Trio of Lawsuits Resolve in Laguna’s Favor

By Andrea Adelson | LB Indy

Attorneys for the city of Laguna Beach won victories in three separate lawsuits, one of which exposed the city to as much as $100 million in damages, City Attorney Phil Kohn said Wednesday.

In that case, a federal appeals court upheld a lower court decision, which refused to certify a class action lawsuit against Laguna Beach brought by Gerald Martin.

In that suit, lawyers for Martin accuse the city of violating provisions of the federal Fair and Accurate Credit Transactions Act. The suit alleges that pay stations in city-owned lots printed out, among other information, the expiration date of patron’s credit cards.

No actual damage, such as identity theft, occurred, but successful plaintiffs are able to obtain statutory damages alone of $100 to $1,000 for each violation, says a statement from Kohn’s law firm. The class could exceed 100,000 people who used credit cards in city lots between 2008 and 2011.

U.S. District Judge Cormac J. Carney denied the suit, saying the class could not be determined. The plaintiff’s appeal was heard by the Ninth Circuit in Pasadena in May and the unpublished opinion issued Friday, July 25.

Martin, a Costa Mesa roofer, became the plaintiff by responding to flyers distributed by attorney Ronald Frank, of Katy, Tex., who has attempted similar class actions suits elsewhere, Kohn said.

Also last week, a state court of appeal upheld another lower court decision in the city’s favor, which denied health injury and financial loss claims by residents Trace and Robert Klug and their two children.

In a claim filed in January 2013, the Klugs allege that diesel fumes from a fire station adjacent to their Second Avenue home in South Laguna sickened them and diminished the value of their property.

Orange County Superior Court Judge Charles Margines denied the claim as well as the Klugs’ subsequent appeal to make a late claim because it came more than a year after they disclosed their suspicions in an Oct. 6, 2011 email to the City Council. The Klugs made complaints about diesel exhaust causing them harm to fire officials as early as 2006, noted the opinion signed by three judges in the Fourth Appellate District.

The email plea revealed one reason the Klugs did not seek relief earlier. “I have called for years . . . but never in writing because my parents are both attorneys and said I would have to disclose to someone trying to buy our house,” Trace Klug wrote. The Klugs purchased their home in 2004, according to the ruling.

In her plea to Council members, Trace Klug, who works professionally as a nurse, outlined health complaints that included severe headaches, chronic inflammation and sinus infections as well as rare optic neuritis suffered by her daughter. Their medical bills tallied $100,000 over five years.

“We knew the letter of the law precluded the parents, but the trial court could have granted relief to the children,” said Newport Beach attorney William Paoli. “They really should have been held liable,” Paoli said of city officials. “They got away with a technicality,” he said. “The kids will suffer with lung problems for life.”

Because the claim was rejected, Paoli said the Klugs never had the opportunity to pursue their suspicions that firefighters also suffered health problems due to diesel exhaust exposure.

In the third suit, a Superior Court judge issued a preliminary ruling Tuesday, July 29 upholding the city’s hedge-height ordinance, whose validity was challenged in a lawsuit.

David Pahnos and Barry Stephens, homeowners on 10th Avenue in South Laguna, sued the city in March 2012 in an effort to invalidate an order to remove trees prompted by a neighbor’s complaints, Kohn said.

The homeowners contended the ordinance constituted a taking of property, would destabilize the home’s foundation and denied their landscaping obstructed views, Kohn said. The court disagreed, finding the ordinance valid and properly applied, he said.

Even so, the claims by Pahnos and Stephens will now be heard by a jury, set for Oct. 21. “Judges decide questions of law, juries decide questions of fact,” explained Pahnos.

The dispute stems from a hedge height claim filed in 2010 by Pahnos’ uphill neighbors, Wayne and Erika Phelps. What followed was a dizzying series of appeals – some supporting the Phelps’ claim and others dismissing it – which ultimately led the city to prosecute Pahnos on a criminal charge with a $1,000 a day fine. One judge dismissed the case, but the city refilled the charge a second time, which is still pending, Pahnos said. “We thought that was beyond the pale,” he said.

Pahnos has lived on 10th Avenue since 1995.


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