HomeMy WebLinkAbout12_Tennis Clubhouse Grill Minor Use Permit_PA2021-210CITY OF NEWPORT BEACH
ZONING ADMINISTRATOR STAFF REPORT
December 16, 2021
Agenda Item No. 12
SUBJECT: Tennis Clubhouse Grill (PA2021-210)
▪Minor Use Permit No. UP2021-033
SITE LOCATION: 1602 East Coast Highway, 5 and 11 Clubhouse Drive
APPLICANT: Clubhouse ATP LLC
OWNER: Golf Realty Fund
PLANNER: Liz Westmoreland, Associate Planner
lwestmoreland@newportbeachca.gov or 949-644-3234
LAND USE AND ZONING
•General Plan Land Use Plan Category: MU-H3/PR (Mixed-Use Horizontal 3/ Parks
and Recreation)
•Zoning District: PC47 (Newport Beach Country Club)
•Coastal Land Use Plan Category: MU-H/PR Mixed-Use Horizontal / Parks And
Recreation
•Coastal Zoning District: PC47 (Newport Beach Country Club)
PROJECT SUMMARY
Request for a minor use permit to operate the existing lounge area in the Tennis
Clubhouse building in conjunction with a Type 57 (Special On-Sale General) Alcoholic
Beverage Control (ABC) License. The Type 57 ABC License would authorize the sale of
beer, wine, and distilled spirits to members and guests only for consumption on the
premises, among other privileges. No food service is required but the grill will offer
packaged food, light meals, and snacks. No construction is proposed at this time. Allowed
hours of operation are between 9:00 a.m. to 11:00 p.m, daily. No late hours (after 11:00
p.m.), live entertainment, or dancing are proposed.
RECOMMENDATION
1)Conduct a public hearing;
2)Find this project exempt from the California Environmental Quality Act (CEQA)
pursuant to Section 15301 under Class 1 (Existing Facilities) of the CEQA Guidelines,
California Code of Regulations, Title 14, Division 6, Chapter 3, because it has no
potential to have a significant effect on the environment; and
3)Adopt Draft Zoning Administrator Resolution No. _ approving Minor Use Permit No.
UP2021-033 (Attachment No. ZA 1).
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Tennis Clubhouse Grill (PA2021-210)
Zoning Administrator, December 16, 2021
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Tmplt: 10/18/21
DISCUSSION
• The site is located in Planned Community PC47 (Newport Beach Country Club)
Zoning District, which includes the Golf Club, Tennis Club, Bungalows and Villas
facilities totaling approximately 140 acres. The subject building (tennis clubhouse)
is located within the Tennis Club site of PC47, which was intended to provide for
recreational uses such as a tennis clubhouse, tennis shop, restroom and locker
facilities, spectator seating areas, etc. Concession uses are allowed by right as an
ancillary use to the Tennis Club, and the sale and service of alcohol (until 11:00
p.m.) is allowed subject to the approval of a minor use permit.
• The proposed project includes the establishment of a new Type 57 ABC License,
with no construction or operational changes that would result in an intensification
of use. Therefore, the project is exempt from coastal development permit
requirements.
• The eating and drinking establishment will continue to provide a convenience for
tennis club members and guests, and the proposed ABC License will not result in
increased demand for parking in the existing surface parking lots.
• The project has been reviewed and includes conditions of approval to ensure that
potential conflicts with the surrounding land uses are minimized to the greatest
extent possible. The operator is required to take reasonable steps to discourage
and correct objectionable conditions that constitute a nuisance in parking areas,
sidewalks and areas surrounding the subject property and adjacent properties
during business hours, if directly related to the patrons of the establishment.
• The service of alcohol will continue to complement the principal use of the facility
and provide an economic opportunity for the property owner to maintain a
successful business in a way which best serves the community.
ENVIRONMENTAL REVIEW
This project is exempt from the California Environmental Quality Act (CEQA) pursuant to
Section 15301 under Class Class 1 (Existing Facilities) of the CEQA Guidelines, California
Code of Regulations, Title 14, Division 6, Chapter 3, because it has no potential to have a
significant effect on the environment.
The Class 1 exemption includes the ongoing use of existing buildings where there is
negligible or no expansion of use. The proposed project involves the addition of the Type
57 ABC License to the existing tennis clubhouse with no other alterations or changes.
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Tennis Clubhouse Grill (PA2021-210)
Zoning Administrator, December 16, 2021
Page 3
Tmplt: 10/18/21
PUBLIC NOTICE
Notice of this application was published in the Daily Pilot, mailed to all owners of property
within 300 feet of the boundaries of the site (excluding intervening rights-of-way and
waterways), including the applicant, and posted on the subject property at least 10 days
before the scheduled hearing, consistent with the provisions of the Municipal Code.
Additionally, the item appeared on the agenda for this meeting, which was posted at City
Hall and on the City website.
APPEAL PERIOD:
An appeal or call for review may be filed with the Director of Community Development within
14 days following the date of action. For additional information on filing an appeal, contact
the Planning Division at 949-644-3200.
Prepared by:
______________________________
Liz Westmoreland, Associate Planner
law
Attachments: ZA 1 Draft Resolution
ZA 2 Vicinity Map
ZA 3 Project Plans
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Attachment No. ZA 1
Draft Resolution
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RESOLUTION NO. ZA2021-###
A RESOLUTION OF THE ZONING ADMINISTRATOR OF THE
CITY OF NEWPORT BEACH, CALIFORNIA APPROVING MINOR
USE PERMIT NO. UP2021-033 TO ADD A TYPE 57 ALCOHOL
BEVERAGE CONTROL (ABC) LICENSE TO AN EXISTING
TENNIS CLUBHOUSE BUILDING LOCATED AT 1602 EAST
COAST HIGHWAY, 5 AND 11 CLUBHOUSE DRIVE (PA2021-210)
THE ZONING ADMINISTRATOR OF THE CITY OF NEWPORT BEACH HEREBY FINDS AS
FOLLOWS:
SECTION 1. STATEMENT OF FACTS.
1. An application was filed by Clubhouse ATP LLC, with respect to property located at 1602
East Coast Highway, 5 and 11 Clubhouse Drive, and legally described as Parcels C and
D of Parcel Map No. 2016-151 requesting approval of a minor use permit.
2. The applicant requests a minor use permit to operate the existing lounge area in the Tennis
Clubhouse building in conjunction with a Type 57 (Special On-Sale General) Alcoholic
Beverage Control (ABC) License. The Type 57 ABC License would authorize the sale of
beer, wine, and distilled spirits to members and guests only for consumption on the
premises, among other privileges. No food service is required but the grill will offer
packaged food, light meals, and snacks. No construction, late hours (after 11:00 p.m.), live
entertainment, or dancing are proposed.
3. The subject property is designated MU-H3/PR (Mixed-Use Horizontal 3/ Parks and
Recreation) by the General Plan Land Use Element and is located within the PC47
(Newport Beach Country Club) District.
4. The subject property is located within the coastal zone. The Coastal Land Use Plan
category is MU-H/PR (Mixed-Use Horizontal / Parks and Recreation) and it is located
within PC47 (Newport Beach Country Club) Coastal Zone District. The proposed project
includes the establishment of a new Type 57 ABC License, with no construction or
operational changes that would result in an intensification of the existing use. Therefore,
the project is exempt from coastal development permit requirements.
5. A public hearing was held on December 16th, 2021 online via Zoom. A notice of time, place
and purpose of the hearing was given in accordance with the Newport Beach Municipal
Code. Evidence, both written and oral, was presented to, and considered by, the Zoning
Administrator at this hearing.
SECTION 2. CALIFORNIA ENVIRONMENTAL QUALITY ACT DETERMINATION.
This project is exempt from the California Environmental Quality Act (CEQA) pursuant to Section
15301 under Class 1 (Existing Facilities) of the CEQA Guidelines, California Code of
Regulations, Title 14, Division 6, Chapter 3, because it has no potential to have a significant effect
on the environment.
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The Class 1 exemption includes the ongoing use of existing buildings where there is negligible or
no expansion of use. The proposed project involves the addition of the Type 57 ABC License to
the existing tennis clubhouse with no other alterations or changes.
SECTION 3. REQUIRED FINDINGS.
In accordance with Section 20.48.030 (Alcohol Sales) of the Newport Beach Municipal Code,
the following findings and facts in support of such findings are set forth:
Finding:
A. The use is consistent with the purpose and intent of Section 20.48.030 (Alcohol Sales
of the Zoning Code.
Facts in Support of Finding:
In finding that the proposed use is consistent with Section 20.48.030 of the Zoning Code, the
following criteria must be considered:
i. The crime rate in the reporting district and adjacent reporting districts as compared to other
areas in the City.
1. The subject property is located in Reporting District 39 (RD 39), which includes Fashion
Island shopping and entertainment district.
2. The Part One Crimes (Part One Crimes are the eight most serious crimes defined by
the FBI Uniform Crime Report – homicide, rape, robbery, aggravated assault, burglary,
larceny-theft, auto theft, and arson) crime rate in RD 39 is higher than adjacent
Reporting Districts RD 43, 38, and 44 and the City overall.
3. The highest volume crime in this area is shoplifting. The highest volume arrests in the
area are drug related offenses. DUI, Public Intoxication, and liquor law violations make
up 16 percent of arrests in this reporting district. In comparison, the figure for neighboring
RD 43 is 17 percent, RD 38 is 23 percent and RD 44 is 18 percent.
4. The Police Department has reviewed the proposal, provided operating conditions of
approval, and has no objection to the addition of the alcoholic beverage license. The
operation of the establishment includes the approved floor plan and a closing hour of
11:00 p.m.
ii. The numbers of alcohol-related calls for service, crimes, or arrests in the reporting district
and in adjacent reporting districts.
1. The total number of alcohol-related calls for service, crimes, or arrests in RD 39 is lower
than neighboring reporting districts. The Police Department has reviewed the proposal
and has no objection.
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2.There has been one Part 1 crime reported at the Tennis Club site in the last reporting
cycle and no Part I arrests.
iii.The proximity of the establishment to residential zoning districts, day care centers,
hospitals, park and recreation facilities, places of worship, schools, other similar uses, and
any uses that attract minors.
1.The eating and drinking establishment is located within the Tennis Club site of PC47,
which was intended for recreational uses such as a tennis clubhouse. The property is
not located within close proximity to any day care centers, hospitals, places of worship,
schools, or similar uses that attract minors. The subject tennis clubhouse building is
located within the Tennis Club complex, which is a recreational use open to members
and guests of the tennis club. The property is not open to the public. The nearest
residential uses are behind the tennis courts in the Granville community. Eating and
drinking establishments with incidental alcohol service are common in Country Clubs
and Tennis Clubs and the proposed change in Alcoholic Beverage Control license type
is not anticipated to alter the operational characteristics of the use such that it becomes
detrimental to the area.
iv.The proximity to other establishments selling alcoholic beverages for either off-site or on-
site consumption.
1.Currently there are no other establishments that sell alcohol within the tennis club
complex. The closest establishment with an alcohol license is the Newport Beach
County Club located at 100 Clubhouse Drive. There is no evidence suggesting this use
has been detrimental to surrounding properties or the neighborhood.
v.Whether or not the proposed amendment will resolve any current objectionable conditions.
1.An eating and drinking establishment with intermittent alcohol service has operated at
the subject property since 1970 with no operating issues or complaints.
2.The project has been reviewed and conditioned to ensure that the purpose and intent of
Section 20.48.030 (Alcohol Sales) of the Zoning Code is maintained and that a healthy
environment for residents and businesses is preserved. The service of alcohol is
intended for the convenience of members and guests recreating at the tennis club.
Operational conditions of approval recommended by the Police Department relative to
the sale of alcoholic beverages will ensure compatibility with the surrounding uses and
minimize alcohol related impacts.
3.The existing hours of operation of the establishment will minimize the potential effects
on land use. The establishment closes by 11:00 p.m., daily, which will ensure the use
does not become a late night bar, tavern, or nightclub.
4.The establishment is located within the existing tennis club which is developed with
recreation uses. Adding the alcohol beverage control license will not alter the existing
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operation of the tennis club complex but will complement the food service in the
Clubhouse and provide a convenience to members and guests.
In accordance with Section 20.52.020 (Conditional Use Permits and Minor Use Permits) of the
Newport Beach Municipal Code, the following findings and facts in support of such findings are
set forth:
Finding:
B. The use is consistent with the General Plan and any applicable specific plan;
Facts in Support of Finding:
1. The General Plan designates the site as MU-H3/PR (Mixed-Use Horizontal and Parks
and Recreation). The MU-H3 designation applies to properties located in Newport
Center. It provides for the horizontal intermixing of regional commercial office, hotel,
multi-family residential and ancillary commercial uses. Within the Tennis Club,
residential uses may be developed as single-family units. The PR designation applies
to land used or proposed for active public or private recreational use. Permitted uses
include parks (both active and passive), golf courses, marina support facilities, aquatic
facilities, tennis clubs and courts, private recreation, and similar facilities. The proposed
Type 57 ABC License would support the existing tennis club complex, an allowed use
within the General Plan Land Use Designations.
2. The existing tennis clubhouse establishment is located within the Newport Beach tennis
club complex along East Coast Highway which provides recreational opportunities to
members and guests, consistent with the MU-H3/PR land use designation.
3. The subject property is not a part of a specific plan area.
Finding:
C. The use is allowed within the applicable zoning district and complies with all other
applicable provisions of this Zoning Code and the Municipal Code;
Facts in Support of Finding:
1. The site is located in Planned Community PC47 (Newport Beach Country Club) Zoning
District, which includes the Golf Club, Tennis Club, Bungalows and Villas facilities
totaling approximately 140 acres. The subject building (tennis clubhouse) is located
within the Tennis Club site of PC47, which was intended to provide for recreational uses
such as a tennis clubhouse, tennis shop, restroom and locker facilities, spectator seating
areas, etc. Concession uses are allowed by right as an ancillary use to the Tennis Club,
and the sale and service of alcohol (until 11:00 p.m.) is allowed subject to the approval
of a minor use permit.
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2. The existing establishment operates pursuant to Use Permit
No. UP1492C which allowed the existing clubhouse lounge to operate with hours from 9:00
a.m. to 11:00 p.m. daily.
3. The use will remain an ancillary eating and drinking establishment for the tennis club
complex and the addition of the ABC Type 57 license will not alter or intensify the existing
use. Further, there will be no change to the floor area or the hours of operation.
Finding:
D. The design, location, size, and operating characteristics of the use are compatible with
the allowed uses in the vicinity;
Facts in Support of Finding:
1. The addition of the alcohol license does not change the operating characteristics of the
existing eating and drinking establishment.
2. The eating and drinking establishment will remain complementary to the other uses and
buildings within the tennis club site. The tennis clubhouse will continue to be an ancillary
use and contribute to the existing operations of the Tennis Club.
3. The eating and drinking establishment will continue to provide a convenience for tennis
club members and guests, and the proposed ABC License will not result in increased
demand for parking in the existing surface parking lots.
Finding:
E. The site is physically suitable in terms of design, location, shape, size, operating
characteristics, and the provision of public and emergency vehicle (e.g., fire and
medical) access and public services and utilities.
Facts in Support of Finding:
1. The existing eating and drinking establishment within the Newport Beach Tennis Club
has proven to be physically suitable in terms of design, location, shape, and size to
support the use. The physical characteristics of the site are not changing with the
addition of the alcohol license. Alcohol service has existed on the site in the past and
would be reinstated as part of this use permit for members and their guests only.
2. Adequate public and emergency vehicle access, public services, and utilities are
provided for on-site.
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Finding:
F. Operation of the use at the location proposed would not be detrimental to the
harmonious and orderly growth of the City, nor endanger, jeopardize, or otherwise
constitute a hazard to the public convenience, health, interest, safety, or general welfare
of persons residing or working in the neighborhood of the proposed use.
Facts in Support of Finding:
1. The project has been reviewed and includes conditions of approval to ensure that
potential conflicts with the surrounding land uses are minimized to the greatest extent
possible. The operator is required to take reasonable steps to discourage and correct
objectionable conditions that constitute a nuisance in parking areas, sidewalks and
areas surrounding the subject property and adjacent properties during business hours,
if directly related to the patrons of the establishment.
2. The eating and drinking establishment will continue to service the Newport Beach
Tennis Club as a convenience to the tennis club members and guests recreating at the
facility. The proposed closing hour of 11:00 p.m. and limited nature of the Type 57 ABC
License, which only allows the sales and service to members and guests, will limit the
potential impacts to the surrounding neighborhood. Further, the Tennis Clubhouse is
located in the center of the Tennis Club and away from any residential or sensitive uses.
3. The service of alcohol will continue to complement the principal use of the facility and
provide an economic opportunity for the property owner to maintain a successful
business in a way which best serves the community.
SECTION 4. DECISION.
NOW, THEREFORE, BE IT RESOLVED:
1. The Zoning Administrator of the City of Newport Beach hereby finds this project is
categorically exempt from the California Environmental Quality Act pursuant to Section
15301 under Class 1 (Existing Facilities) of the CEQA Guidelines, California Code of
Regulations, Title 14, Division 6, Chapter 3, because it has no potential to have a significant
effect on the environment.
2. The Zoning Administrator of the City of Newport Beach hereby approves UP2021-033,
subject to the conditions set forth in Exhibit A, which is attached hereto and incorporated
by reference.
3. This action shall become final and effective 14 days following the date this Resolution
was adopted unless within such time an appeal or call for review is filed with the
Community Development Director in accordance with the provisions of Title 20 Planning
and Zoning, of the Newport Beach Municipal Code.
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PASSED, APPROVED, AND ADOPTED THIS 16TH DAY OF DECEMBER, 2021.
_____________________________________
Jaime Murillo, Zoning Administrator
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EXHIBIT “A”
CONDITIONS OF APPROVAL
(Project-specific conditions are in italics)
Planning Division
1.The development shall be in substantial conformance with the approved site plan, floor
plans and building elevations stamped and dated with the date of this approval (except as
modified by applicable conditions of approval).
2.The project is subject to all applicable City ordinances, policies, and standards, unless
specifically waived or modified by the conditions of approval.
3.The applicant shall comply with all federal, state, and local laws. Material violation of
any of those laws in connection with the use may be cause for revocation of this Use
Permit.
4.All proposed signs shall be in conformance with the approved Comprehensive Sign
Program for the project site and provisions of Chapter 20.42 (Signs) of the Newport
Beach Municipal Code.
5.Use Permit No. UP2021-033 and shall expire unless exercised within 24 months from the
date of approval as specified in Section 20.91.050 of the Newport Beach Municipal Code,
unless an extension is otherwise granted.
6.This Use Permit may be modified or revoked by the Zoning Administrator if determined
that the proposed uses or conditions under which it is being operated or maintained is
detrimental to the public health, welfare or materially injurious to property or
improvements in the vicinity or if the property is operated or maintained so as to
constitute a public nuisance.
7.Any change in operational characteristics, expansion in area, or other modification to
the approved plans, shall require an amendment to this Use Permit or the processing of
a new Use Permit.
8.The site shall not be excessively illuminated based on the luminance recommendations
of the Illuminating Engineering Society of North America, or, if in the opinion of the
Director of Community Development, the illumination creates an unacceptable negative
impact on surrounding land uses or environmental resources. The Director may order
the dimming of light sources or other remediation upon finding that the site is excessively
illuminated.
9.Prior to the issuance of a building permit, the applicant shall pay any unpaid
administrative costs associated with the processing of this application to the Planning
Division.
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10. All noise generated by the proposed use shall comply with the provisions of Chapter
10.26 and other applicable noise control requirements of the Newport Beach Municipal
Code. The maximum noise shall be limited to no more than depicted below for the
specified time periods unless the ambient noise level is higher:
Between the hours of 7:00AM
and 10:00PM
Between the hours of
10:00PM and 7:00AM
Location Interior Exterior Interior Exterior
Residential Property 45dBA 55dBA 40dBA 50dBA
Residential Property located within
100 feet of a commercial property 45dBA 60dBA 45dBA 50dBA
Mixed Use Property 45dBA 60dBA 45dBA 50dBA
Commercial Property N/A 65dBA N/A 60dBA
11. Should the property be sold or otherwise come under different ownership, any future
owners or assignees shall be notified of the conditions of this approval by either the
current business owner, property owner or the leasing agent.
12. No outside paging system shall be utilized in conjunction with this establishment.
13. All trash shall be stored within the building or within dumpsters stored in the trash
enclosure (three walls and a self-latching gate) or otherwise screened from view of
neighboring properties, except when placed for pick-up by refuse collection agencies.
The trash enclosure shall have a decorative solid roof for aesthetic and screening
purposes.
14. Trash receptacles for patrons shall be conveniently located both inside and outside of
the establishment, however, not located on or within any public property or right-of-way.
15. The applicant shall ensure that the trash dumpsters and/or receptacles are maintained
to control odors. This may include the provision of either fully self-contained dumpsters
or periodic steam cleaning of the dumpsters, if deemed necessary by the Planning
Division. Cleaning and maintenance of trash dumpsters shall be done in compliance
with the provisions of Title 14, including all future amendments (including Water Quality
related requirements).
16. Deliveries and refuse collection for the facility shall be prohibited between the hours of
10:00 p.m. and 7:00 a.m. on weekdays and Saturdays and between the hours of 10:00
p.m. and 9:00 a.m. on Sundays and Federal holidays, unless otherwise approved by the
Director of Community Development, and may require an amendment to this Use
Permit.
17. Storage outside of the building in the front or at the rear of the property shall be
prohibited, with the exception of the required trash container enclosure.
18. A Special Events Permit is required for any event or promotional activity outside the
normal operational characteristics of the approved use, as conditioned, or that would
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attract large crowds, involve the sale of alcoholic beverages, include any form of on-site
media broadcast, or any other activities as specified in the Newport Beach Municipal
Code to require such permits.
19. This approval shall expire and become void unless exercised within 24 months from the
actual date of review authority approval, except where an extension of time is approved in
compliance with the provisions of Title 20 Planning and Zoning of the Newport Beach
Municipal Code.
20. To the fullest extent permitted by law, applicant shall indemnify, defend and hold harmless
City, its City Council, its boards and commissions, officials, officers, employees, and agents
from and against any and all claims, demands, obligations, damages, actions, causes of
action, suits, losses, judgments, fines, penalties, liabilities, costs and expenses (including
without limitation, attorney’s fees, disbursements and court costs) of every kind and nature
whatsoever which may arise from or in any manner relate (directly or indirectly) to City’s
approval of Tennis Clubhouse Grill including, but not limited to, UP2021-033 (PA2021-
210)). This indemnification shall include, but not be limited to, damages awarded against
the City, if any, costs of suit, attorneys' fees, and other expenses incurred in connection
with such claim, action, causes of action, suit or proceeding whether incurred by applicant,
City, and/or the parties initiating or bringing such proceeding. The applicant shall indemnify
the City for all of City's costs, attorneys' fees, and damages which City incurs in enforcing
the indemnification provisions set forth in this condition. The applicant shall pay to the City
upon demand any amount owed to the City pursuant to the indemnification requirements
prescribed in this condition.
Building Division
21. If construction is proposed, the applicant is required to obtain all applicable permits from
the City’s Building Division and Fire Department. The construction plans must comply with
the most recent, City-adopted version of the California Building Code. The construction
plans must meet all applicable State Disabilities Access requirements.
Police Department
22. The applicant shall comply with all federal, state, and local laws, and all conditions of
the Alcoholic Beverage License. Material violation of any of those laws or conditions in
connection with the use is a violation and may be cause for revocation of the use permit.
23. All owners, managers and employees selling alcoholic beverages shall undergo and
successfully complete a certified training program in responsible methods and skills for
selling alcoholic beverages within 60 days of hire. This training must be updated every
3 years regardless of certificate expiration date. The certified program must meet the
standards of the certifying/licensing body designated by the State of California. The
establishment shall comply with the requirements of this section within 60 days of
approval. Records of each owner’s manager’s and employee’s successful completion
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of the required certified training program shall be maintained on the premises and shall
be presented upon request by a representative of the City of Newport Beach.
24. Approval does not permit the premises to operate as a bar, tavern, cocktail lounge or
nightclub as defined by the Newport Beach Municipal Code.
25. No alcoholic beverages shall be consumed on any property adjacent to the licensed
premises under the control of the licensee.
26. No games or contests requiring or involving the consumption of alcoholic beverages
shall be allowed.
27. Any event or activity staged by an outside promoter or entity, where the applicant,
operator, owner or his employees or representatives share in any profits, or pay any
percentage or commission to a promoter or any other person based upon money
collected as a door charge, cover charge or any other form of admission charge is
prohibited.
28. The exterior of the business shall be maintained free of litter and graffiti at all times.
The owner or operator shall provide for daily removal of trash, litter, and debris from
the premises and on all abutting sidewalks within 20 feet of the premises. Graffiti shall
be removed within 48 hours of written notice from the City.
29. There shall be no exterior advertising or signs of any kind or type, including advertising
directed to the exterior from within, promoting or indicating the availability of alcoholic
beverages. Interior displays of alcoholic beverages or signs which are clearly visible to
the exterior shall constitute a violation of this condition.
30. Employees shall not be permitted to consume alcohol or be under the influence of
alcohol at any time during their shift.
15
Attachment No. ZA 2
Vicinity Map
16
VICINITY MAP
Minor Use Permit No. UP2021-033
PA2021-210
1602 East Coast Highway, 5 and 11 Clubhouse
Drive
Subject Property
17
Attachment No. ZA 3
Project Plans
18
19
20
21
22
23
24
25
26
27
December 13, 2021
Zoning Administrator
Community Development Department
City of Newport Beach
CDD@newportbeachca.gov
Ref. #: 11684
RE: The Granville Community Association
Tennis Clubhouse Grill Minor Use Permit No. UP2021-033
Comments in Opposition to Permit
Dear Zoning Administrator:
The Tinnelly Law Group serves as general counsel to the Granville Community
Association, a California common interest development comprised of 68 units and well
over 100 residents (“Association”). In that capacity, the undersigned has been directed
to contact you in connection with Minor Use Permit No. UP2021-033 (PA2021-210)
(“Permit”), which will be considered at the December 16, 2021, Zoning Administrator
Meeting. In particular, the Permit will authorize the Tennis Clubhouse Grill (“Tennis
Club”) to sell “beer, wine and distilled spirits to members and guests…for consumption
on the premises….” The Board of Directors (“Board”), on behalf of the Association,
opposes the issuance of the Permit and respectfully requests that the Zoning
Administrator deny same.
The Association is gravely concerned that the sale, distribution and consumption of
alcoholic beverages at the Tennis Club will endanger the health and safety of residents
and guests entering and exiting the community. It is without doubt that alcohol impairs
one’s ability to safely operate a vehicle.1 It is also obvious that the intersection between
the Tennis Club and Granville Drive is dangerous (e.g., high speed traffic entering from
Civic Center Dr., minimal site lines, etc.). Given the location of the Tennis Club relative
to the Association, it is almost certain that serving alcoholic beverages to the patrons of
the Tennis Club will increase the number of accidents. Sadly, the likely victims of these
accidents will be the residents and guests of the Granville community.
1 According to the Centers for Disease Control and Prevention, in 2016, 10,497 people died in alcohol-impaired driving
crashes, accounting for 28% of all traffic-related deaths in the United States. (CDC, Impaired Driving: Get the Facts,
https://www.cdc.gov/transportationsafety/impaired_driving/impaired-drv_factsheet.html#:~:text=At%20all%20levels
%20of%20blood,people%20than%20for%20older%20people.&text=Among%20drivers%20with%20BAC%20levels,ye
ars%20of%20age%20(27%25) (last accessed December 13, 2021).) The statistics for all impaired driving accidents is more
sobering.
ORANGE COUNTY 27101 Puerta Real
Suite 250
Mission Viejo, CA 92691 949.588.0866
LOS ANGELES
633 West Fifth Street Suite 2600
Los Angeles, CA 90071
213.805.7285
RIVERSIDE COUNTY
74-710 Highway 111
Suite 102Palm Desert, CA 92260
760.862.9835
SAN DIEGO 5927 Balfour Court
Suite 102 Carlsbad, CA 92008
760.862.9835
SAN FRANCISCO BAY AREA 951 Mariners Island Blvd.
Suite 300
San Mateo, CA 94404 650.425.9444
TINNELLY LAW GROUP
A Professional Corporation
tinnellylaw.com
27101 Puerta Real – Suite 250
Mission Viejo, CA 92691 P: 949.588.0866
F: 949.588.5993
matt@tinnellylaw.com
Via Electronic Mail Only
Zoning Administrator - December 16, 2021 Item No. 12a Additional Materials Received Tennis Clubhouse Grill Minor Use Permit (PA2021-210)
Zoning Administrator
December 13, 2021
Page 2 of 2
11684/146050
TINNELLY LAW GROUP
A Professional Corporation 27101 Puerta Real, Suite 250 | Mission Viejo, CA 92691
With the foregoing in mind, we respectfully request that the Zoning Administrator deny issuing the
Permit. We thank you for your consideration.
MTP:ba
Very truly yours,
TINNELLY LAW GROUP
MATTHEW T. PLAXTON, ESQ.
Zoning Administrator - December 16, 2021 Item No. 12a Additional Materials Received Tennis Clubhouse Grill Minor Use Permit (PA2021-210)
From:jacob gonzales
To:CDD
Cc:jacob gonzales
Subject:FW: Tennis Property City MUP
Date:December 15, 2021 1:33:25 PM
Attachments:image003.png2021.03.26 Notice of Entry of Judgment (conformed).pdf
[EXTERNAL EMAIL] DO NOT CLICK links or attachments unless you recognize the sender and know the
content is safe.
Please see email below and attachment replying directly to Ms. Westmoreland today(12/15/21) at 11:35 AM and copying Mr. Campbell and Mr. Schneider, in response to Ms.Westmoreland’s email of 12/14/21 at 2:00 PM. Please include this email as part of the recordon MUP No. UP2021-033 (PA2021-210).
Thank you.
From: Elliot Feuerstein <elliot.feuerstein@gmail.com> Sent: Wednesday, December 15, 2021 11:35 AMTo: Westmoreland, Liz <LWestmoreland@newportbeachca.gov>Cc: robert ohill <ROH@golfrealtyfund.com>; Irving M. <irvingmchase@gmail.com>; RyanChase <ryanlylechase@gmail.com>; brett feuerstein <brett@mesacenters.com>; jacobgonzales <jgonzales@jcg-law.com>; Yoder, Michael <myoder@omm.com>; Campbell, Jim<JCampbell@newportbeachca.gov>; Schneider, Matthew<MSchneider@newportbeachca.gov>; Elliot Feuerstein <elliot.feuerstein@gmail.com>Subject: Re: Tennis Property City MUP
Dear Ms. Westmoreland –
Thank you for your email below. We agree the City should not get involved in internalconflicts or disagreements between the owners of the Tennis Property. We are trying to avoidputting the City in such a difficult position which is why we requested that the hearing on theproposed use permit for the Tennis Property be delayed for 60 days to give us a reasonableopportunity to gather information and understand what exactly is happening at the TennisProperty (as we just learned about the application for the use permit late last week) and to tryto work it out with Mr. O Hill.
We also recognize that the issue of an owner’s authority to sign on behalf of other owners is alegal issue, one that the City should not be deciding, and is not as black and white as Mr. OHill may be representing it to be. It is our understanding that Mr. O Hill has submitted to theCity in the past, and most recently within the past six months or so, an arbitration award fromalmost ten years ago issued by Judge Haley Fromholz (Ret.) in March 2013, and that page 9 ofthat award says Mr. O Hill can process certain few remaining discretionary entitlements for
Zoning Administrator - December 16, 2021 Item No. 12b Additional Materials Received Tennis Clubhouse Grill Minor Use Permit (PA2021-210)
his master plan at the Tennis Property.
To be clear, page 9 of the Fromholz award states as follows: “O Hill had been activelypursuing the discretionary entitlements for nearly fifteen years. Voters approved the general
amendment and the only remaining entitlements were the development standards such asheight limits, landscaping, vehicle access, and parking. Thus, very little remained to complete
the NBCC Plan.” (Underline added.) Page 4 of that award also states: “Currently, thedevelopment standards for the NBCC Land such as height limits, landscaping, vehicle access,
and parking, are still undetermined. The development standards are the final discretionaryentitlements for the NBCC Land.” (Underline added.) Judge Fromholz explained his reason
for allowing O Hill to finish processing the limited remaining discretionary entitlements onthe basis that there was little left for O Hill to complete and that we waited too long to object.
We are not waiting to object this time.
In the owners most recent arbitration with Justice Jeffrey King (Ret.)—where Mr. O Hill suedus in an attempt to force us to proceed with the development of his master plan, and in which
the arbitrator denied all of Mr. O Hill’s claims against us and found in favor of us on ourcross-claims against him, and awarded us over $2,300,000 for our attorneys’ fees and costs
which Mr. O Hill had to reimburse us—Mr. O Hill represented over and over again that as ofNovember 2018 he had finished processing the few remaining discretionary entitlements that
the Fromholz award allowed him to process. Indeed, in the Final Award issued by JusticeKing on April 8, 2020, a copy of which is attached (and which was confirmed and entered as a
Judgment on March 26, 2021, in Orange County Superior Court Case No. 30-2020-01159790-CU-PA-CJC), Justice King says at page 5, footnote 3, of his Final Award that as of November
2018 that Mr. O Hill had completed his discretionary entitlements:
“Judge Fromholz states at page 4 of his decision, “‘[c]urrently, thedevelopment standards for the NBCC Land such as height limits, landscaping,
vehicle access and parking are still undetermined. The development standardsare the final discretionary entitlements for the NBCC Land. Proceedings are
continuing to be held before the City to determine the development standards.’To a reader it somewhat leaves the impression that he believed the process of
entitlements was near completion. Entitlements were not completed until aboutfive and one-half years later.” (Justice King Final Award at p. 5, fn. 3,
underline added.)
Justice King also states in his Final Award at page 10 as follows:
“The master plan has three elements: there are 27 bungalows, 5 villas and thetennis club/spa. The tennis/spa building is an amenity for the bungalows and
villas. The entity. By November 2018 he had: the Newport Beach Country Club
Zoning Administrator - December 16, 2021 Item No. 12b Additional Materials Received Tennis Clubhouse Grill Minor Use Permit (PA2021-210)
Planned Community text, a zone change, site plan approval, state WaterQuality Control Board approval, grading plan, storm drain plan, dry utility
plans and street improvement plans, through plan check. They had all theentitlement approvals necessary to do the ‘bake-off.’” (Id. at 10, underline
added.)
Thus, we have informed Mr. O Hill in writing on multiple occasions that any right he believeshe had to process the few remaining discretionary entitlements under the Fromholz award had
run its course as of November 2018 when he finished processing his discretionaryentitlements, that the Fromholz award does not support entitlements/plans he may presently be
processing with the City, and that he does not have our consent—express or implied—to seekentitlements/plans for the Tennis Property.
For the record, we object to the City’s position that “Mr. O Hill is authorized to sign the
[minor use permit] application on behalf of the ownership” – and it is our belief that Mr. OHill does not have the authority to sign documents on behalf of the entire ownership that he
may have submitted to the City since he completed his discretionary entitlements in November2018. But again, our desire is to not put the City in the position of having to weigh-in on that
issue – which from our perspective is not an issue on which the City Community DevelopmentDepartment should be weighing-in. Also, we view the issuance of a liquor license at the
Tennis Property as a material issue, and we need a reasonable opportunity to understand as co-owners of the Tennis Property our potential exposure and liability should alcohol be permitted
to be sold and/or consumed there. Thus, we once more renew our request that the City delaythe hearing on the proposed use permit for the Tennis Property for 60 days to give us a
reasonable opportunity to gather information (including the information requested in my initialemail to you of December 10, 2021) and to try to resolve the issue with Mr. O Hill.
Your prompt response is appreciated. Please let us know the City’s response to our renewed
request to continue the hearing for 60-days as soon as possible.
Thank you.
Elliot Feuerstein on behalf of co-owners Mesa Shopping Center-East LLC and Mira MesaShopping Center-West LLC and Irv Chase (copied) on behalf of co-owner The Fainbarg III,
LP
On Tue, Dec 14, 2021 at 2:00 PM Westmoreland, Liz<LWestmoreland@newportbeachca.gov> wrote:
Good Afternoon Mr. Feuerstein,
Zoning Administrator - December 16, 2021 Item No. 12b Additional Materials Received Tennis Clubhouse Grill Minor Use Permit (PA2021-210)
Thank you for your comments on the proposed Minor Use Permit for the Tennis ClubhouseGrill. Please note that alcohol service in this zoning district (PC47 - Newport Beach
Country Club) requires a minor use permit as there are no late hours proposed (after 11:00p.m.).
Based on previous planning applications and interactions related to the property, our
understanding is that Mr. O Hill is authorized to sign the application on behalf of theownership. If there are any current internal conflicts or disagreements regarding this topic,
they would need to be resolved outside of the entitlement process.
Please contact me if you have any additional questions or concerns regarding theapplication.
Thank you,
<!--[if !vml]-->
<!--[endif]-->LIZ WESTMORELAND
Community Development Department
Associate Planner
lwestmoreland@newportbeachca.gov
949-644-3234
CITY OF NEWPORT BEACH
100 Civic Center Drive, First Floor Bay B, Newport Beach, California 92660 | newportbeachca.gov
From: Elliot Feuerstein <elliot.feuerstein@gmail.com> Sent: December 10, 2021 4:41 PM
Zoning Administrator - December 16, 2021 Item No. 12b Additional Materials Received Tennis Clubhouse Grill Minor Use Permit (PA2021-210)
To: Westmoreland, Liz <LWestmoreland@newportbeachca.gov>Cc: Murillo, Jaime <JMurillo@newportbeachca.gov>; robert ohill
<ROH@golfrealtyfund.com>; Irving M. <irvingmchase@gmail.com>; Ryan Chase<ryanlylechase@gmail.com>; brett feuerstein <brett@mesacenters.com>; jacob gonzales
<jgonzales@jcg-law.com>; Yoder, Michael <myoder@omm.com>; Elliot Feuerstein<elliot.feuerstein@gmail.com>Subject: Tennis Property City MUP
[EXTERNAL EMAIL] DO NOT CLICK links or attachments unless you recognize the sender and know
the content is safe.
Hello Ms. Westmoreland –
I write to you regarding the Tennis Clubhouse Grill Minor Use Permit No. UP2021-033(PA2021-210), for 1602 East Coast Highway in Newport Beach also referred to as 5 and/or
11 Clubhouse Drive (hereinafter the “Tennis Property”), which is on calendar for a ZoningAdministrator hearing on December 16, 2021, at 10:00 AM.
I am a principal of Mesa Shopping Center-East LLC and Mira Mesa Shopping Center-West
LLC which collectively own 25% of the Tennis Property. Copied on this email is my co-owner Irv Chase who is a principal of The Fainbarg III, LP, which also owns 25% of the
Tennis Property. Together we hold a 50% ownership interest in the Tennis Property. Theother owner in the Tennis Property is Golf Realty Fund, LP ("GRF"), whose principal is
Robert O Hill, which owns a 50% interest. All owners hold their interests as tenants incommon.
We write because we just learned a couple of days ago of MUP No. UP2021-033 (PA2021-
210), and that the entity Clubhouse ATP, LLC is the named applicant on the application tothe City, signed solely by GRF as the owner of the Tennis Property. The application to
obtain a use permit for the Tennis Property has been submitted without our knowledge orconsent. It is our understanding that all owners are required to sign a use permit application
– we did not sign the application nor were we asked to do so by GRF. It is also ourunderstanding the City typically processes use permits involving alcohol use as a
conditional use permit (CUP) – and this is being processed as an MUP.
We ask that the City please provide us with copies of all documents in its possessionrelating to the application for MUP No. UP2021-033 (PA2021-210). We also ask that the
City please take MUP No. UP2021-033 (PA2021-210) off-calendar and not hold the hearingon December 16, 2021, and not reset the hearing for at least 60 days to give us a reasonable
opportunity to review the information requested above in advance of a hearing and so we
Zoning Administrator - December 16, 2021 Item No. 12b Additional Materials Received Tennis Clubhouse Grill Minor Use Permit (PA2021-210)
can, as 50% of the ownership of the Tennis Property, meaningfully participate in such ahearing.
If you have questions or would like to discuss any of the above, please do not hesitate to call
me (C: 619.548.2007, O: 858.271.4682) or Mr. Chase (C: 949.584.8700; O: 949.722.7400).
Thank you.
Elliot Feuerstein on behalf of co-owners Mesa Shopping Center-East LLC and Mira MesaShopping Center-West LLC and Irv Chase (copied) on behalf of co-owner The Fainbarg III,
LP
--
Elliot Feuerstein
8294 Mira Mesa Blvd
San Diego, CA 92126
858-271-4682
858-271-5161 Fax
elliot.feuerstein@gmail.com
This message, together with any attachments, may contain material that is confidential
and/or privileged for the sole use of the intended recipient. Any review, reliance ordistribution by others or forwarding without express permission is strictly prohibited. If you
are not the intended recipient, please contact the sender and delete all copies.
--
Elliot Feuerstein
8294 Mira Mesa Blvd
Zoning Administrator - December 16, 2021 Item No. 12b Additional Materials Received Tennis Clubhouse Grill Minor Use Permit (PA2021-210)
San Diego, CA 92126
858-271-4682
858-271-5161 Fax
elliot.feuerstein@gmail.com
This message, together with any attachments, may contain material that is confidential and/or
privileged for the sole use of the intended recipient. Any review, reliance or distribution byothers or forwarding without express permission is strictly prohibited. If you are not the
intended recipient, please contact the sender and delete all copies.
Zoning Administrator - December 16, 2021 Item No. 12b Additional Materials Received Tennis Clubhouse Grill Minor Use Permit (PA2021-210)
NOTICE OF ENTRY OF JUDGMENT
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JACOB C. GONZALES (SBN 235555) jgonzales@jcg-law.com jcg | law 23 Corporate Plaza Drive, Suite 150 Newport Beach, California 92660-7901 Telephone: +1 949 313 8545 MICHAEL YODER (SBN 83059) myoder@omm.com O’MELVENY & MYERS LLP 610 Newport Center Drive 17ᵗʰ Floor Newport Beach, California 92660-6429 Telephone: +1 949 823 6900 Facsimile: +1 949 823 6994 Attorneys for Petitioners MESA SHOPPING CENTER-EAST, LLC MIRA MESA SHOPPING CENTER-WEST, LLC and FAINBARG III, LP
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF ORANGE
MESA SHOPPING CENTER-EAST, LLC, a California limited liability company; MIRA MESA SHOPPING CENTER-WEST, LLC, a California limited liability company; and FAINBARG III, LP, a California limited partnership,
Petitioners,
v.
GOLF REALTY FUND LP, a California limited partnership fka O HILL PROPERTIES, a California limited partnership,
Respondent.
Case No. 30-2020-01159790-CU-PA-CJC
Assigned to Hon. Layne H. Melzer, Dept. C-12
NOTICE OF ENTRY OF JUDGMENT
Electronically Filed by Superior Court of California, County of Orange, 03/29/2021 04:20:00 PM.
30-2020-01159790-CU-PA-CJC - ROA # 37 - DAVID H. YAMASAKI, Clerk of the Court By e Clerk, Deputy Clerk.
Zoning Administrator - December 16, 2021 Item No. 12b Additional Materials Received Tennis Clubhouse Grill Minor Use Permit (PA2021-210)
- 2 -
NOTICE OF ENTRY OF JUDGMENT
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TO ALL PARTIES AND THEIR COUNSEL OF RECORD:
PLEASE TAKE NOTICE Judgment in the above-captioned action was entered and filed
on March 25, 2021. A true and correct copy of the Judgment is attached as Exhibit A.
Dated: March 26, 2021
JACOB C. GONZALES jcg | law By:
Jacob C. Gonzales Attorney for Petitioners Mesa Shopping Center-East LLC,
Mira Mesa Shopping Center-West LLC, and
Fainbarg III LP
Zoning Administrator - December 16, 2021 Item No. 12b Additional Materials Received Tennis Clubhouse Grill Minor Use Permit (PA2021-210)
Exhibit A
Zoning Administrator - December 16, 2021 Item No. 12b Additional Materials Received Tennis Clubhouse Grill Minor Use Permit (PA2021-210)
FILED
SUPERIOR COURT OF CALIFORNIA COUNTY OF ORANGE CENTRAL JUSTICE CENTER
MAR 2 5 2021
DAVID H. YAMASAKI, Cleric of the Court
BY: DEPUTY
JACOB C. GONZALES (SBN 235555)
jgonzAles@jcg-law.com
jcg I law
23 Corporate Plaza Drive, Suite 150
Newport Beach, California 92660-7901
Telephone: +1 949 313 8545
MICHAEL YODER (SBN 83059)
myoder@omm.com
O'MELVENY & MYERS LLP
610 Newport Center Drive
17th Floor
Newport Beach, California 92660-6429
Telephone: +1 949 823 6900
Facsimile: +1 949 823 6994
Attorneys for Petitioners
MESA SHOPPING CENTER-EAST, LLC
MIRA MESA SHOPPING CENTER-WEST, LLC and
FAINBARG III, LP
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF ORANGE
MESA SHOPPING CENTER-EAST, LLC, a
California limited liability company; MIRA
MESA SHOPPING CENTER-WEST, LLC, a
California limited liability company; and
FAINBARG III, LP, a California limited
partnership,
Petitioners,
V.
GOLF REALTY FUND LP, a California
limited partnership &a 0 HILL PROPERTIES,
a California limited partnership,
Respondent.
Case No. 30-2020-01159790-CU-PA-CJC
[ E/frED] JUDGMENT
[PROPOSED] JUDGMENT
Zoning Administrator - December 16, 2021 Item No. 12b Additional Materials Received Tennis Clubhouse Grill Minor Use Permit (PA2021-210)
I The Court, having granted, pursuant to California Code of Civil Procedure section 1285,
Petitioners Mesa Shopping Center-East LLC, Mira Mesa Shopping Center-West LLC, and
Fainbarg III LP's (collectively, "Petitioners" or "Co-Owners") Petition to Confirm Arbitration
Award (the "Petition to Confirm") against Respondent Golf Realty Fund, LP ("Respondent" or
"GRF"), hereby ORDERS, ADJUDGES and DECREES that:
1. The Final Award issued by Arbitrator Hon. Jeffrey King (Ret.) (the "Final Award")
in the arbitration of Golf Realty Fund, LP v. Mira Mesa Shopping Center-East, LLP, et aL, JAMS
Ref. No. 1200053406 (the "Arbitration"), fully and finally adjudicates the parties' claims in the
Arbitration regarding that certain "Agreement Between Real Property Owners — Balboa Bay
Racquet Club" of March 8, 1994 (the "OIC Agreement") for the approximate 6.9 acre Newport
Beach tennis club property (the "Tennis Property"), the legal description of which is set forth in
Exhibit A to the OIC Agreement as follows:
Parcel 1:
That portion of Block 93 of Irvine's Subdivision in the City of Newport
Beach, County of
Orange, State of California, as per Map recorded in Book 1 Page 88 of
Miscellaneous Maps in the Office of the County Recorder of said County
described as follows:
Lot A as shown on that certain Parcel Map filed October 10, 1967 in Book
10 Page 20 of Parcel Maps in the Office of the County Recorder of said
County, and Parcels 1, 2 and 3 as shown on that certain Parcel Map filed
February 11, 1977 in Book 92 Pages 13 and 14 of Parcel Maps, in the
Office of the County Recorder of said County.
Parcel 2:
As easement for ingress and egress over the most Southerly 190.00 feet of
Parcel 1, in the City of Newport Beach, County of Orange, State of
California, as shown on that certain Parcel Map filed October 10, 1967 in
Book 10 Page 20 of Parcel Maps, in the Office of the County Recorder of
said County.
2. Pursuant to the Final Award:
(a) Co-Owners have not already consented under the OIC Agreement (or
otherwise) to the sale, lease or improvement of the Tennis Property as part
- 2 -
[PROPOSED] JUDGMENT
Zoning Administrator - December 16, 2021 Item No. 12b Additional Materials Received Tennis Clubhouse Grill Minor Use Permit (PA2021-210)
of GRF's three element plan to entitle the Tennis Property for (I) five
single-family residences, (2) a hotel consisting of twenty-seven units, and
(3) a new tennis clubhouse with seven tennis courts and a spa facility (the
"Master Plan");
(b) Co-Owners are not estopped from withholding their consent under the OIC
Agreement (or otherwise) to the sale, lease or improvement of the Tennis
Property as part of GRF's Master Plan, and, in particular, to the January 22,
2019 letter of intent executed by Hal M. Sears on behalf of NBC Villas,
LLC, to purchase a portion of the Tennis Property (the "Sears/Patterson
Offer");
(c) Neither Co-Owners nor GRF have the duty to consent to a sale of the
Tennis Property or portions thereof. Under the OIC Agreement any owner
has the unfettered right to refuse for any reason, to voluntarily sell the
Tennis Property or any portion thereof;
(d) Co-Owners have no duty to consent to the Sears/Patterson Offer;
(e) Relative to the leasing of the Tennis Property or portions thereof, no owner
may refuse to lease the Tennis Property or portions thereof for an
objectively unreasonable reason; and
(0 Co-Owners' present refusal to consent to the leasing and construction of
improvements on the Tennis Property and/or portions thereof, is not
objectively unreasonable, and as such, Co-Owners do not presently have a
duty to consent under the OIC Agreement to the development of GRF's
Master Plan;
3. Judgment is hereby entered in favor of Petitioners, and against Respondent, in
conformity with the Final Award, a true and correct copy of which is attached hereto as Exhibit A
and by this reference fully incorporated herein.
////
////
- 3 -
[PROPOSED] JUDGMENT
Zoning Administrator - December 16, 2021 Item No. 12b Additional Materials Received Tennis Clubhouse Grill Minor Use Permit (PA2021-210)
4. Petitioners may seek costs and fees incurred in
costs and motion for attorneys' fees.
Dated: March II, 2021
y memorandum of
Hong dge La H. Izer
J e of the Superior Court
- 4 -
[PROPOSED] JUDGMENT
Zoning Administrator - December 16, 2021 Item No. 12b Additional Materials Received Tennis Clubhouse Grill Minor Use Permit (PA2021-210)
Exhibit A
Zoning Administrator - December 16, 2021 Item No. 12b Additional Materials Received Tennis Clubhouse Grill Minor Use Permit (PA2021-210)
JAMS ARBITRATION
1200053406
Golf Realty Fund, LP
Claimant,
And
Mesa Shopping Center- East, LLP;
Mira Mesa Shopping Center and Fainbarg
Trust Dated April 19, 1982,
Respondents.
FINAL AWARD
Counsel:
Paul B. George Esq.
Lane Powell
601 SW Second Ave.
Suite 2100
Portland, OR 97204
Phone 503-778-2100
georgeplaneposell.com
Parties Represented:
Golf Realty Fund LP
Lauren A. Deeb Esq.
Nelson Mullins
19191 S. Vermont Ave
Torrance, CA 90502
Phone 949-760-1121
lauren.deeb@nelsonmullins.com
Parties Represented:
Golf Realty Fund LP
//
Zoning Administrator - December 16, 2021 Item No. 12b Additional Materials Received Tennis Clubhouse Grill Minor Use Permit (PA2021-210)
Michael G. Yoder Esq.
O'Melveny & Meyers LLP
610 Newport Center Dr.
Suite 1700
Newport Beach, CA 92660
Phone: 949-760-9600
mvoderantnm.com
Parties Represented:
Fainbarg Trust
Mesa Shopping Center-East, LLC
Mira Mesa Shopping Center, LLC
Jacob Gonzales Esq.
Weintraub Tobin
23 Corporate Plaza Dr.
Suite 200
Newport Beach, CA 92660
Phone 949-760-0204
gwaldron@weintraub.com
ieonzalesAweintraub.com
Parties Represented:
Fainbarg Trust
Mesa Shopping Center-East, LLC
Mira Mesa Shopping Center, LLC
Arbitrator:
Jeffrey King
JAMS
3800 Concours Dr.
Suite 320
Ontario, Ca. 91764
Phone: 909-884-6684
Jking.jamsadr@gmail.com
Place of Arbitration Hearing: Orange, CA
Date of Interim Award: August 26, 2019
Date of Final Award: April 8, 2020
This matter was tried in Arbitration for a total of thirteen days. It was submitted on July
23, 2019.1
I. Testimony was taken March 12 —19, 2019 and May 7 —14, 2019. The Hearing on the Motion for
Attorneys' Fees and Costs occurred on March 25, 2020.
2
Zoning Administrator - December 16, 2021 Item No. 12b Additional Materials Received Tennis Clubhouse Grill Minor Use Permit (PA2021-210)
By way of their Supplemental Demand for Arbitration, filed on March 13, 2019,
Claimant Golf Realty Fund, LP, aka 0 Hill Properties seek the following determinations
pursuant to Declaratory Relief: (1) Co-owners, by their past actions and conduct, have consented
to, are estopped from consenting to, and/or have waived their right to oppose the NBCC Master
Plan for the Tennis Club Property as envisioned by the NBCC Master Plan; (2) Co-owners have
a duty to consent to the development of the NBCC Master Plan; (3) Co-owners do not have the
unfettered right to refuse consent to the completion of the NBCC Master Plan as entitled; (4) Co-
owners are required to exercise their consent rights in good faith and not to act in an objectively
unreasonable manner; (5) Co-owners are required to complete the NBCC Master Plan for the
Tennis Club Property; and, (6) Co-owners' refusal to consent to the Patterson Homes Offer for
the Villa sub-area, the lease for the tennis club/spa sub-area and the future lease of the bungalow
sub-area is objectively unreasonable and/or done in bad faith.
Respondents, Mesa Shopping Center-East, LLC, Mesa Shopping Center-West, LLC and
The Fainbarg Trust dated April 19, 1982, an intervivos trust, have set forth various defenses and
seek the following determinations by way of their March 18, 2019 Counterclaim for Declaratory
Relief: (1) Co-owners have not already consented to the sale, lease or improvement of the Tennis
Property as part of 0 Hill's Master Plan, and in particular the Sears/Patterson Offer; (2) Co-
owners are not estopped from withholding their consent under the OIC Agreement (or otherwise)
to the sale, lease or improvement of the Tennis Property as part of 0 Hill's Master Plan, and in
particular the Sears/Patterson offer; and, (3) Co-owners have no duty to consent under the OIC
Agreement (or otherwise) to the sale, lease or improvement of the Tennis Property as part of 0
Hill's Master Plan, and in particular, to the Sears/Patterson Offer.
Witnesses testifying at the Arbitration were: Robert 0 Hill, Iry Chase, Elliot Feuerstein,
Hal Sears, Sean Abdali, Kory Kramer, Leland Stearns, Bruce Baltin, Rosemary Garcia and Alan
Reay. Numerous Exhibits were admitted into Evidence.
From a factual point of view this Opinion summarizes the testimony of Robert 0 Hill, RV
Chase and Elliot Feuerstein; the Opinion attempts to organize the facts on a topic by topic basis,
as to the salient issues presented.2 The testimony of the other witnesses is not summarized, in
2 While the testimony is organized and segmented into various issues, it is clear that most of the testimony
is also relevant to the other issues discussed in this Opinion.
3
Zoning Administrator - December 16, 2021 Item No. 12b Additional Materials Received Tennis Clubhouse Grill Minor Use Permit (PA2021-210)
that while relevant to the issues presented, is not necessary for the ultimate disposition of the
present matter.
I. RES JUDICATA
The starting point for any discussion of the present matter is the Res Judicata effect on
the issues presented here, if any, of Judge Fromholtz' May 20, 2013 "Final Award." The issue
was previously ruled on in this matter, on June 27, 2018. After hearing the evidence in the
present matter, I have revisited the issue and my ruling is the same. In that this Opinion
represents my final opinion on the first phase of the present litigation, I will restate the ruling
herein with a few minor changes.
"Collateral estoppel is one of two aspects of the doctrine of res judicata. In its narrowest
form, res judicata " 'precludes parties or their privies from relitigating a cause of action finally
resolved in a prior proceeding."' But res judicata also includes a broader principle, commonly
termed collateral estoppel, under which an issue "necessarily decided in prior litigation may be
conclusively determined as against the parties thereto or their privies in a subsequent lawsuit on
a different cause of action." (Citations).
"Thus, res judicata does not merely bar relitigation of identical claims or causes of
action," instead, in its collateral estoppel aspect, the doctrine may also preclude a party to prior
litigation from redisputing issues therein decided against him, even when those issues bear on
different claims raised in a later case." (Vandenberg v. Superior Court (1999) 21 Ca1.4th 815,
828.)
"Not only does the issue litigated have to be identical, no aspect of what was decided in
the previous proceeding can be left to conjecture. Evidence extrinsic to the judgment roll may be
used to ascertain which issues were determined in the original action." (Bronco Wine . Frank
Logoluso Farms (1989) 214 Cal. App.3d 699, 709)
Here, what was litigated, determined and necessarily decided in the prior arbitration, was
that by way of acquiescence, and/or estoppel the Co-owners consented to the processing of
development plans with land use changes up through and including the obtaining of entitlements.
The issue of co-owners consenting to any specific plan and/or sale of the property or portions
thereof was not litigated and not necessarily decided.
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In the Fromholtz matter, Co-owners' February 2011 Claim stated causes of action for
Breach of Fiduciary Duty, Breach of Contract and Conversion. The gist of the Claim was that
the Managing Owner, without the consent of the Co-owners processed plans to entitle, rezone
and/or develop the property. It was contended that the Managing Owner failed to account and
improperly spent money for purposes of entitlements, rezoning and redevelopment of the
property. The Claim went no further.
The Managing Owner's response was that he informed the Co-owners of his intent to
seek discretionary entitlements; they agreed and encouraged the planning and seeking of
entitlements.
None of the pleadings addressed the issue of the Managing Owner being allowed to sell
the property or portions thereof, or that the Co-owners consented (either by acquiescence or
estoppel) to said sale. Further, in viewing the Closing Briefs, they addressed the Managing
Owner's authority to seek governmental approval for plans and entitlements and whether the
expenditures of the Managing Owner were wasteful and unauthorized.3
As such nothing more or less was decided by Judge Fromholtz than.....by way of
acquiescence, and/or estoppel the Co-owners consented to the processing of development plans
with land use changes up through and including the obtaining of entitlements. He did not decide
that any of the tenants in common had to follow-through with development consistent therewith.
The next issue is whether by their conduct, the Co-owners in some fashion have
consented to the proposed present development and "Bake-off' sale by the Managing Owner (or
are otherwise estopped from withholding their consent to it). I think not.
II. CONSENT, WAIVER AND/OR ESTOPPEL
(a.) Testimony of Managing Owner
3 Judge Fromholtz states at page 4 of his decision, "Murrently, the development standards for the NBCC
Land such as height limits, landscaping, vehicle access and parking are still undetermined. The development
standards are the final discretionary entitlements for the NBCC Land. Proceedings are continuing to be held before
the City to determine the development standards." To a reader it somewhat leaves the impression that he believed
the process of entitlements was near completion. Entitlements were not completed until about five and one-half
years later.
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The Managing Owner testified in the 1995-1996 timeframe the co-owners were
supportive of the land use changes. He discussed with them the General Plan Amendment and
zone changes; they were in favor of getting the entitlements. He discussed putting Villas on both
the tennis and golf property. They discussed selling some of the property in fee. Both co-
owners wanted to buy the Villa area themselves. The co-owners never objected to the bungalow
concept and never raised any objections or told the Managing Owner to stop what he was doing.
In late 2007 and early 2008 Iry Chase and Elliot Feuerstein began getting involved in the
project from the Co-owners' standpoint. In 2007, Mr. Chase and Mr. Feuerstein expressed some
concern relative to the lack of third party offers for all three components of the master plan.
They also asked for information relative to the deals the Managing Owner was negotiating. In
October of 2007 the George Jones appraisal was done. It dealt with hypothetical land uses and
revealed that a strictly residential use of the property would have a value 4 times that of the
Managing Owner's Master Planned development. In 2008 Mr. 0 Hill received a letter from Mr.
Chase, indicating that the development plan did not maximize the value of the property and the
Co-owners did not support it. They wanted more residential and a reduction of the tennis club
development costs.
Both Mr. Feuerstein and Mr. Chase started expressing reservations relative to the
feasibility of the bungalows. They wanted to increase the residential component and reduce the
tennis club development construction costs. They were seeking a comprehensive plan for
development and sale.
During the early stages of the approval process, Mr. Chase and Mr. Feuerstein would
appear at Planning Commission and City Council meetings opposing approval of the master
plan.
During the 2010 time, 0 Hill explained on a number of occasions that after approval the
Co-owners could go back and try to get more residential.
In 2011 the Co-owners sued the Managing Owner to enjoin him from proceeding further
with the development plan. The Fromholtz decision was issued in May of 2013.
In June of 2014 the Co-owners sent a letter indicating that they disagreed with the project
and the Managing Owner's continued spending of joint money on the project. In 2014 he
indicated to them that he had no obligation or desire to start over on the discretionary entitlement
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process even if it made good business sense. In this time frame discussions began about him
purchasing the Co-owners interests.
In 2016 they informed the Managing Owner that any prior consent implied from the
Fromholtz decision had run its course and that there was no need to continue to spend joint
ownership money on the project unless and until a financially sound comprehensive plan for
development was put together.
In 2017 he was encouraged by the Co-owners to engage with IBC as it relates to the
purchase of the property for $28 million.
In 2018 they also wrote objecting to the duration of the proposed tennis club lease and
the inclusion of capital improvements for the tennis club.
In a February 2019 letter, the Co-owners indicated to the Managing Owner that over the
years they had made several requests for the actual rent that a bungalow operator would be
paying.
Since the February 20, 2008 letter the Co-owners have never changed their position that
the plan did not maximize the value of the property. They have never been supportive of the
plan. They have always asked to explore the possibility of adding more residential.
(b)Testimony of Iry Chase
He became involved in the property in late 2006 early 2007. In March 2007 he
remembers a discussion about the master plan. After he and Mr. Feuerstein became involved
they were asking questions about the economics of the Plan. In 2007 they asked for a timeline
and projected milestones as it relates to the development; they were not provided one. He started
asking questions about financial feasibility. He and Mr. Feuerstein were more interested in
getting costs and income before they asked for an appraisal. Within a year of his involvement he
decided he did not want the Managing Owner to obtain the entitlements. In February 2008 the
Co-owners sent a "stop letter." He wanted the Managing Owner to stop seeking entitlements
altogether. He appeared at Planning Commission meetings and City Council meetings in an
attempt to stop the project. They sued the Managing Owner when he refused to stop seeking
entitlements; they tried to get an injunction. He did not want the entitlements obtained.
In the 2014 time frame he went out to see various people and companies as to whether
they might have some interest in the property. Mr. Feurerstein talked with the Lennar Group and
the Olson Company; there was no follow-up from either.
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(c.) Testimony of Elliot Feuerstein
He has been involved with the property almost from the inception. They understood back
in 2002 that the Managing Owner was trying to up-zone the property and was generally
exploring some development opportunities. He was supportive of the up-zoning.
In the early 2000's they were thinking that it would be primarily residential. In about
October 2006 he became aware that some of the units were to be sold. At that time he started
having concerns in that the Managing Owner indicated that the ground rent for the bungalows
would be around $2 million per year. He started wondering how 27 bungalows could generate
$2 million in ground rent per year and how the sale of the Villas could generate $10 million.
When the projected ground rent dropped to $1.284 million he began to lose confidence
and believed the information they were getting was not reliable. In 2007 they were following up
by seeking information, which they did not get. They were trying to get information about a
bungalow operator, because in their mind the bungalow operator was the anchor tenant.
In February 2008 he instructed the Managing Owner to stop. When the 2008 letter was
sent it was not his intention that he would never approve any further work to entitle the property
or that he would not ultimately agree to a sale or lease.
They filed a lawsuit for an injunction in February 2011.
After 2013 he spoke to the Olson Company and Lennar Group about whether they were
interested in the property. Neither demonstrated any interest.
(d.) Discussion
The Managing Owner, suggests these facts support a conclusion that the Co-owners
consented to the NBCC Master Plan development as proposed by the Managing Owner, waived
any opposition thereto or that they are otherwise estopped from not consenting to the
development of the NBCC Master Plan.
It is clear from the above facts that the present Co-owners have not consented to the
NBCC development. They have opposed it since 2008 and in essence have not given an inch in
their opposition. Even the Managing Owner testified that the Co-owners have always been in
opposition and have not consented to the Plan or the development.
To have consent, there must be an "approval of what is done or proposed by another."
(Webster 's Collegiate Dictionary, 10th Ed., 1997) The Co-owners have not approved of the
Managing Owner's plan or the development thereof.
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"Waiver" is also not present. As discussed infra, under the "Agreement Between Real
Property Owners," the co-owners have the unfettered right not to consent to the sale of the
Tennis Property, or portions thereof. They have the further right to withhold their consent to
lease the subject property, so long as the withholding of consent is not objectively unreasonable.
" 'Waiver is the intentional relinquishment of a known right after full knowledge of the
facts' (citation). The burden is on the party claiming a waiver of a right to prove it by clear and
convincing evidence that does not leave the matter to speculation,... The waiver may be either
express, based on the words of the waiving party, or implied, based on conduct indicating an
intent to relinquish the right.' Thus 'California courts will find waiver when a party intentionally
relinquishes a right or when that party's acts are so inconsistent with an intent to enforce the
right as to induce a reasonable belief that such right has been relinquished.' (Citations)" (Old
Republic Insurance Co. v. FSR Brokerage (2000) 80 Cal. App.4th 666, 678.)
As demonstrated by the above facts, at no time did the Co-owners either expressly or by
their conduct intentionally relinquish their right to object to the development of the Managing
Owner's Master Plan. Since the inception of the plan they have voiced their opposition and have
conducted themselves consistent therewith.
"The doctrine of equitable estoppel is founded on concepts of equity and fair dealing. It
provides that a person may not deny the existence of a state of facts if he....led another to believe
a particular circumstance to be true and to rely upon such belief to his detriment. The elements
of the doctrine are that (1) the party to be estopped must be apprised of the facts; (2) he must
intend that his conduct shall be acted upon, or must so act that the party asserting the estoppel
has a right to believe it was so intended; (3) the other party must be ignorant of the true state of
facts; and (4) he must rely upon the conduct to his injury." (Strong v. County of Santa Cruz
(1975) 15 Ca1.3d 720, 724-725)
Here, there are no facts to suggest that the Co-owners acted in such a way so as to lead
the Managing Owner to the impression that they were on-board with the NBCC Master Plan and
the development thereof.
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III. RIGHTS AND OBLIGATIONS UNDER THE OPERATING AGREEMENT
Moving beyond the past conduct of the parties and their predecessors, the issue becomes
what are the rights and obligations of the parties under the March 8, 1994 "Agreement Between
Real Property Owners Balboa Bay Club Racquet Club," and more specifically whether the Co-
owners must consent to the development proposed by the Managing Partner.
(a.) History and Status of the NBCC Master Plan
The Managing Owner testified when they acquired the tennis and golf property it was
zoned recreational open space. They needed to get approval of the City of Newport Beach and
the Coastal Commission for land use change. The city wide vote as to amending the General
Plan was in November of 2006. Thereafter he needed get the project entitled, which
encompassed getting all the approvals from the various governmental agencies and quasi-
governmental agencies.
From 2002 to 2006 he met with many groups to try to persuade them of the merits of the
General Plan Amendment, Zone change and the Master Plan for the property. He got the whole
thing approved by promising many groups various things. When he met with the tennis
members he promised them that the tennis facility would stay and they would get a new
clubhouse and spa.
The Tennis Property was one of many geographical areas addressed in the 2006 General
Plan Amendment. The planned community district text was approved by the City in 2012.
The master plan has three elements: there are 27 bungalows, 5 villas and the tennis
club/spa. The tennis/spa building is an amenity for the bungalows and villas. The entity
operating the fitness facility and spa would be the hotel bungalow tenant. While initially, the
developer of the villas was to pay for the tennis clubhouse the Managing Owner is now hoping to
get the hotel developer of the bungalows to build or pay for the tennis clubhouse. He doesn't
think of the bungalow property as an anchor tenant. He has tried to market all three together
however, only in the context of having the Co-owners sell their entire interest.
By November 2018 he had: the Newport Beach Country Club Planned Community text, a
zone change, site plan approval, state Water Quality Control Board approval, grading plan, storm
drain plan, dry utility plans and street improvement plans, through plan check. They had all the
entitlement approvals necessary to do the "bake-off."
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(b.) Discussion
From the evidence the proposed and entitled development consists of the sale of 5 lots for
the construction of "Villas," the construction of a new Tennis and Spa Club with the reduction of
some tennis courts and the construction of 27 separate "Bungalows" which are to be primarily a
Hotel (although they could be rented on a long term basis). The above uses have been
represented to various governmental entities and marketed by the Managing Owner as a "Master
Plan." Throughout the Arbitration the evidence demonstrated that from a conceptual standpoint,
the development of all three uses are interrelated. The "Bungalows," which will be land leased
by the general partners to a hotel operator, is the primary money maker of the "Master Plan."
The sale of the "Villa" lots is to obtain not only money for the general partners but also a
commitment from the purchaser of the "Villa" lots to construct a new Tennis and Spa Club as
well as construct the infrastructure for the entire "Master Planned" property. Lastly, the Tennis
and Spa Club will be ground leased by the Owners; it is not only to be self-sufficient as a tennis
club and spa, but also as an amenity for the hotel "Bungalow" guests.
With the above understanding of the proposed development I now turn to the rights and
obligations of the parties under the 1994 agreement and more specifically to whether the Co-
owners must consent to the above development.
(c.) Owners' Understanding of the Agreement
The Managing Owner testified that he approached Allan about the tennis and the golf
property. Allan introduced him to Arnold.
Both Allan and he loved ground leases. Golf Realty fund owns a 50% tenant in common
interest in the tennis property. He testified that under the terms of the agreement there must be a
super majority vote to sell the property and there must be majority approval to put in capital
improvements. Under the agreement each owner must consent to any grant of a leasehold
interest. (At another point he testified that only a majority needed to agree as it relates to a lease.)
Under the sale provision section 4B, for an owner to be compelled to sell his interest there must
be a vote of at least 70%.
He bought his interest in the tennis property for investment; the recitals in the OIC
agreement say that the property was acquired partially for investment. He has taken the position
consistently that he has the right to refuse to sell his interest and has consistently told the Co-
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owners such. He concurs with the notion that the Co-owners have the same right not to sell the
villa area, tenths and spa area as well as the bungalow area.
He has not gotten consent from the Co-owners to use ownership funds for the tennis
clubhouse spa area. He has not got written consent to use the proceeds from the sale of the villa
sub-area to construct a tennis clubhouse and spa building. He believes if a ground lessee of the
bungalow area is required to pay money relative to the construction of the tennis spa club, it
would require Co-owners consent.
Iry Chase testified that he thinks it's absolutely reasonable that if the managing owner
does not wish to sell he does not need to sell; it is his decision. It has always been their goal to
have long-term ground leases.
(d) Discussion
"'A contract must be "interpreted as to give effect to the mutual intention of the parties as
it existed at the time of contracting" (Civ. Code, § 1636), and where, as here, the contract is in
writing, "the intention ... is to be ascertained from the writing alone, if possible ...." (Civ.
Code, § 1639.)"' (Roden v. Bergen Brunswig Corp. (2003) 107 Cal.App.4th 620, 625.) The
interpretation of a contract is a question of law. (Parsons v. Bristol Development Co. (1965) 62
Cal.2d 861, 865.) The interpretation must be "'fair and reasonable, not leading to absurd
conclusions.'" (Kashmiri v. Regents of University of California (2007) 156 Cal.App.4th 809,
842.) A contract must be interpreted so as to be "lawful, operative, definite, reasonable, and
capable of being carried into effect, if it can be done without violating the intention of the
parties." (Civ. Code, § 1643.) "The whole of a contract is to be taken together, so as to give
effect to every part, if reasonably practicable, each clause helping to interpret the other." (Id.,
§ 1641.) "A contract may be explained by reference to the . .. matter to which it relates." (Id.,
§ 1647.)
As to the present dispute, the following are among the relevant contract provisions:
Recitals
"A. The Owners desire to own, lease, manage, maintain, refinance, encumber and hold
for investment, as tenants in common, that certain real property comprising approximately 6.099
acres with improvements thereon..."
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"B. The Owners have discussed the co-ownership of the Property...it is in the best
interest of each Owner that the holding of the Property be governed by an agreement which
defines the rights and duties of each Owner in the form of this Agreement."
Provision 1. "Agreement as Tenants in Common. The owners agree to hold title to the
Property as tenants in common to own, manage, maintain, lease, finance, refinance, and/or hold
the Property for investment in accordance with the terms of this Agreement. The Owners may
conduct such other activities with respect to the Property as are related to or compatible with the
ownership of real estate. Subject to the provisions of the Agreement, each Owner retains the
right to deal with his Interest in the Property...as each owner sees fit."
Provision 4, subdivision (b). "Financing, Refinancing, Sale and Leasing. The Managing
Owner shall list the Property for sale and convey or otherwise transfer the Property if such
transaction is approved by seventy percent (70%) or more of the ownership Interests in the
Property...."
Provision 5, subdivision (a)"Limitation of Owners. Each Owner hereby irrevocably
waives any and all rights that such Owner may withdraw from the terms of this Agreement,
maintain an action for the partition of the Property (unless 65% or more of the Interests in the
Property join or consent to such action), or otherwise force a sale of the Property during the term
hereof, except as expressly provided herein."
Here the testimony and evidence support the conclusion that the contracting parties were
sophisticated in the area of real estate investment. From the contract itself, it is clear that the
parties intended for the Managing Owner to be the individual with the most say so. He was
responsible for the day to day activities of the tenancy in common and no major decision such as
"sale" of the property or investment in capital improvements could be made without his
concurrence. The parties also wished to preserve the independence of each owner to deal with
its Interest in the Property as such Owner sees fit, "subject to the [remaining] provisions of the
Agreement." While preserving some independence, Provision 5, subdivision (a) in essence says
that none of the tenants in common can withdraw from the tenancy and no one without the
Managing Owner's concurrence can bring an end to the tenancy by filing a Partition Action.
As a result of these provisions and manifestations of intent by the contracting parties, the
parties find themselves at an impasse — the Managing Owner with 50% interest wants one thing
and the Co-Owners with a combined 50% interest do not want that.
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Co-Owners' counsel suggests that because "each Owner retains the right to deal with his
Interest in the Property...as each owner sees fit;" that by agreement the parties bargained for an
impasse, and it is what it is. Counsel argues that the Co-owners have the unfettered right not to
agree to any proposed development of the Managing Owner's. In support of this Co-Owners
rely primarily on Wolf v. Walt Disney Pictures & Television (2008) 162 Cal. App.4th 1107, and
Third Story Music, Inc., v. Waits (1996) 41 Cal. App.46 798, for the proposition that when "sole
discretion" is contractually vested in an individual and the contract is otherwise supported by
consideration, the exercise of that discretion is contemplated by the parties and courts will not
imply some other term such as good faith or commercial reasonableness, into the Contract.
The Managing Owner submits that based on Kendall v. Ernest Pestana, Inc. (1985) 40
Ca1.3d 488, the implied covenant of good faith and fair dealing must be implied into the contract
and as such the Co-Owners need to have a good faith reason for not agreeing to the Managing
Owner's proposed development. In that the Co-owners allegedly do not have a good faith reason
for not going along with the Managing Owner's proposed development, they should not only be
found in breach of contract, but be forced to move forward with the sale of the "Villas" as a
result of the "Bake-off sale."
I find myself somewhat in the middle of these two opposed views.
Initially, the agreement provides for the owners to "own, manage, maintain, lease,
finance, refinance, and/or hold the Property for investment." This is the purpose of the
agreement. There is no reference to "sale." Second, Provision 4, subdivision (b) is a "forced
sale" provision, not a provision dealing with a voluntary or consensual sale. The provision
provides, "Nile Managing Owner shall list the Property for sale and convey or otherwise transfer
the Property if such transaction is approved by seventy percent (70%) or more of the ownership
Interests in the Property...." (Emphasis Added.) If the provision was intended to deal with a
voluntary or consensual sale, the provision would be written in a manner similar to "the
Managing Owner may not list the Property for sale and convey or otherwise transfer the Property
unless such transaction is approved by seventy percent (70%) or more of the ownership Interests
in the Property..." Or, "the Managing Owner may list the property for sale only if the transaction
is approved by 70% of the owners." As the provision is written it imposes a mandatory duty on
the Managing Owner to sell the property if 70% of the ownership interest wants the property
sold. If the provision was intended to proscribe the ability of the managing owner to sell the
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property, it would have been written using limiting language, such as "may not list" or "may list
only if' the language would be more permissive in nature.
This distinction is important as it relates to the intent of the parties. When the parties
entered into the agreement, they did not evidence an intent to sell the property. The property was
being purchased for investment purposes, or as sometimes referred to in the arbitration as a
"coupon clipper." The only provision as to "sale" is that the managing owner "shall" sell when
70% of the interests force him to do so. As such, when considering whether to imply the
covenant of good faith into the agreement as it relates to the voluntary or consensual "sale" of
the property, one would not do so, because there is no provision in the agreement dealing with
the voluntary "sale" of the property. This is consistent with the intent of the parties to hold the
property for investment.
We then turn to Provision 1, which indicates "subject to the provisions of the Agreement,
each Owner retains the right to deal with his Interest in the Property...as each owner sees fit."
Reading this provision in conjunction with the notion that the property is being held for
investment, and the fact that there is no provision providing for the sale of the real property other
than a forced sale, the provision can be interpreted in no way other than to allow for the
unfettered right of an owner not to consent to a sale. In that the sale of the property is not
provided for other than by way of forced sale, it (the sale) is not "subject to the provisions of the
Agreement," because it is not provided for. In that it is not provided for, then each owner may
do with his interest "as he (she) sees fit, with no restrictions.4 There need be no good faith
reason for not agreeing to sell the property.
Such is not the case however, when dealing with "owning, managing, maintaining,
leasing, financing, refinancing, and/or holding the Property for investment," (referenced in the
"Purpose" of the Agreement and in Provision 1 of the Agreement). An owner's ability to do "as
he sees fit" is modified by and is subject to the provisions of the agreement. In that owning,
managing, maintaining, leasing, financing, refinancing, and/or holding the property are
provisions of the agreement, the owner cannot do "as he sees fit." If he could, then the purpose
4 With such a construction, each individual owner has the unfettered right not to voluntarily consent to a
sale for whatever reason the individual owner has. As such, the Managing Owner has the unfettered right not to
consent to the sale of the property, because he played tennis there as a kid.
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of the contract would be totally destroyed.5 Thus, as to those activities provided for in the
Purpose of the Agreement and in Provision 1, there must be implied into the Agreement, a
promise that each owner will exercise his discretion in good faith.
The above construction is in my mind ascertained from the writing alone and gives effect
to the mutual intention of the parties. It considers the whole of the contract and gives effect to
each provision. Lastly, it is consistent with the matter to which it relates, to hold property for
purposes of investment.
Further, as demonstrated by the testimony of the Managing Owner and Iry Chase, both
individuals testified that they believe each Co-owner has the right not to consent to a sale of the
property. The Managing Owner testified that at the time of the agreement both he and Allen
loved ground leases. And while at one point the Managing Owner did testify that it took a super-
majority to sell the property, at another point he testified that Provision 4 (B) dealt with
compelling an owner to sell his interest.
The above construction is also consistent with Wolf v. Walt Disney Pictures & Television
(2008) 162 Cal. App.4th 1107, Third Story Music, Inc., v. Waits (1996) 41 Cal. App.4`11 798 and
Carma Developers v. Marathon Development California, Inc. (1992) 2 Ca1.4th 343.
In Wolf supra, Disney acquired the rights to Roger Rabbit in exchange for providing
plaintiff a portion of the "Gross Receipts" from Disney's monetization of Roger Rabbit. Disney
thereafter entered into agreements with various entities allowing said entities to "exploit" Roger
Rabbit characters in exchange for the company's agreement to promote the Roger Rabbit
franchise; there was no monetary compensation involved in the agreements. Plaintiff contended,
that such agreements were in violation of the underlying contract between plaintiff and Disney,
in that Disney breached an implied covenant of fair dealing by entering into agreements in which
plaintiff received no financial benefit. In denying plaintiffs claim, the Court relied upon an
express provision of the underlying contract which provided, "[Disney] shall not be under any
obligation to exercise any of the rights granted to Purchaser hereunder; and any and all said
rights may be assigned by [Disney], and/or licenses may be granted by [Disney] with respect
thereto, as [Disney] may see fit." (Wolf, supra, at p. 1121, footnote 7.)
5 For example, the Managing Owner may decide he does not want to do anything with the property and it
becomes fallow.
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"It has long been recognized in California every contract contains an implied covenant of
good faith and fair dealing that "neither party will do anything which will injure the right of the
other to receive the benefits of the agreement.' (citations) The covenant is 'read into contracts
`in order to protect the express covenants or promises of the contract.
"However, the implied covenant will only be recognized to further the contract's
purpose; it will not be read into a contract to prohibit a party from doing that which is expressly
permitted by the agreement itself' (Id, at p. 1120)
"[I]f the express purpose of the contract is to grant unfettered discretion, and the contract
is otherwise supported by adequate consideration, then the conduct is, by definition, within the
reasonable expectation of the parties and 'can never violate an implied covenant of good faith
and fair dealing." (Citation.) (Id, at p. 1121)6
Here, the purpose of the Contract is set forth in Recital A; "The Owners desire to own,
lease, manage, maintain, refinance, encumber and hold for investment... [the property.]"
Nothing in this Recital or Provision 1 references the "selling" of the property.
Thus, each tenant in common can deal with their respective interests in the property as
they see fit, relative to the sale of the property. The agreement gives them unfettered discretion.
This unfettered discretion however does not apply when dealing with issues of leasing,
managing, maintaining refinancing, encumbering and holding for investment. The parties
expressly agreed to do these certain things with the property. Thus the implied covenant will be
read into the agreement to protect these express promises. Provision 1, even provides that the
discretion to do as one sees fit, is subject to the provisions of the agreement; the provisions of the
agreement provide for the leasing of the property, thus the parties contemplated that unfettered
discretion would not apply in such an instance.
As stated in Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, "The covenant of
good faith and fair dealing was developed in the contract arena and is aimed at making effective
the agreement's promises." (at p. 683) " [T]he courts employ the good faith doctrine to
effectuate the intentions of the parties, or to protect their reasonable expectations.' " (at p. 684)
6 " 'The general rule regarding the covenant of good faith is plainly subject to the exception that the
parties may, by express provisions of the contract, grant the right to engage in the very acts and conduct which
would otherwise have been forbidden by an implied covenant of good faith and fair dealing. This is in accord with
the general principle that, in interpreting a contract 'an implication should not be made when the contrary is
indicated in clear and express words.' (citation)" (Third Story Music, Inc. it Waits (1995) 41 Cal. App.4'h 798, 803.)
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As indicated in Carma Developers, supra, at p. 373, "It is universally recognized the scope of
conduct prohibited by the covenant of good faith is circumscribed by the purposes and express
terms of the contract....[T]he implied covenant of good faith is read into contracts 'in order to
protect the express covenants or promises of the contract,.."(Citation)" Here, one of the express
promises of the contract and a purpose for the contract is to hold the property to lease. As such
the implied covenant of good faith is implied into the agreement, relative to this function. (See,
Foley, supra, at p. 684, "As to the scope of the covenant, "the precise nature and extent of the
duty imposed by such an implied promise will depend on the contractual purpose.' (citation)"
The nature of the implied covenant, is that in exercising discretion, the discretion must
not be exercised with "subjective faith or objective unreasonableness." (See, Wolf, supra, at p.
1124.) In a commercial setting the objective test is the more appropriate standard to be applied.
(Storek & Storek, Inc. v. Citicorp (2002) 100 Cal. App.4th 44)
Thus, in looking at the present facts, because the Managing Owner's present proposal
involves the sale of the Villa sub-area to Sears/Patterson, the co-owners have the unfettered right
not to consent to the sale. Also, the co-owners' refusal to agree with the Managing Owner's
overall development and lease of the bungalow and the tennis club sub-areas, is not "objectively
unreasonable."
IV. ALTERNATIVES AND GOOD FAITH REASONS
(a) Managing Owner's Testimony
As a 50% owner he believes he has a duty to be reasonable and fair to the Co-owners. As
managing owner it is his understanding that the Co-owners expect him to consider potential uses
of the tennis property. He should be looking for alternatives that make good business sense. In
considering alternatives that make good business sense, he would want to have meaningful
information about the potential return on investment.
He believes getting the entitlements and PC text added enormous value to the property.
There was never a goal to sell the property once entitlements were obtained. He believes the
tennis property is a unique property and has good income producing potential.
The largest component of the expected future revenue is the bungalow area. The
bungalows are important to maximize the income. It would be his goal to have the bungalow
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area as a coupon clipper. He thinks he can get the bungalow people to pay for the clubhouse and
spa. The tennis clubhouse and spa is an amenity for the bungalows. The bungalow tenant would
be responsible for cost overruns of the tennis clubhouse. He believes he can obtain $50,000 a
month in ground rent from a hotel developer and/or operator.
Two of his reasons for not changing the Master Plan is that he made certain promises to
stakeholders relative to obtaining entitlements and he wants to avoid infighting among his heirs
and therefore wants a coupon clipper.
A long-term ground lease could address his family reasons. Personal reasons could
potentially be addressed by a long-term ground lease. A long-term ground lease could potentially
address his business concerns as well.
In 2016 he told the Co-owners he intended to retain WD Land for a bake-off sale. In 2016
he started the drop box and started dealing with Tom Doyle. There was a drop box in 2018 for
the bake-off. He has not found a builder willing to build five custom homes. The Sears letter of
intent is the first written offer provided to the Co-owners. The only other offer was from Nexus,
a Texas development company; they wanted to buy out the Co-owners' interest. Nexus is a hotel
developer and it wanted to develop the bungalows, but also wanted an ownership interest.
Throughout the process the Co-owners have wanted more residential both in the area of
the bungalows as well as where the tennis court area. Between 2008 and 2011 the Co-owners
never gave him alternative plans. In 2010 he received a letter from the Co-owners attorney
indicating the Co-owners felt that the Managing Owner should do something other than the
NBCC master plan. The Co-owners have indicated that they do not believe the bungalows are
feasible.
The Coastal Commission made it clear that an all residential use was not going to be
approved. For more residential they would have to start the general plan amendment process all
over. In 2014 he believed that groups would oppose an effort to change to residential density on
the tennis club property; that remains his belief as of today. Moving to all residential would not
be feasible due to exactions and the fact that it would take many years and a lot of money for
purposes of attempting to get approval. All residential is not feasible. (The Jones' appraisal of
$42.5 million does not take into account exaction fees.) It would be a mistake at this time to
change things around. In the past the Co-owners did not understand the economics of the master
plan and thought it was unfeasible.
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(b.) Iry Chase's Testimony
There are three elements to the project and they are all interrelated; he wants to see the
financials for all three elements of the property at one time. He wants to know how the parts of
the project interrelate. He will not approve the sale of the villas unless the bungalow's finances
and development pencil out. He will not approve the lease to Mr. Abdali unless the other parts
work; he wants to look at the economics of the entire project. He has not been presented with
offers for all three elements globally. The most important would be a letter of intent from a
bungalow tenant and to globally see how everything fits together in order to evaluate it, as
opposed to piecemeal approach. All of the parts are interrelated.
He has refused to allow the sale of the villas. In terms of the sale there needs more
information about the purchaser. He wants an independent certified public accountant for
purposes of determining the purchaser's financial credibility. He has to be convinced that they
have the financial wherewithal to purchase the property, cover shortfalls and be responsible for
everything getting done.
He wants more value for his investment; putting more residential property would be one
element of that. He believes the entitlement process for more residential would take probably one
year. The opposition in the community would be nonexistent. In February 2019 they indicated
to the Managing Owner that a project with more residential units will create more value for all of
the owners.
He believes the initial zone change raised the value but the master plan has lowered the
value because it is too specific and too complicated for developers to come in and develop. He
believes the process has been backwards; that's why the property is worthless.
When he looked at the 2007 Jones' appraisal and compared all of the hypothetical uses
there were great differences. After the appraisal they asked the Managing Owner to explore
adding more residential; he responded by indicating that no other project could be approved.
He did not deal with Abdali and Sears after November of 2018 because of the threat of
being sued for interference.
In the Jones appraisal the Managing Owner's plan was about 25% of the value of other
potential uses.
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(a) Elliot Feuerstein Testimony
This is a prime location in Newport Beach and there should be a lot of interest in
building. The price could be a lot higher if a builder is not locked into a plan. To properly
evaluate the bungalows they need a letter to from an actual operator.
In the vein of "alternatives and good faith reasons," I chose to somewhat segregate
testimony relative to IBC, the Tennis facility and what I characterize as "Changing Landscape."
Each have a particular relevance in determining whether the Co-owners' refusal to consent to the
Managing Owner's proposed development, is objectively unreasonable.
(d.) IBC
(I) Managing Owner's Testimony
He has told Pacific Hospitality over the years that Golf Realty has no interest in selling its
interest; it has been his consistent position throughout. He has indicated to the Co-owners that
Pacific Hospitality was not interested in being a bungalow operator but would be interested in
buying Co-owners 50% interest.
Back in 2007 he proposed a lease to IBC, which was then under different ownership. At
that time they were not interested in operating the bungalows.
In May of 2017 he received a letter of intent from IBC expressing an interest in buying
the property for $28 million. He met with IBC about buying out the Co-owners interest. IBC
wanted control if they were to do so; he made it clear that as Managing Owner he would have
control from a business point of view.
In November 2018 he contacted IBC at the request of the Co-owners; in this general time
frame the Co-owners shared with him that IBC was willing to negotiate a long-term lease which
would include the addition of 25 condominiums.
He has made no effort to inquire of IBC as it relates to a long-term ground lease. He
thought it would be counterproductive because he has promised Mr. Abdali that he could operate
the tennis club. Another reason is that he made promises to the tennis club members that the
tennis club would be saved. In a January 2019 letter it was indicated by IBC that they did not
have an interest in piecemeal participation in the tennis property. They further indicated that as
experienced hotel owners and operators they did not believe the bungalow hotel pro forma made
sense.
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IBC has sort of indicated to him that the operator of the bungalows could use the
restaurant facilities at the golf club. IBC would be a logical operator for the bungalows. IBC
wants to reduce the tennis courts to free land for use as apartments.
(2) In, Chase Testimony
As it relates to the IBC offer the Managing Owner objected IBC's first right of refusal
and an extension of the ground lease on the country club. The Co-owners told the Managing
Owner that IBC would D-Link those two requests. The Managing Owner's response was that
there was no reason to contact IBC because no other project could be approved other than his.
He also said he had made promises to various tennis club stakeholders and the tennis club had to
be part of the project.
(3) Elliot Feuerstein Testimony
After reaching out to Lennar the Co-owners contacted IBC because they were at an
impasse with the Managing Owner and thought it may be a way out of the problem. In May of
2017 he believed IBC may have been interested in a long term ground lease and he asked the
Managing Owner to explore it. He understands that IBC is still interested in ground leasing the
property. IBC has not participated further because of the letter from Paul George. The Managing
Owner has said that Pacific Hospitality would be a logical operator.
(e) Tennis Club and Spa
(1) Managing Owner Testimony
The tennis facility is about 40 years old and has 24 courts. In 2007 IBC leased and
operated the tenths club; their lease was to expire in a few years. Sean Abdali is the principal of
Grand Slam Tennis. He took over the tenths facility sometime in 2014; he took possession
without a lease and is still operating the tennis club without a lease. He pays $7,000 a month in
rent. Grand Slam wanted a 20 year lease and agreed to pay the property taxes.
The Managing Owner has indicated to Mr. Abdali that he could operate the club for 20
to 25 years. Recently, the Managing Owner and Mr. Abdali have signed a 12 year lease. The
lease that has been signed by the Managing Owner and Mr. Abdali indicates that the landlord
will use reasonable commercial efforts to cause the planned improvements of the new tennis
club. All of the commitments have been without the Co-owners' consent. The Co-owners have
not signed the lease. They have indicated that they will not consent to the piecemeal division
and sale of the property. He made a commitment that he was going to save the tennis club.
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Part of the personal reasons for him not being interested in selling his fee interest, is that
he has fond memories of learning to play tennis on those courts. He has indicated to the Co-
owners that their desire to sell the tennis courts is a non-starter.
(2) In, Chase Testimony
He's aware that Grand Slam Tennis is willing to enter into a lease and pay the property
taxes. The proposed lease is at a base rent of $12,000 per month. He has refused to enter into a
lease with Grand Slam Tennis. He has refused to execute a lease that will allow Grand Slam to
lease a newly constructed facility. The Managing Owner, in response to the Co-owners'
February 2019 inquiries, did not provide a comprehensive verifiable cost estimate for the tennis
clubhouse spa facility. They were willing to sign a tennis club lease at the end of 2018 with the
changes and markups they made. The Managing Owner would not agree to sign the lease as
marked up. They wanted flexibility as it relates to a short-term lease so that the rest of the
property was not limited.
(3) Elliot Feuerstein Testimony
They did not sign the lease with Grand Slam tennis because they did not want to commit
to the three-phase development project until they understood how it would all work together. He
felt back in 2016 that going along with tennis facility was a segue into the master plan. In
addition the proposed lease indicated that the landlord shall use its best efforts to cause
improvements in the tennis spa facility.
69 Changing Landscape
(1) Managing Owner's Testimony
In November of 2006 he thought there would be $2,400,000 in annual land rent from the
bungalows and the tennis club spa. In February 2007 he indicated that the annual rent would be
$1,284,000. It's possible he told the Co-owners that the bungalow projections were a moving
target. Later the estimates for the ground rent for the bungalows moved substantially lower.
In 2007 he indicated or suggested the sale of the villa sub-area for $10 million. The
purchaser of the villas was also to put in site improvements for the bungalow sub-area and build
out the tennis club spa facility. The estimated cost of building the tennis clubhouse and spa
building was $2 million. In the summer of 2016 the cost of constructing the shell for the tennis
clubhouse and building was $2.6 million. He believes now the building cost for the tennis
clubhouse and spa would be about $3 million.
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In 2016 the minimum bid price for the villas with a requirement to build tennis spa
building was $6 million.
Sears letter of intent initially expressed an amount for the villas as $6 million with an
additional $1 million placed in escrow toward the cost of constructing among other things the
new clubhouse and spa building. Subsequently the proposed purchasers withdrew the $1 million
deposit into escrow and offered to transfer lot 5 back to the seller. Given this it is his plan to
include lot five in the ground lease to the hotel developer along with the bungalow subarea.
(2) In/ Chase Testimony
In the early years the ground rent for the bungalow tenant was going to be $2 million and
the sale of the villas $10 million. In 2007 the projected ground rent for the bungalow was
reduced from $2 million per year to $1.28 million. He understands the proposed lease for the
bungalows at the present time is $600,000 a year. Originally the buyer of villas was to place
money into escrow to build the tennis clubhouse spa building.
(3) Elliot Feuerstein Testimony
In September 2016 the Managing Owner indicated that they were going to get a
minimum bid of $6 million for the villas with a requirement that the purchaser build the tennis
spa building. He thought $6 million was considerably less than $10 million. Further, it seemed
to him that if the homebuilder was paying for the tennis spa building they were going to be paid
less for the land. As for the sale of the villas and the construction of the tennis spa building it
went from a $2.5 million in escrow, to a $1 million set aside, to no set aside but giving back a
villa lot.
(g) Discussion
By way of the pleadings and the issues as framed by the parties, I am to construe the
Agreement and determine under the present facts whether the Co-owners' refusal to consent to
the proposed lease of the bungalow sub-area and the lease of the tennis facility is objectively
unreasonable.
In viewing the issue of objective unreasonableness, the NBCC Master Plan (perhaps
more a specific plan) has been presented to all as "a package." There is a clear inter-relationship
and perhaps inter-dependence between the bungalows, the tennis/spa facility and the villas. As
originally conceived, the villas would provide the basic infra-structure for the development as
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well as the construction of a new tennis spa facility. From the evidence, the bungalows were and
are perceived to be the long-term money maker, anchor or primary "coupon clipper."
Relative to the bungalows, there has not been a serious overture from any hotel developer
or operator. While IBC has perhaps expressed some interest, they appear to be unwilling to
move forward under the conditions suggested by the Managing Owner. Further, over the years
the anticipated ground rent from the bungalows has gone from over an annual $2 million to
$1.24 million to $600,000. These facts in of themselves, are sufficient to conclude that the Co-
owners reticence to move forward is not objectively unreasonable. And while not discussed in
the factual portion of this opinion, it seemed that the underpinning of Mr. Baltin's testimony, was
somewhat problematic. The comparable boutique hotels used by him, all seemed to be full-
service facilities with dining and a bar. Here, there was no testimony that clientele of the
bungalows had access to a full service dining area or bar. There further was no evidence as to
how the bungalow clientele would access the tennis club/spa should they be under separate
operating agreements. In sum, given the fact that the bungalow feature of the NBCC Master
Plan is as unsettled as it is, the Co-owners refusal to move forward with the Plan and its
development is not objectively unreasonable.
As for the tennis club/spa, from the evidence it is not only to be self-sufficient but also
serve as an amenity for the bungalows. The Co-owners' concern relative to a long-term lease
with Mr. Abdali, without consideration for how the facility will interface with a yet unknown
hotel operator, cannot be viewed as objectively unreasonable. Further, the commitment in the
proposed lease to a new tennis club structure without construction funding, appears somewhat
beyond the expectation of the parties and the purpose of the tenancy in common. (The Managing
Owner indicated that the bungalow developer or operator would pay for the construction.)
As earlier discussed, the Co-owners' refusal to move forward with the sale of the villas
does not need to be rationalized under the concept of good faith. They have the unfettered right
to refuse to sell any portion of the property. This aside however, the initial projections for the
sale of the villa lots was $10 million. It recent years the projection has been $6 million with the
purchaser of the villa lots contributing substantial funds for the construction of the new
tennis/spa facility. In Mr. Sears initial offer of $6 million, he was willing to deposit into escrow
an additional $1 million for the construction of the facility. More recently, he has withdrawn that
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offer, and indicated that he would deed-back lot 5 to the ownership, which the Managing Owner
expects would become part of the bungalow deal.
Without the funding for the tennis club/spa being provided by way of the bungalow
operator, in conjunction with the long-term lease to Mr. Abdali with a quasi-commitment to
upgrade the tennis facility at the expense of a bungalow operator who is presently unknown,
there exists reasons which are not objectively unreasonable, for the Co-owners to refuse to move
forward with development of the NBCC Master Plan.
V. ATTORNEYS' FEES AND COSTS
Co-owners were the prevailing party. In the defense of this matter they incurred and paid
substantial attorneys' fees and costs.? By way of Motion, they seek reimbursement for
$2,230,384.41 in attorneys' fees and $315,602.24 in costs.
The Operating Agreement provides, "Section 27. Should any dispute arise between the
parties hereto or their legal representatives, successors or assigns concerning any provision of
this Agreement or the rights and duties of any person in relation thereto, the party prevailing in
such dispute shall be entitled, in addition to such other relief that may be granted, to reasonable
attorneys fees and legal costs in connection with such dispute."
Here, there is no dispute that the Co-owners are entitled to attorneys' fees and legal costs.
As variously set forth in PLMC Group v. Drexler (2000) 22 Ca1.4th 1084, 1094-1096,
"Reasonable attorney's fees shall be fixed by the court. This requirement reflects the legislative
purpose to establish uniform treatment of fee recoveries in actions on contracts containing
attorney fee provisions. (Citation) [The amount to be awarded in attorney's fees is left to the
sound discretion of the trial court.].) As we have explained: The experienced trial judge is the
best judge of the value of professional services rendered in his court. (Citation) The trial court
may make its own determination of the value of the services contrary to, or without the necessity
for, expert testimony. (Citation)
"The fee setting inquiry in California ordinarily begins with the "lodestar." i.e., the
number of hours reasonably expended multiplied by the reasonable hourly rate. California courts
7 Co-owners also maintained a Counter Claim for Declaratory Relief.
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have consistently held that a computation of time spent on a case and the reasonable value of that
time is fundamental to a determination of an appropriate attorneys' fee award. (Citation)
"The reasonable hourly rate is that prevailing in the community for similar work.
(Citation) The lodestar figure may then be adjusted, based on consideration of factors specific to
the case, in order to fix the fee at the fair market value for the legal services provided. (Citation.)
"The trial court makes its determination after consideration of a number of factors,
including the nature of the litigation, its difficulty, the amount involved, the skill required in its
handling, the skill employed, the attention given, the success or failure, and other circumstances
in the case. (Citation)-8
The necessity for the litigation is also a factor to be considered. (EnPalm LLC v. Teiler
Family Trust (2008) 162 Cal. App.4th 770, 774)
I would first like to discuss the "necessity" for the litigation. After the Fromholtz
decision there continued to be some pushback by the Co-owners including the "2016 Stop
Letter." There was however no evidence of active conduct by the Co-owners' with any
governmental entity to interfere with the entitlement process.
The claim filed by the Managing Owner in the present Arbitration sought damages for
interference as well as, or in the alternative, damages for lost profits for the Co-owners' refusal
to go along with the Managing Owner's project. The basic position taken by the Managing
Owner by way of pleading and moving forward was that the Fromholtz Award gave the
Managing owner full authority to entitle and commercialize the subject property accordingly.
In June of 2018, I issued a Ruling as to the Collateral Estoppel/Res Judicata effect of the
Fromholtz Award. As stated, "[Were, what was litigated, determined and necessarily decided in
the prior arbitration, was that by way of acquiescence, and/or estoppel the Co-owners consented
to the processing of development plans and land use changes up through and including the
obtaining of entitlements. The issue of co-owners consenting to any specific plan and/or sale of
the property or portions thereof was not litigated and not necessarily decided."
In my mind, that Ruling should have caused the Managing owner to press either the
"pause" or "stop" button as to his efforts to claim that the Fromholtz decision encompassed a
finding that the Co-owners consented to a specific plan and that he had the right to
8 The preceding is a compilation of direct quotes found at pages 1094-1095 of the PLMC Opinion.
Internal quotations and citations have been omitted.
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commercialize that plan. It was a Ruling from which the Managing owner should rightfully have
stepped back, and questioned exactly where he was going with the present Arbitration.
Instead, the Managing Owner continued forward. He argued that the present Co-owners
had acquiesced or were estopped from not consenting to the specific plan and the
commercialization thereof, or in the alternative were not demonstrating good faith in their refusal
to consent to the plan and commercialization thereof, and as such was entitled to damages.
As to the issue of acquiescence and/or estoppel, the evidence was overwhelming that the
Co-owners did not acquiesce to the overall plan. Mr. O'Hill even testified that since a February
20, 2008 letter, the Co-owners have never changed their position that the plan did not maximize
the value of the property and they have never been supportive of the plan. This state of the facts
was well within the knowledge of the Managing Owner in the mid-2018 time frame.
And, as to the issue of the Co-owners withholding their consent to sell as not being in
good faith, the "Interim Award's" finding on that issue was strongly suggested in the March
2018 ruling on the Motion to Bifurcate wherein I indicated, "Based on the above interpretation of
Provision 4 (b), the implied covenant of good faith and fair dealing and/or commercial
reasonableness relative to Co-owners' refusal to sell the property would not be implied into the
contract in derogation of the 70% ownership threshold."9
As such, there were very clear indications in March and June of 2018 of where this was
going on the two dispositive legal issues. A very large percentage of all of the attorney's fees
and costs were incurred thereafter.19
Lodestar
I would first like to address the hourly rates of Mr. Gonzales and Mr. Yoder. Mr.
Gonzales' hourly rate was $475 an hour and Mr. Yoder's approximately $1,060 an hour. Both
attorneys declared that the fees are reasonable for the community, given their legal knowledge,
experience and training. While their declarations may or may not have conflated the
considerations of a reasonable hourly rate in the community with the additional considerations
9 The decision did indicate that the Ruling was not law of the case. Additionally, the Interim Award dealt
with the issue of the interrelationship between the consent to sell and good faith in a slightly different manner,
however with the exact same resolution. It has been relatively clear from the beginning that the sale of the Villas
was integral to the building of the tennis club and the provision of infrastructure for the bungalows. As early as
March of 2018, resolution of that specific issue appeared to be going contrary to the Managing Owner's position.
I° While the above discussion does not relate directly to the award of attorneys' fees, it does in many ways
help explain the number of hours expended by Co-owners' counsel.
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including their experience and expertise, I have absolutely no problem with their hourly rates.
Their advocacy was excellent. Throughout the proceeding, counsel were very well prepared on
each of the legal issues presented. The written law and motion was concise, to the point, and
well put together. Their preparation for the examination of witnesses was apparent. The
examination of witnesses, including the Managing Owner and Mr. Baltin, was excellent. I have
been involved in the legal field for a number of years, and over the course of this matter I
observed, frankly from both sides, some of the strongest advocacy I have seen.
I have reviewed the Declarations of Kim Karelis in detail numerous times. I simply find
his analysis unavailing. It truly can be summed up with one statement: "He did not participate
in the proceedings and did not observe what I observed."
His basic opinions are found at pages 11, 12 and 14 of his Declaration. Using the 2018
Real Rate Report data he characterizes, a very broad range of subject matters, including Real
Estate -Non-Litigation, Real Estate Commercial Litigation and Real Estate: Land
Use/Zoning/Restrictive Covenants as the barometer for Attorneys Fees; he thereafter concludes
at page 12, lines 21 — 23, "[g] iving counsel the benefit of the doubt, and in consideration of the
fact that the word 'zoning' appears quite frequently in their bills, 1 believe the higher rates for
this latter category are appropriate." (Emphasis Added.) At page 15, after considering the size of
O'Melveny & Meyers, he then opines that a reasonable hourly fee for Mr. Yoder is $663 an
hour.
First, the case had little to do with zoning. The issue of zoning was relevant to the extent
that Mr. O'Hill testified that given the sensitivity of the geographical area, it will be extremely
difficult if not impossible to acquire a more intensive land use. Second, while I understand that
firm size may be relevant to what firm's charge, in my mind it has little relevance in terms of the
reasonable value of an attorney's services rendered. Further, I would think it extremely difficult
to opine as Mr. Karelis did, that Mr. Yoder should bill for his services consistent with the Third
Quartile (the data point being 75%) and that Mr. Gonzalez should bill at the "median rate of
attorneys similarly situated}
I now look to the time billed in the handling of this matter.
II As to Mr Yoder's hourly rate, a Declaration from a member of the American College of Trial Lawyers
might have been helpful.
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'The trial court did not abuse its discretion in accepting defense counsel's computation
of attorney hours as hours reasonably spent working on the case. It is well established that
`California courts do not require detailed time records, and trial courts have discretion to award
fees based on declarations of counsel describing the work they have done and the court's own
view of the number of hours reasonably spent.' [Citations.]
"Because time records are not required under California law ..., there is no required level
of detail that counsel must achieve. See, PLMC Group, supra, ['We do not want 'a [trial] court,
in setting an attorney's fees, [to] become enmeshed in a meticulous analysis of every detailed
facet of the professional representation. It ... is not our intention that the inquiry into the
adequacy of the fee assume massive proportions, perhaps dwarfing the case in chief.'
(Citations)" See, e.g., ... Jaramillo v. County of Orange (2011) 200 Cal. App.4th 811, 830 (noting
that records included very general descriptions, eg., 'trial prep,"TIC-
Cliene); (Citation; [declaration stating time spent on various activities])'. (Citation)" (Seyers
Properties III, Inc. v. Rankin (2014) 226 Cal. App.4th 691, 698-699)
Here, the billing invoices were provided to Respondent. Mr. Karelis takes exception to
the billing under the overall umbrella that the party seeking attorney's fees from a non-client has
a heightened duty to provide by clear and convincing evidence detailed records of time and
services. For this he relies on Hensley v. Eckerhart (1983) 461 U.S. 424. I believe the case is
inapposite. First, I have found no California authority indicating that the party seeking attorneys'
fees under the provisions of a contract, has a heightened duty to which the clear and convincing
evidence standard applies. Second, Hensley deals with a fee shifting statute. (42 U.S.C. Section
1988.) Here we are not dealing with a fee shifting statute.
In the present case, the hours were charged to the clients (Co-owners) and according to
the supporting Declarations, the bills have been paid by the clients. As acknowledged in Mr.
Karelis' Declaration, Hensley provides, "A claim for legal services presented by the prevailing
party to the losing party pursuant to Section 1988 presents quite a different situation from a bill
that a lawyer presents to his own client. In the latter case, the attorney and client have
presumably built up a relationship of mutual trust and respect; the client has confidence that his
lawyer has exercised the appropriate 'billing judgment,' and unless challenged by the client, the
billing does not need the kind of extensive documentation necessary for a payment under Section
1988. The statute requires the losing party in a civil rights action to bear the cost of his
30
Zoning Administrator - December 16, 2021 Item No. 12b Additional Materials Received Tennis Clubhouse Grill Minor Use Permit (PA2021-210)
adversary's attorney and there is, of course, no relationship of trust and confidence between the
adverse parties." (id. 440-441) (Emphasis Added.)
The present bills were sent by Respondents' counsel to Respondents in a relationship of
trust and confidence. The bills sought payment from a client for counsels' time on an hourly
basis. I am sure there existed an expectation that the bills would be paid; and I am relatively sure
there were no assurances to the Co-owners that they would prevail, or that if they did not, the
attorneys would refund the money paid. And, the bills have in fact been paid. Hensley, supra,
has absolutely zero applicability except perhaps in favor of Respondents by negative implication.
An attorney owes a duty of honesty and loyalty to his or her client. The attorney has an
obligation to bill his or her client honestly, with the utmost scrutiny and accountability. It is
within this context that the present attorneys' fees were accrued, billed and paid.
Mr. Karelis' Declaration then identifies six areas in which the invoices should be cut,
including but not limited to: block billing, excessively billed work, vague descriptions and
duplicative work. I have looked at many of the descriptions that are characterized as vague and
do not find them so. Mr. Karelis then, on many of the categories randomly selects a percentage
number by which the total billings should be reduced. For example, on invoices which he
believed were excessive, he reduced them by 50%. There is no explanation as to a methodology
in arriving at 50% as opposed to 90% or 10%.I2
In the final analysis, I do not find Mr. Karelis' opinions, of any great assistance.
Costs
"Contractual arbitration allows the parties to an arbitration agreement to define the
powers of the arbitrator, as opposed to judicial arbitration in which the arbitrator's powers are
defined by operation of law. Contractual arbitration proceedings may also be regulated by
the arbitration rules, by the parties' contract, and/or by other provisions of law regulating such
nonjudicial arbitration.
12 Similar to Mr. Karelis, I can view some of the hours billed and think the allotment high. For example,
the amount of time devoted to picking an arbitrator seems high. However, when considering the significance of the
case, I can well see spending many hours inquiring in the legal community as to others' experiences with any given
prospective arbitrator. As to those prospective arbitrators who have published and unpublished Opinions, viewing
said Opinions would not only be permissible, but a prudent expenditure of time. Further, as practicing lawyers, we
all know that whatever legal task is at hand, it typically takes markedly more time to complete than we think it
should. In the present matter there was a voluminous pre-arbitration record. To summarize, synthesize, and
cogently present and use that record takes a great deal of time. All of the work-product of Respondents' counsel
was right on the mark; to have it be so, requires endless hours of preparation.
31
Zoning Administrator - December 16, 2021 Item No. 12b Additional Materials Received Tennis Clubhouse Grill Minor Use Permit (PA2021-210)
"Because contractual arbitration is a matter of contract, the parties to
an arbitration agreement are free to delineate the governing procedure." (Century City Medical
Plaza v. Sperling, Isaacs & Eisenberg (2001) 86 Cal. App.4th 865, 875.)
As referenced supra, Section 27 provides, "Should any dispute arise between the parties
hereto or their legal representatives, successors or assigns concerning any provision of this
Agreement or the rights and duties of any person in relation thereto, the party prevailing in such
dispute shall be entitled, in addition to such other relief that may be granted, to reasonable
attorneys fees and legal costs in connection with such dispute." (Emphasis Added.)
The provision as to "legal costs," is clearly ambiguous. It does not say "costs as allowed
by law," nor does it simply say "costs." In that the provision uses the word "legal," I believe the
better interpretation is that the parties intended to allow costs as provided and allowed by law. I
will therefore award costs pursuant to Code of Civil Procedure, Section 1033.5.
Total Reimbursement to Co-owners
After reviewing the billings and the Declarations submitted in support of and in
opposition to the Award of Attorneys' Fees and Costs, Co-owners are entitled to recover
attorneys' fees in the amount Of $2,157,461.05. Pursuant to Code of Civil Procedure, Section
1033.5, costs are awarded in the amount of $165,563.97.
VI. DISPOSITION
1. Each of Claimant's (Managing Owner's) prayers for Declaratory Judgment are denied.
2. As for Respondents' (Co-owners') prayers for Declaratory Judgment, the Judgment is as
follows;
(a) Co-owners have not already consented under the OIC Agreement (or otherwise) to
the sale, lease or improvement of the Tennis Property as part of 0 Hill's Master Plan, and
in particular, to the Sears/Patterson Offer.
(b) Co-owners are not estopped from withholding their consent under the OIC
Agreement (or otherwise) to the sale, lease or improvement of the Tenths Property as part
of 0 Hill's Master Plan, and in particular, to the Sears/Patterson Offer.
32
Zoning Administrator - December 16, 2021 Item No. 12b Additional Materials Received Tennis Clubhouse Grill Minor Use Permit (PA2021-210)
(c) Neither Co-owners nor the Managing Owner have the duty to consent to a sale of the
Tennis Property or portions thereof. Under the 1994 "Agreement Between Real Property
Owners," any owner has the unfettered right to refuse for any reason, to voluntarily sell
(as opposed to a forced sale as provided for in Provision 4 (b) of the agreement) the
Tennis Property or any portion thereof
(d) The Co-owners have no duty to consent to the Sears/Patterson offer.
(d) Relative to the leasing of the Tennis Property or portions thereof, no owner may
refuse to lease said property or portions thereof for an objectively unreasonable reason.
(e) The Co-owners' present refusal to consent to the leasing and construction of
improvements on the Tennis Property and/or portions thereof, is not objectively
unreasonable, and as such, the Co-owners do not presently have a duty to consent under
the OIC Agreement to the development of 0 Hill's Master Plan.
3. Respondents are awarded $2,157,461.05 for reimbursement of attorneys' fees.
4. Pursuant to Code of Civil Procedure, Respondents are awarded $165,563.97 in costs.
Dated: April 8, 2020 /s/ Jeffrey King
Hon. Jeffrey King (Ret.)
Arbitrator
33
Zoning Administrator - December 16, 2021 Item No. 12b Additional Materials Received Tennis Clubhouse Grill Minor Use Permit (PA2021-210)
PROOF OF SERVICE BY E-Mail
Re: Golf Realty Fund, a California Limited Partnership vs. Mesa Shopping Center-East LLC, a Limited
Liability Company, et al.
Reference No. 1200053406
I, Steven McChristy, not a party to the within action, hereby declare that on April 09, 2020, I served the
attached Final Award on the parties in the within action by electronic mail at Sherman Oaks, CALIFORNIA,
addressed as follows:
Paul B. George Esq.
Lane Powell PC
601 SW Second Ave.
Suite 2100
Portland, OR 97204-3158
Phone: 503-778-2100
georgep@lanepowell.com
Parties Represented:
Golf Realty Fund LP
Michael G. Yoder Esq.
O'Melveny & Myers LLP
610 Newport Center Dr.
Suite 1700
Newport Beach, CA 92660
Phone: 949-823-6900
myoder@omm.com
Parties Represented:
Fainbarg Trust Dated April 19, 1982
Mesa Shopping Center-East, LLC
Mira Mesa Shopping Center, LLC
Jacob Gonzales Esq.
Weintraub Tobin
23 Corporate Plaza Dr.
Suite 200
Newport Beach, CA 92660
Phone: 949-760-0204
jgonzales@weintraub.com
Parties Represented:
Fainbarg Trust Dated April 19, 1982
Mesa Shopping Center-East, LLC
Mira Mesa Shopping Center, LLC
Lauren A. Deeb Esq.
Nelson Mullins
19191 S Vermont Ave
Torrance, CA 90502
Phone: 424-221-7400
lauren.deeb@nelsonmullins.com
Parties Represented:
Golf Realty Fund LP
I declare under penalty of perjury the foregoing to be true and correct. Executed at Sherman Oaks,
CALIFORNIA on April 09, 2020.
Att.tia inc.rik/Cutt-
Steven McChristy
JAMS
SMcChristy@jamsadr.com
Zoning Administrator - December 16, 2021 Item No. 12b Additional Materials Received Tennis Clubhouse Grill Minor Use Permit (PA2021-210)
From:jacob gonzales
To:CDD
Cc:jacob gonzales
Subject:FW: Tennis Property City MUP
Date:December 16, 2021 9:02:08 AM
[EXTERNAL EMAIL] DO NOT CLICK links or attachments unless you recognize the sender and know the
content is safe.
Please see the email chain below between me and City Attorney Aaron Harp from yesterday
between 4:05 PM and 6:18 PM regarding the application for MUP No. UP2021-033 (PA2021-210). I
ask that this email chain please be included as part of the record on MUP No. UP2021-033 (PA2021-
210).
Thank you.
From: Harp, Aaron <aharp@newportbeachca.gov>
Sent: Wednesday, December 15, 2021 6:18 PM
To: jacob gonzales <jgonzales@jcg-law.com>
Cc: Michael Cho (mcho@ptwww.com) <mcho@ptwww.com>; myoder@omm.com; Summerhill,
Yolanda <YSummerhill@newportbeachca.gov>
Subject: Re: Tennis Property City MUP
Hi Jacob,
I believe this line of cases supports the ability of Mr. O’Hill to execute the application. Every situatIon
is different but the broader principals in these cases support moving forward with the application I
understand that you do not agree and you should feel free to take whatever action you believe is
appropriate. As mentioned in my original email, this matter will be moving forward tomorrow.
Thank you,
Sent from my iPhone
On Dec 15, 2021, at 6:04 PM, jacob gonzales <jgonzales@jcg-law.com> wrote:
[EXTERNAL EMAIL] DO NOT CLICK links or attachments unless you recognize the
sender and know the content is safe.
Aaron –
I appreciate you sending this along. I’m having a hard time understanding how the Shell
Oil Company v. City and County of San Francisco (1983) 139 Cal.App.3d 917 applies to
the pending use permit application for the Tennis Property. In Shell it was determined
Zoning Administrator - December 16, 2021 Item No. 12c Additional Materials Received After Deadline Tennis Clubhouse Grill Minor Use Permit (PA2021-210)
that a long-term lessee had the standing to apply for a conditional use permit: “The
subject lease expressly provides that the lessee has the right to use the property as a
service station —and for no other purpose—for the term of the lease. In that context,
Shell Oil is the owner of the exclusive right to use the property for such purpose and
thereby is entitled to seek the necessary permit in order to carry out the agreed
purpose of the lease. Accordingly, we conclude that Shell Oil has standing as an owner
to apply for a conditional use permit.” Id. at 921.
I do not follow how Shell supports or explains the City’s position that Mr. O Hill has the
authority to sign the use permit on behalf of my clients – who are 50% owners. Mr. O
Hill is not a long-term lessee of the Tennis Property; he is a co-owner with my clients.
The use permit applicant, Clubhouse ATP, is not a long-term lessee of the Tennis
Property. Indeed, my clients are not aware of any lease with Clubhouse ATP for the
Tennis Property, as they have never been asked to sign any such lease and up until late
last week had not heard of Clubhouse ATP. Section 3 of the owners in common
agreement for the Tennis Property states that each owner must consent in writing to
the grant of a leasehold interest for the Tennis Property: “The Owners acknowledge
and agree that...any leasehold interest [in the Tennis Property]... may be granted,
conveyed or so encumbered by the execution of the applicable instrument by each
Owner.” (Underline added.) Presently, there is no written lease in place for the Tennis
Property signed by my clients. Has Mr. O Hill provided the City with a written lease with
Clubhouse ATP for the Tennis Property?
Thank you.
From: Harp, Aaron <aharp@newportbeachca.gov>
Sent: Wednesday, December 15, 2021 5:28 PM
To: jacob gonzales <jgonzales@jcg-law.com>
Cc: Michael Cho (mcho@ptwww.com) <mcho@ptwww.com>; myoder@omm.com;
Summerhill, Yolanda <YSummerhill@newportbeachca.gov>
Subject: Re: Tennis Property City MUP
Good evening,
The primary case that is on point is the Shell Oil case referenced in the attached
memorandum. Thank you,
From: jacob gonzales <jgonzales@jcg-law.com>
Sent: Wednesday, December 15, 2021 4:46 PM
To: Harp, Aaron <aharp@newportbeachca.gov>
Cc: Michael Cho (mcho@ptwww.com) <mcho@ptwww.com>; myoder@omm.com
<myoder@omm.com>; Summerhill, Yolanda <YSummerhill@newportbeachca.gov>;
jacob gonzales <jgonzales@jcg-law.com>
Subject: RE: Tennis Property City MUP
Zoning Administrator - December 16, 2021 Item No. 12c Additional Materials Received After Deadline Tennis Clubhouse Grill Minor Use Permit (PA2021-210)
[EXTERNAL EMAIL] DO NOT CLICK links or attachments unless you recognize the
sender and know the content is safe.
I think I understand you to be saying you won’t have time to share that case law with
me before the Zoning Administrator hearing tomorrow at 10 AM. Regardless, it would
be helpful to understand, even after tomorrow morning’s hearing, the City’s basis for
the opinion or understanding that Mr. O Hill has the authority to sign the use permit on
behalf of my clients. Would you please share with me that basis (and case law) within
the next couple of days when you have time?
Thank you.
From: Harp, Aaron <aharp@newportbeachca.gov>
Sent: Wednesday, December 15, 2021 4:40 PM
To: jacob gonzales <jgonzales@jcg-law.com>
Cc: Michael Cho (mcho@ptwww.com) <mcho@ptwww.com>; myoder@omm.com;
Summerhill, Yolanda <YSummerhill@newportbeachca.gov>
Subject: Re: Tennis Property City MUP
There is case law on point but I will not have time to pull it for you. Thanks again,
Sent from my iPhone
On Dec 15, 2021, at 4:35 PM, jacob gonzales <jgonzales@jcg-law.com>
wrote:
[EXTERNAL EMAIL] DO NOT CLICK links or attachments unless you
recognize the sender and know the content is safe.
Aaron –
Thanks for getting back to me. Can you please share the basis for the
City’s opinion or understanding that Mr. O Hill has the authority to sign
the use permit on behalf of my clients?
Thank you again.
From: Harp, Aaron <aharp@newportbeachca.gov>
Sent: Wednesday, December 15, 2021 4:11 PM
To: jacob gonzales <jgonzales@jcg-law.com>
Cc: Michael Cho (mcho@ptwww.com) <mcho@ptwww.com>;
myoder@omm.com; Summerhill, Yolanda
Zoning Administrator - December 16, 2021 Item No. 12c Additional Materials Received After Deadline Tennis Clubhouse Grill Minor Use Permit (PA2021-210)
<YSummerhill@newportbeachca.gov>
Subject: Re: Tennis Property City MUP
Good afternoon,
It is our opinion that Mr. O’Hill has authority to sign the application and
we plan to move forward with hearing tomorrow.
Thank you,
Aaron Harp.
Sent from my iPhone
On Dec 15, 2021, at 4:05 PM, jacob gonzales
<jgonzales@jcg-law.com> wrote:
[EXTERNAL EMAIL] DO NOT CLICK links or attachments
unless you recognize the sender and know the content is safe.
Mr. Harp –
This follows-up the voicemail I left you this morning. As you
may recall from a prior conversation with Mr. Yoder a couple
of years ago, we represent the Feuerstein and Fainbarg
families’ combined 50% interest in the Tennis Property at
1602 East Coast Highway.
I am forwarding along the email Elliot Feuerstein sent to Ms.
Westmoreland, copying Mr. Campbell and Mr. Schneider as
well as Mr. O Hill, this morning at 11:35 AM objecting to the
application for use permit No. UP2021-033 (PA2021-210), on
the basis that Mr. O Hill and Golf Realty Fund did not have
the authority to sign the application on behalf of the entire
Tennis Property ownership. Also, Mr. Feuerstein has made a
renewed request for a continuance of the hearing
tomorrow, as he and Mr. Chase just learned of the use
permit application last week - it was filed by Mr. O Hill and
the entity Clubhouse ATP without my clients’ knowledge or
consent.
Zoning Administrator - December 16, 2021 Item No. 12c Additional Materials Received After Deadline Tennis Clubhouse Grill Minor Use Permit (PA2021-210)
We continue to not want to put the City in the position of
having to decide whether Mr. O Hill had the authority to sign
the use the permit application on behalf of the entire of the
ownership—which we view as a legal issue that we don’t
believe the City should be deciding, particularly, when it’s
being contested by my clients—and are asking for the
continuance to give my clients a reasonable opportunity to
gather information and understand what exactly is
happening at the Tennis Property, and to try to work it out
with Mr. O Hill.
We hope to hear from you.
Thank you.
From: Elliot Feuerstein <elliot.feuerstein@gmail.com>
Sent: Wednesday, December 15, 2021 11:35 AM
To: Westmoreland, Liz
<LWestmoreland@newportbeachca.gov>
Cc: robert ohill <ROH@golfrealtyfund.com>; Irving M.
<irvingmchase@gmail.com>; Ryan Chase
<ryanlylechase@gmail.com>; brett feuerstein
<brett@mesacenters.com>; jacob gonzales <jgonzales@jcg-
law.com>; Yoder, Michael <myoder@omm.com>; Campbell,
Jim <JCampbell@newportbeachca.gov>; Schneider,
Matthew <MSchneider@newportbeachca.gov>; Elliot
Feuerstein <elliot.feuerstein@gmail.com>
Subject: Re: Tennis Property City MUP
Dear Ms. Westmoreland –
Thank you for your email below. We agree the City should
not get involved in internal conflicts or disagreements
between the owners of the Tennis Property. We are trying to
avoid putting the City in such a difficult position which is why
we requested that the hearing on the proposed use permit
for the Tennis Property be delayed for 60 days to give us a
reasonable opportunity to gather information and
understand what exactly is happening at the Tennis Property
(as we just learned about the application for the use permit
late last week) and to try to work it out with Mr. O Hill.
We also recognize that the issue of an owner’s authority to
sign on behalf of other owners is a legal issue, one that the
City should not be deciding, and is not as black and white as
Zoning Administrator - December 16, 2021 Item No. 12c Additional Materials Received After Deadline Tennis Clubhouse Grill Minor Use Permit (PA2021-210)
Mr. O Hill may be representing it to be. It is our
understanding that Mr. O Hill has submitted to the City in
the past, and most recently within the past six months or so,
an arbitration award from almost ten years ago issued by
Judge Haley Fromholz (Ret.) in March 2013, and that page 9
of that award says Mr. O Hill can process certain few
remaining discretionary entitlements for his master plan at
the Tennis Property.
To be clear, page 9 of the Fromholz award states as follows:
“O Hill had been actively pursuing the discretionary
entitlements for nearly fifteen years. Voters approved the
general amendment and the only remaining entitlements
were the development standards such as height limits,
landscaping, vehicle access, and parking. Thus, very little
remained to complete the NBCC Plan.” (Underline added.)
Page 4 of that award also states: “Currently, the
development standards for the NBCC Land such as height
limits, landscaping, vehicle access, and parking, are still
undetermined. The development standards are the final
discretionary entitlements for the NBCC Land.” (Underline
added.) Judge Fromholz explained his reason for allowing O
Hill to finish processing the limited remaining discretionary
entitlements on the basis that there was little left for O Hill
to complete and that we waited too long to object. We are
not waiting to object this time.
In the owners most recent arbitration with Justice Jeffrey
King (Ret.)—where Mr. O Hill sued us in an attempt to force
us to proceed with the development of his master plan, and
in which the arbitrator denied all of Mr. O Hill’s claims
against us and found in favor of us on our cross-claims
against him, and awarded us over $2,300,000 for our
attorneys’ fees and costs which Mr. O Hill had to reimburse
us—Mr. O Hill represented over and over again that as of
November 2018 he had finished processing the few
remaining discretionary entitlements that the Fromholz
award allowed him to process. Indeed, in the Final Award
issued by Justice King on April 8, 2020, a copy of which is
attached (and which was confirmed and entered as a
Judgment on March 26, 2021, in Orange County Superior
Court Case No. 30-2020-01159790-CU-PA-CJC), Justice King
says at page 5, footnote 3, of his Final Award that as of
November 2018 that Mr. O Hill had completed his
discretionary entitlements:
Zoning Administrator - December 16, 2021 Item No. 12c Additional Materials Received After Deadline Tennis Clubhouse Grill Minor Use Permit (PA2021-210)
“Judge Fromholz states at page 4 of his
decision, “‘[c]urrently, the development
standards for the NBCC Land such as height
limits, landscaping, vehicle access and
parking are still undetermined. The
development standards are the final
discretionary entitlements for the NBCC
Land. Proceedings are continuing to be held
before the City to determine the
development standards.’ To a reader it
somewhat leaves the impression that he
believed the process of entitlements was
near completion. Entitlements were not
completed until about five and one-half
years later.” (Justice King Final Award at p. 5,
fn. 3, underline added.)
Justice King also states in his Final Award at page 10 as
follows:
“The master plan has three elements: there
are 27 bungalows, 5 villas and the tennis
club/spa. The tennis/spa building is an
amenity for the bungalows and villas. The
entity. By November 2018 he had: the
Newport Beach Country Club Planned
Community text, a zone change, site plan
approval, state Water Quality Control Board
approval, grading plan, storm drain plan, dry
utility plans and street improvement plans,
through plan check. They had all the
entitlement approvals necessary to do the
‘bake-off.’” (Id. at 10, underline added.)
Thus, we have informed Mr. O Hill in writing on multiple
occasions that any right he believes he had to process the
few remaining discretionary entitlements under the
Fromholz award had run its course as of November 2018
when he finished processing his discretionary entitlements,
that the Fromholz award does not support
entitlements/plans he may presently be processing with the
City, and that he does not have our consent—express or
implied—to seek entitlements/plans for the Tennis Property.
Zoning Administrator - December 16, 2021 Item No. 12c Additional Materials Received After Deadline Tennis Clubhouse Grill Minor Use Permit (PA2021-210)
For the record, we object to the City’s position that “Mr. O
Hill is authorized to sign the [minor use permit] application
on behalf of the ownership” – and it is our belief that Mr. O
Hill does not have the authority to sign documents on behalf
of the entire ownership that he may have submitted to the
City since he completed his discretionary entitlements in
November 2018. But again, our desire is to not put the City
in the position of having to weigh-in on that issue – which
from our perspective is not an issue on which the City
Community Development Department should be weighing-
in. Also, we view the issuance of a liquor license at the
Tennis Property as a material issue, and we need a
reasonable opportunity to understand as co-owners of the
Tennis Property our potential exposure and liability should
alcohol be permitted to be sold and/or consumed there.
Thus, we once more renew our request that the City delay
the hearing on the proposed use permit for the Tennis
Property for 60 days to give us a reasonable opportunity to
gather information (including the information requested in
my initial email to you of December 10, 2021) and to try to
resolve the issue with Mr. O Hill.
Your prompt response is appreciated. Please let us know the
City’s response to our renewed request to continue the
hearing for 60-days as soon as possible.
Thank you.
Elliot Feuerstein on behalf of co-owners Mesa Shopping
Center-East LLC and Mira Mesa Shopping Center-West LLC
and Irv Chase (copied) on behalf of co-owner The Fainbarg
III, LP
On Tue, Dec 14, 2021 at 2:00 PM Westmoreland, Liz
<LWestmoreland@newportbeachca.gov> wrote:
Good Afternoon Mr. Feuerstein,
Thank you for your comments on the proposed Minor Use
Permit for the Tennis Clubhouse Grill. Please note that
alcohol service in this zoning district (PC47 - Newport
Beach Country Club) requires a minor use permit as there
are no late hours proposed (after 11:00 p.m.).
Based on previous planning applications and interactions
related to the property, our understanding is that Mr. O
Zoning Administrator - December 16, 2021 Item No. 12c Additional Materials Received After Deadline Tennis Clubhouse Grill Minor Use Permit (PA2021-210)
Hill is authorized to sign the application on behalf of the
ownership. If there are any current internal conflicts or
disagreements regarding this topic, they would need to be
resolved outside of the entitlement process.
Please contact me if you have any additional questions or
concerns regarding the application.
Thank you,
LIZ WESTMORELAND
Community Development Department
Associate Planner
lwestmoreland@newportbeachca.gov
949-644-3234
CITY OF NEWPORT BEACH
100 Civic Center Drive, First Floor Bay B, Newport Beach,California 92660 | newportbeachca.gov
From: Elliot Feuerstein <elliot.feuerstein@gmail.com>
Sent: December 10, 2021 4:41 PM
To: Westmoreland, Liz
<LWestmoreland@newportbeachca.gov>
Cc: Murillo, Jaime <JMurillo@newportbeachca.gov>;
robert ohill <ROH@golfrealtyfund.com>; Irving M.
<irvingmchase@gmail.com>; Ryan Chase
<ryanlylechase@gmail.com>; brett feuerstein
<brett@mesacenters.com>; jacob gonzales
<jgonzales@jcg-law.com>; Yoder, Michael
<myoder@omm.com>; Elliot Feuerstein
<elliot.feuerstein@gmail.com>
Subject: Tennis Property City MUP
[EXTERNAL EMAIL] DO NOT CLICK links or
attachments unless you recognize the sender and know the content
is safe.
Hello Ms. Westmoreland –
I write to you regarding the Tennis Clubhouse Grill Minor
Use Permit No. UP2021-033 (PA2021-210), for 1602 East
Coast Highway in Newport Beach also referred to as 5
and/or 11 Clubhouse Drive (hereinafter the “Tennis
Property”), which is on calendar for a Zoning
Zoning Administrator - December 16, 2021 Item No. 12c Additional Materials Received After Deadline Tennis Clubhouse Grill Minor Use Permit (PA2021-210)
Administrator hearing on December 16, 2021, at 10:00
AM.
I am a principal of Mesa Shopping Center-East LLC and
Mira Mesa Shopping Center-West LLC which collectively
own 25% of the Tennis Property. Copied on this email is
my co-owner Irv Chase who is a principal of The Fainbarg
III, LP, which also owns 25% of the Tennis Property.
Together we hold a 50% ownership interest in the Tennis
Property. The other owner in the Tennis Property is Golf
Realty Fund, LP ("GRF"), whose principal is Robert O Hill,
which owns a 50% interest. All owners hold their interests
as tenants in common.
We write because we just learned a couple of days ago of
MUP No. UP2021-033 (PA2021-210), and that the entity
Clubhouse ATP, LLC is the named applicant on the
application to the City, signed solely by GRF as the owner
of the Tennis Property. The application to obtain a use
permit for the Tennis Property has been submitted
without our knowledge or consent. It is our understanding
that all owners are required to sign a use permit
application – we did not sign the application nor were we
asked to do so by GRF. It is also our understanding the City
typically processes use permits involving alcohol use as a
conditional use permit (CUP) – and this is being processed
as an MUP.
We ask that the City please provide us with copies of all
documents in its possession relating to the application for
MUP No. UP2021-033 (PA2021-210). We also ask that the
City please take MUP No. UP2021-033 (PA2021-210) off-
calendar and not hold the hearing on December 16, 2021,
and not reset the hearing for at least 60 days to give us a
reasonable opportunity to review the information
requested above in advance of a hearing and so we can,
as 50% of the ownership of the Tennis Property,
meaningfully participate in such a hearing.
If you have questions or would like to discuss any of the
above, please do not hesitate to call me (C: 619.548.2007,
O: 858.271.4682) or Mr. Chase (C: 949.584.8700; O:
949.722.7400).
Thank you.
Zoning Administrator - December 16, 2021 Item No. 12c Additional Materials Received After Deadline Tennis Clubhouse Grill Minor Use Permit (PA2021-210)
Elliot Feuerstein on behalf of co-owners Mesa Shopping
Center-East LLC and Mira Mesa Shopping Center-West LLC
and Irv Chase (copied) on behalf of co-owner The Fainbarg
III, LP
--
Elliot Feuerstein
8294 Mira Mesa Blvd
San Diego, CA 92126
858-271-4682
858-271-5161 Fax
elliot.feuerstein@gmail.com
This message, together with any attachments, may
contain material that is confidential and/or privileged for
the sole use of the intended recipient. Any review,
reliance or distribution by others or forwarding without
express permission is strictly prohibited. If you are not the
intended recipient, please contact the sender and delete
all copies.
--
Elliot Feuerstein
8294 Mira Mesa Blvd
San Diego, CA 92126
858-271-4682
858-271-5161 Fax
elliot.feuerstein@gmail.com
This message, together with any attachments, may contain
material that is confidential and/or privileged for the sole
use of the intended recipient. Any review, reliance or
distribution by others or forwarding without express
permission is strictly prohibited. If you are not the intended
recipient, please contact the sender and delete all copies.
Zoning Administrator - December 16, 2021 Item No. 12c Additional Materials Received After Deadline Tennis Clubhouse Grill Minor Use Permit (PA2021-210)
From:Westmoreland, Liz
To:Lee, Amanda
Subject:FW: City of N.B. - signed Letter re Project PA 2021-210
Date:December 16, 2021 7:11:50 PM
Attachments:City of N.B. - signed Letter re Project PA 2021-210.pdf
Please see email below. The original email appears to have been sent to the wrong email address.
-----Original Message-----From: pmchrist@earthlink.net <pmchrist@earthlink.net>Sent: December 16, 2021 7:01 PMTo: Westmoreland, Liz <LWestmoreland@newportbeachca.gov>Subject: City of N.B. - signed Letter re Project PA 2021-210
[EXTERNAL EMAIL] DO NOT CLICK links or attachments unless you recognize the sender and know the contentis safe.
Hello, Ms. Westmoreland.
I am re-sending this email as I am not sure it arrived prior to the meeting on Dec. 16, 2021.
Hello Ms. Westmoreland,
Attached is a letter from the Granville Community Association Noise Abatement Committee regarding the subjectProject Application.
I apologize for not forwarding this earlier but insufficient time was available due to late delivery of the city notice. More time was definitely needed to reply to the city Notice.
Please contact me at 949-212-8426 with any questions or comments that you may have.
Cordially,Paul Christ
Zoning Administrator - December 16, 2021 Item No. 12c Additional Materials Received After Deadline Tennis Clubhouse Grill Minor Use Permit (PA2021-210)
Zoning Administrator - December 16, 2021 Item No. 12c Additional Materials Received After Deadline Tennis Clubhouse Grill Minor Use Permit (PA2021-210)
Zoning Administrator - December 16, 2021 Item No. 12c Additional Materials Received After Deadline Tennis Clubhouse Grill Minor Use Permit (PA2021-210)