 3 phases:

19

20

21

22

23

24

25

26

27 19. On April 29, 2014, the City Council gave its approval and support for the Pure

28 Water Program. The PWP is a phased, multi-year program that uses proven technology to produce

4
FIRST AMENDED COMPLAINT CASE NO. 37-2020-00046212-CU-NP-CTL
 1 a safe, reliable, and cost-effective water supply for the City. At full implementation in 2035, the

2 Program will provide one-third (1/3) of San Diego’s water supply locally.

3 20. The PWP facilities will be located throughout the City of San Diego and are

4 grouped into three geographical areas to facilitate implementation: North City, Central Area and

5 South Bay, as shown in this map:

9
10

11

12

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18

19 A. SDG&E’s Duty To Pay Utility Relocation Costs Under Franchise Agreement

20 21. Since 1970, SDG&E and the City of San Diego are parties to a Franchise

21 Agreement that allows SDG&E “to construct, maintain, and use in [San Diego City streets] all

22 poles, wires, conduits and appurtenances ** necessary to transmit and distribute electricity suited

23 for and for use by consumers [in San Diego].”

24 22. In Section 8 of the Franchise Agreement, the City reserved the right “to lay,

25 construct, erect, install, use, operate, repair, replace, remove, relocate, regard, or maintain below

26 the surface or above surface improvements of any type or description in. upon, along, across, or

27 over the streets of the City.”

28 ///

5
FIRST AMENDED COMPLAINT CASE NO. 37-2020-00046212-CU-NP-CTL
 1 23. Section 8 of the Franchise Agreement also provides:

2 “If the necessary exercise of the aforementioned reserve rights conflicts with any
poles, wires, conduits, and appurtenances of Grantee (SDG&E) constructed,
3 maintained and used pursuant to the provisions of the franchise granted hereby,
whether previously constructed, maintained and used or not by the Grantee
4 (SDG&E), Grantee (SDG&E) shall, without costs or expense to the City within
ninety (90) days after written notice from the City Manager, or his designated
5 representative, and request do to do, begin the physical field construction of changing
the location of all facilities or equipment so conflicting. Grantees shall proceed
6 promptly to complete such required work.”

7 24. From the Franchise Agreement, SDG&E had a legal duty to pay for the PWP

8 relocation costs.

9 25. As far back as 2016, the City and SDG&E performed several reviews to identify
10 any conflicts across the various project alignments. However, there are several locations where

11 numerous utility conflicts cannot be avoided and must be relocated. Contrary to the terms of the

12 Franchise Agreement between the City and SDG&E, SDG&E has stated it will not incur the costs

13 associated with the design and construction of the relocations associated with these conflicts.

14 26. On June 7, 2018, SDG&E told the City it had “reviewed the plans submitted by the

15 [City] for the [PWP] and determined that the cost of the utility relocations required for the Project

16 should be paid by the City.” In the letter, SDG&E stated: “Now that we [SDG&E officials] have

17 analyzed the current proposed Project, SDG&E finds that it is not responsible for any utility

18 relocation costs in the Franchise area ** .” In so acting, SDG&E willfully breached a material

19 term of the franchise contract by failing and refusing to pay for the PWP relocations as required by

20 the Section 8 of the Franchise Agreement. SDG&E decision makers know San Diego’s water

21 supply is dependent on the implementation of the PWP. SDG&E knew its equipment had to be

22 relocated for the PWP to go forward. SDG&E knew San Diego’s water security was, and is,

23 dependent on the PWP.

24 27. As of August 2018, the CITY provided designs for the PWP to SDG&E indicating

25 which SDG&E facilities must be relocated to eliminate utility location conflicts and to

26 accommodate the Project. The City represented to the People of San Diego there were several

27 areas of known conflict between SDG&E equipment and the PWP identified in the design,

28 including but not limited to what is shown on a document known as “Exhibit B.” However, the

6
FIRST AMENDED COMPLAINT CASE NO. 37-2020-00046212-CU-NP-CTL
 1 document the City released as “Exhibit B” cannot be read, as shown here:

9
10

11

12

13

14 B. The Scheme

15 28. Rather than enforce Section 8 of the Franchise Agreement by requiring SDG&E to

16 pay for PWP relocations, City officials and agents of SDG&E designed and executed a scheme to

17 conceal from San Diego taxpayers SDG&E’s material breach of the Franchise Agreement (“The

18 Scheme”).

19 29. In the first part of The Scheme, SDG&E represented “SDG&E disagrees that it is

20 required to pay for the relocation of these facilities because of the nature of the Project.” In the

21 second part of The Scheme, SDG&E and the City claimed, “[T]he Parties dispute who is

22 responsible for the cost of relocating SDG&E facilities located in the public right-of-way to

23 accommodate the design and construction of Phase I of the [PWP].” In the third part of The

24 Scheme, the City and SDG&E claimed it could not take the time to enforce the Section 8

25 requirement that SDG&E pay the PWP relocation costs because the PWP was subject to

26 construction “schedule requirements.”

27 30. The schedule excuse did not square with the PWP schedule the City filed with the

28 United Stated Environmental Protection Agency (EPA). The City told the EPA most of the

7
FIRST AMENDED COMPLAINT CASE NO. 37-2020-00046212-CU-NP-CTL
 1 scheduled construction would not start until 2019, as shown here:

9
10

11

12

13

14

15 31. In the fourth part of their Scheme, SDGE and City officials used the ploy of having

16 the City pay the PWP relocation costs upfront while pretending to reserve the option of full

17 recovery of the PWP relocation costs from SDG&E under a “Reservation of Rights Agreement”

18 (ROR). The City paid SDG&E thirty-five million, six hundred and seventy-eight thousand, five

19 hundred and twenty-one dollars ($35,678,521) for PWP design and relocation work. In addition,

20 the City agreed to pay additional $60 million for a total of more than $94 million, as shown here:

21 Easement/ Franchise Railroad Private Total

SDG&E Facility Type Fee Property
Owner
22
ED: Electric $0 $36,388 $0 $0 $36,388
23 Distribution

24 ETL Electric $0 $0 $0 $602 $602

Transmission
25 Gas $3,131 $44,370 $469 $8,293 $56,263
26 Protect in Place (PNP) $0 $0 $0 $1,500 $1,500
27
Total Numbers are in $3,131 $80,758 $469 $10,395 $94,753
$000's
28

8
FIRST AMENDED COMPLAINT CASE NO. 37-2020-00046212-CU-NP-CTL
 1 32. In the fifth part of The Scheme, the City and SDG&E filed a collusive lawsuit

2 wherein the City and SDG&E are not actually in disagreement, but are cooperating to steer the

3 court towards an agreed-upon conclusion in which the City pays the PWP relocation costs.

4 33. In connection with City officials not making SDG&E honor the Franchise

5 Agreement requiring SDG&E to pay to relocate its equipment needed for the PWP, it appears that

6 San Diego (a Charter City) is under SDG&E’s control, and that SDG&E is using that control for

7 its own benefit. Plaintiff brings this action against the allegedly corrupt SDG&E to remove San

8 Diego from SDG&E’s control and require SDG&E to pay restitution to the City.

9 C. City and SDG&E Collusive Litigation

10 34. The City was on notice about SDG&E’s material breach as of June 2018 or even

11 before. On February 6, 2018, SDG&E told the City it “was not responsible for the utility

12 relocations costs related to the Morena Pump Station and Conveyance System.”

13 35. The City should and could have taken two actions: (1) seek an immediate

14 declaratory relief judgment on the legal question of whether SDG&E was required to pay the PWP

15 relocation costs under Section 8 of the Franchise Agreement; and (2) bring a Debarment action

16 against SDG&E which would have resulted in SDG&E “being prohibited from bidding or

17 proposing on a contract” for three years. San Diego Municipal Code §22.0807(b)(1).

18 36. SDG&E’s then-existing Franchise Agreement with the City of San Diego was set

19 to expire in January 2021.

20 37. Under CCP § 1060, the City -- as an interested party under Section 8 of the

21 Franchise Agreement who desired a declaration of City’s rights under the Franchise Agreement --

22 may in cases of actual controversy like the one between SDG&E and the City that arose on June

23 2018, could have brought a case in the Superior Court for a declaration of SDG&E’s duty to pay

24 PWP relocation costs under Section 8 of the Franchise Agreement.

25 38. Instead, the City delayed filing its legal action to January 2020, almost two years

26 after the City was put on notice that SDG&E intended to breach Section 8 of the Franchise

27 Agreement by not paying PWP relocation costs. In January 2020, the City sued SDG&E “For a

28 declaration that SDG&E has failed to meet its contractual obligations under the two Franchise

9
FIRST AMENDED COMPLAINT CASE NO. 37-2020-00046212-CU-NP-CTL
 1 Agreements by refusing to design and relocate its facilities at no cost to the City that are located

2 along the alignment for the Pure Water Project.”

3 39. On February 4, 2021, trial in the City case against SDG&E was postponed two

4 more years to March 17, 2023.

5 TAXPAYER ACTION

6 40. Money is the lifeblood of modern government. A San Diego taxpayer, such as

7 Plaintiff John Stump, has a justiciable interest in money belonging to the City. That holds true

8 whether the money is in the treasury and about to be illegally spent or whether the money is in the

9 hands of a third party like SDG&E, but belongs to the City. The judicial process is the only means
10 by which the individual citizen is guaranteed an influence on official conduct. In the end, the

11 foundation of democratic government rests in the individual, like Plaintiff John Stump.

12 41. San Diego citizens must be able to do more than ratify in the voting booth political

13 decisions that have already been made, or support with their votes some general policy trend that

14 they favor. Taxpayers are left without the ability to influence the day-to-day affairs of the City.

15 These daily decisions determine how far and in what direction our City will advance.

16 Consequently, the individual citizen must be able to take the initiative through taxpayers' suits to

17 keep government accountable on the local level.1

18 42. This taxpayer action is brought on behalf of a City of San Diego citizen and

19 taxpayer under California Code of Civil Procedure § 526a to obtain a judgment restraining or

20 preventing City officials from illegal expenditures and waste of City funds to pay SDG&E for the

21 PWP relocations. Also sought is an order disgorging from SDG&E City funds paid to SDG&E for

22 PWP relocations. The expenditures are illegal because they constitute unlawful gifts of public

23 funds under the California Constitution, Article XVI, Section 6 and San Diego City Charter

24 Section 93.

25 43. In agreeing with SDG&E to transfer City funds to SDG&E to cover SDG&E’s

26 obligation to pay for PWP relocations, City officials made an illegal or unauthorized contract.

27

28 1
See, 28 Hastings L.J. at p. 508.
10
FIRST AMENDED COMPLAINT CASE NO. 37-2020-00046212-CU-NP-CTL
 1 First and foremost, as the contract is void, the City is entitled to restitution from SDG&E who had

2 purportedly contracted with the City. This is true even if the SDG&E agents believed the City

3 officers with whom they were contracting had the authority to bind the city. Persons dealing with a

4 public agency are presumed to know the law with respect to any agency's authority to contract.

5 One who deals with the public officer stands presumptively charged with a full knowledge of that

6 officer's powers and is bound at his peril to ascertain the extent of their powers to bind the

7 government for which they are officers.

8 44. This action is based on the right of a taxpayer to maintain actions and proceedings

9 to enforce public rights and protect the public interest. It seeks to enforce the City’s performance
10 of a mandatory duty to make SDG&E honor its contractual to pay the PWP relocation costs.

11 45. This taxpayer suit to recover City funds that were illegally transferred to SDG&E is

12 also brought by taxpayer John Stump on behalf of the City, the taxpayer standing in the relation of

13 a minor stockholder of a corporation. Plaintiff is suing for the City to recover moneys which

14 Plaintiff John Stump alleges have been illegally diverted from City funds to SDG&E.

15 46. Included in the funds SDG&E unlawfully obtained from the City were moneys

16 given to pay for SDG&E taxes related to the PWP relocation expenditures. For the reasons stated

17 in the San Diego City Attorney April 2, 2004, Memorandum of Law, and for the reasons stated

18 below, the City was not required to pay SDG&E tax liability for funds the City paid SDG&E for

19 the PWP relocation work. First, SDG&E unlawfully and in breach of the Franchise Agreement,

20 required the City to pay the PWP-related relocation costs. The relocation cost expenditures are

21 chargeable to SDG&E under the Franchise Agreement. Second, the City’s payments to SDG&E

22 for PWP relocations were taxable contributions to capital.

23 47. SDG&E coerced the City’s agreement to pay PWP relocation costs by threatening

24 to delay the PWP, which is the water and wastewater project essential for health and well-being of

25 the People of San Diego and others served by the City’s Water Department.

26 48. There was and is no public benefit or consideration obtained by the City’s paying

27 for the relocation costs.

28 ///

11
FIRST AMENDED COMPLAINT CASE NO. 37-2020-00046212-CU-NP-CTL
 1 49. On June 7, 2018, SDG&E breached the Franchise Agreement when on that date,

2 SDG&E’s manager of major projects, Andy Renger, told the City that SDG&E had reviewed the

3 City’s PWP plans, and that SDG&E had determined that the cost of the required PWP utility

4 relocations should be paid by the City. This was a material breach because through its authorized

5 agent Andy Renger, SDG&E told the City on June 7, 2018, that the City -- not SDG&E -- was

6 responsible for the costs of the relocations required by the PWP. SDG&E provided to the City

7 what it represented was a list of PWP utility conflicts based upon information provided as of

8 August 24, 2018, identified as (draft) Exhibit B, shown in pertinent part here:

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FIRST AMENDED COMPLAINT CASE NO. 37-2020-00046212-CU-NP-CTL
 1 50. This version of Exhibit B was obtained from the City by way of a Public Records

2 Request. On March 18, 2021, the City informed Plaintiff, after an initial search, the City had

3 identified responsive records to the request which has been uploaded on the City Public Records

4 website. The City also stated it was currently confirming with City officials to see if they possess a

5 cleaner or clearer version of Exhibit B.

6 51. The City and SDG&E’s own records regarding the PWP relocation costs are

7 inconsistent and in factual conflict. In its letter to the City dated June 7, 2018, SDG&E stated,

8 “Now that we have analyzed the current proposed Project, SDG&E finds that it is not responsible

9 for any utility relocation costs in the Franchise area for the reasons described below.” SDG&E
10 stated in the ROR, “There are several areas of known conflict identified in the design, including

11 but not limited to those listed and/or shown on Exhibit B.” However, when the City asked

12 SDG&E to identify the SDG&E utility equipment in conflict with the PWP, SDG&E balked. On

13 June 12, 2018, SDG&E’s Andy Renger told City officials: “The location of our gas and electric

14 facilities is both proprietary and sensitive information.” In other words, SDG&E not only refused

15 to pay for the relocations, but also withheld what SDG&E equipment was in actual conflict with

16 the PWP facilities.

17 52. The City admits SDG&E, under Section 8 of the Franchise Agreement, is

18 responsible to pay the relocation costs needed for the PWP.

19 53. SDG&E wrongly contends the costs of utility relocations required for the PWP

20 should be paid by the City for two reasons. First, SDG&E contends it should not pay for the
21 PWP-related relocation costs because the PWP benefits select residents of the City of San
22 Diego and not all those in SDG&E’s entire territory. Second, SDG&E claims it should not pay
23 relocation costs because the PWP is propietary and not govermental.

24 54. SDG&E’s reasons for shifting PWP relocation costs to the City were not valid.

25 First, SDG&E agreed to pay relocation costs in the Franchise Agreement between the City and

26 SDG&E. “Without cost or expense to City within 90 days after written notice,” the Franchise

27 Agreemement requires SDG&E to begin the physical field construction of changing the location

28 of all SDG&E facilities, and also requires SDG&E to complete the relocation “promptly.”

13
FIRST AMENDED COMPLAINT CASE NO. 37-2020-00046212-CU-NP-CTL
 1 55. Second, SDG&E’s claim that under common law the City has to pay relocation

2 costs because the PWP is proprietary is wrong. The City is authorized to implement the PWP

3 under California law and therefore SDG&E has no legal excuse to avoid paying the PWP

4 relocation costs under the controlling case law of Riverside County Transportation Com. v.

5 Southern California Gas Co. (2020) 54 Cal.App.5th 823, 856. Contrary to SDG&E’s contention,

6 the governmental-proprietary distinction in the utility relocation context has been “rejected.”

7 Riverside County Transportation Com. v. Southern California Gas Co., 54 Cal.App.5th at 860.

8 The City is authorized by the City Charter to construct the PWP. As such, the PWP constitutes a

9 function of government. In constructing the PWP, the City is acting pursuant to granted authority
10 and therefore the City is acting as a government and not as a private entrepreneur. Id. at 870.

11 Under these facts, SDG&E is required to pay the PWP relocation costs.

12 WIFIA EPA LOAN

13 56. On November 27, 2018, the City of San Diego announced it was borrowing $614

14 million from the U.S. Environmental Protection Agency (EPA) to pay costs of the PWP. The EPA

15 agreed to make the $614 million loan under the federal Water Infrastructure Finance and

16 Innovation Act (WIFIA) to help finance its Pure Water Project. The loan proceeds were supposed

17 to be used to assist in financing a portion of the costs of certain capital improvements to the City’s

18 PWP.

19 57. To obtain the $614 million loan, the City of San Diego represented to the EPA that

20 the City would use the loan proceeds to pay costs to construct the PWP, which was to produce 30

21 million of gallons per day of high-quality drinking water.

22 58. The City of San Diego told the EPA the additional drinking water supply would

23 save the City money through reduced imported water costs. The City told the EPA the PWP would

24 benefit the environment through reduced discharges into the ocean, and would provide a reliable,

25 sustainable, water supply for future generations.

26 59. The EPA made the $614 million loan to help San Diego significantly reduce flows

27 to the Point Loma Wastewater Treatment Plant and to make San Diego more water independent.

28 The EPA made the loan to help pay for the City’s 20-year program to maintain regulatory

14
FIRST AMENDED COMPLAINT CASE NO. 37-2020-00046212-CU-NP-CTL
 1 compliance for the wastewater system, and to provide a safe, secure and sustainable local potable

2 water supply for San Diego. The loan was not intended to be used to pay SDG&E’s obligations to

3 pay the PWP relocation costs.

4 60. As of March 19, 2021, the City proposes to make a new 20- year Franchise

5 Agreement, without an express condition that the Franchise Grantee will pay the PWP relocation

6 costs. On March 19, 2021, the Mayor of San Diego issued an “Invitation to Bid” for “a franchise

7 to construct, maintain and use poles, wires, conduits, and appurtenance for transmitting and

8 distributing electricity in the street of the City of San Diego.

9 61. SDG&E agents and City officials have colluded to perpetrate a bid tailoring
10 scheme. Between January 23, 2021, and February 24, 2021, the City conducted 13 “community

11 forums” to make the case that the City should extend the SDG&E franchise. The community

12 forums were SDG&E sales meetings, not legitimate forums to “collect input on the City’s gas and

13 electric franchises.” At each session, City officials delivered a canned presentation that SDG&E

14 designed.

15 62. The City’s pro-SDG&E message was published as an SDG&E document dated

16 January 2020 and entitled “SDG&E & the City of San Diego Franchise.”

17 63. The City called its version of the SDG&E presentation the “Smart & Sustainable

18 Communities Electric & Gas Franchise Fee Presentation.” The City’s pro-SDG&E presentation

19 was based on SDG&E’s earlier written presentation. The City pushed the SDG&E message. For

20 example:

21 • Most cities have perpetual terms – City of San Diego rare

exception. Only 5 of the 29 cities in SDG&E service territory have
22 franchises with expirations.
• Average franchise fee charge for electricity in SDG&E territory
23 1.1%
• Average franchise fee charge for gas in SDG&E territory is 1% •
24 The franchise fees paid to the City of San Diego are higher than

25 64. The City’s written presentation presented only a pro-SDG&E message and avoided

26 any negative information about SDG&E. The City referred to kinds of equipment that had to be

27 relocated for the PWP that SDG&E was supposed to pay for, but made no mention of SDG&E’s

28 breach of its promise to pay utility relocation costs needed to accommodate City projects like the

15
FIRST AMENDED COMPLAINT CASE NO. 37-2020-00046212-CU-NP-CTL
 1 PWP. This City slide from its pro-SDG&E presentation omitted any mention of the PWP:

9
10

11

12

13 65. The City omitted from its presentations to the 13 community meetings this SDG&E

14 slide in which SDG&E asserted its objection to pay for the PWP relocation costs:

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21

22

23

24

25 66. Section 203 of the San Diego City Charter gives plenary authority to the San Diego

26 City Council to grant City franchises. Specifically, Section 203 provides in pertinent part:

27 The Council shall have power to grant to any person, firm or corporation, franchises,
and all renewals, extensions and amendments thereof, for the use of any public
28 property under the jurisdiction of the City. Such grants shall be made by ordinance

16
FIRST AMENDED COMPLAINT CASE NO. 37-2020-00046212-CU-NP-CTL
 1 adopted by vote of two-thirds (2/3) of the members of the Council and only after
recommendations thereon have been made by the Manager and an opportunity for
2 free and open competition and for public hearings have been given.

3 67. On March 19, 2021, the Mayor (City Manager) usurped the authority of the

4 Council to make city franchises by issuing an invitation to bid for a new electric franchise. These

5 City officials tailored the invitation to bid for SDG&E.

6 68. In so acting, the Mayor violated Charter Section 103, and the invitation to bid is

7 therefore not valid because the Mayor did not have the authority to supplant the authority of the

8 City Council to approve franchises. The Mayor’s authority under Section 103 of the San Diego

9 City Charter is limited to making “recommendations.” The March 19, 2021, Invitation to Bid is
10 void and without any legal effect because it was issued in violation of Section 103 of the San

11 Diego City Charter.

12 FIRST CAUSE OF ACTION

13 Violation of CCP § 526a

14 (Against All Defendants)

15 69. Plaintiff realleges each allegation above as though set forth herein.

16 70. Plaintiff brings this action pursuant to CCP § 526a to cancel as void the illegal

17 Reservation of Rights Agreement because it was an agreement under which the City of San Diego

18 agreed to use taxpayer funds to pay SDG&E’s financial obligation that SDG&E was required to

19 pay under the Franchise Agreements.

20 71. Specifically, Plaintiff seeks to obtain a judgment restraining, preventing, and

21 ordering the recovery of any funds transferred to SDG&E under the Reservation of Rights

22 Agreement.

23 72. This action is brought pursuant to California Code of Civil Procedure section 526a

24 which permits private individuals and entities to bring an action to “obtain a judgment, restraining

25 and preventing any illegal expenditure of, waste of, or injury to, the estate, funds, or other property

26 of a local agency.”

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FIRST AMENDED COMPLAINT CASE NO. 37-2020-00046212-CU-NP-CTL
 1 SECOND CAUSE OF ACTION

2 Declaratory Relief, CCP § 1060

3 (Against All Named Defendants and DOES)

4 73. Plaintiff realleges each allegation above as though set forth herein.

5 74. Plaintiff, as a City taxpayer, is an interested person in the Reservation of Rights

6 Agreement and the Franchise Agreements that require SDG&E to pay for the relocation costs.

7 75. Plaintiff seeks a declaration of his rights as an interested person and as a San Diego

8 City taxpayer under the Reservation of Rights Agreement and the Franchise Agreements as to

9 SDG&E’s obligations to pay for the relocation costs.

10 76. Plaintiff seeks an order declaring the Reservation of Rights Agreement to be void

11 as an illegal contract because it requires the City of San Diego to pay what is an obligation of

12 SDG&E to pay for the PWP relocation costs as provided in Section 8 of the Franchise

13 Agreements.

14 PRAYER FOR RELIEF

15 WHEREFORE, Plaintiff prays for judgment as follows:

16 1. For an order enjoining the City of San Diego from paying City taxpayer funds to

17 SDG&E under the Reservation of Rights Agreements which are in violation of Section 8 of the

18 Franchise Agreements.

19 2. For an order declaring the City of San Diego’s payment of funds to SDG&E to be

20 an illegal expenditure and waste of public funds in violation of CCP § 526a.

21 3. For an order to set aside the Reservation of Right Agreements as void or an illegal

22 contract;

23 4. For an order of the Court that requires SDG&E to disgorge the public funds it

24 received from the City of San Diego under the Reservation of Rights Agreement in violation of

25 CCP § 526a;

26 5. For an order of the Court that declares the March 2021 Invitations to Bid on both a

27 Gas and an Electric Franchise void in violation of City Charter Section 103;

28 ///

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FIRST AMENDED COMPLAINT CASE NO. 37-2020-00046212-CU-NP-CTL
 1 6. For attorney fees and costs against SDG&E and the City of San Diego under

2 California Code of Civil Procedure § 1021.5 because this action seeks to stop and to recover

3 illegal expenditures of City taxpayer funds to SDG&E. Recovery of the funds illegally paid to

4 SDG&E will vindicate an important right that will confer a significant pecuniary benefit on San

5 Diego City taxpayers; and

6 7. For any other further relief the Court deems just and proper.

7 AGUIRRE & SEVERSON, LLP

9 Dated: March 23, 2021 /s/Michael J. Aguirre

Michael J. Aguirre Esq.
10 Attorneys for Plaintiff

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FIRST AMENDED COMPLAINT CASE NO. 37-2020-00046212-CU-NP-CTL