11-0919_MARBELLA DEVELOPMENT CO_Settlement Agr & Gen Release Amd #1AMENDMENT # 1
TO SETTLEMENT AGREEMENT AND GENERAL RELEASE
Incorporating the terms and conditions of the Settlement Agreement and General
Release (the "Agreement") entered into between Marbella Development Company
("Marbella"), a California General Partnership, and the City of San Juan Capistrano, a
municipal corporation, and the City Counsel for the City of San Juan Capistrano
(collectively the "City'), the Agreement is amended, effective as of the date the Parties
execute this amendment, as set forth herein. Capitalized terms shall have the same meanings
as those set forth in the Agreement.
RECITALS
WHEREAS, Marbella and the City would like to ensure that the Agreement will have
full force and effect.
AGREEMENT
WHEREFORE, in consideration of the covenants, conditions, and promises set forth
in the Agreement and in this Amendment, and other valuable consideration, the adequacy
and sufficiency of which consideration is hereby expressly acknowledged, the Parties agree
to amend the terms of the Agreement as follows:
The following section shall be added to and fully incorporated into the Agreement:
4.6 Notice Of Settlement Agreement To Purchaser: City hereby agrees that it
shall provide its successor in interest or purchaser of Lot 217 with a copy of this Settlement
Agreement and General Release and all Exhibits referenced therein, as well as this Amendment
#1 prior to the purchase of the land or the transfer of the City's interest in the land.
[SIGNATURE PAGE FOLLOWS]
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IN'WITNBSS WHEREOF, the Parties evidence their agreement, consents and acceptance of this
Amendment #1 to Settlement Agreement and General Release by executing the same in the
spaces provided below:
"MARBELLA" Marbelia Development C mpany
Dated: 1
By:
Name:
Title; General Partner
"CITE" Ci o an Juan istran0
n . Bruit
anager
Attest:
By.
Nemo a MOM
Title: City Clerk
APPROVED AS TO FORM
M1211(471AIcm
FEW
�ty Attorney
4344W"i810.2
2
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SETTLEMENT AGREEMENT AND GENERAL RELEASE
This Settlement Agreement and General Release (the "Agreement") is made and entered
into as of August 2011 (the "Effective Date") by and between, on the one hand, Marbella
Development Company ("Marbella"), a California General Partnership, and on the other hand,
the City of San Juan Capistrano, a municipal corporation, and the City Counsel for the City of
San Juan Capistrano (collectively the "City"). Marbella and the City may be referred to herein as
the "Parties."
RECITALS
A. In 1987, Marbella sought and received the City's approval of a large mixed-use
planned development, located along the Interstate 5 corridor in and about Rancho Viejo Road,
north of the Ortega Highway (the "Development Project").
B. Pursuant to the Subdivision Map Act, the City, by Resolution No. 87-6-2-8,
approved a subdivision map for the Development Project.
C. In accordance with condition no. 19 of Resolution No. 87-6-2-8, Marbella was
required to dedicate a parcel of land to the City under the "Public Institutional" zoning
designation.
D. The final subdivision tract map ("Final Map") approved for the Development
Project contains Marbella's offer of dedication to the City of certain real property described as
Lot 217 of Tract 12954 (Assessor Parcel Number 650-592-02) (hereinafter, "Lot 217").
E. The City's acceptance of Marbella's offer of dedication of Lot 217 was noted on
the Final Map for the Development Project (recorded in the Orange County Recorder's Office on
February 29, 1988) and stated: "Lot 217 in fee simple for Public Institutional Purposes."
F. The City declared Lot 217 surplus and re -zoned Lot 217 for uses other than those
arguably set forth in the offer and acceptance of dedication and entered into an agreement to
convey Lot 217 to a private third party.
G. Marbella instituted legal action in the Orange County Superior Court, case no. 30-
2008-0010544, styled as Marbella Development Company vs. City of San Juan Capistrano el al.
(the "Action"), seeking to quiet title in Lot 217 by a reversion, or in the alternative, to enforce
the restriction contained in the dedication.
H. The trial court entered judgment in the Action finding that (1) the City owns
Lot 217 in fee simple and Marbella has no right of reversion; (2) Marbella, as the original grantor
of Lot 217, had standing to enforce the restriction; (3) Lot 217 was permanently restricted to Public
Institutional uses; and (4) any conveyance of Lot 217 by the City must contain an appropriate
use restriction. The trial court also entered a permanent injunction enjoining the City from using
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Lot 217 for anything other than a Public Institutional purpose and from conveying Lot 217 to a
third part without a restriction in the instrument of conveyance permanently restricting use of Lot
217 to Public Institutional uses.
I. The City has appealed the trial court's judgment and permanent injunction with
respect to the use restriction. That action is currently pending before the Fourth Appellate
District, Division Three, of the Court of Appeal for the State of California (Court of Appeal Case
No. G043605) (the "Appeal").
J. The Parties desire, and intend hereby, to provide for a full and final resolution and
compromise of any and all claims raised in or related to the Action and the Appeal, through the
mutual execution of this Agreement, and to hereinafter discharge each other from all obligations
between them concerning Lot 217.
AGREEMENT
WHEREFORE, in consideration of the covenants, conditions, and promises set forth
herein, the adequacy and sufficiency of which consideration is hereby expressly acknowledged
by the Parties hereto, it is agreed to, by and between the Parties, as follows:
1.0 Consideration for Settlement of Action
1.1 Dismissal of the Action: Marbella with cooperation from the City, shall
immediately prepare and file with the Court of Appeal and trial court any necessary motion or
paperwork necessary to vacate the current judgment and dismiss the Action without prejudice.
1.2 Dismissal of Appeal: The City shall cause to be filed with the applicable
court(s) of law its voluntary dismissal of the Appeal from the trial court's judgment entered in the
Action, subject to the vacation and/or set-aside of the current judgment of the trial court restricting
the use of the property to Public Institutional uses.
1.3 Release of Restriction: In exchange for the consideration set forth in
section 1.5 below, Marbella, upon receiving notice from the City of a fully enforceable sale of
Lot 217 to a third party and upon receipt of a fully executed purchase agreement evidencing
such sale to a third party shall:
(a) Agree to waive and quit claim all interest in Lot 217 to the City and
thereby waive any and all right, title and interest in Lot 217. By virtue of
Marbella's waiver and quit claim as the original grantor of any interest in
Lot 217, title to Lot 217 shall be merged into the title held by the City and
the City shall thereafter hold legal title to Lot 217 in fee simple, without
condition or restriction as to use and/or conveyance; and
(b) Cooperate with the City for entry of an order quieting title in the
name of the City in fee simple without restriction.
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1.4 Marbella's Conveyance of Interest to City: In addition to vacating the
judgment, as referenced in Section 1.1 herein, if necessary or requested by the City after providing
proof of the sale of the property, Marbella shall convey to the City any and all interest in Lot 217
to the City and the Parties shall work cooperatively to record the appropriate instrument(s) of
conveyance in the Office of the Orange County Recorder, including a copy of any court order or
judgment entered in the Action quieting title to lot 217 in the name of the City.
1.5 Percentage of Purchase Price: The City shall pay to Marbella a sum equal
to twenty-five percent (25%) of the total purchase price received by the City for Lot 217. Said
sum shall not become due and payable until the City receives actual payment from the purchaser of
Lot 217. Marbella acknowledges and agrees that by this provision, the City has no obligation or
duty to sell Lot 217 and any decision to sell Lot 217 shall be at the sole and absolute discretion of
the City. The City acknowledges and agrees that by this provision, Marbella shall not release the
dedication contained in the original instrument of conveyance until such time as the City has
entered into an agreement for the sale of Lot 217, as more fully set forth in section 1.3 above.
2.0 Supplemental Documents: The Parties agree to execute any reasonable
supplemental documents, instruments, agreements, or escrow instructions as may be necessary or
proper to consummate the conveyance or quieting title of Lot 217, or any interest therein, as
contemplated by this Agreement. The Parties acknowledge that time shall be of the essence with
regard to the conditions set forth in this Sections 1.3, 1.4, and 1.5 and shall work cooperatively to
quickly remove the aforementioned restrictions upon receiving notice of the City's execution of an
agreement to sell Lot 217.
3.0 Waiver of Costs and Fees: In accordance with, and conditional upon, the terms of
this Agreement, neither Marbella nor City shall seek and hereby waives any rights to the recovery
thereof, of any and all costs and fees, including, but not limited to, attorneys' fees, incurred in the
Action, the Appeal, or through any transaction or occurrence related thereto.
4.0 Release
4.1 General Release: Marbella, immediately upon the occurrence of the
conditions set forth in Sections 1.3, 1.4, and 1.5, on behalf of itself and any of its current and
former agents, affiliates, successors, assigns, creditors, heirs, subsidiaries, parents, partners,
officers, employees, trustees, trustors, receivers, predecessors, estates, beneficiaries,
representatives, administrators, purchasers, joint ventures, attorneys, and each of them, and any
and all those claiming by, through under, or in concert with them, or any of them, will absolutely,
forever and fully, generally and specifically release and discharge the City of San Juan Capistrano,
the City Council of the City of San Juan Capistrano, and each and every employee, official, agent,
consultant, contractor, attorney, director, representative, department, agency, subdivision, district,
successor, and assign thereof, from any and all claims, contentions, rights, debts, liabilities,
demands, accounts, accountings, reckonings, obligations, duties, liabilities, contracts, promises,
representations, expenses, costs (including, but not limited to, attorneys' fees and interest, whether
statutory or contractual), liens, subrogation rights, indemnification rights, damages, losses, actions,
and causes of action, of any kind whatsoever, whether due or owing in the past, present, or future
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and whether based on contract, tort, statute, or any other equitable or legal theory of recovery or
relief, and whether fixed or contingent, matured or unmatured, liquidated or unliquidated
(collectively, "Claims"), known or unknown, suspected or unsuspected, arising out of or relating to
the Action and/or Lot 217.
4.2 Release of Interest in Lot 217: Marbella, immediately upon the
occurrence of the conditions set forth in Sections 1.3, 1.4, and 1.5, on behalf of itself and any of its
current and former agents, affiliates, successors, assigns, creditors, heirs, subsidiaries, parents,
partners, officers, employees, trustees, trustors, receivers, predecessors, estates, beneficiaries,
representatives, administrators, purchasers, joint ventures, attorneys, and each of them, and any
and all those claiming by, through, under, or in concert with them, or any of them, will absolutely,
forever and fully, generally and specifically relinquish, disavow, and quit any and all claims to any
title, rights, possession or interest whatsoever in Lot 217.
4.3 Release of Unknown Claims: There is a risk that, after the execution of
this Agreement, Marbella will manifest, discover, reassess, or experience new or additional
damages, claims, expenses, or costs, the amount, scope, location, nature, extent, and character of
which is unknown as of the time Marbella releases its claims as contemplated in Section 4.1 and
4.2. There is a further risk that any damages, claims, expenses, or costs currently known to
Marbella and its attorney(s) may become more serious or increase in magnitude (qualitatively or
quantitatively) over time after the execution of this Agreement by Marbella and the subsequent
release of claims as set forth in Sections 4.1 and 4.2. Marbella, therefore, shall assume the above
mentioned risks of releasing its claims as contemplated herein, and the conditions of this
Agreement once satisfied, shall cover and include all future damages, defects, and discoveries,
including all rights and causes of action arising between the Parties. Marbella is aware of the
provisions of California Civil Code section 1542, which provide:
"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 lite debtor."
Having been so advised, Marbella agrees to expressly waive the provisions of section 1542 once
all conditions set forth in this Agreement are satisfied. Such waiver shall extend to all matters
within the scope of the Claims released by this Agreement, the issues raised by and in the Action
and the Appeal, and all interests concerning Lot 217. Marbella hereby warrants and guarantees
that it has full and complete authority to release all such claims on behalf of itself and its current
and former agents, affiliates, successors, assigns, creditors, heirs, subsidiaries, parents, partners,
spouses, officers, employees, trustees, trustors, receivers, predecessors, estates, beneficiaries,
representatives, administrators, purchasers, joint venturers, attorneys, and each of them, and any all
those claiming by, through, under, or in concert with them.
4.4 Indemnification: City agrees to defend, indemnify, and hold Marbella and
any of its current and future agents, successors, assigns, heirs, subsidiaries, partners, officers,
employees, predecessors, representatives, administrators, purchasers, joint ventures, attorneys, and
each of them, harmless from and against any claim (including the payment of attorney's fees and
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costs actually incurred whether or not litigation is commenced) arising from or relating to any third
party challenge to the removal of the use restriction contained in Marbella's original offer of
dedication and contained in the original instrument of conveyance, or any claim made to enforce
the original use restriction or to enjoin the City from selling Lot 217.
4.5 Stipulated Injunction: City hereby agrees that unless and until it sells Lot
217 as contemplated by the terms of this agreement it shall continue to abide by the restriction set
forth in the original instrument of dedication and will only use Lot 217 for Public Institutional
purposes. City further agrees that if it takes any action that violates the current use restriction
without consummating the sale contemplated by this Agreement, Marbella will be entitled to
immediately file with the Court a stipulated injunction in the form attached hereto as Exhibit A. If
necessary to enforce the stipulated injunction referred to herein, Marbella may submit to the Court
a copy of this Settlement Agreement filed under seal.
5.0 General Terms
5.1 Representations and Warranties: Marbella represents and warrants that it
(a) is the lawful owner of everything released hereunder; (b) has all necessary power and authority
to execute, deliver and perform the Agreement and the general release herein, including any
necessary consents or approvals from any other person or entity; and (c) has not heretofore
transferred or attempted to transfer all or any part of any such thing released in any manner
whatsoever, including by way of subrogation or operation of law. Marbella agrees to indemnify
and hold harmless the City of San Juan Capistrano, the City Council of the City of San Juan
Capistrano, and each and every employee, official, agent, consultant, contractor, attorney, director,
representative, department, agency, subdivision, district, successor, and assign thereof with respect
to, pertaining to, or arising from any assertion of such obligation or transfer or lack of such power
or authority including, but not limited to, reasonable attorneys' fees and costs.
5.2 Compromise of Disputed Claims, No Admission: This Agreement
constitutes a compromise and settlement of claims and causes of action which are denied and
disputed and nothing in this Agreement, nor any document referred to herein, nor any act of the
Parties hereto (including, but not limited to, the execution, adoption, or ratification, of this
Agreement, and or payment of any sum contemplated by the Agreement), nor any transaction
occurring between the Parties hereto prior to the effective date of this Agreement, is or shall be
treated, construed or deemed as an admission by the City or Marbella of any liability, fault,
responsibility, or guilt of any kind to any person, as to any allegation or claim in the Action or
otherwise, for any purpose whatsoever, all such liability, fault, responsibility and guilt of any kind
being expressly denied.
5.3 No Third Party Beneficiary: This Agreement and all documents referred
to herein, shall bind and inure to the benefit of each of the Parties hereto and their respective
successors in interest. Except as expressly provided herein, this Agreement is not for the benefit of
any person not a party hereto, or specifically identified herein as a person or entity released hereby,
and is not intended to constitute a third party beneficiary contract.
2322812418440.8
5.4 Final Integrated Agreement: This Agreement and the documents referred
to herein, whether in existence at the time of the execution of this Agreement or subsequently
created to give effect to and cant' out the terms of this Agreement, shall constitute the entire, final,
and binding understanding between the Parties thereto. The Parties hereto do hereby warrant and
represent that no other statement or representation, written or oral, express or implied, has been
received or relied upon in entering into this Agreement. All prior discussions, statements, and
negotiations made or which have occurred prior to the Effective Date of this Agreement shall be
deemed to be merged into this Agreement and the documents referred to herein, and shall not be
used for any purpose whatsoever.
5.5 Understanding of Settlement Agreement: Each Party understands and
agrees to the settlement, the general releases, and the other terms and conditions contained herein
and each Party has relied upon his, her or its own judgment, belief, knowledge, understanding and
expertise after careful consultation with his, her or its own legal counsel concerning the legal effect
of the settlement and all of the terms of this Agreement.
5.6 Ambiguities or Uncertainties: The settlement, this Agreement and the
documents referred to herein, and any ambiguities or uncertainties herein or therein, shall be
equally and fairly interpreted and construed without reference to the identity of the person or
persons preparing this Agreement or the documents referred to herein, on the express
understanding and agreement that the Parties participated equally in the negotiation and
preparation of the Agreement and the documents referred to herein, or have had equal opportunity
to do so. Accordingly, the Parties hereby waive the benefit of any state statute or provision of law
providing that in cases of uncertainty, the language of a contract should be interpreted most
strongly against the party who caused the uncertainty to exist, or that ambiguities should be
construed against the drafter.
5.7 Survival of Executory Provisions: Any and all executory provisions
contained in this Agreement and the documents referred to herein shall survive the consummation
of this Agreement and shall continue in full force and effect until fully performed and satisfied.
5.8 California Law: This Agreement, and any documents referred to herein,
shall be governed by and construed and interpreted in accordance with, the laws of the State of
California.
5.9 Severability: In the event that any provision of this Agreement should be
held to be void, voidable, or unenforceable, the remaining provisions hereof shall remain in full
force and effect.
5.10 Multiple Counterparts: This Agreement and any documents referred to
herein may be executed in any number of counterparts, each of which may be deemed an original
and all of which together shall constitute a single instrument.
5.11 Waiver, Modification, and Amendment: No breach of this Agreement or
of any provision herein can be waived except by an express written waiver executed by the party
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waiving such breach. Wavier of any one breach shall not be deemed a waiver of any other breach
of the same or other provisions of this Agreement. This Agreement may only be amended, altered,
modified, or otherwise changed in any respect or particular by a writing duly executed by the
Parties hereto or their authorized representatives.
5.12 Effective Date/Additional Documents: This Agreement shall be effective
as of the first date written above and upon execution by the last of the Parties hereto, but without
regard to the date of execution by any party. The Parties shall execute additional documents
reasonably necessary to effectuate the intent and purpose of this Agreement without additional
consideration.
5.13 Recitals/Captions: Section, paragraph and other captions or headings
contained in this Agreement are inserted as a matter of convenience and for reference, and in no
way define, limit, extend or otherwise describe the scope or intent of this Agreement, or any
provision hereof and shall not affect in any way the meaning or interpretation of this Agreement.
The Recitals are included fully herein by this reference as a part of this Agreement between the
Parties, and the Parties shall and do agree to be bound by the terms and representations thereof.
5.14 Arbitration: Any dispute or controversy arising out of, relating to, or in
any way connected with this Agreement or the subject matter thereof, shall be resolved through
final binding arbitration conducted pursuing to the then -existing rules and procedures of the
[American Arbitration Association/JAMS]. The arbitration shall occur in Orange County,
California. The costs of the arbitration, including any administration fee, the arbitrator's fee, and
costs for the use of facilities during the hearings, shall be borne equally by the parties to the
arbitration. The parties specifically agree that in any such arbitration the arbitrator shall have the
authority to rule on his or her own jurisdiction.
5.15 Attorneys' Fees: In the event that an action is brought for the enforcement
of this Agreement or as the result of any alleged breach thereof, the prevailing party or parties in
such suit shall be entitled to recover their reasonable attorneys' fees, costs, and expenses from the
losing party or parties, and any judgment or decree rendered in such proceeding shall include an
award thereof.
IN WITNESS WHEREOF, the Parties evidence their agreement, consents and acceptance of this
Agreement by executing this Agreement in spaces provided below:
"MARBELLA"
Dated:
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Marbella Development Company
By:
Name:
U
waiving such breach. Wavier of any one breach shall not be deemed a waiver of any other breach
of the same or other provisions of this Agreement. This Agreement may only be: amended, altered,
modified, or otherwise changed in any respect _or particular by a writing duly executed by the
Parties hereto or their authorized representatives.
5.12 Effective Date/Additional Documents: This Agreement shall be effective
as of the first date written above and upon execution by the last of the Parties hereto, but without
regard to the date of execution by any party. The Parties shall execute additional documents
reasonably necessary to effectuate the intent and purpose of this Agreement without additional
consideration.
5.13 Recitals/Captions: Section, paragraph and other captions or headings
contained in this Agreement are inserted as a matter of,coffrvenience and for reference, and In no
way define, limit, extend or otherwise describe the scope or intent of this Agreement, or any
provision hereof and shall not affect In anyway the meaning or interpretation of this Agreement.
The Recitals are included hilly herein by this reference as a part of this Agreement between the
Parties, and the Parties shall and do agree to be bound by the terms and representations thereof.
5.14 Arbitration: Any dispute or controversy arising out of, relating to, or in
any way connected with this Agreement or the subject matter thereof, shall be resolved through
final binding arbitration conducted pursuing to the then -existing rules and procedures of the
[American Arbitration Association/JAMS]. The arbitration shall occur'in Orange County,
California. The costs of the arbitration, including any administration fee, the arbitrator's fee, and
costs for the use of facilities during the hearings, shall be borne equally by the parties to the
arbitration. The parties specifically agree that in any such arbitration the arbitrator shall have the
authority to rule on his or her own jurisdiction.
5.15 Attorneys' Fees: In the event that an action is brought for the enforcement
of this Agreement or as the result of any alleged breach thereof, the prevailing party or parties in
such suit shall be entitled to recover their reasonable attorneys' fees, costs, and expenses from the
losing party or parties, and any judgment or decree rendered in such proceeding shall include an
award thereof.
IN WITNESS WHEREOF, the Parties evidence their agreement, consents and acceptance of this
Agreement by executing this Agreement in spaces provided below:
"MARBELLA"
Dated: D Z_
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23228\2418440.8
Marbella Development Company
r
By; 4,
Name:
I-
Title: General Partner
"CITY" 4Na:
a apistrano
Dated:
re P. rust
ty Manager
Attest:
Nam§ ri& Morris
Title: Nam"—
APPROVED AS TO
23228\2418440.8
Court of Appeal Case No. G043605
RECEIVED
IN THE COURT OF APPEAI3011 Nov -3 P 1= 20 {
FOR THE STATE OF CALIFOMA&H c�iPIS'- RAW
FOURTH APPELLATE DISTRICT
DIVISION THREE
CITY OF SAN JUAN CAPISTRANO, et al,
Defendants and Appellants.
VS.
N ARBELLA DEVELOPMENT COMPANY
Plaintiff and Respondent.
Appeal from the Superior Court of the State of California
for the County of Orange
Superior Court Case 30-2008-00105544
Honorable Andrew P. Banks, Judge Presiding
JOINT APPLICATION AND STIPULATION FOR REVERSAL OF
JUDGMENT AND REMAND OF ACTION TO THE SUPERIOR
COURT FOR THE COUNTY OF ORANGE FOR DISMISSAL WITH
PREJUDICE; MEMORANDUM OF POINTS AND AUTHORITIES
Mark D. Petersen, Esq.
Diego F. Acevedo, Esq.
FARELLA BRAUN +
MARTEL LLP
235 Montgomery Street
San Francisco, CA 94104
(415) 954-4400 — FAX (415) 954-4480
Attorneys for Plaintiffs and
Respondents
Mark M. Monachino, Esq.
Steven L. Rader, Esq.
WOODRUFF, SPRADLIN &
SMART, APC
555 Anton Boulevard, Suite 1200
Costa Mesa, California 92626-7670
(714) 558-7000 - FAX (714) 835-7787
Attorneys for Defendants and
Appellants
STIPULATION
Plaintiff and Respondent in this action for quiet title and equitable
relief is the Marbella Development Company ("Marbella"). Defendants
and Appellants are the City of San Juan Capistrano and its City Council
(the "City"). Said parties hereby jointly apply for and request this Court to
order a stipulated reversal of the judgment in the case of Marbella
Development Company v. City of San Juan Capistrano, et al, Orange
County Superior Court Case No. 30-2008-00105544.
The parties agree that reversal of the judgment is appropriate and
should be granted pursuant to this stipulation. The parties and their counsel
are in agreement that the result proffered herein serves the interest of
justice, and therefore jointly request that the Court act favorably on this
joint application. The grounds upon which this application is made include:
1. The need for exhaustive and detailed briefing by the parties
and review of the record by this Court will be obviated, thus avoiding
needless expenditure of private, public and judicial resources.
2. The relief sought herein proves consistent with applicable
principles of California law. The parties have reached a settlement that will
result in the economic use of valuable land, will generate income for the
City of San Juan Capistrano, and will benefit the residents of the City.
The parties further request that, upon reversal of the judgment, this
Court remand this action to the Superior Court with instructions to vacate
its judgment and dismiss the action without prejudice, and order each party
to bear their costs on appeal.
791409.2
This Joint Application and Stipulation for Reversal of Judgment is
made and based on the reasons stated herein, and upon the accompanying
Memorandum of Points and Authorities. By their signatures below,
counsel attest that this joint application and Stipulation for Reversal has
been served on their respective clients.
Dated: Octobepfg 2011 WOODRUFF, SPRADLIN & SMART APC
Mark M. Monachino
Steven L. Rader
Attorneys for Defendant and Appellant
CITY OF SAN JUAN CAPISTRANO
Dated: Octobe> 1, 2011 FARELLA BRAUN + MARTEL LLP
By
k D. Petersen
Diego F. Acevedo
Attorneys for Plaintiff and Respondent,
MARBELLA DEVELOPMENT COMPANY
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791409.2
MEMORANDUM OF POINTS AND AUTHORITIES
1. Stipulated Facts
Over twenty-two years ago, Marbella dedicated "Lot 217" to the
City "in fee simple for public institutional purposes" as a condition of the
City's approval of Marbella's development plans. The approval and
dedication occurred at duly noticed public hearings. No legal action was
instituted to challenge the City's approval of Marbella's development plans,
or the dedication of Lot 217. At the time of the dedication, both the City
and Marbella contemplated that Lot 217 would be used for a new County
fire station. The Orange County Fire Department, however, never agreed to
relocate its existing fire station to Lot 217.
After substantial but unsuccessful discussions with the Fire
Department, the City changed the zoning classification of Lot 217 to
"public and institutional" which expanded the permissible uses of the
property beyond those uses specifically stated in the language of the
original dedication, which was set forth on the Tract Map recorded at the
time that Marbella's development plans were approved by the City. The
zoning classification change for Lot 217 was determined at a duly noticed
public hearing. No legal challenge to the change in zoning classification
was brought by any member of the public.
Despite the changes to the zoning classification, the City was unable
to find a beneficial use for Lot 217. In October of 2005, the City declared
Lot 217 to be "surplus property." The Resolution declaring Lot 217 to be
surplus property was adopted by the City Council at a duly noticed public
hearing. The Resolution expressly provided that the City could sell the
property to a private party for development in line with the property's
revised zoning classification.
In August 2006, after a public bidding process, the City entered into
a purchase and sale agreement with a private developer for the sale of Lot
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791409.2
217. In March 2008, the City approved an ordinance amending Lot 217's
land use designation from Public Institutional to Commercial Office.
Marbella filed suit challenging the City's plans to sell Lot 217 on
April 18, 2008. Marbella sought to quiet title to the land claiming that the
land reverted back to the original grantor because the City was violating the
terms of dedication. Marbella alternatively sought to enforce the use
restriction. No other party, and no other member of the public, challenged
the City's Resolution declaring Lot 217 to be surplus property, nor the
City's stated intention to sell Lot 217.
On October 30, 2009, the trial court granted in part and denied in
part the City's Motion for Summary Judgment or Summary Adjudication.
The trial court ruled that Marbella had no right of reversion in Lot 217 and
granted the City summary adjudication on Marbella's First Cause of Action
to quiet title. Marbella did not appeal from this ruling, which was
subsequently incorporated into the trial court's final judgment.
On November 16, 2009, the Court held a one day bench trial on
Marbella's remaining claims to enforce the use restriction. After hearing
the evidence, the trial court declared that "the use of Lot 217 is permanently
restricted to Public Institutional Purposes" and issued a permanent
injunction prohibiting the City from using Lot 217 for anything other than
Public Institutional purposes. In addition, the trial court prohibited the City
from conveying Lot 217 unless a restriction is set forth "in the deed"
limiting the use of Lot 217 to "Public Institutional purposes." Neither the
trial court's judgment nor the trial court's statement of decision defined the
term "Public Institutional purposes."
Notice of Entry of Judgment was served on March 1, 2010. The
City filed its Notice of Appeal on April 29, 2010. Subsequent thereto, the
parties were able to achieve a settlement of their competing interests in Lot
217. Effectuation of that settlement, however, will require the reversal of
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the trial court's judgment and extinguishment of the trial court's permanent
injunction.
2. The Parties Agree that Reversal of the Trial Court's
Judgment is in the Interest of Justice.
The practical and cumulative effect of the Court's rulings in this
matter has been to prevent any economically viable use of Lot 217, and to
frustrate any potential compromise of the parties' competing claimed
interests therein. The parties have entered into a settlement agreement but,
to give that agreement effect, the trial court's judgment must be reversed.
Absent the trial court's injunction, Marbella could release its claimed
interests as the original grantor in enforcing the use restriction previously
recorded against the property to the City, in effect merging title, in fee
simple, in the City's favor. After the merger, the City could put the
presently vacant Lot 217 to some economically viable use. In order to
accomplish this result, however, which will further the public interest, the
trial court's permanent injunction must be set aside.
The City postulates that the trial court erred by ruling that Marbella
had standing to enforce the restrictive language of the dedication, as the
trial court had previously ruled that Marbella retained no reversionary
interest in Lot 217. Marbella disagrees with the City's position regarding
its standing to enforce the use restriction. Although Marbella did not
appeal from the trial court's ruling that Marbella had no reversionary
interest in the subject property, Marbella maintains that a use restriction on
property dedicated to a public entity necessarily creates an enforceable
property right in favor of the original grantor. Both parties agree that the
original grantor may release such interest to the public entity.
The trial court's rulings have had the practical effect of preventing
both the current and former owners of the property from compromising
their claims and obtaining any value from the property.
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791409.2
3. The Parties Respectfully Submit that the Requirements of
Section 128(a)(8) are Satisfied.
Pursuant to section 128(a)(8) of the Code of Civil Procedure, a
stipulated reversal of the trial court's judgment may be granted by the
reviewing court where "[t]here is no reasonable possibility that the interests
of nonparties or the public will be adversely affected by the reversal" and
"[t]he reasons of the parties for requesting reversal outweigh the erosion of
public trust that may result from the nullification of a judgment and the risk
that the availability of stipulated reversal will reduce the incentive for
pretrial settlement." (Code Civ. Pro. § 128 (a) (8))
Both of these statutory prerequisites are met here. A stipulated
reversal will not adversely affect any third party or the public interest. The
litigation concerns the narrow questions of whether and when a private
developer may enforce use restrictions on dedicated property against the
dedicatee municipality. As to dedications occurring post -1990, the State
Legislature has determined that the developer has, in practical effect, a right
of reversion in property dedicated for public purposes. (Government Code
§ 66477.5(c)) This litigation concerns the narrower question of the
developer's right to enforce use restrictions in property dedicated before the
operative date of Government Code section 66477.5(c).
As noted above, the permissible use of Lot 217 has been the subject
of several duly noticed public hearings over a twenty year period. In the
Resolution enacted in October of 2005 the City openly and publicly
declared its intentions to sell Lot 217. Since that time, other than Marbella,
no third parties or members of the general public have voiced any
objections or concerns regarding the City's intention to sell Lot 217. The
reason for the restrictions on stipulated reversals set forth in section 128(a)
of the Code of Civil Procedure would not be fostered by refusing to grant
reversals when doing so will benefit both litigants and the public, and
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where the public has already had an opportunity to be heard and participate
in the resolution of the issue.
To the contrary, both third parties and the public will benefit from
the reversal. After reversal of the judgment, the City may sell the property
to a third party for funds to be used for the public benefit, and such third
party could put the subject property to economically viable use, pay taxes,
and employ persons in the City of San Juan Capistrano. Removing the
current restrictions will allow the City to finally use a 4 acre parcel of land
that has lain vacant for over two decades.
In this instance, the reasons for a stipulated reversal outweigh the
risk of erosion of the public trust and the reduction in incentives for pretrial
settlement that might result. Reversal of the judgment and extinguishment
of the permanent injunction will not erode the public trust in the judicial
system. The "judicial system" brought the parties to the settlement (hence,
perhaps, the subtle wisdom of the trial court's potentially "conflicting"
rulings). "[P]ublic trust in the courts is also enhanced by settlements of
pending appeals and related litigation .... When lawyers responsibly settle
litigation, public trust in the courts is advanced." (Union Bank of
California v. Braille Institute of America (2001) 92 Cal. App. 4" 1324,
1331) In addition the public expense that would be engendered by the
City's continued prosecution of the appeal further counsels in favor of the
stipulated reversal sought herein.
111
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791409.2
Therefore, the parties respectfully request that this Court grant a
reversal of the judgment based upon the stipulation of the parties.
maz-'�ef
Dated: V6Zr201 l WOODRUFF, SPRADLIN & SMART, APC
Mark M. Monachino
Steven L. Rader
Attorneys for Defendant and Appellant
CITY OF SAN JUAN CAPISTRANO
Dated: October ( 2011 FARELLA BRAUN + MARTEL LLP
C�1
By ��
ark D. Petersen
Diego F. Acevedo
Attorneys for Plaintiff and Respondent,
MARBELLA DEVELOPMENT COMPANY
6
791409.2
1 PROOF OF SERVICE
2
STATE OF CALIFORNIA, COUNTY OF ORANGE
3
I am over the age of 18 and not a party to the within action; I am employed by WOODRUFF,
4 SPRADLIN & SMART, a Professional Corporation, in the County of Orange at 555 Anton
Boulevard, Suite 1200, Costa Mesa, California 92626-7670.
5
On November 2, 2011, I served the foregoing document(s) described as JOINT
6 APPLICATION AND STIPULATION FOR REVERSAL OF JUDGMENT AND REMAND
7 OF ACTION TO THE SUPERIOR COURT FOR THE COUNTY OF ORANGE FOR
DISMISSAL WITH PREJUDICE; MEMORANDUM OF POINTS AND AUTHORITIES
8 19
by placing the true copies thereof enclosed in sealed envelopes addressed as stated on the
9 attached mailing list;
10 ❑ by placing ❑ the original ❑ a true copy thereof enclosed in sealed envelopes addressed as
follows:
11 O (BY MAIL) I placed said envelope(s) for collection and mailing, following ordinary
12 business practices, at the business offices of WOODRUFF, SPRADLIN & SMART, and
addressed as shown on the attached service list, for deposit in the United States Postal
Service. I am readily familiar with the practice of WOODRUFF, SPRADLIN & SMART for
13 collection and processing correspondence for mailing with the United States Postal Service,
14 and said envelope(s) will be deposited with the United States Postal Service on said date in
> < the ordinary course of business.
o�os 15
g ❑ (BY ELECTRONIC SERVICE) by causing the foregoing document(s) to be electronically
a 16 filed using the Court's Electronic Filing System which constitutes service of the filed
document(s) on the individual(s) listed on the attached mailing list.
17 ❑ (BY OVERNIGHT DELIVERY) I placed said documents in envelope(s) for collection
18 following ordinary business practices, at the business offices of WOODRUFF, SPRADLIN
& SMART, and addressed as shown on the attached service list, for collection and delivery
19 to a courier authorized by to receive said documents, with
delivery fees provided for. I am readily familiar with the practices of WOODRUFF,
20 SPRADLIN & SMART for collection and processing of documents for overnight delivery,
and said envelope(s) will be deposited for receipt by on said
21 date in the ordinary course of business.
22 ❑ (BY FACSIMILE) I caused the above -referenced document to be transmitted to the
interested parties via facsimile transmission to the fax number(s) as stated on the attached
23 service list.
24 ❑ (BY PERSONAL SERVICE) I delivered such envelope(s) by hand to the offices of the
addressee(s).
25
x❑ (State) I declare under penalty of perjury under the laws of the State of California that the
26 above is true and correct.
27 Executed on November 2, 2011 at Costa Mesa, California.
28
Shari Riggs
7931356.1
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U
ark D. Petersen
Diego F. Acevedo
Farella Braun & Martel
235 Montgomery Street
San Francisco, CA 94104
Telephone: (415) 954-4400
Facsimile: (415)954-4480
is Morris
Clerk
)0 Paseo Adelanto
Juan Capistrano. CA 92675
1 793856.1
SERVICE LIST
Attorneys for Plaintiff and Respondent
MARBELLA DEVELOPMENT
COMPANY
Defendant