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FILED

DONALD FREEMAN SBN 47833

City Attorney
City of Carmel By-The-Sea
P. 0. Box 805
Carmel, CA 93921-0805
(831) 649-5339, Ext. II

OCT 13 2015
TERESA A. RISI
CLERK~Friji-IE..SUf.RIOR COURT

.}, . - Jl .!"!Ul..tiU~

DEPUTY

CASE MANAGEMfiNT C.ONF/=flENCE

Attorney for Petitioner CITY OF CARMEL BY-THE-SEitJATE:
"1- -1\a,;c l-0 f-b
TIME: 9:00AM

PLACE: Courtroom -'---'- 2nd Floor

1200 Aguajito Rd. Monterey CA 93940

MONTEREY COUNTY SUPERIOR COURT

MONTEREY DIVISION

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I o C V tJ ooo
CITY OF CARMEL-BY-THE-SEA,
CALIFORNIA, a municipal corporation

Plaintiff',

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COMPLAINT FOR PRELIMINARY AND

PERMANENT INJUNCTION,
ABATEMENT OF NUISANCE;
COLLECTION OF DELINQUENT
BUSINESS LICENSE TAX

VS

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Case No.

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PACIFIC HARVEST SEAFOODS, INC.,

And DOES I through 20

DEEMED VERIFIED PURSUANT TO

CODE OF CIVIL PROCEDURE 446

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Defendants.

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INTRODUCTION AND PRELIMINARY ALLEGATIONS

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I.

Plaintiff, City of Carmel-by-the-Sea (herein "Carmel" or "City") is a municipal

corporation and general law city located within the County of Monterey, California.
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At all times relevant herein and since at least 2012, Defendant Pacific Harvest

Seafoods, Inc. (herein "PHS") has existed as a business selling and distributing high quality

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As used herein the tenns Plaintiff and Petitioner as well as Defendant and Respondent are used interchangeably
due to the combined nature of the Complaint.
-1Carmel v. Pacific Harvest Seafoods, Inc.
Complaint/Petition

seafood products to restaurants, grocery stores, and resorts, primarily within the central part of the
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State of California, including a dozen or more properties located in Carmel.

3. The true names and capacities, whether individual, corporate, or otherwise, of named
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DOES I through 20 are at this time unknown to Plaintiff, who therefore sues Defendants by such

fictitious names, and will amend this Complaint to reflect their true names and capacities when

they have been ascertained.

4. At all times relevant herein, PHS has possessed and maintained a certificate of "for-hire

carrier of property" pursuant to CA Revenue and Taxation Code 7232(b) which permits the
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transportation of "property for compensation" within the State.

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At all times relevant herein Carmel has maintained, enforced, and published the

Carmel-by-the-Sea Municipal Code (herein "Municipal Code"), consisting of the regulatory and

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penal ordinances and certain administrative ordinance of Carmel.

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6. At all times relevant herein there has been in existence Municipal Code Chapters 5.04,
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GENERAL LICENSING PROVISIONS, and 5.08, DEFINITIONS AND INDEX OF GENERAL

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BUSINESS CLASSIFICATIONS AND TAX RATE creating a Business License Permit and Tax

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within the City of Carmel.

Specifically within those Chapters exist Sections 5.050.010

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(Definitions), 5.04.020 (License Required), 5.04.030 (Evidence of Doing Business), 5.04.060

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(Separate Offenses), 5.04.110 (Exhibiting License), 5.04.120 (License Fee-Debt to City),

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5.04.140 (Payment of Fees and Taxes), 5.04.180 (Licensed Business-Locations), 5.08.005 (Tax

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Required), and 5.08.010 (Classifications), and at all times relevant herein those provisions have

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applied to and regulated persons or entities conducting business within the City, establishing a

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business license tax that is required of each person or entity conducting business within the City.
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-2Carmel v. Pacific Harvest Seafoods, Inc.

Complaint/Petition

7. Since at least and during each period of fiscal years 2012/2013, 2013/2014, 2014/2015,
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and 2015 to present Defendant PHS has failed to pay the required business license tax despite

demands from City that such tax be remitted.

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8. PHS has admitted that it sells and has sold seafood products to business establishments
within City.
9. PHS alleges that it possesses a "Motor Carrier Permit" issued by the State of California
which permits PHS to carry products as a business to local establishments without payment of

local business licenses taxes. Carmel does not dispute that any business of delivering good or
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products as a sole and separate business would be exempt from its Business License Tax;

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however, such tax would apply to anyone who, like PHS, is delivering the products they are

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selling to establishments within Carmel. If they were a true Motor Carrier delivering goods and

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products as a business, the sellers of the goods and products themselves would be required to

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possess a Carmel Business License Permit.

FIRST CAUSE OF ACTION
COLLECTION OF DELINQUENT BUSINESS LICENSE TAXES

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Plaintiff incorporates into this cause of action each and every allegation contained in

paragraphs I through 9 of this Complaint as if the same were set forth fully herein.
11. This cause of action is brought and prosecuted for the failure of Defendants to secure a
Business License Permit and remit the requisite taxes required by that Permit to Carmel pursuant

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to Municipal Code provisions set forth in Paragraph 6 above.

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12. At all times mentioned herein Municipal Code 5.04.020 makes it unlawful for any

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person, as that term is defined in 5.04.0 I 0 to include natural persons, firms, co-partnerships,

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corporations, or other association, to commence or carry on any kind of lawful business, trade,

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calling, profession or occupation without complying with ... this title.

-3Carmel v. Pacific Harvest Seafoods, Inc.

Complaint/Petition

13. Municipal Code 5.040.030 establishes that any person who holds out or represents
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that s/he is in business in the City and fails to deny that this fact is true by sworn affidavit shall be

considered in fact to be prima facie conducting business in the City.

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14. Defendant's counsel in a letter dated March 4, 2015 addressed to the City Attorney, a

copy of which is attached hereto, labeled EXHIBIT "A" and incorporated herein by this reference,

admitted that PHS is in the business of selling seafood products to restaurants, grocery stores, and

resorts, including "a dozen or more properties in Carmel-by-the Sea."

15. Each separate day that PHS conducted business by selling seafood products within the
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City is deemed to be a separate violation of the City's requirement to first obtain a Business
License Permit before conducting business pursuant to Municipal Code 5.04.060.
16. Plaintiff is informed and believes that Defendant provided deliveries within the City
on a regular basis in excess of 100 times per year since the beginning of the 2012/2013 fiscal year,

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with the exact number subject to proof.

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17. At each time during the times mentioned herein, Defendant's delivery person was

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required to possess a copy of the Business License issued by City at all times while delivering its

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product within the City of Carmel pursuant to Municipal Code 5.04.110.

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18. The amount of any Business License fee imposed by Chapter 5.04 and unpaid shall
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deemed a debt to the City subject to collection of the amount of such fee in any court of competent
jurisdiction pursuant to Municipal Code 5.04.120.
19. The specific fee owed by Defendant annually before application of any late fees or
penalties is the sum of an administrative fee of $50 per year, together with an additional tax of

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$1.00 per $1,000.00 of revenue from gross sales of products; or an administrative fee of $50 X 4
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-4Carmel v. Pacific Harvest Seafoods, Inc.

Complaint/Petition

or $200, together with estimated revenue from gross sales during this four year period of
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$20,000.00 subject to proof pursuant to Municipal Code 5.04.140 A. and B.!.

20. There is established in Municipal Code 5.04.!60A.l. a requirement that the License
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Tax must be paid at all times during which business is carried on within the City, including
periods when the business was carried on illegally due to a lack of a valid license.

2!. There is established in Municipal Code 5.04.160A.2. a penalty of 25 percent of the

tax due which shall be added to the tax liability, together with an additional penalty of 5% to be

added every 30 days thereafter not to exceed 50 percent of the total license tax due; applied herein
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it is believed the penalty should be the sum of $10,000.00 for the four year period complained of
herein.
22. The nature of Defendant's business of selling seafood products to various locations
throughout the City falls within the category of "in-and-about" business as defined in Municipal

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Code 5.04.0101. Pursuant to Municipal Code 5.04.180 each person engaged in any in-and-

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about business shall do so only after procuring a Business License therefore, shall have no right to

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sell products or merchandise as is the case with Defendants herein without first obtaining such a

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License.

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Plaintiff is not aware of any legitimate or legal exemption from each and every

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provision of the Municipal Code related to City's Business License Tax.

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24. The City Attorney is authorized by the City Council to bring suit in the name of the

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City for the recovery of a license tax against any person who engages in, conducts or carries on

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any business ... for which a license is required by the provisions of this title (Chapter 5.04), and if

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such litigation is brought to enforce collection of any license tax imposed, such persons are
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responsible to pay all costs of suit incurred by City including reasonable attorney's fee as well as a

-5Carmel v. Pacific Harvest Seafoods, Inc.

Complaint/Petition

civil penalty to be imposed by the Court pursuant to Municipal Code 5.04.230, with City
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requesting a penalty in the sum of $1,000.00 as both a penalty and deterrent for the 4 years of

conducting business without a required Business License with knowledge of the existence of such
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a requirement.
25. Every person that carries on business within the City shall pay a license tax in an
amount determined by the nature of the business pursuant to Municipal Code 5.08.010.
26. Defendants were required to pay a license tax in the amount of$1.00 per $1,000.00 of

gross receipts per year pursuant to Municipal Code 5.08.010.

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27. Despite the requirements of Municipal Code Chapter 5.08, Defendants, and each of

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them have failed and refused to pay the requisite Business License Tax after demand by the City

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to do so.

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28. Wherefore Plaintiff prays relief as set forth following.

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SECOND CAUSE OF ACTION

INJUNCTIVE RELIEF TO REQUIRE COMPLIANCE WITH MUNICIPAL CODE
PROVISIONS REGARDING SECURAL OF A BUSINESS LICENSE PERMIT,
PAYMENT OF REQUIRED FEES, FURNISHING OF AN ACCOUNTING OF GROSS
RECEIPTS AND PAYMENT OF ALL DELINQUENCIES AND COSTS OF SUIT AND
ATTORNEY'S FEES.

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29. Plaintiff incorporates into this cause of action each and every allegation contained in
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paragraphs I through 25 of this Complaint as if the same were set forth fully herein.

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30. The purpose of this Cause of Action is to enjoin Defendants from conducting business

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in the City of Carmel without first obtaining an appropriate Business License, paying required fees

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based on gross revenues, and payment of delinquent fees, costs, penalties, and attorney's fees.

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Carmel v. Pacific Harvest Seafoods, Inc.

Complaint/Petition

31. Defendants, and each of them, have conducted business in the City for more than four
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years without benefit of a required Business License Permit, and without paying required Business

License ta'Ces.
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32. On numerous occasions since November 2014, numbering more than seven separate

times, Plaintiff has communicated with Defendants and their counsel the legal requirement that

prior to commencing or conducting business within the City each person, including corporations,

must first obtain a Business License, including Defendant PHS, and that PHS alleged excuse of

exemption was invalid and did not excuse compliance with the Business License Chapter of the
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Municipal Code.

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33. Despite the demands of City, Defendants and each of them has refused to comply with

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the demands of City that they comply with the legal requirement to obtain a Business License

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before conducting business within the City, and we believe and therefore allege that Defendant

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PHS continues to conduct business within the City unlawfully, and will continue to do so until and
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unless enjoined and restrained by this Court and forced to comply with the law in this respect.
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Plaintiff believes that Defendants will refuse to submit required declarations

establishing actual gross receipts for the fiscal years since 2012/2013 to the present unless ordered

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to do so and restrained by this Court.

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35. Plaintiff believes that Defendants will refuse to pay delinquent sums owed by virtue of

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their failure to obtain valid Business Licenses and pay appropriate Business License Taxes

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pursuant to Municipal Code Chapter 5.04 unless ordered to do so and enjoined from further

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unlawful conduct in this regard by this Court.

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36. Plaintiff believes that Defendants will refuse to pay penalties for late payment of the
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delinquent sums set forth in Paragraph 35 above, and will further refuse to pay reasonable

-7Carmel v. Pacific Harvest Seafoods, Inc.

Complaint/Petition

attorney's fees for collection of the debts, fees, late penalties, attorney's fees and requiring
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Defendants to obtain a valid Business License and pay appropriate Business License Taxes before

conducting business in the City unless enjoined and ordered to do so by this Court.
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37. Plaintiff believes that unless enjoined and restrained by this Court Defendants will
continue to conduct business unlawfully within the City of Carmel.

THIRD CAUSE OF ACTION

ABATEMENT OF NUISANCE PER SE

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38. Plaintiff incorporates into this cause of action each and every allegation contained in
paragraphs 1 through 37 of this Complaint as if the same were set forth fully herein.
39. As set forth above, Plaintiff alleges that Defendants, and each of them, have violated

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numerous provisions of Municipal Code Chapters 5.04 and 5.08 regarding a requirement which
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they refuse to obey that they obtain a Business License Permit after making application and paying

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a Business License Tax, with such refusal to comply with such provisions voluntary and

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intentional.

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40. Violation of a municipal code provision constitutes a public nuisance per se, and as
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such is subject to abatement via injunctive relief.

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41. Plaintiff believes that Defendants and each of them will continue to disregard and

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disobey the provisions cited above regarding non-compliance with Municipal Code sections

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establishing a mandatory requirement that they obtain a Business License Permit after payment of

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a Business License Tax, thus constituting a continuing nuisance until and unless abated by order
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of this Court.
PRAYER

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WHEREFORE, Plaintiff prays judgment for:

That this Court order, adjudge and decree as follows:
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Complaint/Petition

ON THE FIRST CAUSE OF ACTION;

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I. That Defendant be found to be indebted to Plaintiff in the sums of:

a. Administrative fees for four years at $50 per year for a total of $200.
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b. Business License taxes in the sum of $20,000.00 or as demonstrated by evidence

for the four year period of time at the hearing of this matter.

c. For delinquent penalties at the rate of 50% per year on the unpaid tax, for a sum
of $10,000 or as demonstrated by evidence for this four year period of time at the hearing.

d. For a civil penalty of$1 000 or as awarded by the Court.

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ON THE SECOND CAUSE OF ACTION:

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I.

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That a preliminary and permanent injunction 1ssue enJommg and restraining the

Defendants and anyone acting on their behalf, from conducting, allowing, permitting, or engaging
in any business activity, including the sale of seafood products, within the City of Carmel by-the-

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Sea without first obtaining an appropriate Business License Permit after payment of a correct
Business License tax;

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2. That Defendants appear before this Court at a time and place to be set by this Court, and

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then and there to show cause why a preliminary injunction should not be issued enjoining and

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restraining Defendants the anyone acting on their behalf, from conducting, allowing, permitting, or
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engaging in any business activity, including the sale of seafood products, within the City of
Carmel by-the-Sea;
3. That Defendants be ordered to comply with the provisions of the Carmel Municipal
Code Chapters 5.04 and 5.08 relating to secural of Business License permit after payment of an

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appropriate Business License Tax including any and all delinquent taxes, fees, penalties, and
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attorney's fees;

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Complaint/Petition

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4. That Defendants pay civil penalties in the sum of $1000.00 or as awarded by the Court
in accordance with Municipal Code 5 .04.160A2.
ON THE THIRD CAUSE OF ACTION
I. The Court find that Defendants have violated the provisions of Municipal Code Chapter
5.04 and 5.08 and as such their conduct has constituted a public nuisance per se.

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2. The Court order abatement of the public nuisance by issuance of a preliminary and
permanent injunction enjoining and restraining the Defendants and anyone acting on their behalf,
from conducting, allowing, permitting, or engaging in any business activity, including the sale of

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seafood products, within the City of Carmel by-the-Sea without first obtaining an appropriate

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Business License Permit after payment of a correct Business License tax.

FOR ALL CAUSES OF ACTION:

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I. The Court award costs of suit;

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2. The Court require Defendant to pay appropriate attorney's fees as deemed fair and

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reasonable by the Court;

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3. And such other and further relief as the Court deems proper.
Dated: October .(,__, 2015

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City Attorney
City of Carmel-by-the-Sea

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PERRY and FREEMAN
ATTORNEYS AT LAW

SAN CARLOS STREET

BETWEEN 7th AND 8th
POST OFFICE BOX 805
CARMEL-BY-THE-SEA
CALIFORNIA 93921
(831) 624-5339

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Complaint/Petition

Charles jenkins Law P.C.

Telephone
415.672.3351

355 11'h St., Ste. 200

San Francisco, CA 94103

Facsimile
415.285.7266

www.charlesjenkinslaw.com

Via Email Only

March 4, 2015

Law Offices of Perry and Freeman

San Carlos between 7th and 8th
Post Office Box 805
Carmel-by-the-Sea, CA 93021
Re: Business License Demand
Dear Mr. Freeman:
Thank you for your February 10, 2015 letter. My offices represent Pacific Harvest
Seafoods, Inc. ("Pacific Harvest") in connection with the matter above. It has been a
pleasure to work with your associate, LeAnne Graham thus far. You and Ms. Graham
have been patient. Recently, my workload has been remarkably heavy, and any
delay in responding should not reflect poorly on my client.
Pacific Harvest is a small regional distributor of high quality seafood products
obtained from waters all over the world. Its stock in trade is selling and delivering
seafood protein e.g. packages, boxes, cases, etc. to restaurants, grocery stores and
resorts, primarily located in the central part of the State. These include a dozen or
more properties in Carmel-by-the-Sea.
PHS takes orders from customers for its products on-line, via facsimile and via
telephone; then consummates sales in its distribution facility located just outside
San juan Bautista in San Benito County, north of Monterey County. The orders are
filled, then picked up by customers at the facility or placed on one of PHS'
commercial motor vehicles 1 and transported to a customer's place of business.
As such, it is our position that PHS is a "for-hire motor carrier of property" that
"transports property for compensation". California Revenue & Tax Code Section
7232 (b). Accordingly, Pacific Harvest is exempt from Carmel-by-the-Sea's business
license requirement. Revenue and Tax Code Section 7233 provides: "No, city,

Pacific Harvest holds a valid motor carrier permit issued by the State of California.

EXHIBIT "A"

county, or city and county, shall assess, levy, or collect an excise or license tax of any
kind, character, or description whatever upon the transportation business
conducted .... by any for-hire motor carrier of property."
Carmel-by-the Sea has taken the position that Pacific Harvest is "selling" its products
in the City, not acting as a for-hire motor carrier of property. Please advise why the
City feels this way, factually and legally. In making this request, Pacific Harvest
seeks to understand the City's position in hopes of avoiding a formal enforcement
action requiring both parties to expend considerable time and expense.
Thank you for your anticipated cooperation in responding.

Regards,

Charles D. jenkins

Cc: Pacific Harvest Seafoods, Inc.