CONTRACT 4394 Settlement AgreementSETTLEMENT AGREEMENT
I. PARTIES
439 ,4,
,
The parties to this settlement agreement (the "Settlement ") are the City of El
Segundo ("Plaintiff'), and the City of Pomona ( "Pomona ").
II. RECITALS
A. The State Board of E ualization
The California State Board of Equalization (the `BOE ") consists of four
elected members from separate districts in the state plus the State Controller sitting
ex officio. The BOE, among other powers, allocates sales and use tax revenues
derived from levies imposed under the Bradley Burns Uniform Local Sales and
Use Tax Law. (California Revenue and Taxation Code § §7200 et seq.)
B. Pomona's 1994 Reallocation Petition
In June 1994, Pomona filed a petition with the BOE, seeking reallocation of
certain sales tax revenues which had been paid into the Los Angeles County "pool."
Specifically, Pomona argued that sales tax revenues originating with sales from a
warehouse located in Pomona should have been paid to Pomona rather than to the
county -wide pool due to the fact that there was no other point of sale within the state. It
is undisputed that the warehouse in question did not have a seller's permit from the BOE
in 1994.
C. The WE Tax Appeals Auditor Action on Pomona's Petition
On September 21, 1999, the BOE Tax Appeals Auditor handling the Pomona
reallocation petition issued a written "Decision and Recommendation" denying
Pomona's petition for reallocation of local sales tax revenues.
D. The BOE Management's Action on Pomona's Appeal
On May 2, 2000, Pomona filed an administrative appeal from the denial of its
reallocation petition by the Tax Appeals Auditor. On July 24, 2000, Pomona was
notified that its "management appeal" was denied.
Page 1 of 9
LA #4815- 2810 -8050 v1
E. The BOE's 2006 Amendment of Regulation 1699
In 2006, the BOE amended its existing regulations, 18 Cal.Code Regs.
§ § 1699(a) and 1802(c), effective December 13, 2006, regarding the basis for
accounting and allocating sales tax revenues originating from sales from warehouses.
F. Pomona's 2008 Request for the BOE Hearin
On September 9, 2008, Pomona requested a public hearing before the BOE to
review the denial of Pomona's 1994 petition for reallocation. On December 17, 2008,
the BOE voted to grant a hearing on Pomona's petition for reallocation. The BOE
conducted a public hearing on Pomona's petition for reallocation on August 31, 2009,
and again on December 15, 2009. The BOE decided the matter on December 15, 2009
(the `BOE Decision "). The BOE Decision is attached hereto as Exhibit A.
G. The BOE's January 15, 2010 Notice
On January 15, 2010, the BOE issued written notice (the `BOE Notice ")
granting Pomona's petition for reallocation, in part, and ordering that 75% of the
amount claimed at issue be reallocated from the Los Angeles Countywide pool to
Pomona over the following eight quarters. Enforcement of that order would have
resulted in a reallocation of $61,548 in sales tax revenues from the Plaintiff to the City
of Pomona.
H. The Mandate Proceedings
On February 16, 2010, a petition for writ of mandate was filed in the Los
Angeles Superior Court (No. BS 124919) on behalf of the City of Palmdale and
others, challenging the BOE Notice. Other petitions were filed by the City of Los
Angeles (No. BS 12495 0) on February 16, 2010, and the City of Alhambra with
others (No. BS124978) on February 19, 2010. The several proceedings were
ordered consolidated by the Superior Court under the initial filing number. All
petitioners in the above referenced cases are hereinafter referred to collectively as
"Plaintiffs."
I. The Judgment Granting the Writ of Mandate
On February 16, 2011, the Los Angeles Superior Court, Hon. Ann I. Jones,
judge presiding, issued its statement of decision, granting the consolidated
petitions for writ of mandate. On March 9, 2011, the Court entered judgment in
favor of Plaintiff and against the respondent, BOE and against the real party in
interest, Pomona. The peremptory writ of mandate issued pursuant to the
Page 2 of 9
LA #4815- 2810 -8050 vl
4 „
judgment commanded the BOE to vacate and set aside the January 15, 2010 BOE
Notice, and to conduct further proceedings, if any, in accordance with the Court's
statement of decision dated February 16, 2011. Notice of entry of judgment was
served by the Clerk of the Court on March 9, 2011.
J. The Appeals
On May 5, 2011, the BOE filed a notice of appeal from the judgment. On
May 5, 2011, Pomona also filed a notice of appeal from the judgment. The appeals
were consolidated and assigned Court of Appeal Docket No. B 232833. Both
appeals were dismissed via stipulation on July 27, 2012. The remittitur was issued
on July 30, 2012.
K. Settlement
The parties desire to avoid the risk and expense of further litigation and appeals
regarding Pomona's petition for reallocation of sales tax revenues, and any further
proceedings thereon by the BOE, and desire instead to settle this matter by mutually
agreeing to the following terms and conditions.
III. TERMS OF SETTLEMENT
The parties agree as follows:
A. Reimbursement by Pomona of Reallocatied Sales Tax Revenues
Plaintiff affirms that the purpose of this Settlement shall be to facilitate the
BOE's payment to Pomona of monies at issue in the BOE Decision so that Pomona
may reimburse a portion of the monies to Plaintiff. Pomona will pay to Plaintiff
the sum of $55,393, according to the schedule of payments due to Plaintiff as set
forth in Exhibit B.
Should the reallocation and reimbursement result in an overpayment to
Plaintiff in excess of the amounts set forth in Exhibit B, Plaintiff will promptly pay
said excess amounts to Pomona.
If the payments to be remitted by the BOE to Pomona pursuant to the BOE
Decision are, for whatever reason, not received by Pomona by the scheduled
reimbursement payment date, Pomona shall be entitled to postpone the date of such
reimbursement, and shall have no obligation to make, repayment until such time
the BOE provides payment to Pomona. On receipt of any payment from the BOE
Page 3 of 9
LA #4815- 2810 -8050 v1
Y,r
pursuant to the BOE Decision, said funds due to Plaintiff shall be earmarked for
payment to Plaintiff and Pomona shall make payments to Plaintiff within three (3)
business days of receipt whether received prior or subsequent to the schedule set
forth above.
B. Anticipated actions of the BOE at the Continuance of the
December 15, 2009 Hearing
In compliance with the peremptory writ of mandate issued by the Los
Angeles Superior Court, Honorable Ann I. Jones presiding, on March 11, 2011, the
parties to this Settlement anticipate that the BOE will vacate the portion of the
BOE Notice regarding Pomona. It is also anticipated that the BOE will then
reissue a Notice of Reallocation ( "Reissued BOE Notice ") directing reallocation of
the local sales tax revenues in conformity with the BOE Decision and confirming
that the controversy over the reallocation no longer exists due to settlement
between the parties. If the SBOE fails to take the actions anticipated in this
paragraph III B, any of the parties may void this Settlement.
C. Return on Writ
After the Reissued BOE Notice becomes final, the parties anticipate that the
BOE will file, either by unopposed stipulation or otherwise, the return of the
peremptory writ of mandate, in a form consistent with this Settlement, with the
appropriate Department of the Los Angeles Superior Court. The parties also
anticipate that the Return will not be filed sooner than after two payments are made
by Pomona as set forth in Exhibit B. If the SBOE fails to take the actions
anticipated in this paragraph III C, any of the parties may void this Settlement.
D. No Third - Party, Non - Plaintiff Involvement
This Settlement will not be enforceable against any of the Parties prior to the
first payment to Pomona of the funds described in Section III A. of this Settlement.
After the filing of the Return , the reimbursement provisions of this Settlement will
not be enforceable against any of the Parties, at the option of any party, if a non -
Plaintiff successfully intervenes in the administrate proceeding before the BOE, or
by filing a court proceeding, resulting in a rehearing by or remand to the BOE, and
does not within 30 days settle its controversy with Pomona. Prior to the Return on
the Writ noted above, if a party, after a successful intervention as described above,
elects to make the reimbursement provisions unenforceable, the Parties will be
returned to their prior positions pursuant to Judge Jones' Judgment.
Page 4 of 9
LA #4815- 2810 -8050 v1
Pomona's obligation to make the payments required under this Settlement
Agreement shall be suspended if for whatever reason the BOE ceases making
payments to Pomona as contemplated by this Settlement.
E. Costs and Fees
Each party agrees to bear its own costs and attorney's fees incurred related to the
dispute and settlement to the date of the return in the above - entitled action.
F. No Concession of Fact or Law
In making and executing this Settlement, it is the express understanding of each
of the parties hereto, and each of them does hereby represent, warrant, and agree as
follows:
(1) Each of the parties hereto does hereby agree that this Settlement
shall apply to all those known and anticipated results of
Pomona's petition for local tax reallocation (SBOE Case ID
469296, Petition MSLLC #25040) filed on June 17, 1994, and
the BOE Decision which will reallocate sales tax proceeds from
the County of Los Angeles to the City of Pomona for the years
1994 through 2007.
(2) This Settlement is the result of a compromise of doubtful and
disputed claims between the parties and shall not at any time or
for any purpose be considered as an admission of liability or
responsibility on the part of any party, or as an admission or
concession to the truth of any claim, allegation, or statement of
fact which is the subject of the matters, claims, and
controversies specified herein.
(3) That Plaintiff, and each of the Plaintiffs, will be deemed to have
exhausted all administrative remedies in regards to the Reissued
BOE Notice. Further, for Plaintiff, and each of the Plaintiffs,
the statute of limitations for challenging the Reissued BOE
Notice shall be tolled until 30 days after the statue of limitations
for third - party, non - Plaintiff cities to challenge the Reissued
BOE Notice has lapsed.
Page 5 of 9
LA #4815 -2810 -8050 v 1
�w
ll io ulll'
i� ou
G. Notices
Any notice or communication required under this Settlement shall be in writing,
and shall be delivered personally, by facsimile (with original forwarded by United
States Mail), or by Federal Express or other similar courier promising overnight
delivery. Notice shall be deemed to have been duly given and received: (a) when
delivered, if personally delivered to the recipient; (b) when fully transmitted to the
recipient's facsimile device, if sent by facsimile during normal business hours,
provided such device is capable of generating a written confirmation of such
transmission and receipt and provided further that an original is deposited in first -class
mail within two business days thereafter; or (c) on the first business day following
delivery to an overnight delivery service, provided delivery is confirmed by the
delivery service. Any party hereto may at any time, by giving three days' written
notice to the other party, designate a new address and/or facsimile number for notices
and communications pursuant to this Settlement.
If to the Plaintiff:
City Manager
City of El Segundo
350 Main Street
El Segundo, CA 90245
If to the Ci of Pomona:
City of Pomona
Attention: City Manager
With a copy to:
Mark Hensley, Esq.
Jenkins & Hogin LLP
1230 Rosecrans Avenue, Suite 110
Manhattan Beach, CA 90266 -2436
With a copy to:
Richard J. Ayoob, Esq.
505 South Garey Ave. Ajalat, Polley, Ayoob & Matarese
Pomona, CA 91766 500 North Brand Blvd., Suite 1870
Tel. (909) 620 -2311 Glendale, CA 91203
H. Warranty of Capacity to Execute Settlement
Each party represents and warrants that the individual executing this Settlement
on each party's behalf possesses full authority to execute this Settlement and to settle
and compromise all claims settled and compromised by this Settlement.
1. LI, t eg ration
This Settlement contains the entire agreement of the parties and supersedes any
and all prior or contemporaneous understandings, negotiations, representations,
promises, and agreements, oral or written, by or between the parties with respect to the
Page 6 of 9
LA #4815 -2810 -8050 v]
4 fi�,i lug
� ih uu �'IIIIV �
matters set forth in this Settlement. This Settlement shall not be amended, modified, or
otherwise changed except by a writing duly signed by authorized representatives of
each party.
J. Legal Advice
In entering into this Settlement, each party has had the opportunity to consult
with and rely upon the advice of the attorneys of its own choice. Each party represents
and warrants that the terms of this Settlement have been completely read by and
explained to it by its attorneys, and that those terms are fully understood and voluntarily
accepted by it. Accordingly, any rule of law, including but not limited to Section 1654
of the California Civil Code, or any other statutes, legal decisions, or common law
principles of similar effect, which would require interpretation of ambiguities in this
Settlement against the party that has drafted it are of no application and are expressly
waived.
K. Severability
If any portion, provision, or part of this Settlement is held, determined, or
adjudicated to be invalid, unenforceable, or void for any reason whatsoever, each such
portion, provision, or part shall be severed from the remaining portions, provisions, or
parts of this Settlement, and shall not affect the validity or enforceability of such
remaining portions, provisions, or parts.
L. Governing Law
This Settlement shall be construed and interpreted in accordance with the laws of
the State of California.
M. Execution of Counterparts
This Settlement shall become effective upon execution by all parties. This
Settlement may be executed in counterparts, each of which shall be deemed to be an
original and all of which shall be deemed to constitute one and the same document.
N. Attorneys Fees
If any part brings any action to enforce the terms of the Settlement, the
unsuccessful party will bear all costs of the proceeding, as well as all reasonable
attorneys' fees and other costs incurred by the successful party in that action or
proceeding.
Page 7 of 9
LA #4815- 2810 -8050 vl
IN WITNESS WHEREOF, the parties have executed this Settlement
as of February , 2013.
CITY OF EL SEGUNDO
ATTEST:
a`W
,
Clay l YY
C
rll
CITY OF POMONA
in
ATTEST:
Marie Michel Macias, City Clerk
Page 8 of 9
LA #4815 - 2810 -8050 v
Linda Lowry, City Manager
°�.
I/
APPROVED AS TO FORM AND CONTENT:
JENKINS & HOGIN LLP
MARK HENSLEY
Mw, �0Hensley
Attorneys for Petitioner,
City of El Segundo
AJALAT, POLLEY, AYOOB & MATARESE
RICHARD J. AYOOB
m
Richard J. Ayoob
Attorneys for Real Party in Interest
City of Pomona
Page 9 of 9
LA #4815 -2810 -8050 vl
4 .
.. .�. ��
-''�~�--r-- --------'�---'�-'
'
, Vrith respect petitioner Town of Los Gatos, the Board concluded ihat loc4l. sales tax of
$150,784 allo;ated through the Santa Clam countywide pool for the period Octobir 1, 1991,
thro : December 31, 2007, from sale� negotiated outside California and delivered from the Los
Gatos ' eboose location, without participation by any other California location of the ketailer,
should �ave be= allocated directly to Los Gatos. Acoordimgly, the Board ordered that swh local
, -~x be the '
distri�bdons to tho pool tor that period (net reallocation estinisted 6 be about $146,630, . the
awount to be calculated by the D~paoment). ^
. . . . / .
. . .
�
BOARD APPROVED
so Meeting
Board Proceedings DIVISIO
^
CITY OF EL SEGUNDO
SCHEDULE OF PAYMENTS
03/31/13
$7,913
06/30/13
$7,913
09/30/13
$7,913
12/31/13
$7,913
03/31/14
$7,913
06/30/14
$73,913
09/30/14
$7,913
EXHIBIT B
LA #4817- 6652 -8018 vl
444 South Flower Street - Suite 2400
Los Angeles, California 90071 -2953 b
voice 213,236.0600 - fax 213,236.2700
www.bwslaw.com
Direct No.: 213.236.2845
Our File No.: 03476 -0031
rterzian @bwslaw.com
February 8, 2013
Via Federal Express
Mark D. Hensley, Esq.
Jenkins & Hogin LLP
1230 Rosecrans Ave., Suite 110
Manhattan Beach, CA 90266 -2436
Re; City of Alhambra, et al. v. Board of Equalization, et al.
LASC No. BS124919 and Consolidated Cases
Dear Mark:
Enclosed please find the agreement for the City of El Segundo with the City of
Pomona to implement the settlement described in my memorandum to you dated January
31, 2012. The city council in each city approved a substantially similar version of this
agreement earlier last year. Also enclosed is an explanatory memorandum.
Please return executed copies as soon as possible as we have to get them to the
Board of Equalization by February 18, 2013.
Sincerely,
BURKE, WILLIAMS & SORENSEN, LLP
RICHARD R. TERZIAN
RRT: j da
Enclosure
LA #4832- 7995 -0866 v1
Los Angeles - Inland Empire - Marin County - Oakland - Orange County - Palm Desert - Silicon Valley - Ventura County
BURKE, WILLIAMS & SORENSEN, LLP
MEMORANDUM
TO: City of Alhambra, Alhambra Redevelopment Agency, City of Diamond
Bar, City of El Segundo, City of Industry, City of Lancaster, City of
Monterey Park, City of West Hollywood, City of Santa Clarita
FROM: BURKE, WILLIAMS & S :NSEN LLP FILE NO. 03476-0031
Richard R. Terzian
DATE: February 8, 2013
RE: Citv of Alhambra et al. v. Board of Equalization, et al.
LASC No. BS 124919 and Consolidated Cases
SUBJECT Status Report and update
1. Reference is made to my most recent memorandum to you of August 30,
2012.
2. After lengthy of negotiations we have finally reached another settlement
with Pomona which is substantially identical to the first one. In order to carry that out,
Pomona and the Board of Equalization have dismissed their appeal from the adverse
judgment and the matter will now go back to the Board for redetermination. At that time
it is anticipated the Board will once again reallocate $7.1 million in sales tax to Pomona
and it will so report to the trial court as a return to the outstanding writ of mandate. At
the same, time the parties will effectuate their settlement agreement whereby 90% of
those funds that would have gone to each of your cities had it not been for Pomona's
actions will be refunded to you.
3. In substance, it is the same settlement that we reached before, and each of
you approved, in 2011. The only difference is that the payments will be delayed
approximately a year. We anticipate that the Board will act on this matter next month
and the first payment made in April.
4. Attached is a copy of the Settlement Agreement. Please execute and return
to me before February 18, 2013. Call if you have questions.
LA #4821- 2763 -1378 v1
Los Angeles - Inland Empire - Marin County - Oakland - Orange County - Palm Desert - Silicon Valley - Ventura County