BILL ANALYSIS Ó
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THIRD READING
Bill No: SB 730
Author: Kehoe (D)
Amended: 1/19/12
Vote: 27 - Urgency
SENATE APPROPRIATIONS COMMITTEE : 7-0, 1/17/12
AYES: Kehoe, Walters, Alquist, Emmerson, Lieu, Pavley,
Steinberg
NO VOTE RECORDED: Price, Runner
SUBJECT : Payment of claims against the state:
Department of Justice
SOURCE : Department of Justice
DIGEST : This bill appropriates $13,262,000 from the
State Parks and Recreation Fund and the General Fund to the
Department of Justice to pay five settlements. Any funds
appropriated in excess of the amounts required for payment
of these claims shall revert to the State Parks and
Recreation Fund and the General Fund on June 30 of the
fiscal year in which the final payment is made.
ANALYSIS :
Specific Claims
1. Aaron Ciccotti, Harold Ciccotti, and Bradley Ciccotti v.
State of California ; Merced County Superior Court No.
CV000577; $1.5 million settlement
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On October 23, 2009, plaintiffs, Aaron Ciccotti, Harold
Ciccotti, and Bradley Ciccotti, brought an action
against the Department of Parks and Recreation. This
action arises out of an accident that took place on
June 19, 2009, at the Los Banos Creek Reservoir in
Gustine, California. While there, plaintiff Aaron
Ciccotti was struck by a large tree that stood by his
campsite and collapsed on top of him. As a result of
this accident, plaintiff Aaron Ciccotti underwent three
surgeries to his clavicles and his right knee.
Plaintiffs Harold Ciccotti (Aaron's brother) and Bradley
Ciccotti (Aaron's minor son) claimed that they observed
the accident. The complaint included a cause of action
for general negligence and a cause of action for
dangerous condition of public property. The matter was
resolved through a $1.5 million settlement.
2. Environmental Protection Information Center, et al v.
California Department of Forestry and Fire Protection,
et al and Steelworkers of American, et al, v. California
Department of Forestry and Fire Protection, et al ;
Humboldt County Superior Court, No. CV990445 and No.
CV990452; $5.5 million for two settlements
In 1999, petitioner Environmental Protection Information
Center (EPIC) filed a lawsuit against the Department of
Forestry and the Department of Fish and Game challenging
the agencies' approvals of certain permits--the
sustained yield plan and incidental take
permit--pertaining to the harvesting activity on the
Pacific Lumber Company's timberland. In a separate
lawsuit, petitioner United Steelworkers of America sued
the Department of Forestry over its approval of Pacific
Lumber Company's sustained yield plan. Petitioners
alleged abuse of discretion and violations of the Forest
Practice Act and the California Environmental Quality
Act, among other things. From 1999 to 2010, the parties
litigated the cases in the trial court, the Court of
Appeal and the Supreme Court. Ultimately, the appellate
courts found certain provisions of the incidental take
permit and the sustained yield plan invalid.
Petitioners moved for attorneys' fees, initially
requesting nearly $14 million for their work in
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invalidating the sustained yield plan and certain
provisions of the incidental take permit. In 2011, the
agencies and the petitioners settled the attorneys' fees
issue. Through this agreement, the agencies will pay
EPIC $3.5 million, plus interest, and the Steelworkers
$2 million, plus interest.
3. California School Boards Association, et al. v. State of
California ; San Diego Superior Court Case No.
37-2007-0082249; $312,000 settlement
Plaintiffs identified38 mandated programs which will
cost the school districts more than $160 million to
implement, for which only $38,000 was budgeted. The
Court found that although the state agreed to pay the
difference between the cost and the amount budgeted, the
practice of underfunding the mandates violated Article
XIII B, Section 6 of the California Constitution.
Following remand to the trial court, the Department of
Finance successfully negotiated a settlement of
attorneys' fees and costs with plaintiffs, which was
then incorporated into a court order.
4. Mather Development Partners IV, L.P. v. EdFund, Inc., et
al ; Sacramento County Superior Court No.
34-2011-00095194; $4,500,000 settlement
In October 2006, Mather entered into a 10-year
commercial lease agreement with the California Student
Aid Commission's (CSAC) auxiliary organization, EdFund,
a nonprofit public benefit corporation. The State of
California did not sign the lease, but CSAC and EdFund
jointly solicited bids for the lease and shared a
planning committee for the move to Mather's newly
constructed buildings. Under an Operating Agreement
between EdFund and CSAC, EdFund paid the lease payments
and then sought approval and reimbursement from CSAC.
On July 20, 2010, the United States Department of
Education, informed CSAC and the California Department
of Finance that its guaranty agency agreement with CSAC
would be terminated by October 31, 2010. With the
transfer of the portfolio from EdFund to another entity,
EdFund's entire line of business, and its corresponding
ability to generate revenue ceased to exist. EdFund
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therefore repudiated the lease effective December 31,
2010.
Mather claimed losses exceeding $40 million due the
breach of the commercial lease and the failure to
properly wind-down the state's non-profit corporation.
The claims against the state included breach of
contract, negligent misrepresentation, fraudulent
conveyance of funds, third party beneficiary liability
arising under the CSAC/EdFund Operating Agreement, and a
violation of Corporations Code Section 6713. This
mediated settlement resolves all issues of liability
against the state arising out of the breach of the long
term lease agreement lease agreement and the dissolution
of EdFund.
5. Entertainment Merchants Association v. Edmund Brown:
Attorney Fees ; United States Supreme Court, Case No.
08-1448, referred to Ninth Circuit, Case No. 07-16620;
$950,000
Plaintiffs challenged California's violent video game
law (Civil Code Sections 1746-1746.5), which made it
illegal to sell extremely violent video games to
children under age 18. Defendants sought certiorari of
a decision of the Ninth Circuit Court of Appeals
concluding that the statute violated the First
Amendment. The United States Supreme Court ruled
against Defendants on appeal and affirmed the Ninth
Circuit's decision. The Supreme Court referred
Plaintiff's motion for attorneys' fees in the Supreme
Court proceedings to the Ninth Circuit, and Defendants
have negotiated a settlement of those fees. These fees
are for proceedings in the Supreme Court only; the
parties had previously settled fee requests in both the
district court and the Ninth Circuit.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
Appropriates $13,262,000.
SUPPORT : (Verified 1/17/12)
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Department of Justice (source)
Department of Finance
DLW:mw 1/19/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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