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Editor’s Note: Dana Point Times’ initial reporting on last week’s hearing over the Dana Point Harbor Partners’ motion to dismiss the class-action lawsuit misrepresented certain details relating to Judge Sander’s tentative ruling. This story has been updated from its original publication on March 18 to reflect Sander’s official ruling dated March 21.

By Breeana Greenberg

Following a March 18 hearing to discuss the Dana Point Harbor Partners’ motion to dismiss a class-action lawsuit that boaters filed last fall, an Orange County Superior Court judge ruled this week that the case can proceed.

In her March 21 ruling, Judge Glenda Sanders overruled the Partners’ arguments against three of the boaters’ causes of action, or legal claims. The suit will proceed primarily on the basis of three arguments the boaters raised: injunctive relief, breach of contract, and unfair business practices.

Dennis Winters, who represents the boaters in the lawsuit, explained on Thursday, March 24, that the judge’s ruling allows the boaters to begin the discovery process and bring up motions.

“By overruling those objections, that means that those three causes of actions go forward, and we are able to do discovery, we’re able to bring up motions regarding those matters and eventually, if necessary, go to trial on them,” Winters said.

The lawsuit by the Dana Point Boaters Association (DPBA) and Save Our Slips (SOS) stems from the fee increases the Partners imposed on slip renters this past October. It also alleges that those increases are a violation of the lease agreement DPHP has with the County of Orange, the Dana Point Tidelands Grant, and state law.

Winters explained that the boaters’ first argument called for injunctive relief, aiming to get the Harbor Partners to reverse the increase in the slip fees until it does an amended or more complete survey.

Sanders said in the ruling that the boaters’ allegations were “sufficient to support a claim for injunctive relief, because if proven, they could support a finding that monetary damages are an inadequate remedy for the alleged breach of contract.”

The boaters also alleged that the Harbor Partners is in breach of contract with the lease agreement with the county, which requires that the company charge reasonably determined market-rate slip fees.

The Harbor Partners argued in its dismissal motion that the boaters’ complaint failed to demonstrate a breach of the master lease, while Winters, who is a pro bono advisor for DPBA, alleged that the Partners violated its lease by establishing higher-than-market-rate slip fees.

In the hearing, the Harbor Partners’ legal counsel Cox, Castle & Nicholson LLP argued that the master lease allows the Partners to establish market rate lease fees “as reasonably determined by DPHP, meaning DPHP has the discretion to determine what market rate is in a reasonable manner.”

“Although we contend the evidence will show that these are market rates, it doesn’t really matter, because market rate is by definition, the going rate or what the market bears and given the long wait list,” Alicia Vaz of Cox, Castle & Nicholson LLP said. 

Winters argued that the Harbor Partners failed to establish market-rate slip fees. 

“The arguments that have been made here is really the tortured reading of the provision (that) reasonably determined rates has to have some meaning,” Winters said during the hearing. “If the county and the Partners wanted to agree that the Partners had full discretion to charge any rate that they felt was OK, they could have put that in there. They could have said the Partners have the right to, the discretion to put any rates on the slip holders that they want to, but they put ‘market rate,’ and they said it had to be reasonably determined. Those terms have to have meaning.”

Sanders commented that the boaters’ allegation that the Harbor Partners violated the basis on which they needed to evaluate “market rate” slip fees per the master lease agreement, was sufficient.

Sanders ultimately overruled the Harbor Partners’ motion to dismiss the boaters’ argument that the company is in breach of contract with the county.

Winters further explained to Dana Point Times that Sanders indicated that the lease didn’t give the Harbor Partners complete discretion to charge whatever it felt appropriate. 

The boaters’ third cause of action argued that DPHP is in violation of the Unfair Business Practice Act. The boaters allege that the Harbor Partners has a monopoly or quasi monopoly because of the limited slips and harbors in South Orange County, Winters explained. 

Similarly, Sanders found the boaters’ arguments related to the claim of unfair business practices to be sufficient.

The Harbor Partners also contended the boaters’ claim of “constructive eviction”—a claim in which a “tenant has vacated the premises, or the landlord has breached some other covenant.” The Partners argued the boaters failed to show any of the tenants have vacated the premises following the slip-fee increases.

In her ruling, Sanders sustained the Harbor Partners’ argument with leave to amend—meaning the boaters have the opportunity to update their argument as it relates to constructive eviction. She also sustained the Partners’ argument challenging the boaters’ claim for declaratory relief, while allowing the boaters to also amend their complaint.

The next hearing on the lawsuit, a status conference, will be held on July 13 at 1:30 p.m.

Breeana Greenberg is the city reporter for the Dana Point Times. She graduated from Chapman University with a bachelor of arts degree in English. Before joining Picket Fence Media, she worked as a freelance reporter with the Laguna Beach Independent. Breeana can be reached by email at bgreenberg@picketfencemedia.com

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