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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 NIALL P. McCARTHY (SBN 160175) [email protected] 2 ERIC J. BUESCHER (SBN 271323) [email protected] 3 COTCHETT, PITRE & McCARTHY, LLP San Francisco Airport Office Center 4 840 Malcolm Road Burlingame, CA 94010 5 Telephone: (650) 697-6000 Facsimile: (650) 697-0577 6 MARC GOLDSTEIN (SBN 119825) 7 LAW OFFICES OF MARC GOLDSTEIN 620 Newport Center Drive, 11th Floor 8 Newport Beach, CA 92660 Telephone: (949) 718-4433 9 Facsimile: (949) 666-7752 [email protected] 10 Attorneys for Plaintiffs 11 SUPERIOR COURT OF THE STATE OF CALIFORNIA 12 IN AND FOR THE COUNTY OF ORANGE 13 HOOTAN DANESHMAND; LAURI CASE NO. 14 McINTOSH; and BRIAN MONTGOMERY, CX-105 on behalf of themselves and all those CLASS ACTION COMPLAINT FOR: 15 similarly situated, 1. BREACH OF CONTRACT 16 Plaintiffs, 2. BREACH OF THE COVENANT OF 17 v. GOOD FAITH AND FAIR DEALING 18 CITY OF SAN JUAN CAPISTRANO; and DOES 1-20, 3. COMMON COUNT – MONEY HAD 19 AND RECEIVED Defendants. 20 4. NEGLIGENCE 21 DEMAND FOR JURY TRIAL 22 23 24 25 26 27 28 ♼ LAW OFFICES CLASS ACTION COMPLAINT COTCHETT, PITRE & MCCARTHY, LLP 1 TABLE OF CONTENTS Page No. 2 I. INTRODUCTION............................................................................................................. 1 3 II. PARTIES ........................................................................................................................... 2 4 A. Plaintiffs .................................................................................................................. 2 5 B. Defendants .............................................................................................................. 2 6 III. JURISDICTION AND VENUE ....................................................................................... 3 7 A. Jurisdiction is Proper in this Court ......................................................................... 3 8 B. Venue in Orange County is Proper ......................................................................... 3 9 C. Plaintiffs Provided Notice to SJC ........................................................................... 3 10 IV. CLASS ACTION ALLEGATIONS ................................................................................ 3 11 V. FACTUAL BACKGROUND ........................................................................................... 6 12 A. SJC’s Changes to Its Water Rates and Prior Litigation Finding Those Changes 13 Unconstitutional ...................................................................................................... 6 14 B. SJC’s Deceptive “Refund” Offer ............................................................................ 8 15 VI. CAUSES OF ACTION ................................................................................................... 10 16 VII. PRAYER FOR RELIEF................................................................................................. 12 17 VIII. JURY DEMAND ............................................................................................................. 13 18 19 20 21 22 23 24 25 26 27 28 ♼ LAW OFFICES CLASS ACTION COMPLAINT i OTCHETT ITRE C , P & MCCARTHY, LLP 1 I. INTRODUCTION 2 1. Plaintiffs Dr. Hootan Daneshmand, Lauri McIntosh and Brian Montgomery 3 (collectively, “Plaintiffs”) bring this action to require Defendant City of San Juan Capistrano (the 4 “SJC”) to refund its customers (including individuals and businesses, herein, “Residents”) the 5 millions of dollars which it illegally and wrongfully assessed for water services. Thousands of 6 Residents were overcharged during for water from at least February 2010 to July 2015. 7 2. On April 20, 2015, the Fourth District Court of Appeal found SJC had charged 8 residents illegal and improper water rates in violation of the California Constitution. The city 9 continues to retain overcharges paid by Plaintiffs and class of Residents, including interest on 10 those overcharges. 11 3. In or around July 2015, SJC announced it was going to be issuing “refunds” as a 12 result of its illegal overcharges. Unfortunately, SJC’s “refund” program was nothing more than a 13 continuance of its illegal conduct. SJC failed to disclose that its water rates were charged in 14 violation of state law and failed to disclose that the “refund” it was offering included less than 20% 15 of the overcharges SJC collected from Residents, and failed to provide this “refund” offer to all of 16 the people who were charged illegal rates. Further SJC’s “refund” requires that claimants give up 17 the legal right to collect the complete overcharges (which were concealed by SJC) by signing a 18 complete release for all of SJC’s overcharges, and refused to refund Residents who submitted 19 claims but did not sign the release. 20 4. SJC has abrogated a mandatory, constitutional duty which resulted in the city’s 21 residents substantially overpaying for the cost of water. SJC failed to calculate its costs in setting 22 its water rates, instead arbitrarily increasing those rates and using improper tiers with no support, 23 justification or relationship to the cost of supplying the water, as required by Proposition 218 and 24 was found by the Court of Appeal and the Orange County Superior Court. 25 5. SJC’s attempt to escape the consequences of its illegal conduct by accounting 26 sleight of hand should be rejected. 27 6. There can be no dispute that SJC overcharged its residents, nor any dispute that SJC 28 has an obligation to return the illegally collected water rates in the form of refunds or credits. ♼ LAW OFFICES CLASS ACTION COMPLAINT 1 COTCHETT, PITRE & MCCARTHY, LLP 1 Instead of complying with the law, complying with the judgment of this Court and the decision of 2 the Court of Appeals, and instead of returning to the people of San Juan Capistrano the money it 3 illegally collected from them, SJC has doubled down on its illicit conduct. 4 7. SJC has harmed and continues to harm Plaintiffs and the Class by retaining the 5 overcharges its customers paid. SJC should be forced to comply with the law and to refund or 6 credit the full amount of the overcharges it collected from Residents, together with legal interest. 7 II. PARTIES 8 A. Plaintiffs 9 8. Plaintiff Dr. Hootan Daneshmand is a resident of Orange County, CA. Dr. 10 Daneshmand has resided in San Juan Capistrano and been a water customer of SJC for 11 approximately seventeen years. Between February 2010 and July 2014, Dr. Daneshmand was 12 charged more than a “Tier 1” water rate, which amounts Dr. Daneshmand paid. 13 9. Plaintiff Lauri McIntosh is a resident of Orange County, CA. Ms. McIntosh has 14 resided in San Juan Capistrano and been a water customer of SJC for four years. Between 15 February 2010 and July 2014, Ms. McIntosh was charged more than a “Tier 1” water rate, which 16 amounts Ms. McIntosh paid. 17 10. Plaintiff Brian Montgomery is a resident of Orange County, CA. Mr. Montgomery 18 has resided in San Juan Capistrano and been a water customer of SJC for approximately twenty 19 years. Between February 2010 and July 2014, Mr. Montgomery was charged more than a “Tier 1” 20 water rate, which amounts Mr. Montgomery paid. 21 B. Defendants 22 11. Defendant City of San Juan Capistrano is a municipal corporation that operates the 23 City of San Juan Capistrano. 24 12. Defendants Does 1-20 are fictitious names for individuals or entities that may be 25 responsible for or caused or contributed to the wrongful conduct and labor practices that caused 26 harm to the Plaintiffs and the Class, the true names and capacities of which are unknown to 27 Plaintiffs, but Plaintiffs will amend this Class Action Complaint when and if the true names of said 28 Defendants become known to them. ♼ LAW OFFICES CLASS ACTION COMPLAINT 2 COTCHETT, PITRE & MCCARTHY, LLP 1 III. JURISDICTION AND VENUE 2 A. Jurisdiction is Proper in this Court 3 13. The Superior Court of the State of California has jurisdiction of this class action 4 pursuant to C.C.P. §§ 71 and 382, and the amount in controversy exceeds the minimum 5 jurisdictional amount of unlimited civil cases. 6 B. Venue in Orange County is Proper 7 14. Venue is proper in the Superior Court for the County of Orange because the injury 8 of which the named Plaintiffs herein complain occurred in Orange County, Defendant is located 9 within Orange County and Plaintiffs are residents of Orange County. 10 C. Plaintiffs Provided Notice to SJC 11 15. On September 30, 2015, counsel for Plaintiffs served a Notice of Governmental 12 Claim on Clerk of San Juan Capistrano. A true and correct copy of that Notice is attached as 13 Exhibit 1. As of the date of filing of this action, SJC has not responded to that Notice. 14 16. On December 4, 2015, counsel for Plaintiffs served an Additional Notice of 15 Governmental Claim on the Clerk of San Juan Capistrano. A true and correct copy of that Notice 16 is attached as Exhibit 2. As of the date of filing this action, SJC has not responded to the 17 Additional Notice. 18 IV. CLASS ACTION ALLEGATIONS 19 17. Plaintiffs bring this action on behalf of themselves and the other members of the 20 following Class and Subclass, pursuant to C.C.P. § 382. 21 a. Class: 22 All water customers San Juan Capistrano who were charged more than 23 a Tier 1 water rate between February 2010 and July 2015 and paid the 24 higher rate. 25 b. Subclass: 26 All water customers of San Juan Capistrano who were charged more 27 than a Tier 1 water rate between February 2010 and July 2015, paid the 28 higher rate, and who received a partial refund and/or credit from
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