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1 DENNIS J. HERRERA, State Bar #139669
City Attorney ELECTRONICALLY
2 PETER J. KEITH, State Bar #206482
Chief Attorney F I L E D
Superior Court of California,
3 Resident and Neighborhood Safety Division County of San Francisco
JENNIFER E. CHOI, State Bar #184058
4 MEGAN E. RYAN, State Bar #264922 10/03/2019
Clerk of the Court
Deputy City Attorney BY: YOLANDA TABO-RAMIREZ
5 Fox Plaza Deputy Clerk
1390 Market Street, Sixth Floor
.6 SanFrancisco, California 94102-5408
Telephone: (415) 554-3887
7 Facsimile: (415) 437-4644
E-Mail: jennifer.choi@sfcityatty.org
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9 Attorneys for Plaintiffs
CITY AND COUNTY OF SAN FRANCISCO and
10 PEOPLE OF THE STATE OF CALIFORNIA
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SUPERIOR COURT OF THE STATE OF CALIFORNIA
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COUNTY OF SAN FRANCISCO
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· UNLIMITED JURISDICTION
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CITY AND COUNTY OF SAN Case No. CGC-18-565184
15 FRANCISCO, a Municipal Corporation; and
the PEOPLE OF THE STATE OF DECLARATION OF JENNIFER E. CHOI IN
16 CALIFORNIA, by and through Dennis J. OPPOSITION TO DEFENDANTS' MOTION
Herrera, City Attorney for the City and County FOR LEAVE TO FILE CROSS-COMPLAINT;
17 of San Francisco, EXHIBITS A-E
18 Plaintiffs, Hearing Date: October 17, 2019
Time: 9:30 a.m.
19 vs. Place: Dept. 302
20 MELVIN LEE, an individual, TERESA Date Action Filed: March 23, 2018
WONG, an individual, VAN NESS CARE Trial Date: March 9, 2020
21 CENTER, INC., SAN FRANCISCO CARE
CENTER, L.P., MEL LEE MANAGEMENT,
22 INC., and DOE ONE through DOE FIFTY,
inclusive,
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Defendants.
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I, JENNIFER E. CHOI, declare as follows:
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1. I am a Deputy City Attorney with the Office of the City Attorney for the City and
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County of San Francisco. I am one of the attorneys assigned to handle this action on behalf of
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CHOI DECLA OPP MTN XCOMPL, CASE NO. CGC-18-565184 n:\codenf\li2018\170999\01396478.docx
1 Plaintiffs People of the State of California and City and County of San Francisco ("Plaintiffs"). I have
2 personal knowledge of the contents of this Declaration. If called upon to testify, I could and would
3 testify competently to the contents of this Declaration.
4 2. I understand and believe that in 2000, Defendant Van Ness Care Center, Inc.
5 ("VNCC") won a bid from the former San Francisco Redevelopment Agency ("SFRA") to purchase
6 and develop a property located at 1033-1035 Van Ness Avenue, in San Francisco, into an assisted
7 living facility for senior citizens known as The A venue. Defendant Melvin Lee is President, and
8 Defendant Teresa Wong is Vice President and Secretary, of Defendant VNCC. As part of the sale,
9 Defendant VNCC entered into a Disposition and Development ,Agreement with the SFRA ("DDA")
1O and also signed a Declaration of Affordability Restrictions ("DAR").
11 3. In 2002, Defendant VNCC assigned its interest and obligations to Defendant San
12 Francisco Care Center, L.P. ("SFCC.") Defendants Lee, Wong, and VNCC are partners of Defendant
13 SFCC. The DDA and DAR were amended several times, and ultimately required Defendants to
14 provide 25 of the 112 units for low income seniors for a period of 50 years and to provide annual
15 reports on the 25 low income units. The SFRA refunded Defendants over $100,000 to market the
16 units, including $50,000 specifically set aside for marketing of the 25 low income units.
17 4. Construction on The A venue was completed in late 2004. Defendants began housing
18 seniors paying market rate rent in early 2005, but did not house lowincome seniors. In 2006,
19 Defendants were granted an increase in rental fees for the low income units, with Defendant Lee
20 representing to the San Francisco Redevelopment Commission that he would start renting out the low
21 income units, "immediately."
22 5. I understand and believe that Defendants either never housed any, or housed just a
23 handful of, low income seniors. Defendants admit that they failed to provide the SFRA with annual
24 reports on the low income units preventing the SFRA from learning about the vacant status of these
25 units.
26 6. Based on Defendants' failure to comply with the DDA and DAR, the City issued a
27 Notice of Default to Defendants on August 19, 2016.
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CHOI DECLA OPP MTN XCOMPL, CASE NO. CGC-18-565184 n:\codent\li2018\170999\01396478.docx
1 7. On June 26, 2017, I attended an inspection of The Avenue with inspectors from the San
2 Francisco Department of Building Inspection ("DBI''). Defendants Wong and Lee accompanied us on
3 the inspection. In the course of the inspection, I observed that walls had been removed between units,
4 units had been removed altogether to create a lounge, four units had been removed to create an
5 apartment for Allen Yu, Defendant Wong's grown son, five units had been removed to start
6 construction on an apartment for Defendant Wong, and walls had been removed between two units
7 occupied by Defendant Wong. Wong represented that she and Yu are the only managers of The
8 Avenue, and live there to satisfy the state's requirements that a manager be on site at all times. I
9 understand and believe that all of this construction was done without permit or proper oversight from
10 DBI inspectors. Defendants have admitted that Yu's apartment was constructed in 2007. I understand
11 and believe that DBI issued a Notice of Violation for the work without permit observed on June 26,
12 2017.
13 8. On March 23, 2018, Plaintiffs filed a Complaint against Defendants Melvin Lee, Teresa
14 Wong, San Francisco Care Center L.P ., Van Ness Care Center Inc., and Mel Lee Management Inc.
15 ("Defendants"). A true and correct copy of the Complaint is attached as Exhibit A. 1
16 9. The Plaintiffs' Complaint alleges four causes of action: (1) California's Unfair
17 Competition Law (California Business and Professions Code section 17200 et seq.) for Defendants'
18 unlawful and unfair business practices in their management of The Avenue, (2) Local and State public
19 nuisance statutes (SF Building Code section 102, California Civil Code sections 3479 and 3480, and
20 California Code of Civil Procedure section 731) for maintaining The Avenue as a public nuisance, (3)
21 San Francisco Building Code section 103, for Defendants' work without permit, and (4) Breach of
22 Contract for Defendants' failure to abide by the DDA and DAR.
23 10. Plaintiffs seek injunctive relief, specific performance, damages, penalties,. attorney's
24 fees and costs.
25 11. Defendants filed a verified Answer on May 24, 2018. A true and correct copy is
26 attached as Exhibit B.
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The exhibits to the Complaint are voluminous and have not been attached. The City can
28 provide the exhibits upon request.
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1 12. Discovery commenced shortly thereafter.
2 13. The Court initially set trial for May 20, 2019. In February 2019, the trial was continued
3 to September 16, 2019 at the parties' request.
4 14. On May 8, 2019, I received an email from then Defendants' counsel Aaron Gruber,
5 notifying me that he was substituting out as counsel, and would be replaced by the law offices of
6 Millstein & Associates and Willie Brown.
7 15. On May 10, 2019, I received a call from Gerald Richelson, an associate at Millstein &
8 Associates. Mr. Richelson requested, inter alia, that the parties continue the September 16, 2019 trial
9 date. I agreed to continue the trial to November 2019. The Court subsequently signed an Order
10 continuing this case to November 12, 2019.
11 16. On June 10, 2019, Jason Fellner, counsel at Murphy Pearson Bradley & Feeney, called
12 to inform me that he had been retained by Defendant Melvin Lee.
13 17. In July 2019, counsel for all Defendants requested that the parties continue the
14 November 12, 2019 trial. I agreed to the continuance, and the Court continued the trial to March 9,
15 2020.
16 18. Since July 2019, the parties have been engaged in active discovery. The City took the
17 depositions of Defendants Lee and Wong, as well as persons most knowledgeable on various topics.
18 Specifically, Defendant Lee was deposed in his individual capacity on August 13, 2019 and Defendant
19 Wong was deposed on June 19, 2019 and July 9, 2019. Defendants have scheduled four depositions of
20 City witnesses for the month of October.
21 19. On September 20, 2019, Defendants filed their Motion for Leave to File a Cross-
22 Complaint against the City. Defendants set the hearing date on the motion for October 17, 2019.
23 20. Defendants' Cross-Complaint alleges two causes of action for implied breaches of
24 contract, and a cause of action for selective prosecution.
25 21. Rather than wait three additional weeks to begin discovery on the Cross-Complaint, on
26 September 25, 2019, I sent an email to Defendants' counsel with the following proposal: (1) The City
27 stipulates to the filing of the Cross Complaint, (2) Defendants agree to re-open and schedule
28 depositions of Defendants Melvin Lee and Teresa Wong, and (3) Defendants take the matter off-
CHOI DECLA OPP MTN XCOMPL, CASE NO. CGC-18-565184 n:\codenf\li2018\170999\01396478.docx
1 calendar and re-set the matter for the Ex Parte Calendar, to be heard the week of September 30, 2019
2 so that the Cross Complaint could be filed that week. I requested that counsel respond by September
3 26, 2019. A true and correct copy of the September 25, 2019 email is attached as Exhibit C.
4 22. ·On September 26, 2019, Mr. Fellner emailed me that he would discuss the matter with
5 counsel for the other Defendants and get back to me by September 30, 2019. On September 30, 2019,
6 Mr. Fellner emailed me that Defendants were not agreeable to the proposal. They suggested that the
7 City file a Statement of Non-Opposition and have the matter heard on October 17, 2019.
8 23. On October 1, 2019, I emailed Mr. Fellner and counsel for the other Defendants
9 explaining that waiting two-three additional weeks to begin discovery would unnecessarily delay
1O discovery and prejudice the City and to reconsider their position. In the alternative, I proposed that
11 Defendants agree to accept written discovery prior to the filing of the Cross-Complaint in order for the
12 City to obtain discovery sooner and to re-open and set deposition dates for Defendants Melvin Lee and
13 Teresa Wong. Mr. Fellner replied back the same day and advised that he was unavailable and would
14 respond the following day. A true and correct copy of this correspondence is attached as Exhibit D.
15 24. On October 2, 2019, Mr. Fellner responded that he believed waiting until the October
16 17, 2019 hearing would not prejudice the City. He stated that Defendants would respond to discovery
17 with the appropriate objections and responses, but failed to clarify whether he would provide
18 substantive responses to discovery served on him before the Cross Complaint was filed. He also asked
19 for the purpose ofre-opening Lee and Wong's depositions. Our office responded that the Lee and
20 Wong depositions would involve the allegations in the Cross Complaint and Amended Answer. Mr.
21 Fellner did not respond before the deadline to file this Opposition. A true and correct copy of this
22 email correspondence is attached as Exhibit E.
23 25. In order to expedite discovery, our office drafted and served written discovery requests
24 on Defendants related to the allegations contained in the proposed Cross-Complaint on October 3,
25 2019.
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CHOI DECLA OPP MTN XCOMPL, CASE NO. CGC-18-565184 n:\codenf\li2018\l 70999\01396478.docx
1 26. Given the proximity of the March 2020 trial date and the preceding close of discovery,
2 allowing almost three weeks to lapse before discovery can be initiated on the Cross Complaint would
3 unnecessarily delay and prejudice the City's ability to properly prepare for trial.
4 I declare under penalty of perjury under the laws of the State of California that the preceding
5 declaration is true, and that this declaration was executed on October 3, 2019, in San Francisco,
6 California.
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JENNIFER E. CHOI
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CHOI DECLA OPP MTN XCOMPL, CASE NO. CGC-18-565184 n:\codenf\li2018\170999\01396478.docx
1 INDEX TO EXHIBITS
2
Exhibit Description
3
A Complaint For Injunctive and Other Relief filed March 23, 2018 (without
4 exhibits)
5 B Verified Amended Answer of Defendants Melvin Lee, Teresa Wong, Van Ness
Care Center, Inc., San Francisco Care Center, L.P., and Mel Lee Management,
6 Inc. to Complaint of City and County of San Francisco and People of the State of
California filed May 24, 2018
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C Email correspondence from Jennifer Choi to Jason Fellner, Stephanie Yee, David
8 Millstein, Gerald Richelson, Owais Bari, and Chrystal Pham sent Wednesday,
September 25, 2019 at 2:51 p.m.
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D Email correspondence from Jason Fellner to Jennifer Choi, Stephanie Yee, David
10 Millstein, Gerald Richelson, Owais Bari, Chrystal Pham, Samantha Romero sent
Tuesday, october 1, 2019 at 10:16 a.m.
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E Email correspondence from Megan Ryan to Jason Fellner, Jennifer Choi,
12 Stephanie Yee, David Millstein, Gerald Richelson, Owais Bari, Chrystal Phan,
Samantha Romero sent Wednesday, Ocober2, 2019 at 3:23 p.m.
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CHOI DECLA OPP MEL LEE MOT PROT ORD, CASE NO. CGC-18-565184 n:\codenf\li2018\170999\01396478.docx
EXHIBIT A
'C
. ) C)',
1 DENNIS J. HERRERA, StateBar#l39669
City Attorney
2 PETER J. KEITH, State Bar #206482
ChiefAttorney
J Neighborhood and Residential Safety Division
ENDORSED
JENNIFER R CHOI, State Bar #184<158 FILED.
4 Deputy City Attorney San Ff811c/BCO County SIJf)Brtor Court
1390 Market Street, Sixth Floor
5 San Francisco, California 94102-5408 MAR .2 3 2018
Telephone: (415) 554-3887
6 Facsimile: (415) 437-4644 CLERK OF THE COURT
E-Mail: Jennifer.Choi@sfcityatty.org BY: NEYL WEBB
7 OeputiJ Clerk -
Attorneys for Plaintiffs
8 CITY AND COUNTY OF SAN FRANCISCO and
PEOPLE OF THE STATE OF CALIFORNIA
9
10 SUPERIOR COURT OF THE STATE OF CALIFORNIA
11 COUNTY OF SAN FRANCISCO
12 UNLIMITED JURISDICTION
13 CITY AND COUNTY OF SAN
FRANCISCO, a Municipal Corporation; and .
CaseNo. CGC-18-565184
14 the PEOPLE OF THE STATE OF
CALIFORNIA, by and through Dennis J.
15 Herrera, City Attorney for the City and County
of San Francisco,
22 Defendants.
23
24
25 The CITY AND COUNTY OF SAN FRANCISCO, a municipal corporation, and the PEOPLE
26 OF THE STATE OF CALIFORNIA, by and through San Francisco City Attorney DENNIS J.
27 HERRERA, (collectively "PLAINTIFFS") file their Complaint against MELVIN LEE, TERESA
28 WONG, VAN NESS CARE CENTER, INC., SAN FRANCISCO CARE CENTER, L.P., MEL LEE
1
COMPLAINT FOR INJUNCTIVE/OTHER RELIEF, CCSF v. LEE
1 MANAGEMENT, INC., and DOE ONE through DOE FIFTY ("DEFENDANTS"). PLAINTIFFS
2 hereby allege as set forth below:
INTRODUCTION
3
4 1. PLAINTIFFS file this Action due to DEFENDANTS' violations oflaw in their
5 ownership, management and maintenance of a senior assisted living facility known as The Avenue,
6 located at 1033-1035 Van Ness Avenue, San Francisco, California 94109.
7 2. The building in question is a 112-unit assisted living facility for senior citizens. Back
8 in 2000, DEFENDANTS won a bid to purchase and develop the property from the former San
9 Francisco Redevelopment Agency by agreeing to set aside a certain number of units for low-income
1o seniors. DEFENDANTS signed a contract With the San Francisco Redevelopment Agency to provide
11 units for low-income seniors for fifty years.
12 3. DEFENDANTS completed construction of The Avenue in 2004 and have housed
13 seniors from 2005 to the present. DEFENDANTS, however, have never rented out units to low-
14 income seniors. DEFENDANTS have also removed units Without permits to create luxury apartments
15 for non-seniors.
16 4. DEFENDANTS' actions violate San Francisco's Municipal Codes, violate California's
17 Unfair Competition Law, and constitute a breach of DEFENDANTS' contract With the San Francisco
18 Redevelopment Agency.
PARTIES AND SUBJECT PROPERTY
19
20 5. Plaintiff CITY AND COUNTY OF SAN FRANCISCO (the "CITY") is a consolidated
21 charter city and county under the laws of the State of California.. The CITY brings this Action under
22 the San Francisco Building Code, California Civil Code section 3480, California Code of Civil
23 Procedure section 731, and as the successor entity to the former San Francisco Redevelopment
/
24 Agency.
25 6. Plaintiff PEOPLE OF THE STATE OF CALIFORNIA, by and through San Francisco
26 City Attorney Dennis J. Herrera (the "PEOPLE"), brings this action pursuant to California Business
27 and Professions Code sections 17200 and 17204.
28 7. Defendant MELVIN LEE is an individual directly involved in the purchase and
2
COMPLAINT FOR INJUNCTIVE/OTHER RELIEF, CCSF v. LEE
1 construction, as well as the operation, management and maintenance, of the real property and all
2 buildings and other improvements located at 1033-1035 Van Ness Avenue, San Francisco, California
3 94109, Assessor's Block 0714, Lot 028, in the City and County of San Francisco, State of California
4 ("PROPERTr') and more particularly described in Exhibit A, which is attached hereto and
5 incorporated as part of this Complaint. Defendant MELVIN LEE is the President and member of the
6 Board of Directors of Defendant VAN NESS CARE CENTER, INC., a Limited Partner of Defendant
7 SAN FRANCISCO CARE CENTER, L.P., and the Secretary, Agent for Service of Process and a
8 Director of Defendant MEL LEE MANAGEMENT, INC. Defendant MELVIN LEE has a 25.385
9 percentage ownership interest in Defendant SAN FRANCISCO CARE CENTER, L.P.
10 8. Defendant TERESA WONG is an individual directly involved in the purchase and
11 construction of the PROPERTY as well as the operation, management and maintenance of the
12 PROPERTY. Defendant TERESA WONG is the Chief Executive Officer, Vice President, Secretary
13 and member of the Board of Directors of Defendant VAN NESS CARE CENTER, INC., a Limited
14 Partner of Defendant SAN FRANCISCO CARE CENTER, L.P., and the President, Chief Executive
15 Officer, Chief Financial Officer and Director of Defendant MEL LEE MANAGEMENT, INC.
16 Defendant TERESA WONG has a·38.308 percentage ownership interest in Defendant SAN
17 FRANCISCO CARE CENTER, L.P.
18 9. Defendant VAN NESS CARE CENTER, INC. is a California corporation and was the
19 named owner of the PROPERTY from the time of its purchase from the former San Francisco
20 Redevelopment Agency to April 2002. Defendant VAN NESS CARE CENTER, INC. is the General
21 Partner of Defendant SAN FRANCISCO CARE CENTER, L.P.
22 10. Defendant SAN FRANCISCO CARE CENTER, L.P. is a California limited partnership
23 that has owned the PROPERTY from April 2002 to the present.
24 11. Defendant MEL LEE MANAGEMENT, INC. is a California corporation and is
25 involved in the operation, management and maintenance of the PROPERTY.
26 12. At all times herein mentioned in this Complaint, Defendants MELVIN LEE, TERESA
27 WONG, VAN NESS CARE CENTER, INC., SAN FRANCISCO CARE CENTER, L.P., MEL LEE
28 MANAGEMENT, INC., and DOE ONE through DOE FIFTY, have been the legal owners, members,
3
COMPLAINT FOR INJUNCTIVE/OTHER RELIEF, CCSF v. LEE
1 officers, directors, and managers of the PROPERTY. Defendants DOE ONE through DOE FIFTY are
2 sued herein under fictitious names. PLAINTIFFS do not at this time know the true names or
3 capacities of said defendants, but pray that the same may be inserted herein when ascertained.
4 13. DEFENDANTS are sued as the owners, operators, managers, lessors and maintainers
5 of the PROPERTY, as well as the persons committing the acts and/or omissions alleged in the
6 Complaint or the persons allowing or directing the commission of the acts and/or omissions alleged in
7 this Complaint.
8 14. At all times herein mentioned, each Defendant was an agent, officer, member, director,
9 employee, and partner of each other defendant and at all times was acting within the course and scope
IO of said agency, service, membership, employment, partnership, franchise and joint venture.
11 15. At all times herein mentioned, all the acts and omissions described in this Complaint by
12 any Defendant were aided and abetted by all other Defendants. DEFENDANTS were aware of the
13 illegality of the acts and omissions described in this Complaint, and either directly participated in, or
14 encouraged, these acts and omissions.
15 16. Whenever reference is made in this Complaint to any act of "DEFENDANTS" each
16 such allegation shall mean that each defendant acted both individually and jointly with the other
17 defendants. Actions taken by or omissions made by DEFENDANTS' employees, officers, members,
18 directors, partners, or agents in the course of their employment or agency are considered to be actions
19 or omissions of DEFENDANTS for the purposes of this Complaint.
20 GENERAL ALLEGATIONS
21 17. The California Legislature has found the availability of housing to be "of vital
22 statewide importance" and mandated that "local and state governments have a responsibility to use the
23 powers invested in them to facilitate the improvement and development of housing to make adequate
24 provision for the housing needs of all economic segments of the community." (Cal. Govt. Code,
25 §65580.)
26 18. Housing for low-income senior citizens needing assisted care is of particular
27 importance, as senior citizens constitute some of the most vulnerable members of our community.
28
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COMPLAINT FOR INJUNCTIVE/OTHER RELIEF, CCSF v. LEE
1 I. THE IDSTORY BEHIND THE PROPERTY AT ISSUE
2 19. DEFENDANTS own, operate, manage, and maintain the PROPERTY, a 112-unit
.3 senior assisted living facility called The Avenue. The PROPERTY is currently occupied by seniors,
4 Defendant TERESA WONG, and non-seniors.
5 20. On September 12, 2000, Defendant VAN NESS CARE CENTER, INC., entered into a
6 "Disposition and Development Agreement" ("DDA") with the San Francisco Redevelopment Agency
7 to purchase and develop the PROPERTY into a senior assisted living facility. Defendant MELVIN
8 LEE signed the DDA as President and Treasurer of Defendant VAN NESS CARE CENTER, INC.,
9 and Defendant TERESA WONG signed the DDA as Vice President and Secretary of Defendant VAN
10 NESS CARE CENTER, INC. Section 9.03(d) of the DDA mandates that between twenty (20) to
11 thirty (30) out of the one-hundred twelve (112) units at the PROPERTY be occupied or held vacant as
12 affordable residential care units for a period of 50 years. A true and correct copy of the DDA is
13 attached as Exhibit B and incorporated as part of this Complaint. 1
14 21. On May 22, 2001, the DDA was amended ("First Amended DDA") to, inter alia, set
15 the number of required affordable units at twenty-five (25) units. Defendant MELVIN LEE signed the
16 First Amended DDA as President and Treasurer of Defendant VAN NESS CARE CENTER, INC.,
17 and Defendant TERESA WONG signed the First Amended DDA as Vice President and Secretary of
18 Defendant VAN NESS CARE CENTER, INC. A true and correct copy of the First Amended DDA is
19 attached as Exhibit C and incorporated as part of this Complaint.
20 22. On November 13, 2001, the DDA was amended a second time ("Second Amended
21 DDA") to, inter alia, revise the schedule of performance. Defendant MELVIN LEE signed the
22 Second Amended DDA as President and Treasurer of Defendant VAN NESS CARE CENTER, INC.,
23 and Defendant TERESA WONG signed the Second Amended DDA as Vice President and Secretary
24 of Defendant VAN NESS CARE CENTER, INC. A true and correct copy of the Second Amended
25 DDA is attached as Exhibit D and incorporated as part of this Complaint.
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The attachments to the DDA have not been attached due to their length, but are also
28 incorporated as part of this Complaint.
5
COMPLAINT FOR INJUNCTIVE/OTHER RELIEF, CCSF v. LEE
1 23. On April 30, 2002, Defendants VAN NESS CARE CENTER, INC. and SAN
2 FRANCISCO CARE CENTER, L.P. signed an "Assignment and Assumption of Disposition and
3 Development Agreement" assigning Defendant SAN FRANCISCO CARE CENTER, L.P. all of
4 Defendant VAN NESS CARE CENTER, INC. 's right, title, and interest in the DDA and the
5 PROPERTY. A true and correct copy of the April 30, 2002 Assignment agreement is attached as
6 Exhibit E and incorporated as part of this Complaint.
7 24. On April 30, 2002, the DDA was amended a third time ("Third Amended DDA") to,
8 inter alia, assign the DDA from Defendant VAN NESS CARE CENTER, INC. to Defendant SAN
9 FRANCISCO CARE CENTER, L.P. Defendants VAN NESS CARE CENTER, INC., MELVIN LEE
10 and TERESA WONG signed the Third Amended DDA as General Partners of Defendant SAN
11 FRANCISCO CARE CENTER, L.P. A true and correct copy of the Third Amended DDA is attached
12 as Exhibit F and incorporated as part of this Complaint.
13 25. Also on April 30, 2002, Defendant SAN FRANCISCO CARE CENTER, L.P., signed a
14 "Declaration of Affordability Restrictions" ("DAR"). Defendants MELVIN LEE and TERESA
15 WONG both signed the DAR on behalf of Defendant VAN NESS CARE CENTER, INC., a general
16 partner of"Developer" Defendant SAN FRANCISCO CARE CENTER, L.P. Section A of the DAR
17 states, "The Developer also agreed in and through the DDA to make a certain number of residential
18 units in the development affordable." A true and correct copy of the DAR is attached as Exhibit G
19 and incorporated as part of this Complaint.
20 26. On June 7, 2002, the San Francisco Redevelopment Agency sold the PROPERTY to
21 Defendant SAN FRANCISCO CARE CENTER, L.P. for $2,025,000.00.
22 27. On September 7, 2004, the DDA was amended a fourth time ("Fourth Amended DDA")
23 to, inter alia, change the date of completion of construction. Defendants VAN NESS CARE
24 CENTER, INC. and MELVIN LEE signed the Fourth Amended DDA as General Partners of
25 Defendant SAN FRANCISCO CARE CENTER, L.P. A true and correct copy of the Fourth Amended
26 DDA is attached as Exhibit Hand incorporated as part of this Complaint.
27 28. In November 2004, Defendant SAN FRANCISCO CARE CENTER, L.P. completed
28 construction of the senior assisted living facility known as The Avenue, located at the PROPERTY.
6
COMPLAINT FOR INJUNCTIVE/OTIIER RELIEF, CCSF v. LEE
1 29. On June 20, 2006, the DDA was amended a fifth time ("Fifth Amended DDA") to,
2 inter alia, increase the rents of the low income units. Defendants VAN NESS CARE CENTER, INC.,
3 MELVIN LEE and TERESA WONG signed the Fifth Amended DDA as General Partners of
4 Defendant SAN FRANCISCO CARE CENTER, L.P. Paragraph 6 of the Fifth Amended DDA states
5 that unless otherwise expressly modified by the Fifth Amended DDA, the original DDA "shall remain
6 in full force and effect in accordance with its terms." A true and correct copy of the Fifth Amended
7 DDA is attached as Exhibit I and incorporated as part of this Complaint.
8 30. Also on June 20, 2006, the aforementioned DAR was amended and restated.
9 Defendants VAN NESS CARE ENTER, INC., MELVIN LEE and TERESA WONG signed an
10 "Amended and Restated Declaration of Affordability Restrictions" ("Amended DAR") as General
11 Partners of Defendant SAN FRANCISCO CARE CENTERL.P. The "Amended DAR" superseded
12 the original DAR. A true and correct copy of the Amended DAR is attached as Exhibit J and
13 incorporated as part of this Complaint.
14 31. Section 1.3 of the Amended DAR mandates that, "25 Affordable Residential Care Unit
15 requirement shall be in effect for a period of no less than 50 years from June 20, 2006, the date the
16 Amended and Restated Declar~tion of the Affordability Restrictions was authorized by the Agency."
17 Pursuant to the Declaration, the Avenue is required to provide a total of 25 Affordable Residential
18 Care units: 11 are for households with 60% or less of the Area Median Income ("AMI") and 14 are for
19 households with 80% or less of the AMI."
20 32. Section 1.8 of the Amended DAR states that, "On an annual basis, on or before April
21 30th of each year following the Agency's issuance of the Certificate of Completion, Developer shall
22 submit a report (the "Annual Report") to the Agency, which contains, with respect to each Affordable
23 Residential Care Unit, the rental rate and income and family size of the occupant."
24 33. Section 15.2 of the Amended DAR states, "At all times during the term of this
25 Amended and Restated Declaration, Developer will provide to the Agency the reports described
26 below, together with any other information that the Agency is required to provide pursuant to the laws
27 of the State of California or to Federal Law."
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7
COMPLAINT FOR INJUNCTIVE/OTHER RELIEF, CCSF v. LEE
1 34. In 2012, the San Francisco Redevelopment Agency was dissolved by law. That same
2 year, the CITY signed into law Board of Supervisors Resolution No. 11-12, accepting transfer of the
3 San Francisco Redevelopment Agency's housing assets to the CITY and designating the San Francisco
4 Mayor's Office of Housing and Community Development ("MOHCD") to perform the functions
5 previously performed by the San Francisco Redevelopment Agency.
6 II. DEFENDANTS' FAILURE TO ABIDE BY THEm AGREEMENTS
7 35. DEFENDANTS began renting out individual units to seniors in 2005. Despite signing
8 the aforementioned agreements, DEFENDANTS failed to, and have continued to fail to, rent out any
9 Affordable Residential Care Units to qualified seniors. DEFENDANTS have also failed to submit
1O annual reports related to their Affordable Residential Care Units.
11 36. In April 2015, MOHCD notified Defendant MELVIN LEE via electronic mail of the
12 deadline for DEFENDANTS to submit an annual report for each affordable residential care unit,
13 including the rental rate, income and family size of the occupant. DEFENDANTS failed to submit an
14 annual report.
15 37. In January 2016,MOHCD notified Defendant MELVIN LEE via electronic mail of the
16 2016 deadline for DEFENDANTS to submit an annual report for each affordable resident.ial care unit,
17 including the rental rate, income and family size of the occupant. MOHCD even offered to train the
18 staff at the PROPERTY in drafting the report. DEFENDANTS failed to respond to the offer, and
19 failed to submit an annual report.
20 38. In March 2016, a representative of MOHCD made an unscheduled visit to the
21 PROPERTY. Defendant MELVIN LEE met with the representative. Defendant MELVIN LEE
22 admitted to the representative that he had renovated portions of the PROPERTY since 2004, such as
23 combining units or removing units to make room for a new library and gym. The MOHCD
24 representative asked Defendant MELVIN LEE to provide a rent roll, and Defendant MELVIN LEE
25 agreed to provide it by electronic mail. Defendant MELVIN LEE, however, failed to do so.
26 39. On July 22, 2016, MOHCD served a "Notice of Breach" on DEFENDANTS notifying
27 them of their breach of the DDA and the Amended DAR.
28
8
COMPLAINT FOR INJUNCTIVE/OTHER RELIEF, CCSF v. LEE
1 40. On August 19, 2016, MOHCD served a "Notice of Default" on DEFENDANTS
2 notifying them that they were in default of the DDA and Amended DAR.2 A true and correct copy of
3 the ''Notice of Default" is attached as Exhibit Kand incorporated as part of this Complaint.
4 41. To date, DEFENDANTS have failed to ever house any low-income seniors at the
5 PROPERTY, in violation of the DDA and the Amended DAR.
6 42. DEFENDANTS have also allowed several units to be occupied by non-seniors,
7 including Defendant TERESA WONG.
8 43. DEFENDANTS have also removed at least nine units to create two luxury apartments.
9 One luxury apartment is currently occupied by a non-senior and the other luxury apartment, currently
10 under construction, is intended to house Defendant TERESA WONG's upon the completion of
11 construction.
12
III. VIOLATIONS FOUND AT THE PROPERTY BY THE SAN FRANCISCO
13 DEPARTMENT OF BUILDING INSPECTION.
14 44. In June 2017, the San Francisco Department of Building Inspection ("DBI") inspected
15 the PROPERTY. DBI observed multiple violations of the San Francisco Building Code, including
16 multiple instances of work without permit. The work without permit included the construction of new
17 walls and doors that potentially compromised fire sprinkler coverage, the removal of walls between
18 units, and construction of two separate, luxury apartments that required the removal of nine senior
19 residential care units. During the same inspection, inspectors found several units that were occupied
20 by employees of the Avenue, iµcluding Defendant TERESA WONG.
21 45. On or about June 26, 2017, DBI issued a Notice of Violation (''NOV") for work
22 without permit as follows:
23 A. By adding a wall and door to the second and third floor kitchens without permit,
24 possibly compromising sprinkler coverage;
25 B. By removing thirteen units without permit;
26
2
27 Sections 8.0l(d) and 8.0l(m) of the DDA states that DEFENDANTS' default of any
agreement between the SFRA and DEFENDANTS, or DEFENDANTS' failure to perform any other
28 agreements or obligations shall constitute a default.
9
COMPLAINT FOR INJUNCTIVE/OTHER RELIEF, CCSF v. LEE
1 c. By removing walls between units without a permit;
2 D. By constructing a one-bedroom, luxury apartment without permit (and removing four
3 units in the process);
4 E. By beginning construction of a second luxury apartment without permit (and removing
5 five units in the process).
6 46. A true and correct copy of the June 26, 2017 NOV is attached at Exhibit Land
7 incorporated as part of this Complaint.
8 47. DEFENDANTS were ordered to file permit applications within thirty days, obtain a
9 permit within sixty days, and complete all work within ninety days.
1O 48. The June 26, 2017 NOV was mailed on or about June 28, 2017 to DEFENDANTS at
11 their last known address as listed in the San Francisco Assessor's Office.
12 49. DEFENDANTS failed to comply with all of the requirements of the June 26, 2017
13 NOV. To date, the June 26, 2017 NOV remains outstanding and unabated.
14 FIRST CAUSE OF ACTION
FOR UNLAWFUL AND UNFAIR BUSINESS PRACTICES BROUGHT BY THE PLAINTIFF
15 PEOPLE OF THE STATE OF CALIFORNIA AGAINST ALL DEFENDANTS
16 (California Business and Professions Code Sections 17200-17210)
17 50. Plaintiff PEOPLE OF THE STATE OF CALIFORNIA hereby incorporate by reference
18 paragraphs 1 through 49 above, as though fully set forth herein.
19 51. The PEOPLE brings this cause of action in the name of the People of the State of
20 California pursuant to Business and Professions Code Section 17200-17210 in order to protect the
21 public as consumers and competitors from unlawful practices committed by DEFENDANTS in the
22 maintenance, management and ownership of the PROPERTY as a public nuisance and in failing to
23 provide low-income housing
Preview
1 DENNIS J. HERRERA, State Bar #139669 City Attorney ELECTRONICALLY 2 PETER J. KEITH, State Bar #206482 Chief Attorney F I L E D Superior Court of California, 3 Resident and Neighborhood Safety Division County of San Francisco JENNIFER E. CHOI, State Bar #184058 4 MEGAN E. RYAN, State Bar #264922 10/03/2019 Clerk of the Court Deputy City Attorney BY: YOLANDA TABO-RAMIREZ 5 Fox Plaza Deputy Clerk 1390 Market Street, Sixth Floor .6 SanFrancisco, California 94102-5408 Telephone: (415) 554-3887 7 Facsimile: (415) 437-4644 E-Mail: jennifer.choi@sfcityatty.org 8 9 Attorneys for Plaintiffs CITY AND COUNTY OF SAN FRANCISCO and 10 PEOPLE OF THE STATE OF CALIFORNIA 11 SUPERIOR COURT OF THE STATE OF CALIFORNIA 12 COUNTY OF SAN FRANCISCO 13 · UNLIMITED JURISDICTION 14 CITY AND COUNTY OF SAN Case No. CGC-18-565184 15 FRANCISCO, a Municipal Corporation; and the PEOPLE OF THE STATE OF DECLARATION OF JENNIFER E. CHOI IN 16 CALIFORNIA, by and through Dennis J. OPPOSITION TO DEFENDANTS' MOTION Herrera, City Attorney for the City and County FOR LEAVE TO FILE CROSS-COMPLAINT; 17 of San Francisco, EXHIBITS A-E 18 Plaintiffs, Hearing Date: October 17, 2019 Time: 9:30 a.m. 19 vs. Place: Dept. 302 20 MELVIN LEE, an individual, TERESA Date Action Filed: March 23, 2018 WONG, an individual, VAN NESS CARE Trial Date: March 9, 2020 21 CENTER, INC., SAN FRANCISCO CARE CENTER, L.P., MEL LEE MANAGEMENT, 22 INC., and DOE ONE through DOE FIFTY, inclusive, 23 Defendants. 24 25 I, JENNIFER E. CHOI, declare as follows: 26 1. I am a Deputy City Attorney with the Office of the City Attorney for the City and 27 County of San Francisco. I am one of the attorneys assigned to handle this action on behalf of 28 1 CHOI DECLA OPP MTN XCOMPL, CASE NO. CGC-18-565184 n:\codenf\li2018\170999\01396478.docx 1 Plaintiffs People of the State of California and City and County of San Francisco ("Plaintiffs"). I have 2 personal knowledge of the contents of this Declaration. If called upon to testify, I could and would 3 testify competently to the contents of this Declaration. 4 2. I understand and believe that in 2000, Defendant Van Ness Care Center, Inc. 5 ("VNCC") won a bid from the former San Francisco Redevelopment Agency ("SFRA") to purchase 6 and develop a property located at 1033-1035 Van Ness Avenue, in San Francisco, into an assisted 7 living facility for senior citizens known as The A venue. Defendant Melvin Lee is President, and 8 Defendant Teresa Wong is Vice President and Secretary, of Defendant VNCC. As part of the sale, 9 Defendant VNCC entered into a Disposition and Development ,Agreement with the SFRA ("DDA") 1O and also signed a Declaration of Affordability Restrictions ("DAR"). 11 3. In 2002, Defendant VNCC assigned its interest and obligations to Defendant San 12 Francisco Care Center, L.P. ("SFCC.") Defendants Lee, Wong, and VNCC are partners of Defendant 13 SFCC. The DDA and DAR were amended several times, and ultimately required Defendants to 14 provide 25 of the 112 units for low income seniors for a period of 50 years and to provide annual 15 reports on the 25 low income units. The SFRA refunded Defendants over $100,000 to market the 16 units, including $50,000 specifically set aside for marketing of the 25 low income units. 17 4. Construction on The A venue was completed in late 2004. Defendants began housing 18 seniors paying market rate rent in early 2005, but did not house lowincome seniors. In 2006, 19 Defendants were granted an increase in rental fees for the low income units, with Defendant Lee 20 representing to the San Francisco Redevelopment Commission that he would start renting out the low 21 income units, "immediately." 22 5. I understand and believe that Defendants either never housed any, or housed just a 23 handful of, low income seniors. Defendants admit that they failed to provide the SFRA with annual 24 reports on the low income units preventing the SFRA from learning about the vacant status of these 25 units. 26 6. Based on Defendants' failure to comply with the DDA and DAR, the City issued a 27 Notice of Default to Defendants on August 19, 2016. 28 2 CHOI DECLA OPP MTN XCOMPL, CASE NO. CGC-18-565184 n:\codent\li2018\170999\01396478.docx 1 7. On June 26, 2017, I attended an inspection of The Avenue with inspectors from the San 2 Francisco Department of Building Inspection ("DBI''). Defendants Wong and Lee accompanied us on 3 the inspection. In the course of the inspection, I observed that walls had been removed between units, 4 units had been removed altogether to create a lounge, four units had been removed to create an 5 apartment for Allen Yu, Defendant Wong's grown son, five units had been removed to start 6 construction on an apartment for Defendant Wong, and walls had been removed between two units 7 occupied by Defendant Wong. Wong represented that she and Yu are the only managers of The 8 Avenue, and live there to satisfy the state's requirements that a manager be on site at all times. I 9 understand and believe that all of this construction was done without permit or proper oversight from 10 DBI inspectors. Defendants have admitted that Yu's apartment was constructed in 2007. I understand 11 and believe that DBI issued a Notice of Violation for the work without permit observed on June 26, 12 2017. 13 8. On March 23, 2018, Plaintiffs filed a Complaint against Defendants Melvin Lee, Teresa 14 Wong, San Francisco Care Center L.P ., Van Ness Care Center Inc., and Mel Lee Management Inc. 15 ("Defendants"). A true and correct copy of the Complaint is attached as Exhibit A. 1 16 9. The Plaintiffs' Complaint alleges four causes of action: (1) California's Unfair 17 Competition Law (California Business and Professions Code section 17200 et seq.) for Defendants' 18 unlawful and unfair business practices in their management of The Avenue, (2) Local and State public 19 nuisance statutes (SF Building Code section 102, California Civil Code sections 3479 and 3480, and 20 California Code of Civil Procedure section 731) for maintaining The Avenue as a public nuisance, (3) 21 San Francisco Building Code section 103, for Defendants' work without permit, and (4) Breach of 22 Contract for Defendants' failure to abide by the DDA and DAR. 23 10. Plaintiffs seek injunctive relief, specific performance, damages, penalties,. attorney's 24 fees and costs. 25 11. Defendants filed a verified Answer on May 24, 2018. A true and correct copy is 26 attached as Exhibit B. 27 1 The exhibits to the Complaint are voluminous and have not been attached. The City can 28 provide the exhibits upon request. 3 CHOI DECLA OPP MTN XCOMPL, CASE NO. CGC-18-565184 n:\codenf\li2018\l 70999\01396478.docx 1 12. Discovery commenced shortly thereafter. 2 13. The Court initially set trial for May 20, 2019. In February 2019, the trial was continued 3 to September 16, 2019 at the parties' request. 4 14. On May 8, 2019, I received an email from then Defendants' counsel Aaron Gruber, 5 notifying me that he was substituting out as counsel, and would be replaced by the law offices of 6 Millstein & Associates and Willie Brown. 7 15. On May 10, 2019, I received a call from Gerald Richelson, an associate at Millstein & 8 Associates. Mr. Richelson requested, inter alia, that the parties continue the September 16, 2019 trial 9 date. I agreed to continue the trial to November 2019. The Court subsequently signed an Order 10 continuing this case to November 12, 2019. 11 16. On June 10, 2019, Jason Fellner, counsel at Murphy Pearson Bradley & Feeney, called 12 to inform me that he had been retained by Defendant Melvin Lee. 13 17. In July 2019, counsel for all Defendants requested that the parties continue the 14 November 12, 2019 trial. I agreed to the continuance, and the Court continued the trial to March 9, 15 2020. 16 18. Since July 2019, the parties have been engaged in active discovery. The City took the 17 depositions of Defendants Lee and Wong, as well as persons most knowledgeable on various topics. 18 Specifically, Defendant Lee was deposed in his individual capacity on August 13, 2019 and Defendant 19 Wong was deposed on June 19, 2019 and July 9, 2019. Defendants have scheduled four depositions of 20 City witnesses for the month of October. 21 19. On September 20, 2019, Defendants filed their Motion for Leave to File a Cross- 22 Complaint against the City. Defendants set the hearing date on the motion for October 17, 2019. 23 20. Defendants' Cross-Complaint alleges two causes of action for implied breaches of 24 contract, and a cause of action for selective prosecution. 25 21. Rather than wait three additional weeks to begin discovery on the Cross-Complaint, on 26 September 25, 2019, I sent an email to Defendants' counsel with the following proposal: (1) The City 27 stipulates to the filing of the Cross Complaint, (2) Defendants agree to re-open and schedule 28 depositions of Defendants Melvin Lee and Teresa Wong, and (3) Defendants take the matter off- CHOI DECLA OPP MTN XCOMPL, CASE NO. CGC-18-565184 n:\codenf\li2018\170999\01396478.docx 1 calendar and re-set the matter for the Ex Parte Calendar, to be heard the week of September 30, 2019 2 so that the Cross Complaint could be filed that week. I requested that counsel respond by September 3 26, 2019. A true and correct copy of the September 25, 2019 email is attached as Exhibit C. 4 22. ·On September 26, 2019, Mr. Fellner emailed me that he would discuss the matter with 5 counsel for the other Defendants and get back to me by September 30, 2019. On September 30, 2019, 6 Mr. Fellner emailed me that Defendants were not agreeable to the proposal. They suggested that the 7 City file a Statement of Non-Opposition and have the matter heard on October 17, 2019. 8 23. On October 1, 2019, I emailed Mr. Fellner and counsel for the other Defendants 9 explaining that waiting two-three additional weeks to begin discovery would unnecessarily delay 1O discovery and prejudice the City and to reconsider their position. In the alternative, I proposed that 11 Defendants agree to accept written discovery prior to the filing of the Cross-Complaint in order for the 12 City to obtain discovery sooner and to re-open and set deposition dates for Defendants Melvin Lee and 13 Teresa Wong. Mr. Fellner replied back the same day and advised that he was unavailable and would 14 respond the following day. A true and correct copy of this correspondence is attached as Exhibit D. 15 24. On October 2, 2019, Mr. Fellner responded that he believed waiting until the October 16 17, 2019 hearing would not prejudice the City. He stated that Defendants would respond to discovery 17 with the appropriate objections and responses, but failed to clarify whether he would provide 18 substantive responses to discovery served on him before the Cross Complaint was filed. He also asked 19 for the purpose ofre-opening Lee and Wong's depositions. Our office responded that the Lee and 20 Wong depositions would involve the allegations in the Cross Complaint and Amended Answer. Mr. 21 Fellner did not respond before the deadline to file this Opposition. A true and correct copy of this 22 email correspondence is attached as Exhibit E. 23 25. In order to expedite discovery, our office drafted and served written discovery requests 24 on Defendants related to the allegations contained in the proposed Cross-Complaint on October 3, 25 2019. 26 27 28 5 CHOI DECLA OPP MTN XCOMPL, CASE NO. CGC-18-565184 n:\codenf\li2018\l 70999\01396478.docx 1 26. Given the proximity of the March 2020 trial date and the preceding close of discovery, 2 allowing almost three weeks to lapse before discovery can be initiated on the Cross Complaint would 3 unnecessarily delay and prejudice the City's ability to properly prepare for trial. 4 I declare under penalty of perjury under the laws of the State of California that the preceding 5 declaration is true, and that this declaration was executed on October 3, 2019, in San Francisco, 6 California. 7 JENNIFER E. CHOI 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6 CHOI DECLA OPP MTN XCOMPL, CASE NO. CGC-18-565184 n:\codenf\li2018\170999\01396478.docx 1 INDEX TO EXHIBITS 2 Exhibit Description 3 A Complaint For Injunctive and Other Relief filed March 23, 2018 (without 4 exhibits) 5 B Verified Amended Answer of Defendants Melvin Lee, Teresa Wong, Van Ness Care Center, Inc., San Francisco Care Center, L.P., and Mel Lee Management, 6 Inc. to Complaint of City and County of San Francisco and People of the State of California filed May 24, 2018 7 C Email correspondence from Jennifer Choi to Jason Fellner, Stephanie Yee, David 8 Millstein, Gerald Richelson, Owais Bari, and Chrystal Pham sent Wednesday, September 25, 2019 at 2:51 p.m. 9 D Email correspondence from Jason Fellner to Jennifer Choi, Stephanie Yee, David 10 Millstein, Gerald Richelson, Owais Bari, Chrystal Pham, Samantha Romero sent Tuesday, october 1, 2019 at 10:16 a.m. 11 E Email correspondence from Megan Ryan to Jason Fellner, Jennifer Choi, 12 Stephanie Yee, David Millstein, Gerald Richelson, Owais Bari, Chrystal Phan, Samantha Romero sent Wednesday, Ocober2, 2019 at 3:23 p.m. 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CHOI DECLA OPP MEL LEE MOT PROT ORD, CASE NO. CGC-18-565184 n:\codenf\li2018\170999\01396478.docx EXHIBIT A 'C . ) C)', 1 DENNIS J. HERRERA, StateBar#l39669 City Attorney 2 PETER J. KEITH, State Bar #206482 ChiefAttorney J Neighborhood and Residential Safety Division ENDORSED JENNIFER R CHOI, State Bar #184<158 FILED. 4 Deputy City Attorney San Ff811c/BCO County SIJf)Brtor Court 1390 Market Street, Sixth Floor 5 San Francisco, California 94102-5408 MAR .2 3 2018 Telephone: (415) 554-3887 6 Facsimile: (415) 437-4644 CLERK OF THE COURT E-Mail: Jennifer.Choi@sfcityatty.org BY: NEYL WEBB 7 OeputiJ Clerk - Attorneys for Plaintiffs 8 CITY AND COUNTY OF SAN FRANCISCO and PEOPLE OF THE STATE OF CALIFORNIA 9 10 SUPERIOR COURT OF THE STATE OF CALIFORNIA 11 COUNTY OF SAN FRANCISCO 12 UNLIMITED JURISDICTION 13 CITY AND COUNTY OF SAN FRANCISCO, a Municipal Corporation; and . CaseNo. CGC-18-565184 14 the PEOPLE OF THE STATE OF CALIFORNIA, by and through Dennis J. 15 Herrera, City Attorney for the City and County of San Francisco, 22 Defendants. 23 24 25 The CITY AND COUNTY OF SAN FRANCISCO, a municipal corporation, and the PEOPLE 26 OF THE STATE OF CALIFORNIA, by and through San Francisco City Attorney DENNIS J. 27 HERRERA, (collectively "PLAINTIFFS") file their Complaint against MELVIN LEE, TERESA 28 WONG, VAN NESS CARE CENTER, INC., SAN FRANCISCO CARE CENTER, L.P., MEL LEE 1 COMPLAINT FOR INJUNCTIVE/OTHER RELIEF, CCSF v. LEE 1 MANAGEMENT, INC., and DOE ONE through DOE FIFTY ("DEFENDANTS"). PLAINTIFFS 2 hereby allege as set forth below: INTRODUCTION 3 4 1. PLAINTIFFS file this Action due to DEFENDANTS' violations oflaw in their 5 ownership, management and maintenance of a senior assisted living facility known as The Avenue, 6 located at 1033-1035 Van Ness Avenue, San Francisco, California 94109. 7 2. The building in question is a 112-unit assisted living facility for senior citizens. Back 8 in 2000, DEFENDANTS won a bid to purchase and develop the property from the former San 9 Francisco Redevelopment Agency by agreeing to set aside a certain number of units for low-income 1o seniors. DEFENDANTS signed a contract With the San Francisco Redevelopment Agency to provide 11 units for low-income seniors for fifty years. 12 3. DEFENDANTS completed construction of The Avenue in 2004 and have housed 13 seniors from 2005 to the present. DEFENDANTS, however, have never rented out units to low- 14 income seniors. DEFENDANTS have also removed units Without permits to create luxury apartments 15 for non-seniors. 16 4. DEFENDANTS' actions violate San Francisco's Municipal Codes, violate California's 17 Unfair Competition Law, and constitute a breach of DEFENDANTS' contract With the San Francisco 18 Redevelopment Agency. PARTIES AND SUBJECT PROPERTY 19 20 5. Plaintiff CITY AND COUNTY OF SAN FRANCISCO (the "CITY") is a consolidated 21 charter city and county under the laws of the State of California.. The CITY brings this Action under 22 the San Francisco Building Code, California Civil Code section 3480, California Code of Civil 23 Procedure section 731, and as the successor entity to the former San Francisco Redevelopment / 24 Agency. 25 6. Plaintiff PEOPLE OF THE STATE OF CALIFORNIA, by and through San Francisco 26 City Attorney Dennis J. Herrera (the "PEOPLE"), brings this action pursuant to California Business 27 and Professions Code sections 17200 and 17204. 28 7. Defendant MELVIN LEE is an individual directly involved in the purchase and 2 COMPLAINT FOR INJUNCTIVE/OTHER RELIEF, CCSF v. LEE 1 construction, as well as the operation, management and maintenance, of the real property and all 2 buildings and other improvements located at 1033-1035 Van Ness Avenue, San Francisco, California 3 94109, Assessor's Block 0714, Lot 028, in the City and County of San Francisco, State of California 4 ("PROPERTr') and more particularly described in Exhibit A, which is attached hereto and 5 incorporated as part of this Complaint. Defendant MELVIN LEE is the President and member of the 6 Board of Directors of Defendant VAN NESS CARE CENTER, INC., a Limited Partner of Defendant 7 SAN FRANCISCO CARE CENTER, L.P., and the Secretary, Agent for Service of Process and a 8 Director of Defendant MEL LEE MANAGEMENT, INC. Defendant MELVIN LEE has a 25.385 9 percentage ownership interest in Defendant SAN FRANCISCO CARE CENTER, L.P. 10 8. Defendant TERESA WONG is an individual directly involved in the purchase and 11 construction of the PROPERTY as well as the operation, management and maintenance of the 12 PROPERTY. Defendant TERESA WONG is the Chief Executive Officer, Vice President, Secretary 13 and member of the Board of Directors of Defendant VAN NESS CARE CENTER, INC., a Limited 14 Partner of Defendant SAN FRANCISCO CARE CENTER, L.P., and the President, Chief Executive 15 Officer, Chief Financial Officer and Director of Defendant MEL LEE MANAGEMENT, INC. 16 Defendant TERESA WONG has a·38.308 percentage ownership interest in Defendant SAN 17 FRANCISCO CARE CENTER, L.P. 18 9. Defendant VAN NESS CARE CENTER, INC. is a California corporation and was the 19 named owner of the PROPERTY from the time of its purchase from the former San Francisco 20 Redevelopment Agency to April 2002. Defendant VAN NESS CARE CENTER, INC. is the General 21 Partner of Defendant SAN FRANCISCO CARE CENTER, L.P. 22 10. Defendant SAN FRANCISCO CARE CENTER, L.P. is a California limited partnership 23 that has owned the PROPERTY from April 2002 to the present. 24 11. Defendant MEL LEE MANAGEMENT, INC. is a California corporation and is 25 involved in the operation, management and maintenance of the PROPERTY. 26 12. At all times herein mentioned in this Complaint, Defendants MELVIN LEE, TERESA 27 WONG, VAN NESS CARE CENTER, INC., SAN FRANCISCO CARE CENTER, L.P., MEL LEE 28 MANAGEMENT, INC., and DOE ONE through DOE FIFTY, have been the legal owners, members, 3 COMPLAINT FOR INJUNCTIVE/OTHER RELIEF, CCSF v. LEE 1 officers, directors, and managers of the PROPERTY. Defendants DOE ONE through DOE FIFTY are 2 sued herein under fictitious names. PLAINTIFFS do not at this time know the true names or 3 capacities of said defendants, but pray that the same may be inserted herein when ascertained. 4 13. DEFENDANTS are sued as the owners, operators, managers, lessors and maintainers 5 of the PROPERTY, as well as the persons committing the acts and/or omissions alleged in the 6 Complaint or the persons allowing or directing the commission of the acts and/or omissions alleged in 7 this Complaint. 8 14. At all times herein mentioned, each Defendant was an agent, officer, member, director, 9 employee, and partner of each other defendant and at all times was acting within the course and scope IO of said agency, service, membership, employment, partnership, franchise and joint venture. 11 15. At all times herein mentioned, all the acts and omissions described in this Complaint by 12 any Defendant were aided and abetted by all other Defendants. DEFENDANTS were aware of the 13 illegality of the acts and omissions described in this Complaint, and either directly participated in, or 14 encouraged, these acts and omissions. 15 16. Whenever reference is made in this Complaint to any act of "DEFENDANTS" each 16 such allegation shall mean that each defendant acted both individually and jointly with the other 17 defendants. Actions taken by or omissions made by DEFENDANTS' employees, officers, members, 18 directors, partners, or agents in the course of their employment or agency are considered to be actions 19 or omissions of DEFENDANTS for the purposes of this Complaint. 20 GENERAL ALLEGATIONS 21 17. The California Legislature has found the availability of housing to be "of vital 22 statewide importance" and mandated that "local and state governments have a responsibility to use the 23 powers invested in them to facilitate the improvement and development of housing to make adequate 24 provision for the housing needs of all economic segments of the community." (Cal. Govt. Code, 25 §65580.) 26 18. Housing for low-income senior citizens needing assisted care is of particular 27 importance, as senior citizens constitute some of the most vulnerable members of our community. 28 4 COMPLAINT FOR INJUNCTIVE/OTHER RELIEF, CCSF v. LEE 1 I. THE IDSTORY BEHIND THE PROPERTY AT ISSUE 2 19. DEFENDANTS own, operate, manage, and maintain the PROPERTY, a 112-unit .3 senior assisted living facility called The Avenue. The PROPERTY is currently occupied by seniors, 4 Defendant TERESA WONG, and non-seniors. 5 20. On September 12, 2000, Defendant VAN NESS CARE CENTER, INC., entered into a 6 "Disposition and Development Agreement" ("DDA") with the San Francisco Redevelopment Agency 7 to purchase and develop the PROPERTY into a senior assisted living facility. Defendant MELVIN 8 LEE signed the DDA as President and Treasurer of Defendant VAN NESS CARE CENTER, INC., 9 and Defendant TERESA WONG signed the DDA as Vice President and Secretary of Defendant VAN 10 NESS CARE CENTER, INC. Section 9.03(d) of the DDA mandates that between twenty (20) to 11 thirty (30) out of the one-hundred twelve (112) units at the PROPERTY be occupied or held vacant as 12 affordable residential care units for a period of 50 years. A true and correct copy of the DDA is 13 attached as Exhibit B and incorporated as part of this Complaint. 1 14 21. On May 22, 2001, the DDA was amended ("First Amended DDA") to, inter alia, set 15 the number of required affordable units at twenty-five (25) units. Defendant MELVIN LEE signed the 16 First Amended DDA as President and Treasurer of Defendant VAN NESS CARE CENTER, INC., 17 and Defendant TERESA WONG signed the First Amended DDA as Vice President and Secretary of 18 Defendant VAN NESS CARE CENTER, INC. A true and correct copy of the First Amended DDA is 19 attached as Exhibit C and incorporated as part of this Complaint. 20 22. On November 13, 2001, the DDA was amended a second time ("Second Amended 21 DDA") to, inter alia, revise the schedule of performance. Defendant MELVIN LEE signed the 22 Second Amended DDA as President and Treasurer of Defendant VAN NESS CARE CENTER, INC., 23 and Defendant TERESA WONG signed the Second Amended DDA as Vice President and Secretary 24 of Defendant VAN NESS CARE CENTER, INC. A true and correct copy of the Second Amended 25 DDA is attached as Exhibit D and incorporated as part of this Complaint. 26 27 1 The attachments to the DDA have not been attached due to their length, but are also 28 incorporated as part of this Complaint. 5 COMPLAINT FOR INJUNCTIVE/OTHER RELIEF, CCSF v. LEE 1 23. On April 30, 2002, Defendants VAN NESS CARE CENTER, INC. and SAN 2 FRANCISCO CARE CENTER, L.P. signed an "Assignment and Assumption of Disposition and 3 Development Agreement" assigning Defendant SAN FRANCISCO CARE CENTER, L.P. all of 4 Defendant VAN NESS CARE CENTER, INC. 's right, title, and interest in the DDA and the 5 PROPERTY. A true and correct copy of the April 30, 2002 Assignment agreement is attached as 6 Exhibit E and incorporated as part of this Complaint. 7 24. On April 30, 2002, the DDA was amended a third time ("Third Amended DDA") to, 8 inter alia, assign the DDA from Defendant VAN NESS CARE CENTER, INC. to Defendant SAN 9 FRANCISCO CARE CENTER, L.P. Defendants VAN NESS CARE CENTER, INC., MELVIN LEE 10 and TERESA WONG signed the Third Amended DDA as General Partners of Defendant SAN 11 FRANCISCO CARE CENTER, L.P. A true and correct copy of the Third Amended DDA is attached 12 as Exhibit F and incorporated as part of this Complaint. 13 25. Also on April 30, 2002, Defendant SAN FRANCISCO CARE CENTER, L.P., signed a 14 "Declaration of Affordability Restrictions" ("DAR"). Defendants MELVIN LEE and TERESA 15 WONG both signed the DAR on behalf of Defendant VAN NESS CARE CENTER, INC., a general 16 partner of"Developer" Defendant SAN FRANCISCO CARE CENTER, L.P. Section A of the DAR 17 states, "The Developer also agreed in and through the DDA to make a certain number of residential 18 units in the development affordable." A true and correct copy of the DAR is attached as Exhibit G 19 and incorporated as part of this Complaint. 20 26. On June 7, 2002, the San Francisco Redevelopment Agency sold the PROPERTY to 21 Defendant SAN FRANCISCO CARE CENTER, L.P. for $2,025,000.00. 22 27. On September 7, 2004, the DDA was amended a fourth time ("Fourth Amended DDA") 23 to, inter alia, change the date of completion of construction. Defendants VAN NESS CARE 24 CENTER, INC. and MELVIN LEE signed the Fourth Amended DDA as General Partners of 25 Defendant SAN FRANCISCO CARE CENTER, L.P. A true and correct copy of the Fourth Amended 26 DDA is attached as Exhibit Hand incorporated as part of this Complaint. 27 28. In November 2004, Defendant SAN FRANCISCO CARE CENTER, L.P. completed 28 construction of the senior assisted living facility known as The Avenue, located at the PROPERTY. 6 COMPLAINT FOR INJUNCTIVE/OTIIER RELIEF, CCSF v. LEE 1 29. On June 20, 2006, the DDA was amended a fifth time ("Fifth Amended DDA") to, 2 inter alia, increase the rents of the low income units. Defendants VAN NESS CARE CENTER, INC., 3 MELVIN LEE and TERESA WONG signed the Fifth Amended DDA as General Partners of 4 Defendant SAN FRANCISCO CARE CENTER, L.P. Paragraph 6 of the Fifth Amended DDA states 5 that unless otherwise expressly modified by the Fifth Amended DDA, the original DDA "shall remain 6 in full force and effect in accordance with its terms." A true and correct copy of the Fifth Amended 7 DDA is attached as Exhibit I and incorporated as part of this Complaint. 8 30. Also on June 20, 2006, the aforementioned DAR was amended and restated. 9 Defendants VAN NESS CARE ENTER, INC., MELVIN LEE and TERESA WONG signed an 10 "Amended and Restated Declaration of Affordability Restrictions" ("Amended DAR") as General 11 Partners of Defendant SAN FRANCISCO CARE CENTERL.P. The "Amended DAR" superseded 12 the original DAR. A true and correct copy of the Amended DAR is attached as Exhibit J and 13 incorporated as part of this Complaint. 14 31. Section 1.3 of the Amended DAR mandates that, "25 Affordable Residential Care Unit 15 requirement shall be in effect for a period of no less than 50 years from June 20, 2006, the date the 16 Amended and Restated Declar~tion of the Affordability Restrictions was authorized by the Agency." 17 Pursuant to the Declaration, the Avenue is required to provide a total of 25 Affordable Residential 18 Care units: 11 are for households with 60% or less of the Area Median Income ("AMI") and 14 are for 19 households with 80% or less of the AMI." 20 32. Section 1.8 of the Amended DAR states that, "On an annual basis, on or before April 21 30th of each year following the Agency's issuance of the Certificate of Completion, Developer shall 22 submit a report (the "Annual Report") to the Agency, which contains, with respect to each Affordable 23 Residential Care Unit, the rental rate and income and family size of the occupant." 24 33. Section 15.2 of the Amended DAR states, "At all times during the term of this 25 Amended and Restated Declaration, Developer will provide to the Agency the reports described 26 below, together with any other information that the Agency is required to provide pursuant to the laws 27 of the State of California or to Federal Law." 28 7 COMPLAINT FOR INJUNCTIVE/OTHER RELIEF, CCSF v. LEE 1 34. In 2012, the San Francisco Redevelopment Agency was dissolved by law. That same 2 year, the CITY signed into law Board of Supervisors Resolution No. 11-12, accepting transfer of the 3 San Francisco Redevelopment Agency's housing assets to the CITY and designating the San Francisco 4 Mayor's Office of Housing and Community Development ("MOHCD") to perform the functions 5 previously performed by the San Francisco Redevelopment Agency. 6 II. DEFENDANTS' FAILURE TO ABIDE BY THEm AGREEMENTS 7 35. DEFENDANTS began renting out individual units to seniors in 2005. Despite signing 8 the aforementioned agreements, DEFENDANTS failed to, and have continued to fail to, rent out any 9 Affordable Residential Care Units to qualified seniors. DEFENDANTS have also failed to submit 1O annual reports related to their Affordable Residential Care Units. 11 36. In April 2015, MOHCD notified Defendant MELVIN LEE via electronic mail of the 12 deadline for DEFENDANTS to submit an annual report for each affordable residential care unit, 13 including the rental rate, income and family size of the occupant. DEFENDANTS failed to submit an 14 annual report. 15 37. In January 2016,MOHCD notified Defendant MELVIN LEE via electronic mail of the 16 2016 deadline for DEFENDANTS to submit an annual report for each affordable resident.ial care unit, 17 including the rental rate, income and family size of the occupant. MOHCD even offered to train the 18 staff at the PROPERTY in drafting the report. DEFENDANTS failed to respond to the offer, and 19 failed to submit an annual report. 20 38. In March 2016, a representative of MOHCD made an unscheduled visit to the 21 PROPERTY. Defendant MELVIN LEE met with the representative. Defendant MELVIN LEE 22 admitted to the representative that he had renovated portions of the PROPERTY since 2004, such as 23 combining units or removing units to make room for a new library and gym. The MOHCD 24 representative asked Defendant MELVIN LEE to provide a rent roll, and Defendant MELVIN LEE 25 agreed to provide it by electronic mail. Defendant MELVIN LEE, however, failed to do so. 26 39. On July 22, 2016, MOHCD served a "Notice of Breach" on DEFENDANTS notifying 27 them of their breach of the DDA and the Amended DAR. 28 8 COMPLAINT FOR INJUNCTIVE/OTHER RELIEF, CCSF v. LEE 1 40. On August 19, 2016, MOHCD served a "Notice of Default" on DEFENDANTS 2 notifying them that they were in default of the DDA and Amended DAR.2 A true and correct copy of 3 the ''Notice of Default" is attached as Exhibit Kand incorporated as part of this Complaint. 4 41. To date, DEFENDANTS have failed to ever house any low-income seniors at the 5 PROPERTY, in violation of the DDA and the Amended DAR. 6 42. DEFENDANTS have also allowed several units to be occupied by non-seniors, 7 including Defendant TERESA WONG. 8 43. DEFENDANTS have also removed at least nine units to create two luxury apartments. 9 One luxury apartment is currently occupied by a non-senior and the other luxury apartment, currently 10 under construction, is intended to house Defendant TERESA WONG's upon the completion of 11 construction. 12 III. VIOLATIONS FOUND AT THE PROPERTY BY THE SAN FRANCISCO 13 DEPARTMENT OF BUILDING INSPECTION. 14 44. In June 2017, the San Francisco Department of Building Inspection ("DBI") inspected 15 the PROPERTY. DBI observed multiple violations of the San Francisco Building Code, including 16 multiple instances of work without permit. The work without permit included the construction of new 17 walls and doors that potentially compromised fire sprinkler coverage, the removal of walls between 18 units, and construction of two separate, luxury apartments that required the removal of nine senior 19 residential care units. During the same inspection, inspectors found several units that were occupied 20 by employees of the Avenue, iµcluding Defendant TERESA WONG. 21 45. On or about June 26, 2017, DBI issued a Notice of Violation (''NOV") for work 22 without permit as follows: 23 A. By adding a wall and door to the second and third floor kitchens without permit, 24 possibly compromising sprinkler coverage; 25 B. By removing thirteen units without permit; 26 2 27 Sections 8.0l(d) and 8.0l(m) of the DDA states that DEFENDANTS' default of any agreement between the SFRA and DEFENDANTS, or DEFENDANTS' failure to perform any other 28 agreements or obligations shall constitute a default. 9 COMPLAINT FOR INJUNCTIVE/OTHER RELIEF, CCSF v. LEE 1 c. By removing walls between units without a permit; 2 D. By constructing a one-bedroom, luxury apartment without permit (and removing four 3 units in the process); 4 E. By beginning construction of a second luxury apartment without permit (and removing 5 five units in the process). 6 46. A true and correct copy of the June 26, 2017 NOV is attached at Exhibit Land 7 incorporated as part of this Complaint. 8 47. DEFENDANTS were ordered to file permit applications within thirty days, obtain a 9 permit within sixty days, and complete all work within ninety days. 1O 48. The June 26, 2017 NOV was mailed on or about June 28, 2017 to DEFENDANTS at 11 their last known address as listed in the San Francisco Assessor's Office. 12 49. DEFENDANTS failed to comply with all of the requirements of the June 26, 2017 13 NOV. To date, the June 26, 2017 NOV remains outstanding and unabated. 14 FIRST CAUSE OF ACTION FOR UNLAWFUL AND UNFAIR BUSINESS PRACTICES BROUGHT BY THE PLAINTIFF 15 PEOPLE OF THE STATE OF CALIFORNIA AGAINST ALL DEFENDANTS 16 (California Business and Professions Code Sections 17200-17210) 17 50. Plaintiff PEOPLE OF THE STATE OF CALIFORNIA hereby incorporate by reference 18 paragraphs 1 through 49 above, as though fully set forth herein. 19 51. The PEOPLE brings this cause of action in the name of the People of the State of 20 California pursuant to Business and Professions Code Section 17200-17210 in order to protect the 21 public as consumers and competitors from unlawful practices committed by DEFENDANTS in the 22 maintenance, management and ownership of the PROPERTY as a public nuisance and in failing to 23 provide low-income housing