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Geralyn L. Skapik (SBN 145055)
Mark C. Allen III (SBN 60415)
CLAREMONT LAND GROUP
5861 Pine Avenue, Suite A-1
Chino Hills, CA 91709
Tel: (909) 398-4404
Fax: (909) 398-1883
Email: jzskapik@skapiklaw.com
Attorneys for Plaintiff/Petitioner
SUSAN RIDDLE
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF ORANGE — CENTRAL DISTRICT
SUSAN [BIDART] RIDDLE, as Trustee of
the LEONARD A. BIDART FAMILY
TRUST UNDER TRUST AGREEMENT
DATED AUGUST 15, 2001
Petitioner/ Plaintiff,
V.
CITY OF NEWPORT BEACH; JOHN
VALLELY and DOES 1-50,
Respondents/Defendants.
Case No. 30-2015-00808124-CU-WM-CJC
[Assigned to I -Ion, Judge Peter Wilson — Dept, C 15]
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THIRD AMENDED VERIFIED
PETITION FOR WRIT OF MANDATE
AND COMPLAINT FOR INJUNCTIVE
AND DECLARATORY RELIEF UNDER
CCP §§ 526,1085,1086; AND IN THE
ALTERNATIVE FOR REGULATORY
TAKING
1) DECLARE CONTRACT WITH JOHN
VALLELY AND CITY OF NEWPORT
BEACH INVALID
2) VIOLATION OF THE NEWPORT
BEACH CITY CHARTER AND
RESOLUTION
3) VIOLATION OF DUE PROCESS
4) VIOLATION OF BROWN ACT
5) INVERSE CONDEMNATION
THIRD AMENDED VERIFIED PETITION FOR WRIT OF MANDATE AND COMPLAINT
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PARTIES
1. Petitioner/Plaintiff, SUSAN [BIDART] RIDDLE, as Trustee of the LEONARD A.
BIDART FAMILY TRUST UNDER TRUST AGREEMENT DATED AUGUST 15, 2001
("Plaintiff' or "Petitioner") is trustee of a California family trust that owns a residential property
at 510 and 510 '/2, located on the corner of South Bay Front and Opal Street,
2. Respondent/Defendant, City of Newport Beach ("City"), is and at all relevant
times herein was, a California Charter City located in the County of Orange.
3. Respondent/Defendant, John Vallely ("Vallely") is an individual and, operating a
sole proprietorship, Vallely Boat Rentals, the lessee on the Lease (Vallely Lease) described herein
below.
4. Respondents/Defendants, DOES 1 through 50, inclusive, are individuals,
corporations, associations, public agencies, quasi -public agencies, or otherwise related to
Respondents/Defendants. Petitioner does not presently know the true names and capacities and
therefore sues such Respondents/Defendants by those fictitious names pursuant to California
Code of Civil Procedure Section 474. Petitioner is informed and believes and thereon alleges that
each fictitious Respondent/Defendant is responsible for, participated in, or contributed to the
matters and things of which Petitioner complains herein and in some fashion has legal
responsibility thereof. When the identity of such fictitious Respondents/Defendants and the
extent and nature of their responsibility for, participation in and contribution to the matters and
things herein alleged have been ascertained by Petitioner, Petitioner will seek leave of this Court
to amend this Petition/Complaint to show their true names and capacities.
JURISDICTION AND VENUE
5, This Court has jurisdiction over this action pursuant to Sections 526 et seq., 1060,
1085 and 1087 of the California Code of Civil Procedure,
6. Venue is proper in this County under Sections 394 and 395 of the California Code
of Civil Procedure as the County in which the real property in dispute is located, as a County in
which some or all of the Respondents/Defendants reside, and the action is being brought in the
County in which the City is situated.
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THIRD AMENDED VERIFIED PETITION FOR WRIT OF MANDATE AND COMPLAINT
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STANDING
7. Petitioner has a direct interest in the subject matter of this litigation as the illegal
Lease directly affects her property rights.
8. Petitioner has no adequate remedy at law and has exhausted or been excused from
pursuing all administrative remedies as set forth below.
GENERAL ALLEGATIONS
9. Petitioner seeks in this Writ of Mandate and Declaratory Relief Action to declare
void the March 12, 2015 Lease that purports to be between the City and Vallely executed by the
City's City Manager and Vallely but not approved by the City Council ("Vallely Lease" or
"Lease"). A true copy of the Vallely Lease is attached hereto as Exhibit 1. Petitioner further
seeks to vindicate the Due Process rights of the public, as well as herself.
10. Petitioner is the owner of property identified as 510 and 510'/2 South Bay Front
Street, located on the corner of South Bay Front Street and Opal Ave. The Vallely Lease
Premises, identified in the Vallely Lease, completely blocks Petitioner's access to Newport
Harbor.
11. Pursuant to the terms set forth in the Vallely Lease, Vallely will be permitted to
use and occupy the leasehold solely for the commercial operation of a marina or boat berthing
facility and associated ancillary uses for a term of 50 years with an option by Vallely to extend
the lease for an added 50 years. The Vallely Lease "Premises" includes a pier and floats that
encroach in front of Petitioner's property, foreclosing any access to the harbor. The inclusion of
the pier and floats was part of the description of the premises and was a negotiated term in
exchange for a dismissal, between Assistant City Attorney, Michael Torres and Harry Carmack,
counsel for Vallely, in pending litigation between Vallely and the City. (John Stephen yallely,
Trustee of the John Stephen Vallely Trust, established September 8, 1992 v. City ofNewport
Beach; Case No. 30-2013-00677168-CU-PT-CJC) (Vallely Litigation)
12. The Vallely Lease has a long history. Vallely has long contended that he has a
vested property right in the tidelands. Prior to executing Vallely Lease and on April 24, 2013,
Vallely on behalf of a Family Trust (Trust), submitted an application for a Harbor Permit
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THIRD AMENDED VERIFIED PETITION FOR WRIT OF MANDATE AND COMPLAINT
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Transfer, Permit Number CP25605081. The City DENIED the application on May 10, 2013.
The permit was never issued pursuant to NBMC Chapter 17,
13. Chapter 17.10.020 of the Newport Beach Municipal Code states that, "No person
shall engage in, or conduct any commercial activity on Newport Harbor unless that person has
obtained a permit for such activity pursuant to the provision of this chapter." (Chapter 17.10.020
(F))
14. The Denial cited Newport Beach Municipal Code ("NBMC") Section
17.35.020(F), which states that, "In areas where existing piers and floats encroach in front of
abutting upland property owned by another, a new permit approved by the Harbor Commission
shall be required upon ... (3) any change of existing ownership of the abutting upland property
owned by the permittee or upon the death of the permittee.
15. Vallely first appeared before the Harbor Commission for a permit transfer in
March 2013, which was ultimately denied. The Harbor Commission Staff Report, dated March
13, 2013, stated that notice to abutting upland property owners was required and sent a written
letter, dated March 5, 2013, to Petitioners, alerting Ms. Riddle of the Harbor Commission
Iearing. Ms. Riddle did appear and provide testimony at the Harbor Commission Hearing. The
March 13, 2013 Staff Report stated:
"Before the Harbor Commission acts on the new permit, the owner
of the abutting upland property, in front of which the harbor facility
encroaches, shall be notified in writing of the meeting in which the
new permit will be considered. ... (emphasis added).......
A letter dated March 5, 2013 was sent to 510 S. Bay Front notifying
the owner of the Harbor Commission meeting. (Attachment E)"
16. The Denial concluded that a new pier permit was necessary, as the City could not
transfer the existing permit as there was a change in the existing ownership and the original
permittee had died. Therefore, the application was DENIED, without prejudice, so that Vallely
could apply for a new pier permit. Petitioner is informed and believes, and therefore alleges that
Vallely never applied for a new pier permit under NBMC Chapter 17.
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THIRD AMENDED VERIFIED PETITION FOR WRIT OF MANDATE AND COMPLAINT
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17. Upon Denial of his Permit Number CP25605081, the Vallely Trust commenced
litigation against the City to vindicate its supposed right. The Writ filed by the Trust sought to
force the Harbor Commission to accept and grant the transfer of the permit as opposed to being
required to file for a new permit. (John Stephen Vallely, Trustee of the John Stephen Vallely
Trust, established September 8, 1992 v. City of Newport Beach; Case No. 30-2013-00677168-
CU-PT-CJC) (Vallely Litigation)
18. On December 10, 2013, the City amended its Harbor Code to exempt commercial
user from requiring "involvement" of owners or long-term lessees of an abutting upland property.
19. On July 18, 2014, the Court DENIED the Trust's Petition for Writ of Mandate.
The Court ruled that because the pier encroached in fiont of a property owned by another
(Petitioner) and there had been a change in ownership in the property, Vallely or the Trust must
seek a new permit. The Court also concluded that the language of the amended Harbor Code was
riddled with uncertainty and therefore could not control.
20. The trust filed a Notice of Appeal of the Superior Court's ruling (Appeal).
21. During the pendency of the Appeal, and in March 2015, the Assistant City
Attorney, Michael Torres and counsel for Vallely, Hairy Carmack negotiated the terms and
condition of the Vallely Lease (Secret Settlement Agreement). On March 15, 2017 the City
Manager, David Kiff, and Vallely secretly executed the Vallely Lease which contained the secret
terms and conditions negotiated between Torres and Carmack . No notice was provided to the
public or nearby landowners, nor was this Valley Lease approved by the City Council. The
Vallely Lease was not issued pursuant to NBMC Chapter 17. The Vallely Lease was issued in
exchange for a dismissal of the Vallely Litigation, which was a negotiated term and condition in
the Secret Settlement Agreement. These terms and conditions, and the fact that the City resolved
the pending Vallely Litigation were never publicly reported.
22. The Vallely Lease contains a Recital that states that the City previously issued City
Pier Permit Number CP25605081 ("Permit") for the premises. Petitioner alleges that this
statement is incorrect. The Court and the City had already determined that Permit Number
CP25605081 could not be transferred, the Permit Application was denied, and a new permit must
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THIRD AMENDED VERIFIED PETITION FOR WRIT OF MANDATE AND COMPLANT
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be obtained in order for Vallely to continue to use the Premises identified in the Vallely Lease.
Petitioner is informed and believes and on that basis, alleges that no new permit was obtained.
23. As will be further explained below, the Vallely Lease is void for the following
reasons:
a. The Vallely Lease was executed by City Manager, David Kiff, and does not
bear the signature of the Mayor, as required by the Model Lease attached to
Resolution No. 2012-97 (Model Lease) The City's Model Lease form, for such
leases, was not followed. The Model Lease form contains two signature lines,
one for the Mayor and one for the City Manager. The signature line for the
Mayor in the Vallely Lease was deleted and only one signature line was placed
on the Vallely Lease, which line was identified for City Manager, Kiff.
b. The Vallely Lease is void as there is no Resolution by the City Council
authorizing the City Manager to execute a lease that is substantially different
then the Model Lease, such as the Vallely Lease.
c. The Vallely Lease is void, as the lease terms itself, do not authorize it to be
executed by the City Manager.
d. The Vallely Lease is void as pursuant to Chapter 17 of the NBMC, and the
City's own Charter, the City Manager has no authority to enter into, nor execute
this Lease, nor any other lease involving City—owned property, concerning tide
and submerged lands, without direct authorization by the City Council,
designating the City Manager the ability to enter into and execute such a lease.
e. The Vallely Lease is void as no new permit was issued to Vallely to allow him
to operate a commercial business in front of Petitioner's property. In fact, the
City DENIED the Vallely permit transfer application on May 10, 2013.
f. The Vallely Lease is void as it contains terms and conditions that substantially
differ from the Model Lease and deleted certain paragraphs and conditions that
were contained in the Model Lease.
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g. No notice of the Vallely Lease was provided to Petitioner who is the owner of
the abutting upland property.
FIRST CAUSE OF ACTION
Declaration that the Lease is Void
(Against All Defendants)
24. Petitioner hereby incorporates by reference each and every allegation contained in
Paragraphs 1 through 23 as set forth above.
25. A dispute exists between Petitioner on the one hand, and Defendants on the other
as to the validity of the Vallely Lease and Petitioner's property rights related thereto.
26. Petitioner contends:
a. That the Vallely Lease is void as the City Manager entered into the Lease, not
the City Council, as required by the City Charter;
b. The Vallely Lease is void on its own terms as the Vallely Lease does not
authorize the City Manager to execute the Vallely Lease;
c. The Vallely Lease is void as it purports to be relying on a Permit that was
denied;
d. The Vallely Lease is void as it violates NBMC Chapter 17.10 as a valid pern-lit
must be issued before a lease involving the Tidelands and/or Submerged lands
can be effectuated.
e. That the Vallely Lease violated existing City policy;
f. That Petitioner would, but for the Vallely Lease, have the right to seek a permit
for a Residential Dock Permit;
g. The period of the Vallely Lease, plus it renewal options, violates both the City
Charter (Sec. 421 and 1402) and State Law (Govt. C. Sec. 37384);
h. That the Vallely Lease description of the "Premises" includes the dock, but
neither the Council nor any City Official approved the acquisition;
i. That Due Process required some notice to nearby landowners prior to the City
entering into the Vallely Lease but no such notice was given;
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j. That the Valley Lease violates City standards and ordinances; and
k. That the Vallely Lease in combination with the public pier, constitutes a taking
of Petitioner's property.
27. Defendants' contentions are to the contrary.
28. Therefore, an order from this Court is necessary to declare the rights and duties of
the parties with respect to the Lease and Petitioner's related property interests.
SECOND CAUSE OF ACTION
Violation of the Newport Beach City Charter and Resolution
(Against All Defendants)
29. Petitioner hereby incorporates by reference each and every allegation contained in
Paragraphs 1 through 28 as set forth above.
30. The City Charter vests the power to enter into contracts in the City Council.
31. Specifically, Section 421 states "The City shall not be bound by any contract,
except as hereinafter provided, unless the same shall be made in writing, approved by the City
Council or employee designated by the City Council and signed on behalf of the City by the
Mayor or by such other employee as shall be designated by the City Council, the City Clerk and
the City Attorney. Any of said employees shall sign a contract on behalf of the City when
authorized or directed to do so by the City Council." Petitioner is informed and believes and on
that basis alleges, that the Council never "authorized or directed" the City Manager to enter into
the Vallely Lease.
32. Resolution No. 2012-97, entitled, "A Resolution of the City Council of the City of
Newport Beach approving a Model Lease Template and Model Permit Template for Commercial
Uses Located upon Tideland," set forth the authority of the City Manager under the Resolution
and attached the template form lease (Model Lease) that is to be used for conversion of existing
permits to a Commercial Lease.
33. The Vallely Lease recites that the "existing permit" is City Pier Permit Number
CP25605081 ("Permit"). But the Permit was never held by Vallely. In fact, Vallely attempted
unsuccessfully to have the Permit transferred to him. The City Manager did not have the
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authority to issue a lease to a third party.
34. Petitioner is informed and believes and therefore alleges that Vallely did not have
an existing permit when he entered into his lease with the City Manager, and had never held such
a permit for the subject premises.
35. The lease entered into between Vallely with the City Manager exceeded the
scope of the delegated authority nor did it comply with the delegated authority as set forth in
Resolution No. 2012-97. Further, the Lease does not conform to the Model Lease Template
attached to Resolution No. 2012-97.
36. The Vallely Lease deleted and revised terms set forth in the Model Lease
Template. The title provisions are different. The Model Lease proscribes any extension beyond
50 years; the Vallely Lease does not. Obligations placed on other lessees are not imposed on
Vallely. Vallely has no obligation to deed the property back to the City as is required in every
other lease.
37. The Vallely Lease and the Model Lease Template (Model Lease) approved by the
City Council differ substantially, inter alia, as to those matters set forth below:.
Model Lease: Recital D required the Lease to be subject to the Model Lease Agreement.
Vallely Lease: Deletes Recital D.
Model Lease: Recital E requires existing permit.
Vallely Lease: Existing permit language deleted.
Model Lease: Recital F Shorter term with extension.
Vallely Lease: Maximum allowed.
Model Lease: Contains Paragraph 3(b)
Vallely Lease: Paragraph 3(b) deleted.
Model Lease: Paragraph 11(d) requires maintenance report.
Vallely Lease: Paragraph 11(d) deleted.
Model Lease: Paragraph 14 requires lessee to quitclaim to City, surrender, and removal.
Vallely Lease: Paragraph deleted.
Model Lease: Paragraph 16(b) requires transfer if appurtenant real property.
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THIRD AMENDED VERIFIED PETITION FOR WRIT OF MANDATE AND COMPLAINT
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Vallely Lease: Paragraph 16(b) deleted,
Model Lease: Paragraph 20 is entitled "Surrender of Premises,"
Vallely lease: Paragraph 20 Eliminates "Surrender Language" and Changes the title of this
Condition to "Status of the Premises Upon Termination," This allows Vallely to holdover, no
surrender language, reversion of title to Vallely, not City.
Model Lease: Paragraph 24(d) requires delivery of premise in compliance with "Hazardous
Substance Laws,"
Vallely Lease: Paragraph 24(d) deleted
Model Lease: Paragraph 24(0(ii) environmental insurance required.
Vallely Lease: Paragraph 24(0(ii) deleted..
Model Lease: Paragraph 31(c) requires compliance with permit conditions.
Vallely Lease: Paragraph 3l(c) deleted,
Model Lease: Attachment 2, Tidelands Permit to be part of Lease.
Vallely Lease: Attachment 2, deleted..
38, The City Council did not authorize the City Manager to enter into the Valley
Lease. The Valley Lease is materially different fiom the Model Lease in that it deletes material
provisions and adds conditions not contained in the Model Lease. None of the changes benefit
the City or the public.
39. Resolution No. 2012-97 does not permit the City Manager to enter into the Vallely
Lease.
40, The City has a mandatory duty to refuse to enforce and implement any contract
entered into without authority, including the Vallely Lease here at issue, This court should issue
a Writ of Mandamus compelling the City to declare the Vallely Lease invalid.
ll/
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THIRD AMENDED VERIFIED PETITION FOR WRIT OF MANDATE AND COMPLAINT
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THIRD CAUSE OF ACTION
Violation of Due Process
(Against All Defendants)
41. Petitioner hereby incorporates by reference each and every allegation contained in
Paragraphs 1 through 40 as set forth above.
42. California Constitution Article 1, Section 7 and the Fifth and Fourteenth
Amendments of the US Constitution prohibit the taking of "property" without Due Process.
43. Petitioner has a vested property right in access and use of the littoral upland
property. California cases have long held that even though the waters and submerged lands may
be owned by the State, the littoral owners nonetheless have a property right in their continued
access to the adjacent waters.
44. Petitioner has been deprived of her right to seek a permit for a residential dock
even though such docks are favored under Newport Beach ordinances. Moreover, the decision to
deny such access was done with no notice or opportunity to be heard by her, other nearby owners
or the public at large.
45. Such interference with the public and private rights—particularly when it involves
the nearly permanent giving over of public property to a private business, requires at least
minimal notice to those affected.
46. This Court must enter an order setting aside the Vallely Lease until reasonable
notice is given to adjoining landowners and the public is provided the ability to comment on the
City's disposition of tideland property.
47. This court should permanently enjoin the City from issuing any more leases or
permits of public property without complying with Due Process.
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FOURTH CAUSE OF ACTION
Declare Failing to Adopt a Contract and Announce a Settlement Agreement
Granting an Interest in State Tideland in Open Meeting as Violation of the City
Charter and the Brown Act
(Declaratory Relief Against City of Newport Beach)
48. Petitioner hereby incorporates by reference each and every allegation
contained in Paragraphs 1 through 47 as set forth above.
49. Gov. Code, § 54950 et seq., the "Brown Act" requires the action of city councils
and the other public agencies be taken openly and that their deliberations be conducted
openly. The provision of the Brown Act are construed liberally in favor of openness so as to
accomplish its purpose and suppress the mischief at which it is directed, viz., secret deals with
private parties, such as what occurred here between Vallely and the City.
50, The Brown Act in Gov. Code, § 54957.1 further requires specific public disclosure
by the council of settlement of litigation.
51. This cause of action is for Declaratory Relief for violation of the Brown Act's
open meeting and public disclosure requirements. On September 23, 2015, Petitioner served a
Public Records Act Request (PRA) upon the City. One requested category sought all writings,
including all City resolutions, staff reports, agenda items, emails, letters, memorandums and
documents reflecting, relating to, regarding or discussing the lease entered into in March 2015 by
and between, John Vallely ("Vallely") and the City of Newport Beach,
52. On November 10, 2015, the City provided documents in response to Petitioners
PRA request. The City did not provide any sort of "privilege list" of redacted or withheld
documents.
53. Between April 10-13, 2017, Petitioner tools the depositions Defendant Vallely and
Defendant's City employees. During the deposition process, many documents were produced.
During this production, it was discovered that the City entered into a Secret Settlement
Agreement whereby Vallely agreed to dismiss his Litigation against the City in exchange for the
City issuing Vallely his Lease (Vallely Lease). Multiple emails were exchanged in February and
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March 2015, between Assistant City Attorney, Michael Torres and Harry Carmack, counsel for
Vallely, which discussed the terms and conditions of the settlement agreement. These emails were
never produced in response to Petitioner's PRA request. (Torres/Carmack emails)
54. Petitioner believes and therefore alleges that these emails were intentionally
withheld from production to keep secret the fact that the City settled litigation and that the
settlement, nor its terms and conditions, were not announced in open session in violation of the
Brown Act.
55. Immediately upon discovery of the emails between Assistant City Attorney,
Michael Torres and Harry Carmack, and on April 21, 2017, (April Letter) counsel for Petitioner
served a letter upon Harry Carmack, with a copy to the City Attorney for City of Newport Beach,
Aaron Harp. Harry Carmack is counsel of record in this matter for the Defendant City of
Newport Beach and Vallely. Mr. Carmack advised Petitioner's Counsel that all communication
related to this matter is to be directed to his attention. Thus, this letter was served upon Mr.
Carmack.
56. The April Letter, advised the City of their violation of the open meeting
requirements under the Brown Act as the City never publicly reported that the City and Vallely
entered into secret negotiations and then a Secret Settlement Agreement that resolved the pending
Vallely Litigation, The April Letter advised that under the City Charter, settlements are vested in
the City Council and could not be delegated to an employee. The April Letter advised that the
City Manager testified that the Vallely Lease was not ministerial but was negotiated as a
settlement to the litigation. The April Letter also advised that during the deposition process, it
was discovered that the change in the Harbor Code was not neutral, and in fact it was "special
legislation" that benefited Vallely and Vallely only. That action constituted inverse
condemnation.
57. The April Letter requested that the City respond to the above allegations and
accept an order and remand holding the Vallely Lease to be invalid as improperly entered into by
the City. The letter advised if the City did not accept the order and remand holding the Vallely
Lease invalid, Petitioner would be forced to amend her complaint and allege violation of the
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I Brown Act and Inverse Condemnation.
58. On April 26, 2017, Harry Carmack responded to the Petitioner's April 21, 2017,
letter stating that the City of Newport Beach and John Vallely would not agree to the Petitioner's
request.
59. Petitioner exhausted her administrative remedies when Defendants responded to
Petitioner's April 21, 2017, letter denying her request that the City respond to her allegations and
set aside the Vallely Lease which was obtained in violation of the Brown Act.
60. In the response to Plaintiff's PRA request, Defendants failed to produce the
Torres/Carmack emails and documents that referred to Vallely and the City entering into a
settlement agreement to resolve the Vallely Litigation. It was only on or about April 12, 2017,
when the City Manager, David Kiff, was questioned about the Torres/Carmack emails, which
were finally produced during the deposition proceedings, it was discovered that the City and
Vallely entered into a Secret Settlement Agreement.
61. The Torres/Carmack emails explicitly stated a "quid pro quo" between the Vallely
Lease and the dismissal of the Vallely Litigation. When confronted at his deposition with the
Torres/Carmack emails, the City Manager admitted that the Vallely Lease and its terms was a
"settlement" of the Vallely Lawsuit.
62. But for the fact that depositions were conducted, the evidence that the City entered
into a Secret Settlement Agreement to resolve pending litigation and such litigation involved
Tidelands, would still be a dark secret between the City and Vallely.
63. On April 28, 2017, Petitioner sought Ex Parte relief to amend her complaint.
64. Petitioner acted diligently upon the discovery of the fact that the Vallely Lease was
negotiated as part of a settlement of the Vallely Litigation. Petitioner's April 21, 2017 letter was
served upon the City within 9 months of the discovery of the action between the City and Vallely.
This letter could not have been served any sooner due to the nefarious actions of the City, as all
information related to the Secret Settlement Agreement was intentionally concealed from
Petitioner and from the public. This information was only discovered through deposition
testimony and document production.
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65. It is extremely suspect that the only documents missing from the PRA. production
were the settlement emails between Assistant City Attorney, Torres and Harry Carmack.
66. Petitioner acted diligently to seek amendment of her Petition upon the discovery of
the fact that the City entered into a Secret Settlement Agreement which settled the Vallely
Litigation and said settlement involved Tidelands. Because the City failed to produce the email
documents and the City Council failed to publicly announce the settlement of the Vallely
Litigation, Petitioner had no way to discovery that the City violated the Brown Act until the
depositions of Defendants Vallely and the City's employees.
67. The City Council failed to publicly report that they accepted Vallely's settlement
terms and conditions and resolved its pending litigation with Vallely. The City Council failed to
publicly report what the settlement terms and conditions entailed. The City Council failed to
publicly report that it had given approval to its legal counsel to settle the Vallely Litigation, The
City failed to publicly report that the City settled litigation that gave the City's Tidelands away in
exchange for dismissal of the Vallely Litigation. These acts violate the open meeting and public
disclosure requirements of the Brown Act,
68. An actual controversy exists between the City and Petitioner in that the City
contends it may evade the disclosure requirement of The Brown Act by instructing its legal
counsel to settle pending litigation without publicly reporting said action; and that the City may
enter into contracts to lease the City's Tidelands and resolve litigation regarding the Tidelands
without any public hearing or public disclosure. Plaintiff contends, in all respect, to the contrary.
69. In March 2015, the City resolved its litigation with Vallely and failed to publicly
disclose the terms and conditions of said settlement in violation of the Brown Act.
70. Petitioner believes and on that basis alleges that the settlement of the Vallely
Litigation involved circumvention of certain provisions of the NBMC related to Newport Beach
Harbor and Tidelands and granted Vallely certain concessions and rights not available to the
general public nor Petitioner.
71. Petitioner believes and on that basis alleges, that the Assistant City Attorney
violated the Newport Beach City Charter §421 when he entered into the Secret Settlement
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Agreement as he was not authorized to do so,
72. Petitioner believes and on that basis alleges that approval to permit the City
Attorney to resolve the Vallely litigation was never announced in open session by the City
Council; that the terms and conditions resolving the Vallely Litigation were never before the City
Council, nor presented at a City Council meeting for consideration and approval, and never
disclosed to the public, as required by law.
73. The actions by the City Manager and City Attorney in settling litigation without
public disclosure were ultra vires, the terms and conditions involved in the settlement of the
Vallely Litigation must be rescinded and a permanent injunction issued to prevent future
violations of the Brown Act whereby the City Attorney resolves litigation involving the City's
Tidelands without notice to the City Council or to the public, as required by law; a permanent
injunction that the City be prohibited from resolving litigation involving the City's Tidelands
without notice to the public as required by law; and a permanent injunction that the City be
prohibited from allowing it's legal counsel to settle pending litigation without publicly reporting
said action. With these acts, the City violated the Brown Act as the City deprived the public of
information to which the City knew or had reason to know, the public was entitled to, under the
law.
74. Based upon the City's actions set forth above, Petitioner alleges and asserts that
the City intentionally frustrated Petitioners ability to comply with the exhaustion requirements for
its benefit, by secreting actions relating to the Secret Settlement Agreement and the Vallely
Lease, thus, the City cannot now assert administrative noncompliance as a defense.
75. It should be noted that the Defendant's website states that the "City of Newport
Beach is committed to providing the public with as much information as possible to promote
accountability and trust in government." The City's website holds that it is an "Open and
Transparent Government." Failing to announce settlement of pending litigation in open session
during its council meeting, fly's in the face of the City's avowed commitment.
76. Plaintiff is entitled to statutory and actual damages according to proof and to
reasonable attorney's fees for acting as a private attorney general to enforce a matter of statewide
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significance.
FIFTH CAUSE OF ACTION
Inverse Condemnation
(Against City of Newport Beach)
77. Petitioner hereby incorporates by reference each and every allegation contained in
Paragraphs 1 through 76 as set forth above.
78. Prior to executing the Vallely Lease and on April 24, 2013, Vallely on behalf of a
family trust, submitted an application for a Harbor Permit Transfer, Permit Number CP25605081.
The City DENIED the application on May 10, 2013. ("Denial") (the permit was never
resubmitted and was never issued pursuant to NBMC section 17.60.0 10 et. seq. or pursuant to
Chapter 17.
79. On December 10, 2013, the City amended its Harbor Code to exempt commercial
user from requiring "involvement" of owners or long-term lessees of an abutting upland property.
80. This amendment was enacted to allow Vallely to encroach on Petitioners upland
property without redress or notice.
81. During the deposition of the City Harbor Resources Manager, in April 2017, the
City conceded that this Harbor Code amendment affects no other owner of abutting upland
property other than Petitioner.
82. During the depositions of the City Harbor Resources Manager and City Manager,
in April 2017, both testified that they did not review or receive the Vallely Lease for review or
consideration, but treated it entirely as a negotiation of a settlement between the City Attorney
and Vallely.
83. NBMC 17.60.020 mandates that an application for permits which pertain to the
harbor shall be filed in the office of the Harbor Resources Division, on forms prescribed by the
Harbor Resources Manager. Based upon the deposition testimony of the Harbor Resources
Manager, Vallely failed to comply with this mandate. Thus, Petitioner alleges that the Vallely
Lease was not entered into pursuant to Chapter 17 of the NBMC and therefore the exhaustion
requirements identified in Chapter 17 of the NBMC are not applicable here.
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84. During this deposition, the City Harbor Manager testified that he did not review or
receive the Vallely Lease for review or consideration.
85. During the deposition of the City Manager, in April 2017, he testified that the
Vallely Lease was not ministerial but was negotiated as a settlement to the litigation.
86. During the deposition process, it was discovered that the change in the Harbor
Code was not neutral, and in fact it was "special legislation" that benefited Vallely and Vallely
only.
87. This action constitutes inverse condemnation.
88. Petitioner believes and on that basis alleges, that the settlement of the Vallely
Litigation involved circumvention of certain provisions of the NBMC related to Newport Beach
Harbor and Tidelands in order to grant Vallely certain concessions and rights to the detriment of
Petitioner.
89. On March 12, 2015, the City and Vallely entered into the Vallely Lease. The
Vallely Lease violated the mandates set forth in Resolution 2012-97. The Vallely Lease was part
of the Secret Settlement Agreement entered into between the City and Vallely. The Vallely
Lease, which is substantially different then the Model Lease, was a negotiated lease issued in
exchange for a dismissal of the Vallely Litigation, The Vallely Lease was not a lease issued
under NBMC Chapter 17.
90. The Harbor Code amendment and the Vallely Lease affects no other land owner in
the City except for Petitioner.
91. The adoption of the Harbor Code amendment, did not cause harm until the City
effectuated the Vallely Lease,
92. The negotiation of the Vallely Lease in exchange for a dismissal of pending
litigation and the execution of the Vallely Lease by the City Manager, is a violation of Article 1,
section 19 of the California Constitution, as well as the Fifth Amendment of the U.S.
Constitution, as Petitioner's private property rights cannot be taken or damaged by the City and
given to Vallely, a private party, for private use.
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93. With this Harbor Code amendment, as well as with the Vallely Lease, Private
Property rights were taken and damaged by a public entity for the benefit of a private party
owner.
94. The Vallely Lease was not entered into pursuant to Chapter 17 of the Newport
Beach Municipal Code. The Vallely Lease was part of a Secret Settlement Agreement whereby
the City Attorney negotiated the terms and conditions of the Vallely Lease in exchange for a
dismissal of the Vallely Litigation.
95. The Vallely Lease was not an application filed in the Office of the Harbor
Resources Division, on forms prescribed by the Harbor Resources Manager. The Vallely Lease
was never presented to the Harbor Resources Manager. The exhaustion requirement is only
applicable to leases or permits entered into under Chapter 17. Further, when Vallely originally
sought a permit under Chapter 17, it was denied, thus Petitioner had nothing to appeal.
Therefore, the exhaustion requirement stated in NBMC Chapter 17, is not applicable to the
Vallely Lease.
96. Petitioner was not paid or provided compensation for this taking.
97. Petitioner is entitled to just compensation for this taking.
PRAYER FOR RELIEF
1. WHEREAS, Petitioner respectfully prays for the following relief against all
Respondents and Defendants and any and all other parties who may oppose Petitioner in this
proceeding as follows:
As to all Causes of Action:
2. Declare that the Lease is void and of no effect.
3. Declare the Lease entered into between City and Vallely, void as against public
policy, in violation of the City Charter, and City Resolution No. 2012-97.
4. Declare that the City must give reasonable notice to adjoining landowners and the
public and to allow a comment period when the City is addressing the disposition of tideland
property.
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5. Permanently enjoin the City from issuing any leases or permits of public property
without complying with Due Process, the City's Charter and the NBMC.
6. Permanently enjoin the City from entering into any Lease involving Tidelands and
Submerged Lands in the Newport Harbor unless that person has obtained a permit for such
activity in accordance with the provision of NBMC Chapter 17.
7. Permanently enjoin the City from entering into any Lease that is not substantially
similar to the Model Lease Template attached to Resolution No. 2012-97, without public notice
and City Council approval.
8. On the Third Cause of Action find that Petitioner acted as a private Attorney
General pursuant to CCP Sec. 1021.5 and award fees on that basis.
9. As to the Fourth Cause of Action, declare void ab initio, the terms and conditions
involved in the settlement of the Vallely Litigation and declare that the Vallely Lease be deemed
void.
10. As to the Fourth Cause of Action issue a permanent injunction to prevent future
violations of the Brown Act whereby the City Attorney resolves litigation involving the City's
Tidelands without notice to the City Council or to the public, as required by law; issue a
permanent injunction that the City be prohibited from resolving litigation involving the City's
Tidelands without notice to the public as required by law; and issue a permanent injunction that
the City be prohibited from allowing it's legal counsel to settle pending litigation without publicly
reporting said action. Declare that with these acts, the City violated the Brown Act as the City
deprived the public of information to which the City knew or had reason to know, the public was
entitled to under the law.
11. As to the Fourth Cause of Action for statutory and actual damages according to
proof and to reasonable attorney's fees for acting a private attorney general to enforce a matter of
statewide significance.
12. As to the Fifth Cause of Action for statutory and actual damages according to
proof and for reasonable attorney's fees.
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13. As to all Causes of Action, for compensatory damages and for other such relief the
Court deems proper, including costs of this lawsuit herein and all reasonable attorney's fees.
Dated: September 12,2017
CLAREMONT LAND GROUP
:" � .7+L2
Geralyn L. Skapik
Mark C. Allen III
Attorneys for Plaintiff/Petitioner, SUSAN
RIDDLE
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