Liberty Utilities Defeats Attempt to Take Its Water System by Town of Apple Valley, California

Manatt successfully defended Liberty Utilities in a second-of-its kind eminent domain litigation in California. On May 10, 2021, Judge Donald Alvarez of the Superior Court of San Bernardino delivered his decision rejecting the Town of Apple Valley’s attempt to take over the Apple Valley water system through eminent domain. Evidence at trial showed that the Town of Apple Valley expected to pay $100 million for the water system if it prevailed, while Liberty Utilities pegged the system’s value as high as $243.8 million.

Liberty Utilities operates regulated water, wastewater, natural gas and electric utilities, providing local utility management, service and support to small and midsize communities across the United States. In January 2016, the Town of Apple Valley brought suit against Liberty, arguing that customers would benefit from municipal ownership of the Apple Valley water system. Central to the Town’s claim was the presumption that municipal ownership would lead to lower water rates and increased transparency.

The trial, which began on October 23, 2019, and continued after a COVID-19 hiatus, included 67 days of trial testimony, more than 850 admitted exhibits and an 8,500-plus-page transcript. Ultimately, Judge Alvarez concluded that Liberty demonstrated Apple Valley residents would be better served if Liberty continued to own and operate the system, and would be worse off if the Town were to take ownership of the system.

In his decision, Judge Alvarez looked to Liberty’s spotless water quality record in Apple Valley, its stellar employees and staff (who testified they did not want to work for the Town), and record of financial stability and capital investments. The Town’s lack of experience operating a water system and failure to show that water prices would indeed go down under municipal ownership also played a role in Judge Alvarez’s decision.

This marks the third trial court victory for Manatt in defending investor-owned utilities against eminent domain challenges. Manatt previously successfully defended Golden State Water against the City of Claremont’s attempt to take Golden State’s water system in 2016, as well as the South San Joaquin Irrigation District’s attempt to take a PG&E electric distribution system in 2018.

Leading the defense and representing Liberty Utilities was Manatt’s real estate litigation Leader George Soneff, real estate litigation Partners Ed Burg and David Moran, and Associate Lauren Fried.
 
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