Santa Clarita Organization for Planning & the Environment v. Castaic Lake Water Agency

This is a lawsuit to unwind a public water agency’s acquisition of all of the stock of a retail water purveyor within its territory. On appeal of the trial court’s order refusing to unwind the transaction, we confront three questions: (1) must we dismiss the appeal as untimely under the streamlined procedures available for validating certain acts of public agencies (Code Civ. Proc., § 860 et seq.) when those procedures were invoked below, but invoked improperly because the underlying acts fall outside the reach of the validation statutes?; (2) has the purveyor become the agency’s alter ego by virtue of the agency’s ownership of all of its stock and its appointment of a majority of the purveyor’s directors, such that the agency is now engaged in the retail sale of water in violation of Water Code section 12944.7?; and (3) does the agency’s ownership of the purveyor’s stock violate article XVI, section 17 of the California Constitution, which precludes a public agency from “loaning] its credit,” and from “subscribing] to, or be[ing] interested in the stock of any company, association, or corporation” except the “shares of . . . [a] mutual water company or corporation”…