Plaintiff CITY OF TAFT, a California municipal corporation in the County of Kern, (“Plaintiff”) alleges as follows:
Defendant CALIFORNIA DEPARTMENT OF CORRECTIONS AND REHABILITATION (“CDCR”) is a state agency of Defendant STATE OF CALIFORNIA (“State”). CDCR is in charge of the California prison system and provides services to inmates from the time of arrest until reintegration into society. CDCR also executed an agreement with Plaintiff, which agreement is central to this complaint.
Plaintiff is ignorant of the true names and capacities of defendants sued herein as DOES 1-50, inclusive, and therefore sues these defendants by such fictitious names. Plaintiff will amend this Complaint to allege their true names and capacities when ascertained. Plaintiff is informed and believes and thereon alleges that each of the fictitiously named defendants is responsible in some manner for the occurrences herein alleged, and that Plaintiff’s injuries as herein alleged were caused by such defendants.
Plaintiff is informed and believes, and thereon alleges, that at all times herein mentioned, each of the defendants was the agent of each of the remaining defendants, and in doing the things hereinafter alleged, was acting within the course and scope of such agency and with the permission and consent of his co-defendants.
Venue is proper in the County of Los Angeles pursuant to Code of Civil Procedure section 401(1) and Government Code section 955.3.
III. COMMON FACTS
On or about November 26, 1996, Plaintiff and Defendants entered into an agreement, identified as Contract Number R96.1591.105 (“Contract”). A true and correct copy is attached hereto as Exhibit “A” and is herein incorporated by reference. The Contract provides for Plaintiff to establish a Community Correctional Facility (“CCF”) and provide related services to Defendants in return for various payments by Defendants, including but not limited to lease payments and reimbursements of certain costs.
The Contract commenced on January 7, 1997, and was to expire 240 months later in 2017, unless terminated earlier.
Under the Contract, the Plaintiff’s Public Financing Authority (“PFA”) is the Facility Owner.
Among other things, the Contract provides that Paragraphs 18 and 19 will remain effective even after termination of the Contract.
Paragraph 19(b) provides in relevant part that Defendants will continue to pay the monthly CCF Lease Costs to the PFA as well as to reimburse the PFA of all of the CCF Lease Costs.
Paragraph 19(b)(1) provides that Defendants will reimburse Plaintiff for settlement expenses. These settlement expenses include “accounting, legal, clerical and similar costs for preparation and presentation of settlement claims and termination and settlement of subcontracts including payroll taxes, fringe benefits, occupancy costs, and immediate supervision costs.”
Page 2 of 3 - Upon termination, the Contract does not provide that any provision thereof is enforceable outside of Paragraphs 18 and 19 subject to the provisions of Paragraph 16.
Paragraph 6(g) of the Contract provides that after the end of the term of the Contract in 2017, Defendants may lease the CCF for $1 a year.
In or about July 2011, Defendants notified Plaintiff that the Contract would be terminated effective November 30, 2011. Upon termination, the only continuing rights and obligations under the Contract are contained in Paragraphs 18 and 19, as informed by Paragraph 16.
As a result of the termination of the Contract, Plaintiff has been forced to terminate the employment of all employees working at the CCF. Plaintiff has paid over $500,000 in unemployment benefits to the former employees. Under Paragraph 19(b)(1) of the Contract, Defendants are required to reimburse all settlement expenses such as these unemployment benefits expenses. Despite this obligation, Defendants have not reimbursed unemployment costs to Plaintiff.
After the termination of the Contract, Defendants submitted to Plaintiff a Standard Agreement Amendment to the Contract (“Proposed Amendment”). A true and correct copy is attached hereto as Exhibit “B”. The Proposed Amendment erroneously seeks to reinstate the previously terminated Contract and add terms which were neither negotiated with nor agreed to by Plaintiff. As a result, Plaintiff rejected the Proposed Amendment. Notwithstanding Plaintiff’s rejection of the Proposed Amendment, Defendants continue to seek its performance.
FIRST CAUSE OF ACTION (For Declaratory Relief: Continuing Obligation to Pay CCF Lease Costs)
Plaintiff incorporates herein by the reference paragraphs 1 through 15 as though fully set forth at length.
An actual controversy has arisen and now exists between Plaintiff and Defendants concerning their respective rights and duties with regards to Defendants’ continuing obligation to pay the CCF Lease Costs. Plaintiff contends that Paragraphs 18 and 19, as informed by Paragraph 16, are valid and in effect at present, and as such that Defendants have a continuing obligation to pay the CCF Lease Costs to the PFA.
Plaintiff desires a judicial determination of its rights and duties and a declaration as to the validity and enforceability of the Paragraphs 18 and 19 of the Contract.
A judicial declaration is necessary and appropriate at this time under the above mentioned circumstances in order that Plaintiff may ascertain its rights as alleged. Plaintiff will suffer financial damages if the obligations and validity of the various provisions of the Contract are left in controversy.
SECOND CAUSE OF ACTION
(For Declaratory Relief: Continuing Right to Lease CCF After 2017)
Plaintiff incorporates herein by the reference paragraphs 1 through 19 as though fully set forth at length.
An actual controversy has arisen and now exists between Plaintiff and Defendants concerning whether Defendants have a continuing right to lease the CCF following the end of the term of the Contract in 2017. Plaintiff contends that Defendants’ right to lease is terminated as it was contained in Paragraph 6, which is a terminated provision in the Contract.
Page 3 of 3 - Plaintiff desires a judicial determination of Defendants’ current rights under the Contract and a declaration as to the validity of Paragraph 6 of the Contract.
A judicial declaration is necessary and appropriate at this time under the above mentioned circumstances in order that Plaintiff may ascertain its rights as alleged. Plaintiff will suffer financial damages if the rights and validity of Paragraph 6 of the Contract are left in controversy.
THIRD CAUSE OF ACTION
(Breach of Contract)
Plaintiff incorporates herein by the reference paragraphs 1 through 23 as though fully set forth at length.
Following the November 30, 2011, termination of the Contract, the contractual obligations of Paragraphs 18 and 19 remained in effect, including the obligation to pay settlement costs.
At present, Plaintiff has been forced to pay unemployment benefits as part of the settlement resulting from the termination of the Contract. Defendants have not reimbursed these settlement expenses as required under Paragraph 19(b)(1) of the Contract.
By failing to reimburse the unemployment benefits expenses, Defendants have thereby breached the Contract.
Plaintiff has timely performed all of its obligations and duties under the Contract.
Plaintiff has been damaged by Defendants’ breach of the Contract. These damages include, but are not limited to, the unreimbursed settlement costs.
WHEREFORE, Plaintiff prays for judgment as follows:
For a declaration that Defendants have a continuing obligation to pay the CCF Lease Costs as required under Paragraphs 18 and 19, as informed by Paragraph 16, of the Contract;
For a declaration that Defendants have no right to lease the CCF after the term of the Contract expires in 2017;
Compensatory damages in an amount to be proven at the time of trial, in an amount in excess of this Court’s minimum jurisdiction.
For attorneys’ fees incurred herein as part of the settlement costs reimbursable under Paragraph 19(b)(1) of the Contract;
For costs of suit incurred herein as part of the settlement costs reimbursable under Paragraph 19(b)(1) of the Contract; and
For such other and further relief as this Court deems proper.