17-1017_COTTON, JEFFREY AND SHANNON_Agenda Report_E15TO :
FROM :
City of San Juan Capistrano
Agenda Report
Honorable Mayor and Members of the City Council
~n Siegel, City Manager
SUBMITTED BY: Charlie View, Project Manager
DATE : October 17, 2017
10/17/2017
E15
SUBJECT: Amendment to the Settlement, Mutual Release and Well Sharing
Agreement between the Cotton Family Trust and the City of San
Juan Capistrano; and, Appropriation of Funds
RECOMMENDATION :
1) Approve the Amendment to the Settlement, Mutual Release and Well Sharing
Agreement between the Cotton Family Trust and the City of San Juan
Capistrano; and ,
2) Appropriate $18,000 from the City 's Eastern Open Space Fund to allow for
continued use of the Blenheim Well in Fiscal Year 2017-18.
EXECUTIVE SUMMARY:
As part of the Settlement, Mutual Release and Well Sharing Agreement (Agreement)
entered into between the City and the Cotton Family Trust, the City was provided the
shared use of the Blenheim Well, which is located on the Cotton property and provides
irrigation water to the Rancho Mission Viejo Riding Park at San Juan Capistrano (Riding
Park). As a result of further discussions between the City and Cotton Family Trust
regarding longer-term use of the Blenheim Well and its related water delivery system,
an Amendment to the Agreement is presented for City Council approval.
The Cotton Property and Riding Park are shown on Attachment 1. The original
Agreement is provided as Attachment 2, and the proposed Amendment is provided as
Attachment 3 .
City Council Agenda Report
October 17 , 2017
Page 2 of 3
DISCUSSION/ANALYSIS:
In September 2016, the City and the Cotton Family Trust entered into a Settlement
Agreement to resolve litigation regarding disputed water rights. As part of the
Agreement, the City was provided the shared use of the Blenheim Well located on the
Cotton property and serving the Riding Park . Per the Agreement, the City may use the
Blenheim Well to draw and deliver water to the Riding Park. The Agreement established
a monthly $3,000 fee to be paid to the Cotton Family Trust for use of the well. The
Agreement establishes that the payment is inclusive of any and all costs associated with
the City's use of the Blenheim Well. The Agreement also provides that the City's
monthly payment is in addition to any consideration that may be paid by any tenant or
operator (i.e. Blenheim Facility Management) of the Riding Park to the Cotton Family
Trust for the well water.
Initially, the Agreement was considered a short-term solution while the City explored
more permanent water supply options to serve the Riding Park. The City has developed
plans to provide the Riding Park with both potable and reclaimed water service. On
March 21, 2017, the City Council approved Capital Improvement Project (CIP) 17201
(Riding Park Water Fire Flow and Recycled Water Supply Project) for the installation of
a permanent, reliable water supply for the Riding Park. The Riding Park does not have a
separate potable water supply at this time. The benefits of the permanent potable water
service include enhanced fire flow and dedicated domestic water service for the offices
and other facilities. The establishment of reclaimed water service for irrigation provides
a vital alternative should the use of the Blenheim Well become impaired due to pump
failure, basin conditions or termination of the Settlement Agreement with the Cotton
Family Trust.
As the City completed the design of the plans for the water and sewer services, the
option of continued use of the Blenheim Well was evaluated. Given the lower cost of
ground water pumped through the Blenheim Well, it is beneficial to extend the use of
this source as long as feasible. The original Settlement Agreement was limited in scope ,
and the proposed Amendment is intended to provide for longer-term use of the
Blenheim Well and related water delivery system. Changes to the Agreement address
options for sharing costs for major repair of the well, periodic adjustment to the current
$3,000 use payment, allowance for the use payment to be made by either the City or
Riding Park operator, and extending the termination notice provision from 90 to 180
days. With these revisions, the use of the Blenheim Well currently provides the most
cost effective source for irrigation of the Riding Park. Approval of the Amendment to the
Settlement Agreement will facilitate the continued use of the well that historically has
provided irrigation water to the Riding Park.
FISCAL IMPACT:
In accordance with the Settlement Agreement, the City currently pays $3,000 per month
to the Cotton Family Trust for the use of the Blenheim Well. The proposed Amendment
does not result in an immediate change in this payment; however, it does allow for
City Council Agenda Report
October 17, 2017
Page 3 of 3
consideration of an adjustment of the payment every 24 months. The $3,000 monthly
fee is currently paid out of the Eastern Open Space Fund.
The Fiscal Year 2017-18 Budget includes the funding of this well-sharing payment for
the first six months of the fiscal year. An additional appropriation from the Eastern Open
Space Fund in the amount of $18,000 is required to fund the well-sharing payment for
the second six months of the fiscal year. This is significantly less than the cost to irrigate
the Riding Park using potable or reclaimed water.
ENVIRONMENTAL IMPACT:
In accordance with the California Environmental Quality Act (CEQA) the recommended
action is exempt from CEQA per Section 15061 (b)(3), the general rule that CEQA
applies only to projects which have the potential for causing a significant effect on the
environment. Where it can be seen with certainty that there is no possibility that the
activity in question may have a significant effect on the environment, the activity is not
subject to CEQA. The amendment to business terms of the Settlement, Mutual Release
and Well Sharing Agreement will not result in any foreseeable effect on the
environment. If there is a future project to modify the well or water delivery system, the
appropriate documentation will be provided consistent with CEQA guidelines.
A Mitigated Negative Declaration (MND) was approved by the City Council for the
Riding Park Water Fire Flow and Recycled Water Supply Project.
PRIOR CITY COUNCIL REVIEW :
• On September 20, 2016, the City Council approved the Settlement, Mutual
Release and Well Sharing Agreement with the Cotton Family Trust.
COMMISSION/COMMITTEE/REVIEW AND RECOMMENDATIONS:
None
NOTIFICATION :
Cotton Family Trust
Blenheim Facility Management
ATTACHM ENT(S):
Attachment 1:
Attachment 2:
Attachment 3:
Aerial Photo
Settlement, Mutual Release and Well Sharing Agreement
Amendment to the Settlement, Mutual Release and Well Sharing
Agreement
ATTACHMENT 1
SETTLEMENT, M UTUAL RE L EASE AND WELL SHARING AGREEMENT
This SETTLEMENT, MUTUAL RELEASE AND WELL SHARING AGREEMENT (the
"Agreement") is made by and between Jeffrey Cotton and Shannon Cotton, as trustees of the Cotton
Family Trust dated September 9, 2002 (collectively, the "Cottons"); and the City of San Juan Capistrano,
a public municipality (the "City"), on its own behalf and as successor-in-interest to the Capistrano Valley
Water District (the "District"), a redevelopment agency. All references to the City shall mean and refer to
the City, as successor-in-interest to the District. The Cottons and the City are collectively referred to as
the "Parties " and/or individually as a "Party."
RECITALS
A. Pursuant to that certain deed dated April 25, 2014 and recorded as instrument number
2014000159435 in the Official Records of Orange County, California, the Cottons own real property
located at 28801 San Juan Creek Road, San Juan Capistrano, California 92675 (the "Cotton Property"),
as further described in Exhibit A.
B. In or around 1987, Rancho San Juan, a California joint venture, dedicated to the City a
storm drain easement. Concurrently, an entity known as the William Krem Company, a California general
partnership (the "William Krem Company "), purportedly dedicated to the District "the water rights included
within or appurtenant to the land lying within the distinctive border line of this tract [Tract No. 13101]"
pursuant to that document recorded as instrument number 87-608081 in the Official Records of Orange
County, California (the "1987 Dedication "). The Cotton Property is located within Tract No. 13101. The
Parties dispute the William Krem Company's status as a purported predecessor in interest to the Cottons.
The Parties also dispute the validity and effect of the 1987 Dedication.
C. The City owns real property adjacent to the Cotton Property (the "Rid ing Property"), as
further described in Exhibit B. Pursuant to a management agreement dated November 18, 2014, the
Riding Property is operated by Blenheim Facility Management, LLC ("Blenheim "). As of the Effective
Date, as defined in Section 6, Blenheim occupies the Riding Property.
D. The Cottons own and operate multiple functioning wells located on the Cotton Property,
including a well installed in 2002 (the "Blenhe im Well"). All references to the Blenheim Well include all
appurtenant facilities necessary and appropriate to the proper functioning of the Blenheim Well.
Additionally, the Cottons own and operate certain facilities existing in, over, under, on, through, within,
and across the Cotton Property, that are capable of transporting and delivering water produced from the
Blenheim Well to the Riding Property, including but not limited to a pipeline that connects the Cotton
Property to the Riding Property (collectively, the "Blenheim Water Delivery System "). All references to the
Blenheim Water Delivery System include all appurtenant facilities necessary and appropriate to the
proper functioning of the Blenheim Water Delivery System. The Blenheim Water Delivery System
intersects the Riding Property at a point midway along the westerly border of the Cotton Property abutting
the Riding Property ("Point of Connection "). The Blenheim Well, Blenheim Water Delivery System and
Point of Connection are depicted on Exhibit C.
E. On March 23, 2015, the Cottons filed a Verified Complaint against the City, the District,
and other neighboring parties, seeking, inter alia, to quiet title to their water rights, in the case captioned
Case No. 30-2015-00778655-CU-BC-JC in the Superior Court of the State of California County of Orange
(the "Lawsuit").
F. On August 5, 2015, the City, on behalf of itself and as successor-in-interest to the District,
filed an Answer.
G. The Parties wish to avoid the expense, inconvenience, and uncertainty of litigation and
desire to enter into this Agreement to resolve their pending disputes and to provide for the City's use of
the Blenheim Well and Blenheim Water Delivery System for the benefit of the Riding Property.
040185\0006\15072199.5 Page 1 of 14
ATTACHMENT 2
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein
and for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows :
1. STATEMENT OF INTENT AND PURPOSE
1.1 Recitals. To the best of the Parties' knowledge, the Recitals set forth above are
true, accurate and correct, and such recitals are incorporated into this Agreement by this reference.
1.2 Purpose. The purpose of this Agreement is to : (1) resolve, compromise, and
settle the Parties' disputes, including, but not limited to those contentions alleged or that could have been
alleged in the Lawsuit, upon terms and conditions set forth in this Agreement; and (2) provide for the
City's shared use of the Blenheim Well and Blenheim Water Delivery System for the benefit of the Riding
Property and payment to the Cottons for the use of these facilities. The Parties acknowledge and agree
that the City's execution of this Agreement is made solely and exclusively for the above referenced
purpose and shall not constitute or be construed as a waiver of the City's claimed water rights in any
other context or venue, shall have no precedent, and shall not constitute an admission against interest.
2. DISCLAIMER OF WATER RIGHTS AND LIMITATIONS OF DISCLAIMER
2.1 The City waives any claim to any water rights appurtenant to the Cotton Property,
including but not limited to any riparian, overlying, appropriative, prescriptive, statutory, or contractual
rights to surface water, subsurface groundwater, or percolating groundwater, including any claims for
water rights appurtenant to the Cotton Property based on the 1987 Dedication or any other alleged
dedications of water rights to the City or the District from the Cottons, the William Krem Company, or
either of their predecessors/successors-in-interest ("Cotton Water Rights").
2.2 To the extent the waiver of water rights based on the 1987 Dedication in
Section 2.1 above is ineffective to transfer all such water rights to the Cottons, the City does hereby
forever quitclaim to the Cottons, their successors and assigns, all rights, titles, interests, estates, claims
and demands, both at law and in equity, of the City to any and all water rights appurtenant to the Cotton
Property that may have been included in the 1987 Dedication or any other alleged dedications of water
rights to the City or the District from the Cottons, the William Krem Company, or either of their
predecessors/successors-in-interest. The covenants set forth in this Section 2.2 shall be evidenced by the
recordation of a quit claim deed in the official records of the County of Orange. The form of quitclaim deed
is attached as Exhibit D.
2.3 Except as expressly provided in Sections 2 .1 and 2.2, the Cottons acknowledge
and agree that nothing in this Agreement is intended to surrender, alter, waive, transfer, sever, diminish
or lessen the City's water rights, including any water right of any nature and to any source of supply and
any contractual right to water (collectively, "City Water Rights ") and that nothing in this Agreement shall
constitute or be construed as a waiver of any action, claim, protest, complaint, objection or legal argument
with regard to the City Water Rights. Further, notwithstanding Sections 2.1 and 2.2, nothing in this
Agreement shall constitute a waiver or transfer of any rights, titles , interests, estates, claims or demands
of the City to (a) any water rights associated with, appurtenant to, or benefitting any real property that is
not the Cotton Property, including but not limited to any rights, titles, interests, estates, claims and
demands based on the 1987 Dedication or any other alleged dedications of water rights to the City or the
District from the Cottons, the William Krem Company, or either of their predecessors/successors-in-
interest, or (b) any other water rights not appurtenant to the Cotton Property.
2.4 The City agrees that it will not object to or challenge the existence, ownership, or
validity of the Cotton Water Rights on any basis in any proceeding, including but not limited to any
proceeding in state court or before a state regulatory agency, so long as the Cotton Water Rights are
040185\0006\15072199.5 Page 2 of 14
used solely for reasonable and beneficial purposes upon the Cotton Property only. The City further
agrees that it will not object to any application by the Cottons pursuant to the Cotton Water Rights for a
permit for the construction or modification of one or more wells on the Cotton Property, or the construction
or modification of such a well pursuant to a permit issued by an agency authorized to do so , except to the
extent that such construction or modification fails to comply with the terms and conditions of any
applicable permit , law or regulation . Additionally , the City shall withdraw and nullify the effect of its pr ior
objection to the third well located on the Cotton Property. Notwithstanding the foregoing, the Cottons
acknowledge and agree to all of the following:
2.4 .1 Nothing in this Agreement constitutes an agreement, representation or
warranty by the City as to the existence, ownership, character, validity , extent, quantity, or priority of the
Cotton Water Rights and the City reserves all claims, rights and defenses not expressly granted by this
Section 2.4, including but not limited to the City's right to object to or challenge the character, extent,
quantity, or pr iority of the Cotton Water Rights, or the exercise of such rights, in any proceeding, including
but not limited to a stream adjudication.
2.4.2 In the event a court, regulatory agency or other adjudicatory body issues
a final decision, order or judgment finding , concluding or determining the existence, ownership, character,
validity, extent, quantity or priority of the Cotton Water Rights, nothing in this Agreement shall prohibit the
City from taking any action, or inaction , consistent with such decision, order or judgment, including but not
limited to objecting to or challenging the Cotton Water Rights, or the exercise of such rights .
3. COTTON DISMISSAL OF THE CITY FROM THE LAWSUIT
3.1 Within ten (1 0) days of the Effective Date , the Cottons will file the necessary
paperwork to dismiss the City with prejudice from the Lawsuit.
4. CITY'S USE OF BLENHEIM WELL AND WATER DELIVERY SYSTEM
4.1 The City shall have the right to share in the use of the Blenheim Well and
Blenheim Water Delivery System as provided herein. The Parties hereto anticipate that the Blenheim
Well shall be capable of produc ing at least 300 gallons per minute of water, which rate is sufficient to
permit the delivery of at least 170 acre-feet per year for use on the Riding Property ("M inimum Rate").
The City shall take delivery of the water produced from the Blenheim Well at the Point of Connection . The
Cottons acknowledge and agree that the City shall have no responsibility for the production,
transportation or delivery of water prior to , or before, the Point of Connection . The Cottons shall bear all
responsibility for the use, operation and maintenance of the Blenheim Well, the Blenheim Water Delivery
System and any other facilities located upon the Cotton Property. The Point of Connection is intended to
be the point of separation between the Parties' respective responsibilities for those facilities located upon
the Cotton Property for which the Cottons are responsible and those facilities located upon the Riding
Property for which the City is responsible .
4 .2 The City acknowledges and agrees that the Cottons do not represent or warrant
any right to pump or convey water and that Section 4.1 simply provides the City with the right to shared
use of the Blenheim Well and Blenheim Water Delivery System to produce and deliver water pursuant to
the City Water Rights and that the Monthly Payments described in Section 5 relate to the City's shared
use of the Blenheim Well and Blenheim Water Delivery System only and not to the wate r produced . The
Cottons acknowledge and agree that the City's Water Rights are separate and apart from the Cotton
Water Rights, and that the City's use of water pursuant to this Agreement is made pursuant to the City's
Water Rights.
040185\0006\1 5072 I 99.5 Page 3 of 14
5. INITIAL AND MONTHLY PAYMENTS
5.1 In full settlement of any and all claims by the Cottons as to or against the City, as
well as any of the City's representatives, agents, officers, attorneys, , successors, and/or assigns, the City
shall tender to the Cottons the sum of $35,000 .00 (the "I nitia l Payment"). The Initial Payment shall be
paid within ten (10) business days of the Effective Date . The check shall be made out to : "Kushner
Carlson Atty-Ciient Trust Account."
5.2 For each month of the Term of this Agreement, regardless of whether any water
is drawn from the Blenheim Well , the City shall pay to the Cottons $3,000 .00 by the 1st day of each
month for use of the Blenheim Well and Blenheim Water Delivery System ("M on thl y Payment")
commencing on the Effective Date. In the event the first month is a partial month, payment for that month
witt be prorated . The Monthly Payment is inclusive of any and all costs associated with the City's use and
of the Blenheim Well and Blenheim Water Delivery System pursuant to this Agreement , including but not
limited to the cost of energy to operate the Blenheim Well, and any costs of repair. The City
acknowledges and agrees that such Monthly Payment is above and beyond and in addition to any
consideration that may be paid by any tenants or operators of the Riding Property relating to electricity for
the Blenheim Well and Blenheim Water Delivery System or other services provided by the Cottons.
6. EFFECTIVE DATE AND PARTIAL TERMINATION
6.1
("Effective Date").
Effective Date. This Agreement is effective on the date executed by both Parties
6.2 Partial Termination. Sections 4 and 5 of this Agreement shall terminate ("Partia l
Terminatio n") upon the occurrence of any of the following: (1) either Party withdraws from this Agreement
on ninety (90) days prior written notice to the other Party ; (2) the Blenheim Well does not meet the
Minimum Rate set forth in Section 4. 1 or the Blenheim Water Delivery System otherwise becomes
unusable for the purpose of this Agreement; or (3) either Party breaches this Agreement.
6.3 Termination of Rights or Obligations . Upon Partial Termination, the Parties shall
be released from all rights and obligations under Sections 4 and 5, including but not limited to the City's
right to use the Blenheim Well and Blenheim Water Delivery System and the City's obligation to make the
Monthly Payments. The Parties shall cooperate to decommission the Point of Connection within a
reasonable period . For purposes of clarity , all provisions of this Agreement, excepting Sections 4 and 5,
shall survive any Partial Termination.
6.4 Partial Refund of Initial Payment. In the event Partial Termination occurs on or
before the one-year anniversary of the Effective Date (said 12-month period being the "Refun d Period"),
and such termination is not the result of the City's withdrawal pursuant to Section 6.2, the City shall be
entitled to a refund of the Initial Payment in an amount that is equal to the Initial Payment prorated for the
number of full months remaining in the Refund Period from the date of Part ial Termination ("Partial
Refund"). For example, if Partial Termination occurs 63 days following the Effective Date , the City shall
be entitled to a Partial Refund that is equal to nine-twelfths (9/12) of the Initial Payment. The Cottons shall
make the Partial Refund to the City within ten (1 0) business days of the date of Partial Termination. The
check shalt be made out to: "City of San Juan Capistrano" and shall be delivered to the City Clerk.
040185\0006\15072199.5 Page 4 of 14
7. RELEASES
7.1 Release and Waiver of Claims. The Parties, individually and collectively, release
and waive any and all claims, demands, actions, causes of action, damages, costs, expenses, and other
rights of any nature whatsoever, whether known or unknown, whether or not accrued, whether in tort or
contract against any other Party, individually and collectively, and their respective officers, directors,
shareholders, expert witnesses , attorneys, consultants, representatives, agents, employees , insurers ,
owners, managers , members, affiliates, and contractors, the Parties' predecessors, successors , and
assigns arising out of or in any way relating to the allegations , claims, and/or causes of action alleged in
the Lawsuit.
7.2 Section 1542 Release . The Parties waive their rights under Section 1542 of the
California Civil Code and any similar law of any state or territory of the United States as it relates to the
claims made or alleged in the Lawsuit only. Section 1542 provides as follows :
A general release does not extend to claims which the creditor does
not know or suspect to exist in his or her favor at the time of
executing the release, which if known by him or her must have
materially affected his or her settlement with the debtor.
7.3 Post-Settlement Facts and Law. The Parties understand and agree that facts or
law applicable to any matter covered by this Agreement might be discovered hereafter to be other than or
different from the facts or law now believed by them or their attorneys and advisors to be true or
applicable. The Parties expressly accept and assume the risk of such possible differences in fact or law,
which they or their attorneys or any other person or party may later discover, and agree that this
Agreement will nevertheless remain in full force and effect notwithstanding the later discovery of such
differences, if any.
8. GENERAL PROVISIONS
8.1 Attorney's Fees and Costs. The Parties expressly acknowledge that they are
solely responsible for the payment of all of their expenses, costs of any nature, and attorneys' fees related
to the Lawsuit and this Agreement.
8.2 Independent Review . The Parties represent that they have read and understand
this Agreement and enter into this Agreement of their own free will and have not been pressured or
coerced in any way whatsoever into signing this Agreement. Each Party has been represented by
independent legal counsel through the execution of this Agreement.
8.3 Agreement Governed By California Law . This Agreement is governed in all
respects, whether as to validity, construction , capacity, performance, or otherwise , by the laws of the
State of California without regard to the choice of law provisions thereof. If any provision of this
Agreement is held to be invalid, void or unenforceable for any reason, the remaining provisions must be
construed to continue in full force and effect without being impaired in any manner whatsoever.
8.4 Not an Admission of Liability. The Parties and any and all related persons or
entities do not admit any liability of any kind to each other. This Agreement is intended to resolve and
release any and all claims related to the Lawsuit between the Parties and to avoid the uncertainty and
costs of litigation . Nothing in this Agreement shall prejudice, waive or impair any right, remedy or defense
that any Party may have in any other or further legal proceeding .
8.5 No Assignment. The Cottons shall not voluntarily or by operation of law ass ign,
hypothecate, give or otherwise transfer or encumber all or any part of their rights , duties, or other
interests in this Agreement ("Assignment") except in connection with the conveyance or encumbrance of
the Cotton Property , without the City's prior written consent , which consent shall be in the sole discretion
040185\0006\15072199.5 Page 5 of 14
B
of the City. Any attempt to make an Assignment in violation of this Section 8.5 shall be null and void and
of no effect whatsoever. Without limiting the foregoing, the Cottons expressly acknowledge and agree
that the rights and obligations under this Agreement shall not be assigned or otherwise transferred for the
benefit of any property other than the Cotton Property.
8.6 Agreement Binding On Successors and Permitted Assigns. This Agreement
shall be binding upon the Parties and their respective heirs, executors, administrators, corporate parents,
subsidiaries, affiliates, operating companies, administrators, representatives, executors, successors and
permitted assigns.
8.7 Agreement Mutually Drafted . This Agreement is the product of negotiation and
preparation by each of the Parties and their lawyers who have had an opportunity to draft and prepare its
provisions . As a result, the Parties expressly acknowledge and agree that this Agreement shall not be
deemed to have been prepared or drafted by any one Party over any other and shall be construed
accordingly. Accordingly, any rule of law or legal decision that would require interpretation of this
Agreement against the drafter, including without limitation, California Civil Code §1654, is not applicable
and is irrevocably and unconditionally waived.
8.8 The Parties Have Not Transferred Any Claims. The Parties covenant that they
have not heretofore assigned or transferred, or purported to assign or transfer , to any person or entity,
any claims or portion thereof or interest therein which are released in th is Agreement.
8.9 Execution in Counterparts. This Agreement may be executed in counterparts,
each of which will constitute an original, but all of which taken together shall constitute one and the same
document. Any Party may rely on a signature from another party transmitted by fax or by PDF, and any
Party who faxes ore-mails by PDF a signature page bearing the faxing Party's signature does so with the
understanding and intent that such faxed or PDF signature is equivalent to delivery of an ink-original
signature.
8.10 No Waiver. No failure to exercise and no delay in exercising any right, power, or
remedy hereunder shall impair any right, power or remedy that any Party may have, nor shall any such
delay be construed to be a waiver of any such right, power, or remedy , or any acquiescence in any
breach or default hereunder, nor shall any waiver of any breach or default of any Party hereunder be
deemed a waiver of any default or breach subsequently occurring. All rights and remedies granted to any
Party hereunder shall remain in full force and effect notwithstanding any single or partial exercise of, or
any discontinuance of, any dispute begun to enforce any such right or remedy. The rights and remedies
specified herein are cumulative and not exclusive of each other or of any rights or remedies which any
Party would otherwise have. Any waiver, permit, consent or approval by any Party of any breach or
default hereunder must be in writing and shall be effective only to the extent set forth in such writing
signed by the Party to be charged and only as to that specific instance.
8.11 Entire Agreement. This Agreement and its Exhibits shall together constitute the
full and entire integrated Agreement between the Parties regarding the subject matter of this Agreement.
The Parties acknowledge that no Party has made any representations, warranties, agreements , or
covenants which are not expressly set forth herein . This Agreement may only be amended or modified
by a written instrument executed by the Parties . Under no circumstances may this Agreement be
modified orally by any Party.
8.12 Execution by the Parties. Each signatory to this Agreement hereby represents
and warrants that he or she possesses all necessary capacity and authority to execute and deliver this
Agreement on behalf its respective Party . The City represents and warrants that it has the necessary
authority to enter into this Agreement as the predecessor-in-interest to the District, and by doing so on
behalf of the District, agrees to indemnify and hold harmless the Cottons against any claims brought by
the District arising out of or relating to this Agreement or the Lawsuit.
040185\0006\15072199.5 Page 6 of 14
IN WITNESS WHEREOF, the Parties have ·caused this Agreem~nt to be executed a_~ of the
dale(s),-se t forth below .
Dated: 9.!Jil£o/ h -(I
Cottons:
Jeffrey Cotton. as · trustee of the Cotton Family
Trusl~?
Dated:. _________ _
City of San -Juan Capist~ano, a .public
municipality
By:-----------Name: ___________ __
Its:-------------
04CIIR I OO()(i\1 11721')9.5
Dated: q ...: .?.l ~ .2 o I b
Shannon Co.tton, as trustee o_f the Cotton Family
Tr~st dated September 9, 2002
£.bz.nrrxt C1+roD,
Page 7 of 14
J I
IN WITNESS WHEREOF, the Parties have caused thls Agreement to be executed as of the
date(s) set forth below.
Dated : _________ _
Cottons:
Jelf,ey Colt n as trt J t ~e of lh Cotton Family
Tru t dated Scptemb .r 9, 002
ATIEST:
(\
I'·,'
Ma ria Morri s, City C lerk
Dated: _________ _
Shan non Co lt o n, as trustee o f the Cotton Family
Tru s dat September 9, 2002
Page 7 of 14
EXHIBIT A
LEGAL DESCRIPTION OF THE COTTON PROPERTY
Real property in the City of San Juan Capistrano, County of Orange, State of California, described as
follows:
PARCELS 1 AND 2 AS SHOWN ON EXHIBIT "A" ATTACHED TO LOT LINE ADJUSTMENT LL NO. 06-
13101-01 RECORDED AS AUGUST 22, 2006 AS INSTRUMENT NO. 06-560266 OF OFFICIAL
RECORDS OF ORANGE COUNTY, CALIFORNIA.
APN: 664-111-04 and 664-111-06
040185\0006\15072199.5 Page 8 of 14
EXHIBIT B
LEGAL DESCRIPTION OF THE RIDING PROPERTY
PlitCe17:
That portion of Parcel 104 of C!rtilicatq of Compliance No. CC 2001-01, in the
U:UnCOJJlOrnted Territory ~f the Cotnty of Orange, State of Californi•. reeorded July 26,
2001 ils Instromcnt No. 20010S0863S of Offioial Records, in the office or the County
R~order ofsafd Co\lnty, described as follows;
Beg inmng at the So11tbcasterly tenninus of t11at cedain course along the Southwestcrlr
Une of Rancho Mission Viejo, as shown on R~oord of SUIVey No. 2006-11 Sl, iu Book
218, Pa~es 14 throu&h 2.4, inclusive, of Rcoords , of Survey, in the office of said CoWlty
Reeordoer, described as having a bearing and distance of "North 52°57'24" West
4459 .27' " on said Record of Survey; thence along said Southwesterly line North
521)57':.l!4'' West 526 .36 feet to a point hen;innftcr referred to as Point 'A"; thence leaving
said Southwesterly line and nlong fue Northwesterly line of Parcel Two of I he Plalillill&
Area One Development BoundfiT)' as approved July 26, 2006 by 1he 011UJge CollJ\ty
Planning Commiss-ion Resoluti()n No. 06-0S, as shown on said Record of Survey, tbe
following ~owses: North 2(;38'15'' East 301.76 feet, North 34"09'5~" East 888.59 f"~~
and North 23 9 20'42il EMt 814.28 feet to the Southerly right-of-WlJ.Y line of o ... ega
Higjmr.l!)! •. as described in Exbibi.L''C'' .. !!L$~_.Qnn~ Ps:ed_J9..J1l.~.Q~mnty of~~.!.
rcoorded August 1, 2008 as lnslnlment No. 2008000368965 of said Official Re:c<lrds;
thence 9long said Southerly righl ·d -way line, tbc following courses: Nonh BJO 12'45"
East 344.58 feel, }forth 6°47'15'' West 19.74 feet to the beginning of:. non-tangent: curve
concave Southerly having a mdiU$ of6326.27 feet, a radial line ohaid curve to said point
bears North 31>13'37" West, Easterly 24.26 feet along sa3d ~urve through a central angle
of 0°13'11 ", North 8(i"59'34" Eas. 256 .57 feel (0 the beginning ()f a CUtvll concav~
Northerly having a radius of 45? 9. 7~ feet, El\$ter ly 139.413 feet along ~id curve tbmugh a
central angle of 1°44'42", non·langrot South 87°43'5.5" East 90 .93 fcocl to the beginning
of a uo!O-fangeut curve concave Northerly bavin& a radius of 4.S!) I . 70 feel; a radial line of
sitid curve to said point boars South 5°52'42" East, Easterly 275.99 feet along said curve
through a central angle Of3°26'38", nou•tnngent North 87°16'57" En;;t 71.92 feet, South
10°12'54'' Easl 4.17 feet , South 5?0 04'J7'' East 84.63 feet. and North 8SD16'07 '' East
U .27 F.ee1 to a point oA a non-tanBtmt curve concave Nodbwcstcrly having a radius of
!550 .00 feet, a radial Uno of said ·~un·e to said point bears Norlb ss~>t 7'19" Bl\51, said
c11rv~ also being lhe Nodhwcs.!crly right-of-way line of L~ Pata A \'enue, as sbown on
said Record of Survey; thence alc·ng said Northwesterly right-of-way, the following
courses ; Southwesterly 11 ()3 .15 feet along said CUIVQ through a central tmgl¢ of
409 46'40", South 36~>03'59H West 561.99 feet to the beginn]ng of a curve ooncavo
Southeasterly having a radius of 1650.00 feet, and Southwesterly 882.54 feet along said
curve through a centllil !lngle of30.,38'46", to a point herein!lfter refcrrcrd to 11$ Point "B"i
th:nce 'leaving .said Northwe$terly right-of-way line non-tangeul South 84 °26'50" West
703.78 feet to a point on S8id Southwesterly tino or Rancho Missioa Viejo, said point
b<!ing distant thereon South 19DI7'44" East 213.59 feet from the point of beginning~
th~itce North 19<'17'44" West 213.59 fec:l to th e point of beginning.
EXC"l!?TJNG therefrom that portion of land desc.ri~d in the Grant Deed to ther County of
Orange recorded ..JA.wuee.y tlf. 2010 as Instrument No . ~IDtJ()()()~I/€81::.. of
Official Records, in the office of said Councy R~order.
Containing an area of68.889 acres, more or less.
040185\0006\15072199.5 Page 9 of 14
•
Legend
@Well
• Connection Point
040185\0006\15072199.5
Exhibit "C"
The Blenheim Well, Blenheim Water Delivery
System and Point of Connection
-ln1galion Line
Parcel
All depictions are approximate
0 100
Page 10 of 14
200 Feet
I
EXHIBIT D
QUIT CLAIM DEED
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO
AND MAIL ALL TAX STATEMENTS TO:
The Cotton Family Trust
28801 San Juan Creek Road
San Juan Capistrano, CA 92675
Attn: Jeffrey Cotton
QUITCLAIM DEED
(Space Above For Recorder's Use)
THE UNDERSIGNED GRANTOR DECLARES AS FOLLOWS:
The undersigned declares that this Quitclaim Deed is exempt from Recording Fees
pursuant to Califomia Govemment Code Section 27383.
FOR VALUABLE CONSIDERATION, the receipt of which is hereby acknowledged,
and pursuant to that certain Settlement, Mutual Release and Well Sharing Agreement dated
September_, 2016, by and between the City of San Juan Capistrano, a public municipality
(the "City") and Jeffrey Cotton and Shannon Cotton, as trustees of the Cotton Family Trust dated
September 9, 2002 (collectively, the "Cottons"), the City, on its own behalf and as successor-in-
interest to the Capistrano Valley Water District (the "District"), a redevelopment agency, does
hereby FOREVER QUITCLAIM to the Cottons all rights, titles, interests, estates, claims and
demands, both at law and in equity, of the City to any and all water rights appurtenant to that
certain real property owned by the Cottons described on Schedule 1 attached hereto (the "Cotton
Property"), including but not limited to any water rights appurtenant to the Cotton Property that
may have been included in that document recorded as instrument number 87-608081 in the
Official Records of Orange County, California ("the 1987 Dedication") or any other alleged
dedications of water rights to the City or the District from the Cottons, the William Krem
Company, or either of their predecessors/successors-in-interest. This Quitclaim Deed applies
solely to rights, titles, interests, estates, claims and demands pertaining to the Cotton Property
and does not apply to all rights, titles, interests, estates, claims and demands in and to any other
property described in the 1987 Dedication or any other property. Further, this Quitclaim Deed
does not include all rights, titles, interests, estates, claims and demands, both at law and in
equity, of the City to any and all other water rights not appurtenant to the Cotton Property.
040185\0006\15072199.5 Page 11 of 14
IN WITNESS WHEREOF, this Quitclaim Deed has been executed this _ day of
____ __,2016.
040185\0006\15072199.5
CITY OF SAN JUAN CAPISTRANO,
a public municipality
By: ------------------------Name: ----------------------Its: ------------------------
Page 12 of 14
•
ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only the identity of the individual
who signed the document to which this certificate is attached, and not the truthfulness, accuracy,
or validity of that document.
State of California )
County of _________ )
On ____________________ __J beforeme, ____________________________ ~
(insert name of notary)
Notary Public, personally appeared -------------------------------------------
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instnunent and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument
the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERnJR Y under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature. ____________________________ _ (Seal)
040 185\0006\15072199.5 Page 13 of 14
•
SCHEDULE 1
DESCRIPTION OF THE COTTON PROPERTY
Real property in the City of San Juan Capistrano, County of Orange, State of California, described as
follows :
PARCELS 1 AND 2 AS SHOWN ON EXHIBIT "A" ATTACHED TO LOT LINE ADJUSTMENT LL NO . 06-
13101-01 RECORDED AS AUGUST 22, 2006 AS INSTRUMENT NO. 06-560266 OF OFFICIAL
RECORDS OF ORANGE COUNTY, CALIFORNIA.
APN: 664-111-04 and 664-111-06
040185\0006\15072199.5 Page 14 of 14
AMENDMENT TO SETTLEMENT, MUTUAL RELEASE AND
WELL SHARING AGREEMENT
This Amendment to Settlement, Mutual Release and Well Sharing Agreement
("Amendment") is made, and is effective as of the date executed by all Parties, by and between
Jeffrey Cotton and Shannon Cotton, as trustees of the Cotton Family Trust dated September 9,
2002 (collectively, "Cottons") and the City of San Juan Capistrano, a public municipality ("City")
(collectively, the "Parties") with reference to the following facts:
RECITALS
A. On or about September 27, 2016, the City and the Cottons entered into the Settlement,
Mutual Release and Well Sharing Agreement fully and finally resolving litigation pending in
the Orange County Superior Court (Case No. 30-2015-00778655-CU-BC-JC) ("Litigation")
between the Cottons and the City ("Agreement").
B. Unless otherwise expressly defined herein, all defined terms shall have the same meaning
as provided in the Agreement. The Agreement is attached hereto as Exhibit A and
incorporated herein by this reference.
C. Among other things, the Agreement provides for the City's shared use of the Blenheim
Well and Blenheim Water Delivery System, which well and water delivery system are
owned and operated by the Cottons and located on the Cotton Property, in exchange for the
City's Monthly Payment to the Cottons. Water produced from the Blenheim Well is used
for the benefit of the Cottons and the City's Riding Property and any tenants or operators
of the Riding Property. This arrangement is mutually beneficial to both the Cottons and the
City.
D. The Parties now desire to provide for the City's long-term shared use of the Blenheim Well
and Blenheim Water Delivery System as provided in this Amendment.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals which are incorporated into
the operative provisions of this Amendment by this reference, and for other good and valuable
consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the Parties
hereto agree as follows:
1. A new Section 4.3 is added as follows:
Section 4.3 If at any time the Blenheim Well or the Blenheim Water Delivery
System fails to permit the City's shared use of the Blenheim Well and Blenheim Water Delivery
System for the benefit of the Riding Property as intended by this Agreement ("Well Failure"), the
City shall give written notice of the Well Failure to the Cottons ("Notice of ailure '). Within
seven (7) days of the Cottons' receipt of the City's Notice of Failure, the Parties shall meet and
Page 1 of 3
15826689
ATTACHMENT 3
confer to determine the cause of the Well Failure, whether and to what extent repairs may be
undertaken to remedy the Well Failure, and the associated costs of such repairs. The Parties may,
but shall have no obligation to, make and fund the repairs necessary to permit continued operation
of the Blenheim Well and Blenheim Water Delivery System for the benefit of the Parties. In the
event the Parties do not agree to repair the Well Failure, as necessary to permit the City's continued
shared use of the Blenheim Well and Blenheim Delivery System, Sections 4 and 5 of the
Agreement shall terminate, as provided in Section 6.2 of this Agreement.
2. A new Section 4.4 is added as follows:
Section 4.4 No later than thirty (30) days prior to the second anniversary of this
Agreement, which date is two (2) years following the Effective Date, the Parties shall meet and
confer to determine whether the Monthly Payment for the subsequent two (2) years should increase
or decrease. Thereafter, every two (2) years, the Parties shall meet and confer for this same
purpose. In the event the Parties do not agree to modify the Monthly Payment, the Monthly
Payment shall remain the same.
3. A new Section 5.3 is added as follows:
Section 5.3 If at any time the tenants or operators of the Riding Property cease to
reimburse the Cottons for the actual electrical utility costs (at a minimum of $3,300 per month)
attributable to operation of the Blenheim Well for the benefit of the Riding Property ("Energy
Costs"), and neither Party has given notice of its right to Partial Termination from this Agreement
pursuant to Section 6.2, the City shall be responsible for both the City's Monthly Payment, as
provided in Section 5.2, and the Energy Costs, on a monthly basis. Annually, the minimum Energy
Costs shall increase by an amount corresponding to increases in applicable tariff electrical utility
rates in the south Orange County area. At the City's election, the City, or the tenants or operators
of the Riding Property, acting on behalf of the City, may pay both the Monthly Payment and the
Energy Costs in a single monthly payment to the Cottons. Except as the Parties may otherwise
agree pursuant to Section 4.3, the City shall not be responsible for any costs in excess of the
Monthly Payment and the Energy Costs, on a monthly basis, including but not limited to any costs
associated with the use, operation, maintenance, repair or replacement of the Blenheim Well or
Blenheim Water Delivery System.
4. Section 6.2 of the Agreement is amended in its entirety to state as follows:
6.2 Partial Termination. In its sole and absolute discretion, either Party may
terminate Sections 4 and 5 of this Agreement ("Partial Termination") upon one hundred and eighty
(180) days written notice to the other Party, which Partial Termination takes effect at the expiration
of such notice period. Partial Termination shall also occur if there is a Well Failure and the Parties
do not agree to repair it pursuant to Section 4.3, in which case Partial Termination shall take effect
thirty (30) days following the Cottons' receipt of the City's Notice of Failure.
5. Section 6.4 of the Agreement is deleted in its entirety.
6. Except as amended above, each and every provision of the Agreement, inclusive of
all Exhibits, shall remain in full force and effect without change or modification.
Page 2 of 3
15826689
IN WITNESS WHEREOF, the Parties have executed this Amendment as of the date first
above written.
City of San Juan Capistrano
City of San Juan Capistrano,
a public municipality
By: --------------------
Name: Kerry K. Ferguson
Title: Mayor
ATTEST:
Maria Morris, City Clerk
15826689
Cottons
Jeffrey Cotton, as trustee ofthe
Cotton Family Trust dated
September 9, 2002
Shannon Cotton, as trustee of the
Cotton Family Trust dated
September 9, 2002
Page 3 of 3