Pacific Grove City Council
May 18, 2022

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14. Indeed, the City’s reliance on Section 17.112.130 is nothing more than a pretext to erect barriers and deny homeownership to new diverse residents, and to control who owns and occupies a particular residence. This unlawful and exploitative conduct must be stopped.

THE PARTIES

15. Pacaso is a corporation formed under the laws of Delaware, doing business as “Pacaso,” and headquartered in San Francisco, California. Pacaso, which previously operated under the brand name “Niner Homes,” first started operations in 2020. It launched as Pacaso in October 2020. Pacaso currently owns and/or manages at least five single-family homes in the City of St. Helena.

16. PAC 6 CA 2021 LLC, a California limited liability company, is the propertyspecific LLC that owns deeded title to 1242 Madrona Ave., a single-family residence located in St.

Helena.

17. The City of St. Helena is a municipality in Napa County, California and is part of the North Bay Region of the San Francisco Bay Area. St. Helena is a General Law City and operates a Council-City Manager style of government and derives its power from the California Constitution and laws enacted by the State legislature.

18. Defendant Maya DeRosa is the Planning & Building Director of St. Helena. In this role, she is responsible for reviewing, revising, and implementing St. Helena’s General Plan and zoning ordinances. She provides regular staff support for the City Council and Planning Commission. As the Planning & Building Director, DeRosa has “the authority and powers necessary to gain compliance with the provisions of this code and applicable state codes,” and is “considered to be [an] enforcement official[].” Section 1.12.040.

19. Defendant Geoff Ellsworth is the Mayor of St. Helena. The City Attorney acts under the Mayor and City Council’s direction. Defendant Ellsworth served as City Council member from November 2016 until he was elected Mayor in November 2018. The Mayor presides over City Council meetings, signs official documents, and officiates at ceremonies and events. The Mayor is elected at-large to serve a two-year term as presiding officer at City Council meetings and as the official head of the City for legislative purposes.

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20. Defendant Ethan Walsh is the City Attorney of St. Helena. As City Attorney, Mr.

Walsh is responsible for providing legal advice to the City Council and staff in carrying out their duties in the operations of the City government. Mr. Walsh is responsible for bringing about suits on behalf of the City.

21. Doe Defendants #1-5 may include St. Helena City Council members including Vice Mayor Paul Dohring, Anna Chouteau, Lester Gardy, and Eric Hall. Although certain of their names are known, the basis for liability against the Doe Defendants has yet to be determined, because the full extent of their involvement in the ongoing violations of Pacaso’s rights will only be uncovered through discovery. These members have collectively represented the City Council since November 2020, with Vice Mayor Dohring and Anna Chouteau serving since 2018. The City Council is the legislative and policy-making body of the City of St. Helena. Acting as a whole, but bearing individual responsibility, these members are responsible for setting the direction of City policy and for adopting ordinances, resolutions and other orders as necessary for governing the City. Given the lack of transparency around the City Council’s involvement and Defendants’ decision to depart from the July 2020 Report and to start enforcing Section 17.112.130 against Pacaso, Pacaso is ignorant of the true names of the Does who are also directly responsible for the conduct giving rise to the causes of action herein. Pacaso will later seek to amend the complaint to include the true names of the defendants once ascertained through discovery.

JURISDICTION AND VENUE

22. As this case involves questions which arise under the U.S. Constitution and the laws of the United States, the jurisdiction of this court is invoked pursuant to 28 U.S.C. § 1331. This action is authorized by 42 U.S.C. § 1983. The Court has jurisdiction to issue relief pursuant to the Declaratory Relief Act, 28 U.S.C. §§ 2201 and 2202. This court has jurisdiction to hear Plaintiffs’ pendent state claim through the doctrine of supplemental jurisdiction set forth at 28 U.S.C. § 1367.

23. This district is the proper venue and jurisdiction to the location of some or all of the Defendants, and the location where the injury occurred, under 28 U.S.C. § 1391(b).

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GENERAL ALLEGATIONS
I. Pacaso Seeks To Democratize Second Home Ownership In St. Helena

24. Pacaso (formerly known as Niner Homes) launched in October of 2020 introducing a new pathway for second home ownership.

25. Pacaso currently owns and/or manages five single-family homes in the City of St.

Helena.

26. Pacaso lowers the barriers to the second home market by simplifying and streamlining the co-ownership process by reducing costs and making ownership possible at a more accessible price point. Pacaso organizes the ownership group, manages the legal process, and provides a management service to streamline the home ownership process for the co-owners.

27. Pacaso further facilitates broader access to the second home market by allowing coowners to buy partial interests in real property. Pacaso creates a property-specific LLC for each home, which owns deeded title to the real property. Then Pacaso organizes and vets a maximum of eight co-owners, who hold co-ownership interests in the LLC and co-own the home in increments ranging from 12.5% to 50%.

28. The co-owners can purchase their desired ownership interest based on their expected occupancy needs, financial means, and even in certain circumstances their desire to participate in the LLC with co-owners of their choosing. At closing, the co-owners enjoy 100% ownership in the property, and Pacaso’s only role remains to serve, at the discretion of the homeowners, as program manager overseeing the LLC and employing local businesses to care for the home.

29. The concept of co-ownership through an LLC is far from new. In St. Helena, property ownership through LLCs or other vehicles that facilitate multiple owner arrangements is very common. But Pacaso simplifies the process in a novel way that makes the experience accessible to people who lack the resources or time to own and manage a whole second home. As a result, Pacaso has made second home ownership available to a broader set of people, including those in traditionally diverse and underrepresented communities.

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30. In short, Pacaso’s model seeks to enrich the lives of new and diverse second home owners and open the second home market, which has traditionally only been accessible to affluent and predominantly white buyers. Pacaso specializes in top second home destinations and is currently focused on 25 markets across 10 states.

31. This is especially true in St. Helena. In St. Helena, second home ownership has typically been possible only for elite and predominantly white buyers, particularly on St. Helena’s affluent west side. In contrast, Pacaso’s owner group is organically diverse; approximately 66% of Pacaso homeowners in St. Helena and 25% of Pacaso’s total owner group are non-white or identify as LGBTQ+.

II. Pacaso Shifts Demand Away From The More Limited Supply Of Affordable Homes And Ensures Second Homes Are Fully Utilized

32. The workforce housing challenges in St. Helena are acute, and much of this shortage can be attributed to second home buyers purchasing moderately priced whole homes.

33. Since 2018, only 7% of homes sold in St. Helena were sold below $500,000, and 82% of those properties were purchased by second home buyers.

34. Pacaso’s approach helps relieve competition for more affordable homes by giving second home buyers a better option. Instead of competing for a whole home valued at $525,000, for example, Pacaso offers second home buyers an option to be co-owners of a $4-5 million property for the same price. Just one Pacaso home can remove up to eight buyers from local competition.

35. Second homes are notorious for sitting empty much of the year. In contrast, Pacasomanaged homes are fully utilized, which means that Pacaso homeowners engage in their community and support local businesses year-round.

36. Just like their neighbors, Pacaso homeowners make large financial investments in their homes and bring an owner mentality, not a vacation mentality, to their use of the property.

Short-term rentals are strictly prohibited, and all owners agree to Pacaso’s policies, which prohibit large events or parties. A Pacaso home in St. Helena is subject to all of the same noise and nuisance ordinances that apply to other single-family residences.

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III. In July 2020, The City Attorney And City Council Members Concluded That The Time-Share Ordinance Does Not Regulate Co-Owned Homes, Conceding That The Ordinance Does Not Apply To Pacaso
A. Overview Of Section 17.112.130, The City’s Time-Share Project Ban

37. The City of St. Helena has a time-share ordinance, codified in Section 17.112.130, which states:

The creation of a time-share project as a means of ownership of any single-family, two-family or multiple-family dwelling or any apartment house shall be prohibited within the city.

38. Section 17.112.130 sets forth a series of definitions—which are both circular, vague, and incomplete. For example, a “Time-sharing project” is defined as “any real property that is subject to a time-share program.” Section 17.112.130(B). 2

39. In turn, “time-share program” is defined to mean “any arrangement for time-share intervals [which is later defined as either a time-share estate or a time-share use] in a time-sharing project whereby the use, occupancy or possession of real property has been made subject to either a time-share estate or time-share use whereby such use, occupancy or possession circulates among purchasers of the time-share intervals . . . .” Id. (emphasis added).

40. Section 17.112.130 defines “time-share estate” as ownership in a “property devoted to a time-share fee” and “time-share use” means “any contractual right of exclusive occupancy, which does not fall within the definition of a time share estate, including, without limitation, a vacation license, prepaid hotel reservation, club membership, limited partnership, or vacation bond.” Id.

B. Under Defendants’ Own Analysis, Section 17.112.130 Does Not Apply To Pacaso

41. Defendants are carrying out an enforcement campaign against Pacaso that is in direct conflict with a position that City Attorney Ueda took in a written report and oral presentation

2 The ordinance also defines “offering” as “any offer to sell, solicitation, inducement or advertisement, whether by radio, television, newspaper, magazine or by mail, whereby a person is given an opportunity to acquire a time-share interval of a residence within the city,” but “offering” is not used anywhere in Section 17.112.130 or its definitions. (cont’d)
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to the City Council in July 2020.
3 42. The July 2020 Report was undertaken based on purported “concerns raised by both City residents and Council members after some residents discovered a real estate listing for a fractional or partial ownership interest in a residential home in town.” Report at 323.4

43. As City Attorney Ueda and Maya DeRosa herself concluded, “timeshare use differs from a fractional or partial ownership of a property.” Id.

44. Indeed, after laying out the “fairly circuitous definition”—as the City Attorney described it—“to determine if a project is a prohibited timeshare or not,” the City Attorney conceded the differences between a time-share and a fractional ownership:

What emerges from these various definitions is that a timeshare, as defined in the City’s Zoning Code, is not identical to a fractional or partial ownership; but, rather, a timeshare involves an ownership arrangement where the owners have purchased an allotted amount of time to use the property (a timeshare interval). The Code also notes that timesharing projects have the same character as commercial hotels and other transient uses. (Report at 324 (emphasis added).)

3 DeRosa, in her capacity as Planning & Building Director of St. Helena and acting under the color of law, approved the report and participated in the July 14, 2020 meeting at which its findings were presented, which both concluded that the time-share ban does not apply to a coownership models like Pacaso’s, and that Pacaso’s operations do not violate the ordinance.

Ellsworth, in his capacity as Mayor of St. Helena and acting under the color of law, and the City Council also participated in July 14, 2020 meeting. See July 14, 2020, Meeting at 3:29; see also Regular City Council Meeting, August 11, 2020, at 39,
https://sthelena.civicweb.net/document/43063/Regular%20City%20Council%20-%2011%20Aug% 202020.pdf?handle=838240E8400F467DA80B707D222A9EA8. As such, Ellsworth was made aware of the July 2020 report and the issues surrounding application of the time-share ordinance against fractional or partial co-ownership structures.
4 In the July 14, 2020 meeting regarding its findings, the discussion referenced “this particular piece of property”—i.e., the Pacaso home that was the subject of Defendants’ earlier correspondence. July 14, 2020, Meeting at 3:35. That this “piece of property” is a Pacaso property is confirmed by the fact that a City Council member stated that this property came to the attention of the City by way of a complaint from neighbors, as indicated in the City’s May 22, 2020 Letter.

Further, City Attorney Ueda later confirmed during the discussion that the structure of the “particular piece of property that we’re talking about” was through a corporation (which is the exact structure of a Pacaso home).

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45. The City Attorney further admitted that its time-share ordinance cannot regulate “based solely on ownership”—which is exactly what the City’s recent challenge to Pacaso attempts to do:
[Z]oning based solely on ownership, as opposed to the use of land, is impermissible. Timeshare regulations should, thus, focus on the type and use of the property and its related impacts, such as specific intervals of exclusive occupancy that render the use more akin to a transient commercial use. (Report at 326.)

46. The July 2020 Report identifies that this is indeed the goal of enforcement efforts against Pacaso, stating that the analysis stems from “a concern that non-permanent City residents are purchasing property in St. Helena as a second home(s) either for themselves or their guests.” Report at 325. Thus, the City Attorney cautioned against the very path that it is now pursuing:
“[Z]oning regulations may not target individuals. In other words, the City may not adopt a zoning regulation based on the identity of a tenant or where a particular resident permanently resides.” Id. (citing Friends of Davis v. City of Davis, 83 Cal. App. 4th 1004, 1013 (2000)).

47. In fact, the City Council members were unable to state even one permissible purpose, goal or non-suspect reason to justify application of the time-share ordinance against partial co-ownership structures like Pacaso’s. Rather, the primary concern identified at the July meeting was “different people coming in and out of the unit or house” (July 14, 2020, Meeting at 3:25):

I think what concerns me about [Pacaso homes] and what the neighbors raised was, instead of having one family living next door to you, you have maybe six, and you know they’d alternate when they arrived and they felt, I think they alluded to it being like a shortterm rental. But it certainly maybe isn’t what the people think when you buy a single-family dwelling in an area that is known for singlefamily homes. I know over the years the definition of what’s a family has gotten broadened, but I’m just wondering if there’s a way to address the concerns of the neighbors if you see one because I’m sympathetic to . . . what they’re saying. We have multiple people next door coming in and out. It’s not really short term rental, but what can we do about that? Anything? (July 14, 2020, Meeting at 3:24-25.)

48. This purported “reason” clearly targets individuals and “the identity of a tenant or where a particular resident permanently resides”—which is strictly impermissible (see infra at Case 3:21-cv-02493-WHO Document 1 Filed 04/06/21 Page 12 of 50

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¶¶ 113-127). In fact, the City Attorney was forced to admit that this was improper grounds for invoking Section 17.112.130 and inconsistent with the purpose behind the ordinance:

If the issue is primarily that there are different people coming in and out of the unit or house, then I’m not entirely sure what can be done about that . . . . The direction that it’s gone in, in terms of potential regulation, is that if there’s a concern about impacts that are caused from having too many people basically at a particular residence, [then] those impacts can be addressed by current standards in place for noise and parking standards and that type of thing. So I think it’s one thing to talk about people versus you know the potential impacts that could result. (July 14, 2020, Meeting at 3:25-26.)

49. The discussion of the July 2020 Report further confirmed Defendants’ intent to improperly target particular types of homeowners. Notably, City Attorney Ueda confirmed that the City would ideally want to exclude certain types of owners based on family or friend relationships, from being barred from partial ownership of a residence in St. Helena:

I do think the hardest part is really figuring out how to define the issue and the scope, right, because if we’re getting at multiple ownership of one piece of property, it’s really challenging to figure out a way to define that that doesn’t preclude people who really do need to go buy a piece of property for financial reasons. . . . They may all be friends or family members, and I don’t think that’s the type of activity that the City would want to preclude, and that’s the challenge that we have in trying to figure out how to define this in a way that would work. (July 14, 2020, Meeting at 3:33-34.)

50. City Attorney Ueda also stated concerns over the “significant practical challenges to implementing and enforcing the existing timeshare regulations.” Report at 325. This is because it lacks visibility into each residence’s ownership structure and “[t]he City does not have an easily available means to scrutinize such agreements or monitor the terms of particular ownership arrangements.” Id. As a result, and by its own admission, the City’s outreach to Pacaso is targeted and arbitrary, based solely on a “tip” from a real estate agent.

51. Further, City Attorney Ueda conceded that the “City’s code appears to try to . . . regulate timeshare uses as a commercial use.” Report at 325. As explained below, Pacaso homes are strictly residential homes with no commercial purpose (see infra at ¶¶ 55-63).

52. In providing an example of a joint ownership scenario that does not trigger the City’s time-share prohibition, the City specifically described a scenario where a residence is owned by multiple people who each do not choose to live in the residence, but the “joint or partial Case 3:21-cv-02493-WHO Document 1 Filed 04/06/21 Page 13 of 50

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ownership of the residence would not be considered a timeshare” because each “member could have equal access to the residence (as opposed to purchasing a limited amount of time).” Report at 326. This is Pacaso’s model and Pacaso’s homeowners do not “purchase a limited amount of time” in the residence.

53. In fact, the distinction between a “time-share” and other types of partial or fractional ownership structures is so obvious that even the National Association of Realtors (one of the most trusted sources for matters relating to residential real estate) explicitly acknowledges these distinct concepts:

Fractional interest ownership, once used primarily with commercial tenants-in-common, has recently blossomed in the vacation home market. Not to be confused with a time-share or a destination club, fractional interest properties can be a sensible and profitable alternative to owning a second home.5

54. Consistent with its correspondence with Pacaso and public statements regarding the inapplicability of Section 17.112.130 to Pacaso, Defendants did not attempt to further interfere with Pacaso or its homeowners until recently.

A. Pacaso Is Not A “Time Share Project”

55. The City’s July 2020 analysis flows from the simple and indisputable fact that Pacaso’s small co-ownership model is starkly different from any “time-share project” purportedly covered by Section 17.112.130 or that is properly the subject of any zoning regulation.

56. Pacaso creates a property-specific LLC for each home, which owns deeded title to the property. Then Pacaso organizes and vets a maximum of eight co-owners, who have an ownership interest in the LLC and co-own the home in increments ranging from 12.5% to 50%.

The co-owners can purchase their desired ownership interest based on their expected occupancy needs, financial means, and even in certain circumstances their desire to participate in the LLC with co-owners of their choosing. At closing, the co-owners enjoy 100% ownership in the property, and Pacaso’s only role remains as program manager overseeing the LLC.

5 See Def. of Fractional Interest Ownership, National Association of Realtors, at https://www.nar.realtor/fractional-interest-ownership.

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57. Pacaso’s homeowners do not merely own the “right of exclusive occupancy,” (Def. of “Time-share use,” Section 17.112.130(B)) or a “use, occupancy or possession” right that “circulates among purchasers . . . according to a fixed or floating time schedule on a periodic basis for a specific period of time during any given year” (Def. of “Time-share program,” Section

17.112.130(B)). Nor do they participate in an “arrangement for time-share intervals.” Def. of “Time-share program,” Section 17.112.130(B).

58. Rather, just like any other residential homeowner, Pacaso homeowners own a real property asset in a single-family home that includes real property interests, rights and obligations.

An interest in a time-share project is vastly different from the rights inherent to real property coownership, including possession, control, exclusion, and disposition. Indeed, a Pacaso homeowner, just like any other homeowner, has rights well beyond a situation whereby “somebody literally gets a limited amount of time in a particular piece of property to use,” which is how a “timeshare” was described by City Attorney Ueda. July 14, 2020, Meeting at 3:19.

59. Instead, Pacaso homeowners have inherent and inalienable rights inherent to owning property, which include the right to possession, to control, to use and quiet enjoyment, to privacy and to exclude others, to sell the property, to physically be on the property, to leave the property, to choose who else can be on the property, to build or alter the property, to make improvements or refurbish the property, and to sell or dispose of the property, among many other rights.6

60. Pacaso’s involvement in management of the home, at the election of the home’s coowners, does not change the nature of the homeowners’ interests and rights. Pacaso supports owners as a program manager, making their ownership experience seamless through LLC and property management services, interior design, scheduling service, and concierge services. In fact,

6 Further, an owner of a “time-share” interest, as opposed to an owner of a single-family home, is typically a member of a large commercial development of density, whereby multiple unrelated occupants are using the overall property at the same time, buying not for the purposes of real estate ownership, but for purposes of enjoying or benefiting from the time-share program or amenities.

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if Pacaso homeowners collectively agree that Pacaso’s services are no longer desired, the owners can choose to terminate their relationship with Pacaso and self-manage their property.

61. Plainly, Pacaso co-owners are not merely purchasing “time-share intervals.” Def. of “Time-share program,” Section 17.112.130(B). Pacaso homeowners’ ability to stay in the home is not capped. Subject to availability and covering operating and ownership costs, a Pacaso co-owner can spend more time in the house, beyond the default time attributable to each co-owner’s ownership stake. Co-owners’ ability to spend time in the home is fluid and flexible.

62. Further, Pacaso homeowners are true owners with complete control of their home and expansive rights, rather than merely having a right of “use, occupancy or possession” that is limited to a time schedule. Def. of “Time-share program,” Section 17.112.130(B). For example, Pacaso homeowners have the right to store their personal possessions on the property year round.

Pacaso homeowners are also heavily involved in all levels of management and decision-making regarding the property. They vote on matters such as selecting and replacing the program manager, renovations on the home or other changes to the interior or exterior design, and various other fundamental homeownership matters. Co-owners can even sell the home outright. Pacaso is merely a service. Ultimately, Pacaso homeowners have complete control.

63. It is clear that Pacaso’s properties do not fall within the purview of the City’s timeshare ordinance, which on its face does not apply to real property co-ownership structures like Pacaso’s.

B. Section 17.112.130’s “Findings and Purpose” Confirm that the Ordinance Does Not Apply to Pacaso

64. It is abundantly clear from the “Findings and Purpose” of Section 17.112.130 that Pacaso homes are not a covered “time-share project.” Section 17.112.130 includes the following express purposes for the time-share ban:

1. There is a critical shortage of affordable housing in the city for long-term occupancies (more than six months annually), and the availability of additional residential dwelling units is substantially restricted by the growth management system;

2. The conversion of residential dwelling units within the city to time-sharing projects eliminates residential dwelling units otherwise available for long-term occupancies (more than six months annually) in the city;
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3. Time-sharing projects have the same character as commercial hotels, motels and other transient occupancy uses due to their transient nature and to the multiple short-term (less than six months annually) occupancies by those participating in time-sharing projects;

4. Such commercial or quasi-commercial like use is inappropriate in residential areas due to the increased traffic generation and multiple occupancies disturbing the peace and quiet of residential neighborhoods; and

5. The city council finds and determines that this section is necessary to protect the public health, safety and welfare of the citizens of the city.

Section 17.112.130(A).

65. The City’s attempt to obstruct Pacaso’s operations lacks any rational connection to any of the stated purposes behind Section 17.112.130.

66. Targeting Pacaso does nothing to ensure homes are available for long-term occupancies. The City lacks all visibility and control into how much time homeowners intend to spend in their homes. Preventing Pacaso from buying properties does nothing to prevent other prospective buyers from buying the home as a second home that will remain unoccupied for the majority of the year, or that will be rented for periods under six months, or who buy anticipating the ability to use it for short-term rentals, among other non “long-term occupancy” uses.

67. In fact, Pacaso has the exact opposite effect by redirecting second homeowners who would have otherwise purchased affordable inventory needed by the local workforce to homes at a higher price point.

68. Pacaso homeowners are long-term oriented (like most homeowners) and have materially different incentives with respect to their conduct, use and treatment of the home as compared to short-term renters. This is because Pacaso homeowners are directly invested in the home, its surrounding neighborhood and community, and the long-term maintenance and success of the property and community at large. Pacaso homeowners are true homeowners who own for their personal use and enjoyment, not for profit. They can sell their interest at any point after the first year of ownership by listing the property on the Multiple Listing Service (“MLS”) with a local real estate agent, and they are strictly prohibited from renting out the property at any point to anyone. In fact, Pacaso homeowners are “long-term” occupants under the City’s stated “sixmonth” standard (Section 17.112.130(A)), as Pacaso homeowners are strictly prohibited from Case 3:21-cv-02493-WHO Document 1 Filed 04/06/21 Page 17 of 50

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selling their interest at any point before the first year of ownership or from renting out the property at any point to anyone.

69. In contrast, a time-share typically entails merely the right to use a fixed amount of time in a property. A time-share is highly restrictive in terms of resell ability, pricing and control.

Time-share interests are usually held in multi-unit buildings or resort properties and use of the property is typically split across a large number of investors. Owners of a time-share interest are unlikely to have any interactions, let alone form a community. Behaviorally (and due to the nature of the properties, the structure of time-share ownership, and nature of the investment), time-share owners resemble short-term renters or hotel guests.

70. Nor is there a rational relation between the City’s stated purpose of banning “commercial or quasi-commercial like use” in residential areas, such as that which results from “commercial hotels, motels and other transient occupancy uses,” and any enforcement measures taken against Pacaso (Section 17.112.130(A)). Pacaso is a purely residential co-homeownership structure that lacks any resemblance to such “commercial or quasi-commercial like use.”

71. Pacaso’s homes are subject to the same residential occupancy rules as other homes, and homeowners respect the same rules that other owners are expected to follow. Unlike commercial properties, which are required to offer parking for each individual guest room, Pacaso homes are single-family homes with two parking spaces per dwelling unit, as required by Section

17.124.030.

72. Moreover, Pacaso co-owners use their homes in a way that is wholly consistent with other single-family residences. Their use does not cause “traffic generation and multiple occupancies disturbing the peace and quiet.” Section 17.112.130(A)(4). Just like all other singlefamily homes, there is only one co-owner using the property at a time; co-owners agree not to have large events or parties; co-owners adhere to a 9 pm to 7 am quiet hour policy; co-owners agree not to rent the home to third parties; and Pacaso encourages homeowners to avoid parking on the street unless absolutely necessary. There is nothing “transient” or “commercial” about the co-owners who choose to share home ownership of property in St. Helena. In sum, Pacaso homeowners are Case 3:21-cv-02493-WHO Document 1 Filed 04/06/21 Page 18 of 50

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no different from other homeowners in St. Helena; Pacaso and its co-owners are dedicated to ensuring the peace, safety, and welfare of the citizens of St. Helena.

73. Indeed, in discussing the July 2020 Report, City Council members confirmed that the primary purpose behind the time-share ordinance is to regulate commercial uses. For example, one City Council member stated: “First of all, I think our whole timeshare thing probably came into being when Rodney Friedrich brought his hotel forward.” July 14, 2020, Meeting at 3:24.

This reference was to a hotel development approved by City Council in 2010, for a 60-room hotel which would sell shares in the hotel rooms.

74. Further, the then-acting City Attorney stated: “[I]n a nutshell, the prohibition [is] . . . based, in part, on findings that the city council made, that timeshare uses are commercial for quasicommercial uses that serve to reduce available residential housing and increase traffic and noise impacts.” July 14, 2020, Meeting at 3:18. Thus, time-share ordinances generally “treat timeshares as commercial uses, often times in buildings that are like high rise condo-type buildings to other fractional ownership hotels.” July 14, 2020, Meeting at 3:20 (emphasis added).

75. On the other hand, as noted by City Attorney Ueda, “fractional or partial ownership interests may not necessarily trigger any concerns as more commercial uses would because, for example, multiple members of one family could decide to purchase a residence together, they may not stay there all at the same time, but they wouldn’t necessarily be having interest like a timeshare either.” July 14, 2020, Meeting at 3:21-22.

76. Pacaso and its homes do not implicate these “commercial” uses. As a result, the City Council members were unable to state even one purpose, goal or non-suspect reason to justify application of the time-share ordinance against partial co-ownership structures like Pacaso’s (see supra at ¶¶ 47-49), and the City Council was forced to admit that the primary concern identified at the July meeting (i.e., “different people coming in and out of the unit or house”) is clearly impermissible (id; see infra at ¶¶ 125-27).

77. Nor do Pacaso homes detract from the City’s goal of ensuring availability of “critical shortage of affordable housing in the city.” Pacaso’s service reduces competition for housing inventory critically-needed by the local workforce. Today, St. Helena’s median home Case 3:21-cv-02493-WHO Document 1 Filed 04/06/21 Page 19 of 50

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value of $1.65 million is at odds with its median household income of $90,031; most of those employed in St. Helena cannot afford to live there. Pacaso offers second home buyers a better option than a whole home, thus redirecting second home buyers away from the low inventory available at that level.

78. The major disconnects between the stated goals underpinning Section 17.112.130, Pacaso's model, and the City's latest enforcement efforts against Pacaso suggest that the City's reliance on Section 17.112.130 is nothing more than a pretext to deny homeownership to new, diverse residents.

IV. Defendants Communicated To Pacaso Nearly A Year Ago Its Conclusion That Section

17.112.130 Does Not Apply To Pacaso

79. The City first raised the issue of the time-share ban with Pacaso (formerly Niner Homes) in May 2020. On May 15, 2020, Maya DeRosa, in her capacity as the Planning & Building Director of the City of St. Helena, sent a letter on behalf of the City to a Pacaso homeowner, giving notice that “if” the home located at 1005 Valley View Street were “used as a timeshare or short term rental,” such use would be impermissible pursuant to the City Municipal Code. May 15, 2020 Letter. Those cc’d on the letter included: Elizabeth Olcott with Keller Williams; City Attorney Ueda, City Attorney; and Mark Prestwich, City Manager. Id.

80. On May 19, 2020, Pacaso responded on behalf of the Pacaso homeowner, explaining why Pacaso’s operations do not violate such ordinances and that the homeowner’s use of his property was entirely consistent with such laws. May 19, 2020 Letter.

81. On May 22, 2020, Maya DeRosa, cc’ing Mark Prestwich and City Attorney Ueda, replied on behalf of the City thanking Pacaso for providing an explanation of its proposed property ownership structure, its proposed use of the property, and the reasons Pacaso does not fall within a timeshare model.
7 7 Defendant Maya DeRosa instructed the Pacaso homeowner to “direct any future correspondence through [her] on this matter as [she is] the designated point of contact for the City.” May 22, 2020 Letter at 2.

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82. Notably, in the May 22, 2020 letter, DeRosa and the City, tacitly acknowledging that Pacaso is not a “timeshare project,” dropped any reference to a violation of the City’s timeshare ordinance, giving Pacaso the presumed green-light to move forward with its operations from this standpoint. Instead, the May 22, 2020 letter challenged only the homeowner’s alleged posting of his home on “Luxury Retreats” for short-term rentals without a permit to do so.

83. Pacaso responded on May 26, 2020, confirming that the property would not be used as a short-term rental property in the future and that the homeowners would remove any posting on the “Luxury Retreats” website. May 26, 2020 Letter.

84. Following this initial exchange with the City, Pacaso moved forward with its operations, investing material resources, time, and efforts, in reliance on the City’s representations that Pacaso’s operations were permitted.

V. Despite Its Legal Conclusions That It Cannot Regulate Pacaso, Defendants Have Now Proceeded To Unlawfully And Brazenly Enforce The Ordinance Against Pacaso

85. Against the backdrop of Defendants’ repeated conclusions that the time-share ordinance does not apply to fractional co-ownership structures like Pacaso’s and that the time-share ordinance would need to be amended in order to reach such structures, Defendants, acting under the color of law, have nevertheless sought to enforce the time-share ordinance against Pacaso.

86. The change in position and determination to enforce the ordinance against Pacaso, absent any change in facts or law, is untimely, unfounded, and suspect.

87. In January 2021, a real estate agent for Pacaso received a letter from DeRosa regarding four Pacaso property listings, inaccurately charging that the properties are subject to the City’s time-share ordinance. Jan. 25, 2021 Letter. With full knowledge and awareness of the chilling effect that her actions—as a enforcement official under St. Helena’s Municipal Code— would have, DeRosa requested that the letter be forwarded to “the buyer and the buyer’s agent” (id. at 1), and “any other agents that share these listings” to ensure that no zoning violations occur (id. at 2).

88. DeRosa’s letter had only one purpose: to knowingly and falsely invoke Section

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together. DeRosa knew that in purporting to enforce the “local regulations in place pertaining to timeshares,” she was unlawfully targeting Pacaso, despite her knowledge that Pacaso is not subject to Section 17.112.130, and that myriad other homes have identical co-ownership structures. Jan. 25, 2021 Letter at 1.

89. Ellsworth and City Council approved and were cc’d on the January 2021 letter, which they knew was inaccurate and sent with an improper purpose. Nonetheless, they failed to intervene to correct or retract the letter.

90. In response, Pacaso contacted DeRosa to confirm, again, that Pacaso is not a timeshare, nor does the service allow time sharing use, and that Pacaso prohibits short-term rentals.

91. Next, at a City Council meeting on February 9, 2021, City Attorney Walsh again raised the issue of Section 17.112.130. City Attorney Walsh’s update to the City Council and St.

Helena residents confirms that he and the City had not reached a different conclusion regarding the time-share ordinance since the conclusion reached in its July 2020 Report.8 Instead, City Attorney Walsh conceded that he and the City were still “looking at” and “delving further into that issue” (the applicability of the zoning ordinance), confirming that they had not yet determined what to do regarding co-ownership structures like Pacaso’s and whether such structures could be regulated under the time-share ordinance. City Attorney Walsh further stated that he and the City were “looking into both what we can do under our current regulations and potentially looking at some

8 Ellsworth, in his capacity as Mayor, along with Paul Dohring, in his capacity as Vice Mayor, and Anna Chouteau, Eric Hall and Lester Hardy, in their capacities as City Council members, also attended the February 9 City Council meeting. See February 9, 2021 City Council Meeting Agenda, at https://sthelena.civicweb.net/filepro/documents/48295?preview=48296.

Ellsworth, Dohring and Chouteau were made aware of and participated in discussions regarding the July 2020 Report, including the fact that applying the time-share ordinance against partial coownership structures like a Pacaso home was impermissible, unconstitutional, and exceeded the scope of the City’s zoning authority and police power. Defendant Ellsworth, and Council Members Dohring and Chouteau were thus on notice that City Attorney Walsh was continuing to consider such impermissible actions, despite the July 2020 Report. Ellsworth had the power to prevent the City Attorney Walsh from taking such actions, but failed to intervene, as evidenced by the enforcement efforts against Pacaso that followed.
(cont’d)
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changes to the existing regulations,” confirming the need to amend the time-share ordinance in order for such co-ownership structures to be subject to the ordinance was still being considered.9

92. Nonetheless, and in the face of these statements, the very next day on February 10, 2021, City Attorney Walsh sent a letter to Pacaso stating that the City “disagrees” that “Pacaso is not operating a timeshare in St. Helena,” and threatening “to enforce its restrictions on timeshares” as well as “action to educate brokers and the public about the illegal nature of Pacaso’s timeshares.” Feb. 10, 2021 Letter. City Attorney Walsh suggested that the City’s challenge was purportedly “[b]ased on the evidence that the City has received” about “the nature of Pacaso’s and its buyers’ intended use” of Pacaso homes, yet did not provide or describe such “evidence.” Id. at 1.

93. Despite being unable to point to any alleged “evidence,” and without any law or authority supporting his conclusion (which directly contradicts the earlier, reasoned analysis), the City Attorney improperly placed the burden on Pacaso, inviting it to “convince” the City that it was not subject to the time-share ordinance: “If Pacaso convinces the City that Pacaso’s—and its buyers’—intended use of residential property in the City does not constitute a timeshare under state law and regulations or the City’s code, the City will not apply the timeshare-prohibition.” Id.

94. Meanwhile, to effectively foreclose any ability of Pacaso homeowners to become part of the City of St. Helena community (and thereby eliminate the need for the City Council to reconcile its elitist position with the plain language of the time-share ordinance), the City Attorney sent a threatening letter regarding timeshare regulations to all City listing agents and brokers on March 16, 2021 (the “March 2021 Letter”) alleging that the City’s timeshare regulations apply to co-ownership—thereby chilling, under threat of fines and other penalties, any desire on the agents’ part to be involved in a sale of ownership interests in Pacaso properties in St. Helena. 10 9
See February 9, 2021 City Council Meeting at 14:11-14:42 at https://www.youtube.com/watch?v=XUTsUdZ5wA8&t=759s&ab_channel=CityofSt.Helena. 10 City Attorney Walsh was not acting within the scope of his official discretion when he sent the March 2021 Letter and performed other acts in furtherance of enforcing the time-share ordinance against Pacaso. City Attorney Walsh was merely attempting to implement a policy decision reached by the City. Those acts were not taken as part of any policy-making functions. In (cont’d)
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95. City Attorney Walsh expressly warned that his letter applied to “several properties that are currently listed for sale”— plainly linking his notice of purported zoning violations to listings for interests in Pacaso homes. March 2021 Letter at 1.

96. Thus, City Attorney Walsh’s March 2021 Letter to all real estate agents and brokers in St. Helena is the manifestation of this very threat “to educate brokers and the public about the illegal nature of Pacaso’s timeshare” (Feb. 10, 2021 Letter), and constitutes the City’s determination that it was “not convinced” that Pacaso’s operations are permitted under Section

17.112.130.

97. City Attorney Walsh was not acting within the scope of his official discretion when he sent the February 2021 Letter or March 2021 Letter and determined to enforce the time-share ordinance against Pacaso; his actions were attempts to implement a policy decision, which he had no basis to reach, given the conclusions reached in the July 2020 Report. In light of the opposite conclusion reached in the June 2020 Report, he acted without due care by sending the February 2021 Letter in an effort to enforce the time-share ordinance against Pacaso.

98. Defendant Ellsworth had the power to prevent and should have prevented City Attorney Walsh from sending the February 2021 Letter and March 2020 Letter, but failed to intervene in order to stop the impermissible application of the time-share ordinance against Pacaso.

Defendant Ellsworth knew that City Attorney Walsh’s conduct would violate Pacaso’s rights, as it constituted unlawful selective enforcement against Pacaso and violated Pacaso’s due process rights by applying Section 17.112.130 in a manner that directly conflicted with the earlier analysis of the scope of the ordinance.11

light of the conclusions reached in the June 2020 Report, City Attorney Walsh acted with full knowledge of the wrongfulness of his conduct.
11 Moreover, “[s]tate law prohibits [St. Helena City] Council from taking action on any item not listed on the agenda.” See St. Helena City Council Home, at https://www.cityofsthelena.org/bc-citycouncil. Following the July 14, 2020 meeting (which included on its agenda both the item for “Discussion Regarding Timeshare Issues” and an attachment to the July 2020 Report (see Agenda Item 11.2 at https://sthelena.civicweb.net/document/42347?splitscreen=true&media=true&timestamp=11860)), City Attorney Walsh, acting at the direction of City Council, nevertheless took an action at odds with the conclusion reached in the July 2020 Report and the July 14, 2020 City Council discussion without re-adding this item to any subsequent agenda for further discussion—including the (cont’d)
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99. On March 17, 2021, Pacaso responded to City Attorney Walsh, identifying the myriad ways in which the City’s challenge to Pacaso is flawed and unsupported by fact or law.

Pacaso requested confirmation by April 1, 2021, confirming that the City would adhere to the analysis and conclusions from the July 2020 Report, and would drop its improper crusade against Pacaso. The City and City Attorney Walsh failed to respond. 100. The March 2021 Letter, among other communications with real estate agents, brokers, and potential buyers in St. Helena—which Defendants have failed to retract—have caused Pacaso substantial harm. Among other harm, Defendants’ misinformation campaign undermines Pacaso’s existing relationships with real estate agents working on its behalf, interferes with Pacaso’s business relationships and arrangements, tarnishes Pacaso’s reputation and goodwill in the community, and impairs Pacaso from future development (including future business partners and key stakeholders in the St. Helena community) by calling into question the legality of Pacaso’s operations.
101. These threats have scared real estate agents and chilled their efforts to buy and sell ownership interests in Pacaso properties. Likewise, Defendants’ threats have deterred prospective buyers from purchasing Pacaso properties.
102. Indeed, as a direct result of the March 2021 Letter, individuals on NextDoor (a social networking service for neighborhoods) posted comments about Pacaso potentially being violative of the time-share ordinance, further reflecting the confusion created by the March 2021 Letter regarding Pacaso’s legality. One user wrote:

The [March 16, 2021] letter from the City of St. Helena didn’t specify any action but did say violators of the City’s . . . timeshare [ordinance] are subject to code violations and costly fines. The homes in St. Helena currently being offered for sale as fractional ownership purchases (8 separate owners per house) haven’t closed yet. It’s my understanding this Pacaso Fractional Ownership Management Company had a few months to find 8 buyers for each of these homes. If they were unable to do so, the listings would go back to the agents that initially listed these properties. I have no idea where they stand today. I haven’t seen any reported sales of the properties in questions.

February 9, 2021 City Council meeting agenda. Adopting the enforcement policy set out in the February 2021 Letter, without adding this item to an agenda for further City Council discussion and public commentary, was impermissible.

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103. By intentionally disrupting Pacaso’s ability to list its properties on the MLS, discouraging real estate agents and brokers from working with or listing Pacaso properties, and causing confusion among residents, real estate agents, and potential buyers regarding the legality of Pacaso’s operations in St. Helena (especially without first resolving Pacaso’s challenge to such prohibitive actions by the City), Pacaso has directly suffered and continues to suffer damages. 104. To date, Ellsworth has failed to take action to terminate the violative effect of his, City Attorney Walsh’s and DeRosa’s actions.

VI. As The City Concedes, The Ordinance Is Ambiguous, Confusing, And Void For Vagueness
105. If the City’s interpretation of Section 17.112.130 and recent conclusion that it does apply to Pacaso is accepted, then the time-share ordinance fails for being vague, ambiguous and overly broad as applied to Pacaso.
106. The City all but admits that its time-share ordinance is vague and difficult to determine whether conduct is prohibited, stating that it “has a fairly circuitous definition to determine if a project is a prohibited timeshare or not”:

The Code has a fairly circuitous definition to determine if a project is a prohibited timeshare or not. A “time-share project” means any real property subject to a “time-share program.” A “time-share program” is defined as “any arrangement for time-share intervals in a timesharing project whereby the use, occupancy or possession of real property has been made subject to either a time-share estate or timeshare use whereby such use, occupancy or possession circulates among purchasers of the time-share intervals according to a fixed or floating time schedule on a periodic basis for a specific period of time during any given year, but not necessarily for consecutive years.” (SHMC § 17.112.130(A).) A “time-share estate” is defined in the Code to mean “an ownership or leasehold estate in property devoted to a time-share fee (tenants in common, time span ownership, interval ownership) or a time-share lease.” (Id.) (Report at 324.)
107. In fact, during a City Council meeting discussing the time-share ordinance, City Attorney Ueda repeatedly stated that “the definition and the overall section is a little bit confusing,” July 14, 2020, Meeting at 3:18, and that the ordinance “ has some terms that are not defined.” Id. at 3:19.

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108. Likewise, one City Council member acknowledged that, as written, the time-share ordinance does not apply to fractional co-ownership structures, referring to it as “improperly written or inaccurately written,” and requesting that the City “clean it up so that we extend the fractional and eliminate this activity” of Pacaso. July 14, 2020, Meeting at 3:30. City Attorney Ueda agreed, acknowledging that if the Council wants to regulate partial ownerships, it would be necessary for the City Attorney to “take a look at that and try to clean up the ordinance.” Id. at 3:22.
109. After interpreting these “circuitous” definitions, City Attorney Ueda concluded that “[w]hat emerges from these various definitions” is that a timeshare is not a fractional or partial ownership, and that the ordinance only applies to timeshare intervals involving “an ownership arrangement where the owners have purchased an allotted amount of time to use the property”:

What emerges from these various definitions is that a timeshare, as defined in the City’s Zoning Code, is not identical to a fractional or partial ownership; but, rather, a timeshare involves an ownership arrangement where the owners have purchased an allotted amount of time to use the property (a timeshare interval). The Code also notes that timesharing projects have the same character as commercial hotels and other transient uses. (Report at 324.)
110. The City’s, City Attorney Walsh’s, Ellsworth’s and DeRosa’s interpretation of the time-share ordinance and conclusion that it does not apply to fractional or partial ownerships in July 2020 cannot be squared with their position today that the ordinance applies to Pacaso. 111. Setting aside the vague and circuitous definitions in the ordinance, one thing is perfectly clear: the particular “use” that the ordinance intends to cover (and all it is permitted to regulate) are large-scale commercial and quasi-commercial use (like condominiums and hotels (see supra at ¶¶ 47-49; infra at ¶¶ 125-27)), which is completely different from the activity and use of Pacaso homes (among other single-family homes). By interpreting the ordinance to apply to Pacaso, Defendants’ reading would cover every single-family home with more than one owner (whether through an LLC or otherwise), rendering the ordinance overbroad, failing to adhere to its stated legislative purpose, and defying common sense. Thus, Defendants’ tortured application of the time-share ordinance against Pacaso is further vague, circular, and confusing, as the ordinance was never intended to apply to the partial ownership of single-family residential dwellings.

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112. If the terms of Section 17.112.130 are so amorphous as to lead Defendants to conclude first that Pacaso is not covered, and then—with no change in underlying facts—that Pacaso is covered, the Ordinance should be deemed void for vagueness, as applied to Pacaso.

VII. The Ordinance, As Applied To Pacaso, Exceeds The Scope Of Permissible Zoning Ordinances Under Government Code § 65850 And So Should Be Stricken 113. Defendants’ attempt to apply the time-share ordinance against Pacaso exceeds the scope of a municipality’s zoning authority and police power under California Government Code § 65850(a), and is outside the scope of its authority to regulate permissible zoning subject matters. 114. A local legislative body may only adopt ordinances that regulate “the use of buildings, structures, and land as between industry, business, residences, open space, including agriculture, recreation, enjoyment of scenic beauty, use of natural resources, and other purposes.” Cal. Gov’t Code § 65850(a).
115. The City acknowledged the limits on its power in this regard, and conceded that zoning ordinances “must focus on the use of land”:

The most fundamental challenge to amending the Zoning Code to regulate fractional or partial ownership in single-family residences is that by law zoning regulations must focus on the use of land. (See, e.g., O’Loane v. O’Rourke, 231 Cal.App.2d 774, 780 (1965) [zoning is “the regulation of buildings and structures, according to their construction, and the nature and extent of their use, and the nature and extent of the uses of land.”].) State law enumerates the specific types of permissible zoning regulations, which are likewise focused on “the use of buildings, structures, and land” and related physical requirements, such as the location and size of signs, buildings and structures. (Gov. Code, § 65850.) (Report at 325 (emphasis added).) 116. The City’s time-share ordinance regulates beyond the mere “use” of buildings, structures, or land, as permitted in Gov. Code 65850(a). Defendants’ application of Section

17.112.130 against Pacaso regulates the individuals and persons who can reside in a residential residence, and targets individuals “based on the identity of a tenant or where a particular resident permanently resides.” Report at 325.
117. The City itself acknowledged this very concern by stating that zoning regulations may only regulate the types of uses, and cannot target individuals or adopt regulations “based on the identity of a tenant or where a particular resident permanently resides,” and described the Case 3:21-cv-02493-WHO Document 1 Filed 04/06/21 Page 28 of 50

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“concern that non-permanent City residents are purchasing property in St. Helena as a second home(s):”
While there may be a concern that non-permanent City residents are purchasing property in St. Helena as a second home(s) either for themselves or their guests, zoning regulations may not target individuals. In other words, the City may not adopt a zoning regulation based on the identity of a tenant or where a particular resident permanently resides. (See, e.g., Friends of Davis v. City of Davis, 83 Cal.App.4th 1004, 1013 (2000) [“a city does not have carte blanche to exclude a retail merchant that it, or some of its residents, do not like”].) City ordinances also may not regulate or define what constitutes a “family” for purposes of limiting the number of unrelated people who live together in a dwelling. (City of Santa Barbara v. Adamson, 27 Cal.3d 123 (1980).) (Report at 325 (emphasis added).)
118. Indeed, Section 17.112.130 regulates the “means of ownership” in its prohibition of the “creation of a time-share project as a means of ownership.” Instead of focusing on the “use” of land as between residential and other purposes, Section 17.112.130, by its terms, and Defendants, in their application against Pacaso, regulate and target individuals based on who the owners are. 119. Further highlighting Defendants’ tortured application of the time-share ordinance against Pacaso, City Attorney Ueda stated “that it is difficult to regulate if we’re primarily focused on taking a piece of property and looking at it in terms of how many people own that property because that’s not really a particular use as the zone code regulates uses, but it focuses on ownership.” July 14, 2020, Meeting at 3:22 (emphasis added). 120. In fact, the City and City Council even conceded that Defendants are overreaching, and admitted that attempting to apply the time-share ordinance against Pacaso is wrongful, illegal, unconstitutional, and beyond the power of the City. As one City Council member acknowledged:
“[w]hat you want and what’s legal are entirely different matters,” and suggested that regulating Pacaso under the time-share ordinance would be against “case law and civil rights,” (July 14, 2020, Meeting at 3:31 (emphasis added)), stating that the City is “not in the business of regulating families and how people come together to buy properties.” Id. at 3:32. 121. Another City Council member stated her concern “that [Defendants] are overreaching what [they] can do legally,” stating that the City is not permitted to “control how people own” property, and that she does not “want [the City] to go down a path spending a lot of Case 3:21-cv-02493-WHO Document 1 Filed 04/06/21 Page 29 of 50

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money” battling a clearly-losing legal argument (like the one Pacaso brings here). July 14, 2020, Meeting at 3:31.
122. A land use ordinance exceeds municipal authority under the police power where it has no substantial relation to the public health, safety, morals or general welfare. Defendants’ enforcement of the time-share ordinance against Pacaso is arbitrary and unreasonable, and has no substantial relation to the public health, safety, morals, or general welfare, let alone any of the other stated purposes underlying Section 17.112.130, as propounded against Pacaso. See supra at ¶¶ 47- 50, 64-78.
123. In fact, the City itself stated to Pacaso in its May 22, 2020 letter that its property “came to the City’s attention because neighbors in the surrounding area are concerned about [the] types of impacts” created by “loud parties, amplified sound, and increased traffic.” May 22, 2020 Letter. However, the City previously admitted that “[i]f the City Council is concerned about the potential neighborhood impacts timeshare uses may create”—listing “large parties” as an example—“the City has existing regulations in place to address such impacts.” Report at 326 (emphasis added). Specifically, “if the concern is that part-time owners may infrequently visit the property and have large parties, the City’s noise ordinance addresses noise and authorizes abatement and issuance of an infraction.” Id. “The City’s Municipal Code also addresses nuisances generally and has parking standards in place.” Id. 124. In fact, a City Council member confirmed that the primary “concern” with fractional co-ownership structures like Pacaso’s stemmed from neighbors raising their gripe that “instead of having one family living next door to you, you have maybe six” that are “alternat[ing].” July 14, 2020, Meeting at 3:24.
125. However, City Attorney Ueda in July 2020 herself conceded that this stated concern was not a rational basis to apply the time-share ordinance against Pacaso:
[I]f the issue is primarily that there are different people coming in and out of the unit or house, I’m not entirely sure what can be done about that, right, because different people could be at a house at any given time for whatever reason. They could be guests, or they could be people who own the house and their siblings or whatever. The direction that it’s gone in in terms of potential regulation is that if there’s a concern about impacts that are caused from having too Case 3:21-cv-02493-WHO Document 1 Filed 04/06/21 Page 30 of 50

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many people basically at a particular residence and those impacts can be addressed by current standards in place for noise and parking standards and that type of thing. So I think it’s one thing to talk about people versus the potential impacts that could result, and if there are specific impacts, we can look at what we have in place or if there are additional changes that could be made to perhaps is the nuisance abatement procedures and the nuisance, what we define as a nuisance, for sort of having a more quiet neighborhood. (July 14, 2020, Meeting at 3:25-26.)
126. Given the many other existing regulations and policies in place to address the supposed “concerns” the City had with Pacaso’s properties and that supposedly underly the purpose and intent of Section 17.112.130, Defendants’ attempt to apply this time-share ordinance against Pacaso is unreasonable, unwarranted, and an invalid land use ordinance under Cal. Gov’t Code § 65850(a).
127. Thus, the City’s determination that Pacaso’s operations are “illegal” under the timeshare ordinance—a decision reflected in the City Attorney’s March 2021 Letter to all real estate agents and brokers in St. Helena—exceeds the scope of the City’s zoning authority and police power under Cal. Gov’t Code § 65850(a).

VIII. Defendants’ Selective And Arbitrary Enforcement Of The Time-Share Ordinance Against Pacaso Is Impermissible
128. Defendants deliberately singled out Pacaso, attempting to enforce the time-share ordinance against Pacaso but not against those entities or individuals who are similarly situated or functionally the same as Pacaso.
129. The City’s selective enforcement of the time-share ordinance against Pacaso highlights the very concerns that the City itself recognized in July 2020. The City conceded that one of the “significant practical challenges to implementing and enforcing the existing timeshare regulations” is that “[a]bsent a proposed new development to specifically construct a timeshare project, the City does not know when a residence becomes a timeshare, since the ownership change is a private transaction between private parties.” Report at 325. The City conceded that it “does not have an easily available means to scrutinize such agreements or monitor the terms of particular ownership arrangements.” Id.

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130. City Attorney Ueda further highlighted these concerns during discussions of the July 2020 Report:
[W]e also would have practical challenges implementing and enforcing timeshare regulations and that City generally doesn’t know when a residence becomes a timeshare. Those are typically private transactions between private parties and the city doesn’t monitor real estate sales, and . . . some types of fractional or partial ownership interests may not necessarily trigger any concerns as more commercial uses would because, for example, multiple members of one family could decide to purchase a residence together, they may not stay there all at the same time, but they wouldn’t necessarily be having interest like a timeshare either. (July 14, 2020, Meeting at 3:21-22 (emphasis added).)
131. City Attorney Ueda further confirmed the selective and arbitrary approach the City is taking by pursuing enforcement only against Pacaso properties, but not fractional co-ownership structures among multiple friends who wish to purchase and co-own property (which is functionally the same as Pacaso’s co-ownership structure):
[I]f we’re getting at multiple ownership of one piece of property, it’s really challenging to figure out a way to define that. That doesn’t preclude people who really do need to go buy a piece of property for financial reasons. They all want to have a piece of it. They may all be friends or family members, and I don’t think that’s the type of activity that the city would want to preclude, and that’s the challenge that we have in trying to figure out how to define this in a way that would work. (July 14, 2020, Meeting at 3:33-34.)
132. In fact, in St. Helena, 559 second homes12 are owned by an LLC, trust, or similar mechanism which facilitates multiple owner arrangements.13 This represents 36% of all second homes and 21% of the entire housing stock. However, these non-Pacaso LLCs are still in existence, and do not differ from Pacaso with respect to the use of the residential single-family home. Nonetheless, Defendants have not pursued a similar enforcement agenda against them as against Pacaso.
133. Defendants’ attempt to enforce Section 17.112.130 against Pacaso, where other coowned residences (through LLCs or otherwise) have not faced similar challenges, is selective and

12 “Second home” refers to homes that did not take the owner occupant exemption. 13 Among the 559 second homes, 221 are held as LLCs or other companies.

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arbitrary, and based on invidious criteria—namely, to deny homeownership to new diverse and/or less affluent residents who hope to purchase property in St. Helena through a co-ownership structure.

IX. Defendants’ Enforcement Agenda Against Pacaso Is The Latest Chapter In The City’s Long History Of Exclusion
134. The City’s arbitrary, selective, and pretextual enforcement of its invalid time-share ban against Pacaso—whose mission is to enrich the lives of diverse individuals by democratizing the ownership of second homes—is the latest chapter in a long history of the City of St. Helena erecting barriers to home ownership for people of diverse and less affluent backgrounds. 135. Notably, in St. Helena, second home ownership is typically accessible only to elite and predominantly white buyers. This is no “accident.” The City has enshrined anti-growth principles into law, residents have filed lawsuits against affordable housing projects, and unelected neighborhood vigilantes have made it difficult for diverse individuals to move into the City. 136. For example, in 1993, the City of St. Helena adopted a long-term policy document that acts as a guide for future land use decisions called “The General Plan.” See City of St. Helena,
General Plan Update 4 (Apr. 2, 2018),
https://www.cityofsthelena.org/sites/default/files/fileattachments/planning_resources/page/6501/st_ helena_general_pan_nop_033018.pdf. The “primary goal of this General Plan is to preserve the rural, small town quality and agricultural character of St. Helena.” City of St. Helena, General Plan Introduction 1-1 (1993),
https://www.cityofsthelena.org/sites/default/files/fileattachments/planning/page/881/e_1_intro_1.p df. The plan explicitly called for “growth management.” Id. at 1-3. 137. Over the years, as the plan was updated, the City made it more and more difficult for affordable housing to be built on City property under the guise of managing growth. The latest plan, titled “the 2040 General Plan,” was approved in 2019 by the St. Helena Housing Commission after nearly a decade of entanglements over environmental concerns, among other issues. See Uzo Ehi, Legal Settlement Enables St. Helena to Embrace Density in General Plan, California Planning & Development Report (June 3, 2019), https://www.cp-dr.com/articles/20190603_1.

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138. Underpinning all the debates, however, is a general reluctance for progress and innovation in the City of St. Helena. Members of the City Council communicated to Pacaso representatives that they do not want things to change from how they have always been. In fact, St. Helena City Council Member and former Planning Commission Chair, Lester Hardy, stated that “the rise of anti-growth ‘hopes’ in St. Helena is not a recent development.” Id. In fact, “[c]omparing the 2040 General Plan Update with the 1993 General Plan . . . I would say that antigrowth sentiment has as much influence today as it did then.” Id. He further went on to say that the efforts to limit “population growth ha[ve] been a priority for many residents and voters in St. Helena for the last 30 years or more; this sentiment is always a factor in the city’s land use policy decisions, of varying significance depending on the particulars.” Id. This reality is in tension with St. Helena’s stated legislative purpose behind the time-share ordinance, which purports to preserve “affordable housing in the city for long-term occupancies.” Section

17.112.130(A)(1).
139. Discussions during City Council meetings regarding the time-share ordinance confirm this exclusionary sentiment among City Council members and residents alike.

CLAIM 1
DECLARATORY RELIEF: INAPPLICABILITY OF SECTION 17.112.130 (AGAINST THE CITY)
140. Pacaso adopts and reasserts the allegations contained in paragraphs 1-139 as if fully set forth herein.
141. There is an actual controversy now existing between Pacaso and the City concerning the application of Section 17.112.130 against Pacaso. Defendants have started enforcing Section

17.112.130 against Pacaso and its homeowners, have deemed Pacaso “illegal,” are seeking to prohibit sales by Pacaso to multiple owners, and are taking steps to prevent real estate agents and brokers from working with or transacting with Pacaso under Section 17.112.130, despite the fact that this ordinance is inapplicable to Pacaso.
142. On March 17, 2021, Pacaso wrote to the City Attorney and identified the myriad ways in which Defendants’ challenge to Pacaso is flawed and unsupported by fact or law. Pacaso Case 3:21-cv-02493-WHO Document 1 Filed 04/06/21 Page 34 of 50

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requested confirmation by April 1, 2021, confirming that the City would adhere to the analysis and conclusions from the July 2020 Report, and would drop its battle against Pacaso. The City and City Attorney failed to respond.
143. Section 17.112.130 does not apply to co-ownership of real property. Section

17.112.130 prohibits “[t]he creation of a time-share project as a means of ownership.” A “timesharing project” is defined as “any real property that is subject to a time-share program.” Section

17.112.130(B). A “time-share program” is defined to mean “any arrangement for time-share intervals [which is later defined as either a time-share estate or a time-share use] in a time-sharing project whereby the use, occupancy or possession of real property has been made subject to either a time-share estate or time-share use whereby such use, occupancy or possession circulates among purchasers of the time-share intervals.” Id. A “time-share estate” is defined as ownership in a “property devoted to a time-share fee” and “time-share use” means “any contractual right of exclusive occupancy.” Id.
144. Pacaso’s small co-ownership model is starkly different from any “time-share” project purportedly covered by Section 17.112.130, and thus does not apply to Pacaso. See supra at ¶¶ 56-80. Pacaso homeowners do not merely own the “right of exclusive occupancy,” or a “use, occupancy or possession” right that “circulates among purchasers . . . according to a fixed or floating time schedule on a periodic basis for a specific period of time during any given year.” Section 17.112.130(B), Def. of “Time-Share program.” Rather, Pacaso homeowners own a real property asset in a single-family home that includes real property interests, and rights and obligations shared among co-owners.
145. Section 17.112.130 prohibits “[t]he creation of a time-share project as a means of ownership.” Pacaso creates a property-specific LLC for each home, which owns deeded title to the property. The LLC which holds the Pacaso property does not constitute “[t]he creation of a timeshare project as a means of ownership.” Rather, it serves as a structure for homeowners to co-own a home and facilitates a collaborative ownership experience with diverse individuals of their choosing.

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146. Further, the legislative intent of the Section 17.112.130 further confirms that it does not apply to Pacaso. The City’s attempts to enforce Section 17.112.130 are wholly inconsistent with its stated “Findings And Purpose.” Targeting Pacaso does nothing to ensure homes are available for long-term occupancies. The City lacks all visibility and control into how much time homeowners intend to spend in their homes. Preventing Pacaso from buying properties has no bearing on the likelihood that other prospective buyers are either buying the home as a second home, or anticipating the ability to use it for short-term rentals, among other non “long-term occupancy” uses. Nor is there a rational relation between the City’s stated purpose of banning “commercial or quasi-commercial like use” in residential areas, as results from “commercial hotels, motels and other transient occupancy uses” and any enforcement measures taken against Pacaso.

Pacaso is a purely residential co-homeownership structure that lacks any resemblance to such “commercial or quasi-commercial like use.”
147. Because Section 17.112.130 does not apply to Pacaso, the City cannot enforce this section against Pacaso. Pacaso seeks declaratory judgment and a permanent injunction barring enforcement of Section 17.112.130 against Pacaso.

CLAIM 2
DUE PROCESS VIOLATION: DEFENDANTS’ APPLICATION OF SECTION 17.112.130

TO PACASO IS UNCONSTITUTIONALLY VAGUE AND AMBIGUOUS
(AGAINST ALL DEFENDANTS)
148. Pacaso adopts and reasserts the allegations contained in paragraphs 1-147 as if fully set forth herein.
149. The Ordinance violates the due process guarantees of the Fourteenth Amendment and California Constitution because if the Defendants’ interpretation of Section 17.112.130 as covering Pacaso is accepted, it is based on terms that are unconstitutionally vague and ambiguous. 150. Section 17.112.130 fails to provide Pacaso, homeowners, or real estate agents and brokers a reasonable opportunity to know what conduct is prohibited under the ordinance, or any guidance as to how to determine whether the activities fall within the prohibited conduct.

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151. Instead, Defendants, acting under the color of law, are exploiting definitions in Section 17.112.130 that are unclear circuitous, and incomplete, in order to claim that Pacaso is a “timeshare project” within its meaning. For example, a “[t]ime-sharing project” is defined as “any real property that is subject to a time-share program.” Section 17.112.130(B). In turn, “[t]imeshare program” is defined to mean “any arrangement for time-share intervals in a time-sharing project whereby the use, occupancy or possession of real property has been made subject to either a time-share estate or time-share use whereby such use, occupancy or possession circulates among purchasers of the time-share intervals.” Id. The Code then defines “[t]ime-share interval” as “a time-share estate or a time-share use.” Id. The Code then circuitously defines “[t]ime-share use” as “any contractual right of exclusive occupancy which does not fall within the definition of a timeshare estate, including, without limitation, a vacation license, prepaid hotel reservation, club membership, limited partnership or vacation bond,” and defines “time-share estate” as ownership in a “property devoted to a time-share fee . . . or a time-share lease” (without further defining either of those terms). Id.
152. Further, the prohibited conduct under Section 17.112.130 is “[t]he creation of a time-share project as a means of ownership.” Neither “creation” nor “means of ownership” are defined in the ordinance. And “means of ownership” does not specify the type of ownership interest held. This in turn conflicts with the definition of “[t]ime-share program,” which focuses on “any arrangement for time-share intervals,” and “[t]ime-share use” which focuses on a “contractual right of exclusive occupancy,” both of which differ from “ownership” in the abstract.

Section 17.112.130(B).
153. The City admits that under its time-share ordinance, it is difficult to determine whether conduct is prohibited, stating that it “has a fairly circuitous definition to determine if a project is a prohibited timeshare or not.” See Report at 324. 154. Section 17.112.130 is further vague and ambiguous as applied by Defendants against Pacaso. A person of ordinary intelligence would read the time-share ordinance differently than Defendants have applied it, and when reading the time-share ordinance, it cannot reasonably be applied the way Defendants now interpret it. There is no reference in Section 17.112.130 or its Case 3:21-cv-02493-WHO Document 1 Filed 04/06/21 Page 37 of 50

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definitions to fractional or partial co-ownership structures like Pacaso’s. The City, City Council, City Attorney and DeRosa confirmed this interpretation of the time-share ordinance in the July 2020 Report, finding that the time-share ordinance only regulates commercial use and that timeshares are distinct from fractional or partial ownership structures. Yet, Defendants, acting under the color of law, now apply a wholly different interpretation of the time-share ordinance against Pacaso, abandoning their previous position in the July 2020 Report, and now interpreting the ordinance to apply to Pacaso, a fractional co-ownership structure. Defendants’ inconsistent interpretation and application of the time-share ordinance over the course of time has failed to give Pacaso fair notice that the time-share ordinance regulates partial or fractional ownership structures, and further highlights Defendants’ arbitrary, capricious and unjustified standard of interpretation and enforcement of the ordinance.
155. The City’s application of an unconstitutionally vague ordinance against Pacaso has been carried out through City Attorney Walsh’s, DeRosa’s, and Ellsworth’s conduct, including through sending, and other acts taken in connection with, the January 2021 Letter, the City Attorney’s February 2021 Letter to Pacaso, deeming Pacaso “illegal,” and the City Attorney’s March 2021 Letter to all real estate agents and brokers in St. Helena, acting on his threat to inform others that the City and City Attorney Walsh had determined that Pacaso was illegal, as well as Defendants’ other communications to real estate agents, brokers and residents of St. Helena stating or suggesting that Pacaso’s operations violate the time-share ordinance. Defendants have undertaken these actions against Pacaso by interpreting the time-share ordinance in such a manner that deprived Pacaso of fair notice that the unconstitutionally vague ordinance regulates partial or fractional ownership structures.
156. By enforcing Section 17.112.130 against Pacaso, DeRosa, Ellsworth and City Attorney Walsh, acting under the color of law, deprived Pacaso of its rights under the United States Constitution, by depriving Pacaso of fair notice that the unconstitutionally vague time-share ordinance regulates partial or fractional ownership structures. DeRosa’s, Ellsworth’s and City Attorney Walsh’s actions were a direct cause of Pacaso’s injuries, because their conduct directly Case 3:21-cv-02493-WHO Document 1 Filed 04/06/21 Page 38 of 50

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caused a violation of Pacaso’s rights. DeRosa, Ellsworth and City Attorney Walsh are authorized to enforce Section 17.112.130 and they did so in an unlawful manner. 157. Ellsworth, acting under the color of law and in a position of superiority to City Attorney Walsh, failed to prevent or take action to correct the enforcement efforts against Pacaso carried out by City Attorney Walsh. Ellsworth was aware that his failure to prevent or take corrective actions would apply an unconstitutionally vague time-share ordinance against Pacaso in such a way that deprived Pacaso of its rights under the United States Constitution. As a result, Pacaso lacked fair notice that the ordinance regulates partial or fractional ownership structures.

Nevertheless, Ellsworth knowingly failed to prevent or take actions to correct such enforcement efforts, despite his power and authority to do so.
158. DeRosa, in her capacity as the Planning & Building Director of St. Helena, is responsible for reviewing, revising, and implementing the City of St. Helena’s General Plan and zoning ordinances, including the time-share ordinance; is “considered to be [an] enforcement official” with “the authority and powers necessary to gain compliance with the provisions of [the St. Helena Municipal] code and applicable state codes” (Section 1.12.040); and was the “designated point of contact for the City” with regard to time-share enforcement against Pacaso.

As such, Defendant DeRosa had final policymaking authority concerning the review, revision, implementation, and enforcement of the time-share ordinance against Pacaso, and, acting under the color of law, ratified, failed to prevent and/or carried out such enforcement efforts against Pacaso, which caused Pacaso to suffer a constitutional violation, on behalf of the City. 159. City Attorney Ethan Walsh is responsible for providing legal advice to the City Council in carrying out its duties in the operations of the City government, and for bringing about suits on behalf of the City. Walsh had final policymaking authority concerning the enforcement of the time-share ordinance against Pacaso, and, acting under the color of law, ratified and/or carried out such enforcement efforts against Pacaso, which caused Pacaso to suffer a constitutional violation, on behalf of the City.
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authority concerning the review, adoption, and enforcement of the time-share ordinance against Pacaso, and, acting under the color of law, ratified, failed to prevent and/or carried out such enforcement efforts against Pacaso, which caused Pacaso to suffer a constitutional violation, on behalf of the City.
161. Defendants’ enforcement of the time-share ordinance against Pacaso, which caused Pacaso to suffer a constitutional violation, is carried out pursuant to St. Helena’s long history of exclusion, discrimination and anti-growth principles, which include actions designed to stifle diversity and housing opportunities for underrepresented communities. See supra at ¶¶ 134-39.

The City’s long-standing policy and practice of exclusion, outsider bias, and erecting barriers to home ownership for people of diverse and underrepresented backgrounds is so closely related to and coheres with the City’s enforcement efforts against Pacaso as to be the moving force that caused it.
162. Pursuant to 42 U.S.C. § 1983 and the Court’s equitable powers, Pacaso seeks injunctive relief against Defendants, whose enforcement of the vague and ambiguous time-share ordinance against Pacaso conflicts with and violates the Fourteenth Amendment and California Constitution.

CLAIM 3

SELECTIVE AND DISCRIMINATORY ENFORCEMENT
(AGAINST ALL DEFENDANTS)
163. Pacaso adopts and reasserts the allegations contained in paragraphs 1-162 as if fully set forth herein.
164. Defendants’ pattern of selective and arbitrary enforcement violates Pacaso’s constitutional rights.
165. Pacaso was and is treated differently from entities or persons similarly situated.

Defendants, acting under the color of law, deliberately singled out Pacaso, attempting to enforce Section 17.112.130 against Pacaso, but not against those entities or individuals who are similarly situated or functionally the same as Pacaso.

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166. For example, in St. Helena, 559 second homes14 are owned by an LLC, trust, or similar mechanism which facilitates multiple owner arrangements.15 This represents 36% of all second homes and 21% of the entire housing stock. These homes include single-family residences that are co-owned by multiple owners, and which do not different in any respect from how a Pacaso home is used by its co-owners.
167. These non-Pacaso LLCs are still in existence, and Defendants have not pursued a similar enforcement agenda against them as against Pacaso. 168. Defendants’ unequal treatment of Pacaso (i.e., its enforcement of Section

17.112.130 against Pacaso, where other co-owned residences, through LLCs, tenancy in common, or otherwise, have not faced similar challenges) was intentional and based on invidious criteria.

Defendants have intentionally and deliberately singled out Pacaso on the basis of invidious criteria—namely, that Pacaso serves diverse individuals who, in the eyes of Defendants, are nonresident transients. Defendants’ arbitrary and selective enforcement of Section 17.112.130 against Pacaso is the latest chapter in a long history of the City erecting barriers to home ownership for people of diverse backgrounds, and is a pretext to deny homeownership to new diverse residents who hope to purchase property in St. Helena through a co-ownership structure. 169. Defendants’ unequal treatment of Pacaso is selective, arbitrary, and not rationally related to a legitimate governmental purpose. The City’s stated reasons for enforcement against Pacaso cannot pass muster. The City stated to Pacaso in the May 22, 2020 letter that its property “came to the City’s attention because neighbors in the surrounding area are concerned about [the] types of impacts” created by “loud parties, amplified sound, and increased traffic.” 170. However, the City itself conceded that such stated reasons for enforcement were pretextual. For example, the City admitted that “[i]f the City Council is concerned about the potential neighborhood impacts timeshare uses may create” —listing “large parties” as an example—“the City has existing regulations in place to address such impacts.” Report at 326

14 “Second home” refers to homes that did not take the owner occupant exemption. 15 Among the 559 second homes, 221 are held as LLCs or other companies.

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(emphasis added). The City stated, “[I]f the concern is that part-time owners may infrequently visit the property and have large parties, the City’s noise ordinance addresses noise and authorizes abatement and issuance of an infraction.” Report at 326. “The City’s Municipal Code also addresses nuisances generally and has parking standards in place.” Id. 171. Given the many other existing regulations in place to address the supposed “concerns” the City has stated with regard to Pacaso, the City’s enforcement agenda against Pacaso is suspect and appears to be nothing but a pretext to deny homeownership to new diverse residents. 172. Further, Pacaso co-owners agree to several additional restrictions that ensure their use promotes the City’s stated goals. For example, there is a maximum of eight co-owners for any home, with only one family using the property at a time; co-owners agree not to have large events or parties; co-owners adhere to a 9 p.m. to 7 a.m. quiet hour policy; co-owners are prohibited from renting the home; and Pacaso encourages homeowners to avoid parking on the street. Pacaso homeowners are no different from other homeowners in St. Helena, thus, efforts to preclude their homeownership does nothing to advance the City’s stated goals for enforcement against Pacaso (and not other residential co-ownership structures).
173. Discussions regarding the July 2020 Report confirmed that Defendants were unable to state one purpose, goal or non-suspect “basis” to justify application of the time-share ordinance against Pacaso, and that the primary “concern” identified (i.e., “different people coming in and out of the unit or house”) is not a permissible (let alone rational) basis for enforcing the time-share ordinance against Pacaso.
174. Defendants’ enforcement efforts against Pacaso are but a pretext for Defendants’ improper motive and discriminatory design of exclusion and actions designed to stifle diversity and housing opportunities for underrepresented communities. The City itself concedes that one of the “significant practical challenges to implementing and enforcing the existing timeshare regulations” is that “[a]bsent a proposed new development to specifically construct a timeshare project, the City does not know when a residence becomes a timeshare, since the ownership change is a private transaction between private parties.” Report at 325. The City concedes that it “does not have an easily available means to scrutinize such agreements or monitor the terms of particular ownership Case 3:21-cv-02493-WHO Document 1 Filed 04/06/21 Page 42 of 50

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arrangements.” Id. The City’s selective enforcement of the time-share ordinance against Pacaso highlights the very concerns that the City itself recognized. 175. The City’s selective and arbitrary enforcement against Pacaso has been carried out through City Attorney Walsh’s, DeRosa’s, and Ellsworth’s conduct, including through sending, and other acts taken in connection with, the January 2021 Letter, the City Attorney’s February 2021 Letter to Pacaso, deeming Pacaso “illegal,” and the City Attorney’s March 2021 Letter to all real estate agents and brokers in St. Helena, acting on his threat to inform others that the City and City Attorney Walsh had determined that Pacaso was illegal, as well as Defendants’ other communications to real estate agents, brokers and residents of St. Helena stating or suggesting that Pacaso’s operations violate the time-share ordinance. Defendants have undertaken these actions against Pacaso, while failing to carry out an enforcement regime against similarly situated or functionally equivalent individuals or entities.
176. By enforcing Section 17.112.130 against Pacaso, DeRosa, Ellsworth and City Attorney Walsh, acting under the color of law, deprived Pacaso of its rights under the United States Constitution, by unlawfully targeting Pacaso without any rational basis for enforcing the law against Pacaso, but no other co-owners of homes within St. Helena. DeRosa’s, Ellsworth’s and City Attorney Walsh’s actions were a direct cause of Pacaso’s injuries, because their conduct directly caused a violation of Pacaso’s rights. DeRosa, Ellsworth and City Attorney Walsh are authorized to enforce Section 17.112.130 and they did so in an unlawful manner. 177. Ellsworth, acting under the color of law and in a position of superiority to City Attorney Walsh, failed to prevent or take action to correct the enforcement efforts against Pacaso carried out by City Attorney Walsh. Ellsworth was aware that his failure to prevent or take corrective actions would deprive Pacaso of its rights under the United States Constitution by unlawfully targeting Pacaso without any rational basis for enforcing the law against Pacaso, but no other co-owners of homes within St. Helena. Nevertheless, Ellsworth knowingly failed to prevent or take actions to correct such enforcement efforts, despite his power and authority to do so. 178. DeRosa, in her capacity as the Planning & Building Director of St. Helena, is responsible for reviewing, revising, and implementing the City of St. Helena’s General Plan and Case 3:21-cv-02493-WHO Document 1 Filed 04/06/21 Page 43 of 50

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zoning ordinances, including the time-share ordinance, is “considered to be [an] enforcement official” as the “planning director” and has “the authority and powers necessary to gain compliance with the provisions of this code and applicable state codes” (Section 1.12.040), and was the “designated point of contact for the City” with regard to time-share enforcement against Pacaso.

DeRosa had final policymaking authority concerning the review, revision, implementation, and enforcement of the time-share ordinance against Pacaso, and, acting under the color of law, ratified, failed to prevent and/or carried out such enforcement efforts against Pacaso, which caused Pacaso to suffer a constitutional violation, on behalf of the City. 179. City Attorney Walsh is responsible for providing legal advice to the City Council in carrying out their duties in the operations of the City government, and for bringing about suits on behalf of the City. City Attorney Walsh had final policymaking authority concerning the enforcement of the time-share ordinance against Pacaso, and, acting under the color of law, ratified and/or carried out such enforcement efforts against Pacaso, which caused Pacaso to suffer a constitutional violation, on behalf of the City.
180. City Council members, including Ellsworth, are responsible for reviewing public policy and adopting policies responsive to the community. Ellsworth had final policymaking authority concerning the review, adoption, and enforcement of the time-share ordinance against Pacaso, and, acting under the color of law, ratified, failed to prevent and/or carried out such enforcement efforts against Pacaso, which caused Pacaso to suffer a constitutional violation, on behalf of the City.
181. Defendants’ enforcement of the time-share ordinance against Pacaso, which caused Pacaso to suffer a constitutional violation, was carried out pursuant to St. Helena’s long history of exclusion, discrimination and anti-growth principles, which include actions designed to stifle diversity and housing opportunities for underrepresented communities. See supra at ¶¶ 134-39.

The City’s long-standing policy and practice of exclusion, outsider bias, and erecting barriers to home ownership for people of diverse and underrepresented backgrounds is so closely related to and coheres with the City’s enforcement efforts against Pacaso as to be the moving force that caused it.

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182. Pursuant to 42 U.S.C. § 1983 and the Court’s equitable powers, Pacaso seeks injunctive relief against Defendants, whose selective and discriminatory enforcement of the timeshare ordinance against Pacaso conflicts with and violates the Fourteenth Amendment and California Constitution.

CLAIM 4
DECLARATORY RELIEF: INVALID USE OF MUNICIPAL AUTHORITY
(AGAINST THE CITY)
183. Pacaso adopts and reasserts the allegations contained in paragraphs 1-182 as if fully set forth herein.
184. Section 17.112.130 is inapplicable against Pacaso for the separate and independent reason that it represents an invalid use of legislative authority, and exceeds the scope of a municipality’s zoning authority and police power under Cal. Gov’t Code § 65850(a). 185. The City’s application of the time-share ordinance against Pacaso regulates beyond the mere “use” of buildings, structures, or land, as permitted in Cal. Gov’t Code § 65850(a).

Instead, the City’s application of Section 17.112.130 against Pacaso targets individuals “based on the identity of a tenant or where a particular resident permanently resides” and tries to regulate the individuals and persons who can reside in a residential residence. 186. The plain language of Section 17.112.130 regulates the “means of ownership” in its prohibition of the “creation of a time-share project as a means of ownership.” Instead of focusing on the “use” of land as between residential and other purposes, Section 17.112.130 focuses on who the owners are rather than the use of land as between residential and other purposes. 187. By applying Section 17.112.130 against Pacaso, the City is targeting individuals and regulating “based on the identity of a tenant or where a particular resident permanently resides.” Report at 325.
188. Section 17.112.130 is arbitrary and unreasonable, having no substantial relation to the public health, safety, morals, or general welfare.
189. The City’s stated reasons for Section 17.112.130 and its enforcement against Pacaso have no rational basis or substantial relation to its legislative purpose and findings. The City itself Case 3:21-cv-02493-WHO Document 1 Filed 04/06/21 Page 45 of 50

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stated to Pacaso in its May 22, 2020 letter that its property “came to the City’s attention because neighbors in the surrounding area are concerned about [the] types of impacts” created by “loud parties, amplified sound, and increased traffic.” However, the City previously admitted that “[i]f the City Council is concerned about the potential neighborhood impacts timeshare uses may create”—listing “large parties” as an example—“the City has existing regulations in place to address such impacts.” Report at 326 (emphasis added). The City stated, “[I]f the concern is that part-time owners may infrequently visit the property and have large parties, the City’s noise ordinance addresses noise and authorizes abatement and issuance of an infraction.” Id. “The City’s Municipal Code also addresses nuisances generally and has parking standards in place.” Id. 190. Further, Pacaso strictly prohibits short-term rentals, and all Pacaso homeowners agree to Pacaso’s policies, which prohibit large events or parties. 191. Given the many other existing regulations and policies in place to address the supposed “concerns” the City had with Pacaso’s properties and that supposedly underly the purpose and intent of Section 17.112.130, Section 17.112.130 (and the City’s attempt to apply this section against Pacaso) is unreasonable, unwarranted, and an invalid land use ordinance under Cal.

Gov’t Code § 65850(a).

CLAIM 5

INTENTIONAL INTERFERENCE WITH PROSPECTIVE ECONOMIC ADVANTAGE (AGAINST THE CITY AND CITY ATTORNEY ETHAN WALSH)
192. Pacaso adopts and reasserts the allegations contained in paragraphs 1-191 as if fully set forth herein.
193. The City’s and its employees’ efforts to discourage real estate agents, brokers and potential home buyers from working or transacting with Pacaso constitutes a clear, intentional interference with Pacaso’s business relationships with St. Helena residents, real estate agents and brokers in St. Helena.
194. Among other tortious behavior, City Attorney Walsh sent the March 2021 Letter to all real-estate offices in the City regarding time-share regulations in an effort to discourage agents and brokers from working or transacting with Pacaso. The March 2021 Letter intimidated and Case 3:21-cv-02493-WHO Document 1 Filed 04/06/21 Page 46 of 50

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threatened real estate agents and brokers from engaging and transacting with Pacaso, claiming the “objective” of the letter is “to ensure that no zoning violation occurs as a result of a transaction” in which the real estate agents or brokers and their clients are involved. 195. Likewise, Defendants, on behalf of and at the direction of the City, sent letters to Pacaso and its homeowners notifying them that if their home was used as a timeshare, such use would be impermissible pursuant to the City Municipal Code. See supra at ¶¶ 56-80. 196. The City’s and City Attorney Walsh’s actions and communications undermine Pacaso’s existing contractual relationships with real estate agents working on its behalf, interferes with Pacaso’s business relationships and arrangements, tarnishes Pacaso’s reputation and good will in the community, and impairs Pacaso from future developments (including future business partners and key stakeholders in the St. Helena community) by calling into question the legality of Pacaso’s operations.
197. The City and City Attorney Walsh are aware of Pacaso’s business model, its target market, its customer base, and the importance of Pacaso’s business relationships with real estate agents and brokers in St. Helena.
198. The actions and communications of the City and City Attorney Walsh were intentional and aimed at halting Pacaso’s current and future business opportunities in St. Helena, and at discouraging real estate agents and brokers from working with Pacaso or listing Pacaso properties.
199. The interference with Pacaso’s current and prospective business relationships is wrongful. It is based on an incorrect and erroneous application of a time-share ordinance that does not apply to Pacaso—a position that the City and City Attorney Ueda, conceded in the July 2020 Report, which made clear that Section 17.112.130 does not apply to ownership models like Pacaso.

The City and City Attorney Walsh invoked Section 17.112.130 with full knowledge that it cannot be applied to Pacaso, and that enforcing it violated Pacaso’s and its homeowners’ constitutional rights.
200. Pacaso has directly suffered and continues to suffer damages resulting from the fact that the March 2021 Letter that discouraged transactions or working with Pacaso was sent to all Case 3:21-cv-02493-WHO Document 1 Filed 04/06/21 Page 47 of 50

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real estate agents and brokers in St. Helena. This letter has (1) discouraged and continues to chill, under threat of fines and other penalties, agents from marketing Pacaso properties or being involved in a sale of ownership interests in Pacaso properties in St. Helena in any capacity; and (2) intentionally disrupted Pacaso’s ability to list its properties on the MLS by discouraging real estate agents and brokers from working with or listing Pacaso properties. 201. Further, Pacaso suffered and continues to suffer damages as a result of the confusion caused by Defendants among all agents, brokers, and potential homeowners in St. Helena as to the legality of Pacaso’s operations (especially without first resolving Pacaso’s challenge to such prohibitive actions by the City), which further hampers Pacaso’s operations and ability to sell ownership interests in Pacaso properties in St. Helena. Moreover, the confusion caused by Defendants as to the legality of Pacaso homes among existing Pacaso homeowners in St. Helena (and in other cities) has inappropriately caused such homeowners anxiety, fear, and distrust in Pacaso, causing such homeowners to reach out to Pacaso and the City as to their ability to resale the property.16
202. Absent corrective action, Defendants’ prior communications to agents, brokers, and potential Pacaso homeowners will continue to cause irreparable harm to Pacaso.

PRAYER FOR RELIEF
WHEREFORE, Plaintiffs respectfully pray for relief as follows:
a) For judgment in favor of Pacaso against Defendants on all Causes of Action; b) For a judgment declaring that Section 17.112.130 does not apply to Pacaso; c) For a judgment declaring that Defendants do not have the authority to enforce Section 17.112.130 against Pacaso;
d) For an injunction enjoining the City and Defendant Walsh from continuing to knowingly interfere with Pacaso’s economic interests by communicating false information about the legality of Pacaso’s operations and homes; e) For a mandatory injunction compelling the City and Defendant Ethan Walsh to send a retraction letter to the real estate agents and brokers in St. Helena clarifying that real estate listings and transactions that sell co-ownership opportunities that are not

16 Though the City’s and Defendant Walsh’s conduct has harmed Pacaso, Pacaso does not seek monetary or other damages based on their intentional interference with Pacaso’s economic interests. As set forth herein, Pacaso seeks mandatory and prohibitory injunctions to cure Defendants’ tortious conduct and to prevent future, recurring harms.

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“time share projects” fall outside of the City’s time-share regulations, and that no “zoning violation” will “occur[]” as a result of transacting with Pacaso and listing a home owned by Pacaso for sale;
f) For attorneys’ fees pursuant to 42 U.S.C. § 1988 and Cal. Code of Civ. Proc. § 1021.5; and
g) For such other and further relief as this Court may deem proper.

DATED: April 6, 2021 SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP By: /s/ Lance A. Etcheverry
LANCE A. ETCHEVERRY
Attorneys for Plaintiffs
PACASO INC. and PAC 6 CA 2021 LLC
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DEMAND FOR JURY TRIAL
Pacaso respectfully requests a trial by jury on all issues so triable.

DATED: April 6, 2021 SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP By: /s/ Lance A. Etcheverry
LANCE A. ETCHEVERRY
Attorneys for Plaintiffs
PACASO INC. and PAC 6 CA 2021 LLC
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Exhibit A
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Report to the City Council
Regular City Council - 14 Jul 2020
Agenda Section: NEW BUSINESS
Subject: Discussion Regarding Timeshare Issues
CEQA
Determination:

Not a CEQA project
Prepared By: Kara Ueda, City Attorney
Reviewed By: April Mitts, Finance Director
Approved By: Maya DeRosa, Planning & Building Director/Acting City Manager

BACKGROUND
This agenda item is for informational purposes only to guide and facilitate a policy discussion amongst the City Council regarding timeshare uses and fractional ownership of residences in the City. The issue is being discussed following concerns raised by both City residents and Council members after some residents discovered a real estate listing for a fractional or partial ownership interest in a residential home in town.

The St. Helena Municipal Code currently prohibits creation of a timeshare project as a means of ownership of any single-family, two-family or multiple-family dwelling or any apartment house within the City. (SHMC § 17.112.130) The prohibition is based, in part, on findings made by the City Council that timeshare uses are commercial or quasicommercial uses that serve to reduce available residential housing and increase traffic and noise impacts. (See SHMC § 17.112.130(A).) As explained further below, though, a timeshare use differs from a fractional or partial ownership of a property.

DISCUSSION
What is a timeshare?
State law and the California Department of Real Estate regulate the advertising and sale of timeshares pursuant to “The Vacation Ownership and Time-Share Act of 2004.” (Bus. & Prof. Code, § 11210 et seq.). That law defines a “time-share plan” to mean “any arrangement, plan, scheme, or similar device, other than an exchange program, Agenda Item #11.2.

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whether by membership agreement, sale, lease, deed, license, right to use agreement, or by any other means, whereby a purchaser, in exchange for consideration, receives ownership rights in or the right to use accommodations for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not necessarily for consecutive years.” (Bus. & Prof. Code, § 11212(z).) The law mandates certain registration and advertising requirements for timeshare plans and regulates the information and terms that must be included in a sale in order to protect consumers who may purchase time-share interests. However, the law does not regulate the location and use of timeshare plans, and it expressly does not invalidate or modify local “zoning, subdivision, or building code” ordinances. (Bus. & Prof. Code, § 11280.) The St. Helena Zoning Code prohibits the creation of a timeshare project as a means of ownership of any single-family, two-family, or multi-family dwelling or apartment house. (SHMC § 17.112.130). The Code has a fairly circuitous definition to determine if a project is a prohibited timeshare or not. A “time-share project” means any real property subject to a “time-share program.” A “time-share program” is defined as “any arrangement for time-share intervals in a time-sharing project whereby the use, occupancy or possession of real property has been made subject to either a time-share estate or time-share use whereby such use, occupancy or possession circulates among purchasers of the time-share intervals according to a fixed or floating time schedule on a periodic basis for a specific period of time during any given year, but not necessarily for consecutive years.” (SHMC § 17.112.130(A).) A “time-share estate” is defined in the Code to mean “an ownership or leasehold estate in property devoted to a time-share fee (tenants in common, time span ownership, interval ownership) or a time-share lease. (Id.) What emerges from these various definitions is that a timeshare, as defined in the City’s Zoning Code, is not identical to a fractional or partial ownership; but, rather, a timeshare involves an ownership arrangement where the owners have purchased an allotted amount of time to use the property (a timeshare interval). The Code also notes that timesharing projects have the same character as commercial hotels and other transient uses.

Timeshares, thus, are somewhat similar to short-term rentals and fractional ownership hotels but differ from both in important ways. The City defines short-term rentals as a use in which overnight accommodations are provided to guests for compensation for periods of less than thirty (30) days in a single-family dwelling and are only authorized with a short-term rental permit. (SHMC § 17.04.160.) Short-term rentals are generally rented by guests on a short-term basis. After the guest leaves, they have no further obligation or ownership of the property. A timeshare, on the other hand, means that the person has an ongoing ownership interest in the property for a limited duration of time.

The City defines fractional ownership hotels as hotels with a minimum of 40 rooms, in which 75% or more of the rooms may be made available to individuals as “time-share estates,” “which is defined as a time-share interest, which is the right to occupy a timeshare property, coupled with a freehold estate or an estate for years with a future interest in a time-share property or a specified portion thereof, pursuant to Section 11212(x)(1) of the California Business and Professions Code, and subject to obtaining Agenda Item #11.2.

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permission required to do so obtained from the California Department of Real Estate.” (SHMC § 17.112.150.) The Zoning Code provides that fractional ownership hotels are conditionally permitted in the Service Commercial district. Timeshares as discussed herein, by comparison, may be for any particular interval of time and are a type of fractional/partial ownership. But not all fractional/partial ownership interests are considered timeshare interests. For purposes of much of the discussion in this report, timeshares are discussed in the context of a single-family home rather than, for example, a large condominium project or converted hotel.

What are the challenges and limitations to regulating partial ownership in single-family residences?
City staff and the City Attorney’s office have reviewed a small sample of other jurisdictions’ ordinances regulating timeshares. What emerges as a theme from this limited review is that other jurisdictions appear to regulate timeshare uses as commercial uses, such as timeshare units in high-rise condominium buildings or something akin to fractional ownership hotels. The City’s code appears to try to similarly regulate timeshare uses as a commercial use.

The most fundamental challenge to amending the Zoning Code to regulate fractional or partial ownership in single-family residences is that by law zoning regulations must focus on the use of land. (See, e.g., O’Loane v. O’Rourke, 231 Cal.App.2d 774, 780 (1965) [zoning is “the regulation of buildings and structures, according to their construction, and the nature and extent of their use, and the nature and extent of the uses of land.”].) State law enumerates the specific types of permissible zoning regulations, which are likewise focused on “the use of buildings, structures, and land” and related physical requirements, such as the location and size of signs, buildings and structures. (Gov. Code, § 65850.) Thus, the City’s Zoning Code focuses on the types of uses, including, for example, different types of residential uses, winery uses, and commercial uses.

While there may be a concern that non-permanent City residents are purchasing property in St. Helena as a second home(s) either for themselves or their guests, zoning regulations may not target individuals. In other words, the City may not adopt a zoning regulation based on the identity of a tenant or where a particular resident permanently resides. See, e.g., Friends of Davis v. City of Davis, 83 Cal.App.4th 1004, 1013 (2000) [“a city does not have carte blanche to exclude a retail merchant that it, or some of its residents, do not like”].) City ordinances also may not regulate or define what constitutes a “family” for purposes of limiting the number of unrelated people who live together in a dwelling. (City of Santa Barbara v. Adamson, 27 Cal.3d 123 (1980).) There are also significant practical challenges to implementing and enforcing the existing timeshare regulations. Absent a proposed new development to specifically construct a timeshare project, the City does not know when a residence becomes a timeshare, since the ownership change is a private transaction between private parties.

The City does not have an easily available means to scrutinize such agreements or monitor the terms of particular ownership arrangements. Additionally, there may be a Agenda Item #11.2.

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number of joint ownership scenarios that do not necessarily trigger the same concerns as commercial transient uses or that do not qualify as a prohibited timeshare under the City’s ordinance. For example, multiple members of an extended family may all wish to purchase a residence together. The family members may not all necessarily live in the home together at the same time, but they also did not set up an arrangement where they each have a timeshare interval. While this residence may be owned by multiple people who each do not choose to live in the residence, the joint or partial ownership of the residence would not be considered a timeshare as each family member could have equal access to the residence (as opposed to purchasing a limited amount of time).

These challenges do not necessarily preclude regulating or prohibiting timeshare uses but should be considered in determining whether additional or amended regulations are desired.

What may the City regulate with respect to timeshares?
For the above reasons, zoning based solely on ownership, as opposed to the use of land, is impermissible. Timeshare regulations should, thus, focus on the type and use of the property and its related impacts, such as specific intervals of exclusive occupancy that render the use more akin to a transient commercial use.

If the City Council is concerned about the potential neighborhood impacts timeshare uses may create, the City has existing regulations in place to address such impacts. For example, if the concern is that part-time owners may infrequently visit the property and have large parties, the City’s noise ordinance addresses noise and authorizes abatement and issuance of an infraction. The City’s Municipal Code also addresses nuisances generally and has parking standards in place. However, these regulations all regulate the impacts of certain activities on the land, not the land uses themselves.

FISCAL IMPACT
None at this time. Additional staff time and research will be required if zoning amendments are proposed.

RECOMMENDED ACTION
Receive this report, discuss, and provide direction to staff if desired. City staff is seeking guidance and clarification from the City Council concerning the specific problem(s) a Zoning Code amendment could help resolve, but with the limitations noted above for regulating timeshares and partial ownership.

Agenda Item #11.2.

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ATTORNEYS AT LAW
18101 VON KARMAN AVENUE, SUITE 1000
IRVINE, CALIFORNIA 92612
DAMIAN M. MOOS, Bar No. 240030
[email protected]
DAMIAN A. NORTHCUTT, Bar No. 258183
[email protected]
TYLER D. ANTHONY, Bar No. 305652
[email protected]

BEST BEST & KRIEGER LLP
18101 Von Karman Avenue
Suite 1000
Irvine, California 92612
Telephone: (949) 263-2600
Facsimile: (949) 260-0972
Attorneys for Defendants
CITY OF ST. HELENA; PLANNING & BUILDING
DIRECTOR MAYA DEROSA; MAYOR GEOFF
ELLSWORTH; and CITY ATTORNEY ETHAN
WALSH

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA
PACASO INC. and PAC 6 CA 2021 LLC,
Petitioner,
v.

THE CITY OF ST. HELENA; PLANNING &
BUILDING DIRECTOR MAYA DEROSA;
MAYOR GEOFF ELLSWORTH; CITY
ATTORNEY ETHAN WALSH; and DOES 1-
5,
Defendants.

Case No. 3:21-cv-02493
DEFENDANTS’ ANSWER TO

COMPLAINT
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Defendants, CITY OF ST. HELENA (“City”), PLANNING & BUILDING DIRECTOR MAYA DEROSA; MAYOR GEOFF ELLSWORTH; CITY ATTORNEY, and CITY ATTORNEY ETHAN WALSH (“City Attorney”) (collectively the “City Defendants”) hereby answer Plaintiff PACASO INC. and PAC 6 CA 2021 LLC (collectively “Plaintiffs”) Complaint for: (1) Declaratory Judgment; (2) Due Procession Violation; (3) Selective Enforcement; (4) Invalid Use of Municipal Authority; and (5) Intentional Interference with Prospective Economic Advantage (“Complaint”). City Defendants answers as follows: (hereafter “City” or “Defendant” hereby answers the allegations in the Complaint of PACASO INC. and PAC 6 CA 2021 LLC (“Plaintiffs”), as follows:

INTRODUCTION

1. In answering Paragraph 1 of the Complaint, City Defendants deny each and every allegation in Paragraph 1 of the Complaint.

2. In answering Paragraph 2 of the Complaint, City Defendants deny each and every allegation in Paragraph 2 of the Complaint.

3. In answering Paragraph 3 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 3 of the Complaint.

4. In answering Paragraph 4 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 4 of the Complaint.

5. In answering Paragraph 5 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 5 of the Complaint.

6. In answering Paragraph 6 of the Complaint, City Defendants deny each and every allegation in Paragraph 6 of the Complaint.

7. In answering Paragraph 7 of the Complaint, City Defendants deny each and every allegation in Paragraph 7 of the Complaint.

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8. In answering Paragraph 8 of the Complaint, City Defendants admit that a Report to the City Council was prepared on July 14, 2020 and that local residents expressed concerns about a residential property, which one of the Plaintiffs owns. City Defendants deny each and every other allegation in Paragraph 8 of the Complaint.

9. In answering Paragraph 9 of the Complaint, to the extent that Plaintiffs have accurately quoted portions of the July 2020 Report, City Defendants admit that the July 2020 Report reads as alleged. City Defendants deny each and every other allegation in Paragraph 9 of the Complaint, including, but not limited to, any conclusions, meaning or interpretation that Plaintiffs derive or seek to insert into the July 2020 Report.

10. In answering Paragraph 10 of the Complaint, to the extent that Plaintiffs have accurately quoted portions of the July 2020 Report, City Defendants admit that the July 2020 Report reads as alleged. City Defendants deny each and every other allegation in Paragraph 10 of the Complaint, including, but not limited to, any conclusions, meaning or interpretation that Plaintiffs derive or seek to insert into the July 2020 Report.

11. In answering Paragraph 11 of the Complaint, to the extent that Plaintiffs have accurately quoted what was said during the July 2014 Meeting, City Defendants admit that such statements were made. City Defendants deny each and every other allegation in Paragraph 11 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what was said during the July 2014 Meeting.

12. In answering Paragraph 12 of the Complaint, City Defendants deny each and every allegation in Paragraph 12 of the Complaint.

13. In answering Paragraph 13 of the Complaint, City Defendants deny each and every allegation in Paragraph 13 of the Complaint.

14. In answering Paragraph 14 of the Complaint, City Defendants deny each and every allegation in Paragraph 14 of the Complaint.

THE PARTIES
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15. In answering Paragraph 15 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 15 of the Complaint.

16. In answering Paragraph 16 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 16 of the Complaint.

17. In answering Paragraph 17 of the Complaint, City Defendants admit the allegations asserted.

18. In answering Paragraph 18 of the Complaint, City Defendants admit the allegations asserted.

19. In answering Paragraph 19 of the Complaint, City Defendants deny that the City Attorney acts under the Mayor’s direction. Except as denied, City Defendants admit the allegations asserted.

20. In answering Paragraph 20 of the Complaint, City Defendants admit the allegations asserted.

21. In answering Paragraph 21 of the Complaint, City Defendants admit that St. Helena City Council members include Vice Mayor Paul Dohring, Anna Chouteau, Lester Gardy, and Eric Hall. City Defendants admit that these members have collectively represented the City Council since November 2020. City Defendants deny that Vice Mayor Dohring has served on the City Council since 2018. City Defendants admit that Anna Chouteau has served on the City Council since 2018. City Defendants admit that the City Council is a legislative and policy-making body for the City of St. Helena. City Defendants admit that the City Council bears responsibility for setting City policy and for adopting ordinances, resolutions and other orders as necessary for governing the City. Except as admitted, City Defendants deny each and every other allegation in Paragraph 21 of the Complaint.

JURISDICTION AND VENUE

22. In answering Paragraph 22 of the Complaint, City Defendants assert that the allegations contain Plaintiffs’ legal theories and/or legal conclusion to which no response is Case 3:21-cv-02493-WHO Document 17 Filed 05/17/21 Page 4 of 26

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required. To the extent a response is required, City Defendants deny each and every allegation in Paragraph 22 of the Complaint.

23. In answering Paragraph 23 of the Complaint, City Defendants assert that the allegations contain Plaintiffs’ legal theories and/or legal conclusion to which no response is required. To the extent a response is required, City Defendants deny each and every allegation in Paragraph 23 of the Complaint.

GENERAL ALLEGATIONS

24. In answering Paragraph 24 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 24 of the Complaint.

25. In answering Paragraph 25 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 25 of the Complaint.

26. In answering Paragraph 26 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 26 of the Complaint.

27. In answering Paragraph 27 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 27 of the Complaint.

28. In answering Paragraph 28 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 28 of the Complaint.

29. In answering Paragraph 29 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 29 of the Complaint.

30. In answering Paragraph 30 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 30 of the Complaint.

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31. In answering Paragraph 31 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 31 of the Complaint.

32. In answering Paragraph 32 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 32 of the Complaint.

33. In answering Paragraph 33 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 33 of the Complaint.

34. In answering Paragraph 34 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 34 of the Complaint.

35. In answering Paragraph 35 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 35 of the Complaint.

36. In answering Paragraph 36 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 36 of the Complaint.

37. In answering Paragraph 37 of the Complaint, to the extent Plaintiffs have accurately quoted the ordinance, City Defendants admit that the ordinance reads as such. Except as admitted, City Defendants deny each and every other allegation in Paragraph 37 of the Complaint.

38. In answering Paragraph 38 of the Complaint, to the extent Plaintiffs have accurately quoted the ordinance, City Defendants admit that the ordinance reads as such. Except as admitted, City Defendants deny each and every other allegation in Paragraph 38 of the Complaint.

39. In answering Paragraph 39 of the Complaint, to the extent Plaintiffs have accurately quoted the ordinance, City Defendants admit that the ordinance reads as such. Except as Case 3:21-cv-02493-WHO Document 17 Filed 05/17/21 Page 6 of 26

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admitted, City Defendants deny each and every other allegation in Paragraph 39 of the Complaint.

40. In answering Paragraph 40 of the Complaint, to the extent Plaintiffs have accurately quoted the ordinance, City Defendants admit that the ordinance reads as such. Except as admitted, City Defendants deny each and every other allegation in Paragraph 40 of the Complaint.

41. In answering Paragraph 41 of the Complaint, City Defendants deny each and every allegation in Paragraph 41 of the Complaint.

42. In answering Paragraph 42 of the Complaint, to the extent Plaintiffs have accurately quoted the July 2020 Report, City Defendants admit that the Report reads as quoted. Except as admitted, City Defendants deny each and every other allegation in Paragraph 42 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what is written in the July 2020 Report.

43. In answering Paragraph 43 of the Complaint, to the extent Plaintiffs have accurately quoted the July 2020 Report, City Defendants admit that the Report reads as quoted. Except as admitted, City Defendants deny each and every other allegation in Paragraph 43 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what is written in the July 2020 Report.

44. In answering Paragraph 44 of the Complaint, to the extent Plaintiffs have accurately quoted the July 2020 Report, City Defendants admit that the Report reads as quoted. Except as admitted, City Defendants deny each and every other allegation in Paragraph 44 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what is written in the July 2020 Report.

45. In answering Paragraph 45 of the Complaint, to the extent Plaintiffs have accurately quoted the July 2020 Report, City Defendants admit that the Report reads as quoted. Except as admitted, City Defendants deny each and every other allegation in Paragraph 45 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what is written in the July 2020 Report.

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46. In answering Paragraph 46 of the Complaint, to the extent Plaintiffs have accurately quoted the July 2020 Report, City Defendants admit that the Report reads as quoted. Except as admitted, City Defendants deny each and every other allegation in Paragraph 46 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what is written in the July 2020 Report.

47. In answering Paragraph 47 of the Complaint, to the extent Plaintiffs have accurately quoted who said what during the July 14, 2020 Meeting, City Defendants admit that the person said the accurately quoted material during the Meeting. Except as admitted, City Defendants deny each and every other allegation in Paragraph 47 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what was said during the July 14, 2020 Meeting.

48. In answering Paragraph 48 of the Complaint, to the extent Plaintiffs have accurately quoted who said what during the July 14, 2020 Meeting, City Defendants admit that the person said the accurately quoted material during the Meeting. Except as admitted, City Defendants deny each and every other allegation in Paragraph 48 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what was said during the July 14, 2020 Meeting.

49. In answering Paragraph 49 of the Complaint, to the extent Plaintiffs have accurately quoted who said what during the July 14, 2020 Meeting, City Defendants admit that the person said the accurately quoted material during the Meeting. Except as admitted, City Defendants deny each and every other allegation in Paragraph 49 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what was said during the July 14, 2020 Meeting.

50. In answering Paragraph 50 of the Complaint, to the extent Plaintiffs have accurately quoted the July 2020 Report, City Defendants admit that the Report reads as quoted. Except as admitted, City Defendants deny each and every other allegation in Paragraph 50 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what is written in the July 2020 Report.

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51. In answering Paragraph 51 of the Complaint, to the extent Plaintiffs have accurately quoted the July 2020 Report, City Defendants admit that the Report reads as quoted. Except as admitted, City Defendants deny each and every other allegation in Paragraph 51 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what is written in the July 2020 Report.

52. In answering Paragraph 52 of the Complaint, to the extent Plaintiffs have accurately quoted the July 2020 Report, City Defendants admit that the Report reads as quoted. Except as admitted, City Defendants deny each and every other allegation in Paragraph 52 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what is written in the July 2020 Report.

53. In answering Paragraph 53 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 53 of the Complaint.

54. In answering Paragraph 54 of the Complaint, City Defendants deny each and every allegation in Paragraph 54 of the Complaint.

55. In answering Paragraph 55 of the Complaint, City Defendants deny each and every allegation in Paragraph 55 of the Complaint.

56. In answering Paragraph 56 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 56 of the Complaint.

57. In answering Paragraph 57 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 57 of the Complaint.

58. In answering Paragraph 58 of the Complaint, to the extent Plaintiffs have accurately quoted who said what during the July 14, 2020 Meeting, City Defendants admit that the person said the accurately quoted material during the Meeting. Except as admitted, City Defendants deny each and every other allegation in Paragraph 58 of the Complaint, including, but not limited Case 3:21-cv-02493-WHO Document 17 Filed 05/17/21 Page 9 of 26

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to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what was said during the July 14, 2020 Meeting.

59. In answering Paragraph 59 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 59 of the Complaint.

60. In answering Paragraph 60 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 60 of the Complaint.

61. In answering Paragraph 61 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 61 of the Complaint.

62. In answering Paragraph 62 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 62 of the Complaint.

63. In answering Paragraph 63 of the Complaint, City Defendants deny each and every allegation in Paragraph 63 of the Complaint.

64. In answering Paragraph 64 of the Complaint, to the extent Plaintiffs have accurately quoted the ordinance, City Defendants admit that the ordinance reads as alleged. Except as admitted, City Defendants deny each and every other allegation in Paragraph 64 of the Complaint.

65. In answering Paragraph 65 of the Complaint, City Defendants deny each and every allegation in Paragraph 65 of the Complaint.

66. In answering Paragraph 66 of the Complaint, City Defendants deny each and every allegation in Paragraph 66 of the Complaint.

67. In answering Paragraph 67 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 67 of the Complaint.

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68. In answering Paragraph 68 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 68 of the Complaint.

69. In answering Paragraph 69 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 69 of the Complaint.

70. In answering Paragraph 70 of the Complaint, City Defendants deny each and every allegation in Paragraph 70 of the Complaint.

71. In answering Paragraph 71 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 71 of the Complaint.

72. In answering Paragraph 72 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 72 of the Complaint.

73. In answering Paragraph 73 of the Complaint, to the extent Plaintiffs have accurately quoted who said what during the July 14, 2020 Meeting, City Defendants admit that the person said the accurately quoted material during the Meeting. Except as admitted, City Defendants deny each and every other allegation in Paragraph 73 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what was said during the July 14, 2020 Meeting.

74. In answering Paragraph 74 of the Complaint, to the extent Plaintiffs have accurately quoted who said what during the July 14, 2020 Meeting, City Defendants admit that the person said the accurately quoted material during the Meeting. Except as admitted, City Defendants deny each and every other allegation in Paragraph 74 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what was said during the July 14, 2020 Meeting.

75. In answering Paragraph 75 of the Complaint, City Defendants assert that the documents/meeting speak for themselves and that no response is otherwise required.

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76. In answering Paragraph 76 of the Complaint, City Defendants deny each and every allegation in Paragraph 76 of the Complaint.

77. In answering Paragraph 77 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 77 of the Complaint.

78. In answering Paragraph 78 of the Complaint, City Defendants deny each and every allegation in Paragraph 78 of the Complaint.

79. In answering Paragraph 79 of the Complaint, City Defendants admit the allegations asserted.

80. In answering Paragraph 80 of the Complaint, City Defendants admit that a response, dated May 19, 2020 was sent, and assert that the document speaks for itself. Except as admitted, City Defendants deny each and every other allegation in Paragraph 80 of the Complaint.

81. In answering Paragraph 81 of the Complaint, City Defendants admit that Ms.

DeRosa sent a written response, dated May 22, 2020, and assert that the document speaks for itself. Except as admitted, City Defendants deny each and every other allegation in Paragraph 81 of the Complaint.

82. In answering Paragraph 82 of the Complaint, City Defendants deny each and every allegation in Paragraph 82 of the Complaint.

83. In answering Paragraph 83 of the Complaint, City Defendants admit that a response, dated May 26, 2020 was sent, and assert that the document speaks for itself. Except as admitted, City Defendants deny each and every other allegation in Paragraph 83 of the Complaint.

84. In answering Paragraph 84 of the Complaint, City Defendants deny that the City represented that Pacaso’s operations were permitted. City Defendants are without sufficient knowledge or information to form a belief as to the truth of the remaining allegations contained therein, and, on that basis, deny each and every other allegation in Paragraph 84 of the Complaint.

85. In answering Paragraph 85 of the Complaint, City Defendants assert that the allegations contain Plaintiffs’ legal theories and/or legal conclusion to which no response is Case 3:21-cv-02493-WHO Document 17 Filed 05/17/21 Page 12 of 26

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required. To the extent a response is required, City Defendants deny each and every allegation in Paragraph 85 of the Complaint.

86. In answering Paragraph 86 of the Complaint, City Defendants deny each and every allegation in Paragraph 86 of the Complaint.

87. In answering Paragraph 87 of the Complaint, City Defendants admit that Ms.

DeRosa sent a letter, dated January 25, 2021, and assert that the document speaks for itself.

Except as admitted, City Defendants deny each and every other allegation in Paragraph 87 of the Complaint.

88. In answering Paragraph 88 of the Complaint, City Defendants deny each and every allegation in Paragraph 88 of the Complaint.

89. In answering Paragraph 89 of the Complaint, City Defendants deny each and every other allegation in Paragraph 89 of the Complaint.

90. In answering Paragraph 90 of the Complaint, City Defendants admit that Pacaso contacted Maya DeRosa. City Defendants assert that the other allegations contain Plaintiffs’ legal theories and/or legal conclusion to which no response is required. To the extent a response is required, City Defendants deny each and every other allegation in Paragraph 90 of the Complaint.

91. In answering Paragraph 91 of the Complaint, to the extent that Plaintiffs have accurately quoted who said what during the February 9, 2021 meeting, then City Defendants admit that such person(s) said what they are alleged to have said during the meeting. Except as admitted, City Defendants deny each and every allegation in Paragraph 91 of the Complaint.

92. In answering Paragraph 92 of the Complaint, City Defendants admit that City Attorney Walsh sent a letter to Pacaso on February 10, 2021, and assert that the document speaks for itself. Except as admitted, City Defendants deny each and every other allegation in Paragraph 92 of the Complaint.

93. In answering Paragraph 93 of the Complaint, City Defendants admit that City Attorney Walsh sent a letter to Pacaso on February 10, 2021, and assert that the document speaks Case 3:21-cv-02493-WHO Document 17 Filed 05/17/21 Page 13 of 26

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for itself. Except as admitted, City Defendants deny each and every other allegation in Paragraph 93 of the Complaint.

94. In answering Paragraph 94 of the Complaint, City Defendants admit that City Attorney Walsh sent a letter to local real estate agents, dated March 16, 2021, and assert that the document speaks for itself. Except as admitted, City Defendants deny each and every other allegation in Paragraph 94 of the Complaint.

95. In answering Paragraph 95 of the Complaint, City Defendants admit that City Attorney Walsh sent a letter to local real estate agents, dated March 16, 2021, and assert that the document speaks for itself. Except as admitted, City Defendants deny each and every other allegation in Paragraph 95 of the Complaint.

96. In answering Paragraph 96 of the Complaint, City Defendants assert that the allegations contain Plaintiffs’ legal theories and/or legal conclusion to which no response is required. To the extent a response is required, City Defendants deny each and every allegation in Paragraph 96 of the Complaint.

97. In answering Paragraph 97 of the Complaint, City Defendants deny each and every allegation in Paragraph 97 of the Complaint.

98. In answering Paragraph 98 of the Complaint, City Defendants deny each and every allegation in Paragraph 98 of the Complaint.

99. In answering Paragraph 99 of the Complaint, City Defendants admit that Pacaso responded to City Attorney Walsh on March 17, 2021 and that Mr. Walsh did not respond to Pacaso’s letter by April 1, 2021. City Defendants assert that the documents/meeting speak for themselves and that no response is otherwise required.
100. In answering Paragraph 100 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 100 of the Complaint. 101. In answering Paragraph 101 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 101 of the Complaint.

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102. In answering Paragraph 102 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 102 of the Complaint. 103. In answering Paragraph 103 of the Complaint, City Defendants deny each and every allegation in Paragraph 103 of the Complaint.
104. In answering Paragraph 104 of the Complaint, City Defendants assert that the allegations contain Plaintiffs’ legal theories and/or legal conclusion to which no response is required. To the extent a response is required, City Defendants deny each and every allegation in Paragraph 104 of the Complaint.
105. In answering Paragraph 105 of the Complaint, City Defendants deny each and every allegation in Paragraph 105 of the Complaint.
106. In answering Paragraph 106 of the Complaint, to the extent that Plaintiffs have accurately quoted the July 2020 Report, City Defendants admit that the report reads as alleged.

Except as admitted, City Defendants deny each and every allegation in Paragraph 106 of the Complaint.
107. In answering Paragraph 107 of the Complaint, to the extent that Plaintiffs have accurately quoted what Ms. Ueda said during the July 14, 2020 meeting, City Defendants admit she said what Plaintiffs allege. Except as admitted, City Defendants deny each and every allegation in Paragraph 107 of the Complaint.
108. In answering Paragraph 108 of the Complaint, to the extent that Plaintiffs have accurately quoted who said what during the July 14, 2020 meeting, City Defendants admit those persons said what Plaintiffs allege. Except as admitted, City Defendants deny each and every allegation in Paragraph 108 of the Complaint, including any attempts by Plaintiffs to interpret, distort, misconstrue or take out of context what was said during the July 14, 2020 meeting. 109. In answering Paragraph 109 of the Complaint, to the extent that Plaintiffs have accurately quoted the July 2020 Report, City Defendants admit that the report reads as alleged.

Except as admitted, City Defendants deny each and every allegation in Paragraph 109 of the Complaint.

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110. In answering Paragraph 110 of the Complaint, City Defendants deny each and every allegation in Paragraph 110 of the Complaint.
111. In answering Paragraph 111 of the Complaint, City Defendants deny each and every allegation in Paragraph 111 of the Complaint.
112. In answering Paragraph 112 of the Complaint, City Defendants assert that the allegations contain Plaintiffs’ legal theories and/or legal conclusion to which no response is required. To the extent a response is required, City Defendants deny each and every allegation in Paragraph 112 of the Complaint.
113. In answering Paragraph 113 of the Complaint, City Defendants deny each and every allegation in Paragraph 113 of the Complaint.
114. In answering Paragraph 114 of the Complaint, City Defendants assert that Government Code § 65850 speaks for itself, and that no response is otherwise required. To the extent a response is required, City Defendants deny each and every allegation in Paragraph 114 of the Complaint.
115. In answering Paragraph 115 of the Complaint, to the extent that Plaintiffs have accurately quoted the July 2020 Report, City Defendants admit that the report reads as alleged.

Except as admitted, City Defendants deny each and every allegation in Paragraph 115 of the Complaint.
116. In answering Paragraph 116 of the Complaint, City Defendants deny each and every allegation in Paragraph 116 of the Complaint.
117. In answering Paragraph 117 of the Complaint, to the extent that Plaintiffs have accurately quoted the July 2020 Report, City Defendants admit that the report reads as alleged.

Except as admitted, City Defendants deny each and every allegation in Paragraph 117 of the Complaint.
118. In answering Paragraph 118 of the Complaint, City Defendants deny each and every allegation in Paragraph 118 of the Complaint.
119. In answering Paragraph 119 of the Complaint, to the extent that Plaintiffs have accurately quoted what Ms. Ueda said during the July 14, 2020 meeting, City Defendants admit Case 3:21-cv-02493-WHO Document 17 Filed 05/17/21 Page 16 of 26

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she said what Plaintiffs allege. Except as admitted, City Defendants deny each and every allegation in Paragraph 119 of the Complaint.
120. In answering Paragraph 120 of the Complaint, City Defendants deny each and every allegation in Paragraph 120 of the Complaint.
121. In answering Paragraph 121 of the Complaint, City Defendants deny each and every allegation in Paragraph 121 of the Complaint.
122. In answering Paragraph 122 of the Complaint, City Defendants assert that the allegations contain Plaintiffs’ legal theories and/or legal conclusion to which no response is required. To the extent a response is required, City Defendants deny each and every allegation in Paragraph 122 of the Complaint.
123. In answering Paragraph 123 of the Complaint, to the extent that Plaintiffs have accurately quoted the May 22, 2020 letter and July 2020 Report, City Defendants admit that the letter and/or report read as alleged. Except as admitted, City Defendants deny each and every allegation in Paragraph 123 of the Complaint.
124. In answering Paragraph 124 of the Complaint, to the extent that Plaintiffs have accurately quoted who said what during the July 14, 2020 meeting, City Defendants admit those persons said what Plaintiffs allege. Except as admitted, City Defendants deny each and every allegation in Paragraph 124 of the Complaint, including any attempts by Plaintiffs to interpret, distort, misconstrue or take out of context what was said during the July 14, 2020 meeting. 125. In answering Paragraph 125 of the Complaint, to the extent that Plaintiffs have accurately quoted who said what during the July 14, 2020 meeting, City Defendants admit those persons said what Plaintiffs allege. Except as admitted, City Defendants deny each and every allegation in Paragraph 125 of the Complaint, including any attempts by Plaintiffs to interpret, distort, misconstrue or take out of context what was said during the July 14, 2020 meeting. 126. In answering Paragraph 126 of the Complaint, City Defendants deny each and every allegation in Paragraph 126 of the Complaint.
127. In answering Paragraph 127 of the Complaint, City Defendants deny each and every allegation in Paragraph 127 of the Complaint.

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128. In answering Paragraph 128 of the Complaint, City Defendants deny the allegations asserted.
129. In answering Paragraph 129 of the Complaint, to the extent that Plaintiffs have accurately quoted the July 2020 Report, City Defendants admit that the report reads as alleged.

Except as admitted, City Defendants deny each and every allegation in Paragraph 129 of the Complaint.
130. In answering Paragraph 130 of the Complaint, to the extent that Plaintiffs have accurately quoted who said what during the July 14, 2020 meeting, City Defendants admit those persons said what Plaintiffs allege. Except as admitted, City Defendants deny each and every allegation in Paragraph 130 of the Complaint, including any attempts by Plaintiffs to interpret, distort, misconstrue or take out of context what was said during the July 14, 2020 meeting. 131. In answering Paragraph 131 of the Complaint, to the extent that Plaintiffs have accurately quoted who said what during the July 14, 2020 meeting, City Defendants admit those persons said what Plaintiffs allege. Except as admitted, City Defendants deny each and every allegation in Paragraph 131 of the Complaint, including any attempts by Plaintiffs to interpret, distort, misconstrue or take out of context what was said during the July 14, 2020 meeting. 132. In answering Paragraph 132 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 132 of the Complaint. 133. In answering Paragraph 133 of the Complaint, City Defendants deny each and every allegation in Paragraph 133 of the Complaint.
134. In answering Paragraph 134 of the Complaint, City Defendants deny each and every allegation in Paragraph 134 of the Complaint.
135. In answering Paragraph 135 of the Complaint, City Defendants deny each and every allegation in Paragraph 135 of the Complaint.
136. In answering Paragraph 136 of the Complaint, City Defendants admit that the City adopted a General Plan, and assert that the document speaks for itself. To the extent a further Case 3:21-cv-02493-WHO Document 17 Filed 05/17/21 Page 18 of 26

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response is required, City Defendants deny each and every allegation in Paragraph 136 of the Complaint.
137. In answering Paragraph 137 of the Complaint, City Defendants deny each and every allegation in Paragraph 137 of the Complaint.
138. In answering Paragraph 138 of the Complaint, City Defendants deny each and every allegation in Paragraph 138 of the Complaint.
139. In answering Paragraph 139 of the Complaint, City Defendants deny each and every allegation in Paragraph 139 of the Complaint.

CLAIM 1
DECLARATORY RELIEF: INAPPLICABILITY OF SECTION 17.112.130 (AGAINST THE CITY)
140. The City Defendants reasserts the answers to Paragraphs 1-139. 141. In answering Paragraph 141 of the Complaint, the City Defendants asserts that the allegations contain Plaintiffs’ legal theories and/or legal conclusion to which no response is required. To the extent a response is required, City Defendants deny each and every allegation in Paragraph 141 of the Complaint.
142. In answering Paragraph 142 of the Complaint, the City Defendants admit that Pacaso sent a letter dated March 17, 2021, requested a response by April 1, 2021, and that the City Defendants did not respond before April 1, 2021. Except as admitted, City Defendants deny each and every allegation in Paragraph 142 of the Complaint. 143. In answering Paragraph 143 of the Complaint, City Defendants deny each and every allegation in Paragraph 143 of the Complaint.
144. In answering Paragraph 144 of the Complaint, City Defendants deny each and every allegation in Paragraph 144 of the Complaint.
145. In answering Paragraph 145 of the Complaint, the City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 145 of the Complaint.

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146. In answering Paragraph 146 of the Complaint, the City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 146 of the Complaint. 147. In answering Paragraph 147 of the Complaint, the City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 147 of the Complaint.

CLAIM 2
DUE PROCESS VIOLATION: DEFENDANTS’ APPLICATION OF SECTION 17.112.130

TO PACASO IS UNCONSTITUTIONALLY VAGUE AND AMBIGUOUS
(AGAINST ALL DEFENDANTS)
148. City Defendants reassert the answers to Paragraphs 1-147. 149. In answering Paragraph 149 of the Complaint, City Defendants deny each and every allegation in Paragraph 149 of the Complaint.
150. In answering Paragraph 150 of the Complaint, City Defendants deny each and every allegation in Paragraph 150 of the Complaint.
151. In answering Paragraph 151 of the Complaint, City Defendants deny each and every allegation in Paragraph 151 of the Complaint.
152. In answering Paragraph 152 of the Complaint, City Defendants deny each and every allegation in Paragraph 152 of the Complaint.
153. In answering Paragraph 153 of the Complaint, City Defendants deny each and every allegation in Paragraph 152 of the Complaint.
154. In answering Paragraph 154 of the Complaint, City Defendants deny each and every allegation in Paragraph 154 of the Complaint.
155. In answering Paragraph 155 of the Complaint, City Defendants deny each and every allegation in Paragraph 155 of the Complaint.
156. In answering Paragraph 156 of the Complaint, City Defendants deny each and every allegation in Paragraph 156 of the Complaint.

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157. In answering Paragraph 157 of the Complaint, City Defendants deny each and every allegation in Paragraph 157 of the Complaint.
158. In answering Paragraph 158 of the Complaint, City Defendants deny each and every allegation in Paragraph 158 of the Complaint.
159. In answering Paragraph 159 of the Complaint, City Defendants deny each and every allegation in Paragraph 159 of the Complaint.
160. In answering Paragraph 160 of the Complaint, City Defendants deny each and every allegation in Paragraph 160 of the Complaint.
161. In answering Paragraph 161 of the Complaint, City Defendants deny each and every allegation in Paragraph 161 of the Complaint.
162. In answering Paragraph 162 of the Complaint, City Defendants deny each and every allegation in Paragraph 162 of the Complaint.

CLAIM 3

SELECTIVE AND DISCRIMINATORY ENFORCEMENT
(AGAINST ALL DEFENDANTS)
163. City Defendants reassert the answers to Paragraphs 1-162. 164. In answering Paragraph 164 of the Complaint, City Defendants deny each and every allegation in Paragraph 164 of the Complaint.
165. In answering Paragraph 165 of the Complaint, City Defendants deny each and every allegation in Paragraph 165 of the Complaint.
166. In answering Paragraph 166 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 166 of the Complaint. 167. In answering Paragraph 167 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 167 of the Complaint. 168. In answering Paragraph 168 of the Complaint, City Defendants deny each and every allegation in Paragraph 168 of the Complaint.

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169. In answering Paragraph 169 of the Complaint, City Defendants deny each and every allegation in Paragraph 169 of the Complaint.
170. In answering Paragraph 170 of the Complaint, City Defendants deny each and every allegation in Paragraph 170 of the Complaint.
171. In answering Paragraph 171 of the Complaint, City Defendants deny each and every allegation in Paragraph 171 of the Complaint.
172. In answering Paragraph 172 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 172 of the Complaint. 173. In answering Paragraph 173 of the Complaint, City Defendants deny each and every allegation in Paragraph 173 of the Complaint.
174. In answering Paragraph 174 of the Complaint, City Defendants deny each and every allegation in Paragraph 174 of the Complaint.
175. In answering Paragraph 175 of the Complaint, City Defendants deny each and every allegation in Paragraph 175 of the Complaint.
176. In answering Paragraph 176 of the Complaint, City Defendants deny each and every allegation in Paragraph 176 of the Complaint.
177. In answering Paragraph 177 of the Complaint, City Defendants deny each and every allegation in Paragraph 177 of the Complaint.
178. In answering Paragraph 178 of the Complaint, City Defendants deny each and every allegation in Paragraph 178 of the Complaint.
179. In answering Paragraph 179 of the Complaint, City Defendants deny each and every allegation in Paragraph 179 of the Complaint.
180. In answering Paragraph 180 of the Complaint, City Defendants deny each and every allegation in Paragraph 180 of the Complaint.
181. In answering Paragraph 181 of the Complaint, City Defendants deny each and every allegation in Paragraph 181 of the Complaint.

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182. In answering Paragraph 182 of the Complaint, City Defendants deny each and every allegation in Paragraph 182 of the Complaint.

CLAIM 4
DECLARATORY RELIEF: INVALID USE OF MUNICIPAL AUTHORITY
(AGAINST THE CITY)
183. The City reasserts the answers to Paragraphs 1-182. 184. In answering Paragraph 184 of the Complaint, City Defendants deny each and every allegation in Paragraph 184 of the Complaint.
185. In answering Paragraph 185 of the Complaint, City Defendants deny each and every allegation in Paragraph 185 of the Complaint.
186. In answering Paragraph 186 of the Complaint, City Defendants deny each and every allegation in Paragraph 186 of the Complaint.
187. In answering Paragraph 187 of the Complaint, City Defendants deny each and every allegation in Paragraph 187 of the Complaint.
188. In answering Paragraph 188 of the Complaint, City Defendants deny each and every allegation in Paragraph 188 of the Complaint.
189. In answering Paragraph 189 of the Complaint, City Defendants deny each and every allegation in Paragraph 189 of the Complaint.
190. In answering Paragraph 190 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 190 of the Complaint. 191. In answering Paragraph 191 of the Complaint, City Defendants deny each and every allegation in Paragraph 191 of the Complaint.

CLAIM 5

INTENTIONAL INTERFERENCE WITH PROSPECTIVE ECONOMIC ADVANTAGE (AGAINST THE CITY AND CITY ATTORNEY ETHAN WALSH)
192. The City Defendants reassert the answers to Paragraphs 1-191.

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193. In answering Paragraph 193 of the Complaint, City Defendants deny each and every allegation in Paragraph 193 of the Complaint.
194. In answering Paragraph 194 of the Complaint, the City and City Attorney admit that City Attorney Walsh sent a letter in March 2021 to real-estate offices in the City. Except as admitted, City Defendants deny each and every other allegation in Paragraph 194 of the Complaint.
195. In answering Paragraph 195 of the Complaint, City Defendants admit that Ms.

DeRosa sent a letter on May 15, 2020 notifying a homewoner that, if a house was used as a timeshare in violation of the Municipal Code, then that would be a violation of the Municipal Code.
196. In answering Paragraph 196 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 196 of the Complaint. 197. In answering Paragraph 197 of the Complaint, Defendants deny each and every allegation in Paragraph 197 of the Complaint.
198. In answering Paragraph 198 of the Complaint, City Defendants deny each and every allegation in Paragraph 198 of the Complaint.
199. In answering Paragraph 199 of the Complaint, City Defendants deny each and every allegation in Paragraph 199 of the Complaint.
200. In answering Paragraph 200 of the Complaint, City Defendants deny each and every allegation in Paragraph 200 of the Complaint.
201. In answering Paragraph 201 of the Complaint, City Defendants deny each and every allegation in Paragraph 201 of the Complaint.
202. In answering Paragraph 202 of the Complaint, City Defendants deny each and every allegation in Paragraph 202 of the Complaint.

AFFIRMATIVE DEFENSES

FIRST AFFIRMATIVE DEFENSE
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1. As a first, separate affirmative defense, City Defendants allege that the Complaint, and each claim alleged therein, fail to state facts sufficient to state a claim upon which relief can be granted.

SECOND AFFIRMATIVE DEFENSE

2. As a second, separate affirmative defense, City Defendants allege that the Complaint is barred in whole or in party by the applicable statute of limitations.

THIRD AFFIRMATIVE DEFENSE

3. As a third, separate affirmative defense, City Defendants allege that they are entitled to immunity pursuant to Government Code § 820.2.

FOURTH AFFIRMATIVE DEFENSE

4. As a fourth, separate affirmative defense, City Defendants allege that they are entitled to immunity pursuant to Government Code § 821.6.

FIFTH AFFIRMATIVE DEFENSE

5. As a fifth, separate affirmative defense, City Defendants allege that the Complaint is barred by the doctrine of estoppel.

SIXTH AFFIRMATIVE DEFENSE

6. As a sixth, separate affirmative defense, City Defendants allege that the Complaint is barred by the doctrine of unclean hands.

SEVENTH AFFIRMATIVE DEFENSE

7. As a seventh, separate affirmative defense, City Defendants allege that the Complaint is barred, in whole or in part, on the ground that one or more claims is based on a privileged communication.

EIGHTH AFFIRMATIVE DEFENSE

8. As an eighth, separate affirmative defense, City Defendants allege that the Complaint is barred, in whole or in part, on the ground of illegality.

NINTH AFFIRMATIVE DEFENSE

9. As a ninth, separate affirmative defense, City Defendants reserve the right to plead additional affirmative defenses.

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PRAYER FOR RELIEF
WHEREFORE, Defendant prays that:

1. That the Complaint be dismissed with prejudice;

2. That Plaintiffs take nothing by this proceeding;

3. That City Defendants be awarded their costs of suit incurred in the defense of this action;

4. That City Defendants be awarded their reasonable attorneys’ fees incurred in the defense of this action; and

5. For such other and further relief as the Court deems just and proper.

Dated: May 17, 2021 BEST BEST & KRIEGER LLP
By:

DAMIAN M. MOOS
DAMIAN A. NORTHCUTT
TYLER D. ANTHONY
Attorneys for Defendants
CITY OF ST. HELENA; PLANNING &

BUILDINGDIRECTOR MAYA
DEROSA; MAYOR GEOFF
ELLSWORTH; and CITY ATTORNEY

ETHAN WALSH
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KRIEGER LLP ATTORNEYS AT LAW 18101 VON KARMAN AVENUE, SUITE 1000 IRVINE, CALIFORNIA 92612 DAMIAN M. MOOS, Bar No. 240030
[email protected]
DAMIAN A. NORTHCUTT, Bar No. 258183
[email protected]
TYLER D. ANTHONY, Bar No. 305652
[email protected]

BEST BEST & KRIEGER LLP
18101 Von Karman Avenue
Suite 1000
Irvine, California 92612
Telephone: (949) 263-2600
Facsimile: (949) 260-0972
Attorneys for Defendants
CITY OF ST. HELENA; PLANNING & BUILDING
DIRECTOR MAYA DEROSA; MAYOR GEOFF
ELLSWORTH; and CITY ATTORNEY ETHAN
WALSH

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA
PACASO INC. and PAC 6 CA 2021 LLC,
Petitioner,
v.

THE CITY OF ST. HELENA; PLANNING &
BUILDING DIRECTOR MAYA DEROSA;
MAYOR GEOFF ELLSWORTH; CITY
ATTORNEY ETHAN WALSH; and DOES 1-
5,
Defendants.

Case No. 3:21-cv-02493-WHO
DEFENDANTS’ FIRST AMENDED

ANSWER TO COMPLAINT
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KRIEGER LLP ATTORNEYS AT LAW 18101 VON KARMAN AVENUE, SUITE 1000 IRVINE, CALIFORNIA 92612 Defendants, CITY OF ST. HELENA (“City”), PLANNING & BUILDING DIRECTOR MAYA DEROSA; MAYOR GEOFF ELLSWORTH; CITY ATTORNEY, and CITY ATTORNEY ETHAN WALSH (“City Attorney”) (collectively the “City Defendants”) hereby answer Plaintiff PACASO INC. and PAC 6 CA 2021 LLC (collectively “Plaintiffs”) Complaint for: (1) Declaratory Judgment; (2) Due Procession Violation; (3) Selective Enforcement; (4) Invalid Use of Municipal Authority; and (5) Intentional Interference with Prospective Economic Advantage (“Complaint”). City Defendants answers as follows: (hereafter “City” or “Defendant” hereby answers the allegations in the Complaint of PACASO INC. and PAC 6 CA 2021 LLC (“Plaintiffs”), as follows:

INTRODUCTION

1. In answering Paragraph 1 of the Complaint, City Defendants deny each and every allegation in Paragraph 1 of the Complaint.

2. In answering Paragraph 2 of the Complaint, City Defendants deny each and every allegation in Paragraph 2 of the Complaint.

3. In answering Paragraph 3 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 3 of the Complaint.

4. In answering Paragraph 4 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 4 of the Complaint.

5. In answering Paragraph 5 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 5 of the Complaint.

6. In answering Paragraph 6 of the Complaint, City Defendants deny each and every allegation in Paragraph 6 of the Complaint.

7. In answering Paragraph 7 of the Complaint, City Defendants deny each and every allegation in Paragraph 7 of the Complaint.

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8. In answering Paragraph 8 of the Complaint, City Defendants admit that a Report to the City Council was prepared on July 14, 2020 and that local residents expressed concerns about a residential property, which one of the Plaintiffs owns. City Defendants deny each and every other allegation in Paragraph 8 of the Complaint.

9. In answering Paragraph 9 of the Complaint, to the extent that Plaintiffs have accurately quoted portions of the July 2020 Report, City Defendants admit that the July 2020 Report reads as alleged. City Defendants deny each and every other allegation in Paragraph 9 of the Complaint, including, but not limited to, any conclusions, meaning or interpretation that Plaintiffs derive or seek to insert into the July 2020 Report.

10. In answering Paragraph 10 of the Complaint, to the extent that Plaintiffs have accurately quoted portions of the July 2020 Report, City Defendants admit that the July 2020 Report reads as alleged. City Defendants deny each and every other allegation in Paragraph 10 of the Complaint, including, but not limited to, any conclusions, meaning or interpretation that Plaintiffs derive or seek to insert into the July 2020 Report.

11. In answering Paragraph 11 of the Complaint, to the extent that Plaintiffs have accurately quoted what was said during the July 2014 Meeting, City Defendants admit that such statements were made. City Defendants deny each and every other allegation in Paragraph 11 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what was said during the July 2014 Meeting.

12. In answering Paragraph 12 of the Complaint, City Defendants deny each and every allegation in Paragraph 12 of the Complaint.

13. In answering Paragraph 13 of the Complaint, City Defendants deny each and every allegation in Paragraph 13 of the Complaint.

14. In answering Paragraph 14 of the Complaint, City Defendants deny each and every allegation in Paragraph 14 of the Complaint.
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THE PARTIES

15. In answering Paragraph 15 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 15 of the Complaint.

16. In answering Paragraph 16 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 16 of the Complaint.

17. In answering Paragraph 17 of the Complaint, City Defendants admit the allegations asserted.

18. In answering Paragraph 18 of the Complaint, City Defendants admit the allegations asserted.

19. In answering Paragraph 19 of the Complaint, City Defendants deny that the City Attorney acts under the Mayor’s direction. Except as denied, City Defendants admit the allegations asserted.

20. In answering Paragraph 20 of the Complaint, City Defendants admit the allegations asserted.

21. In answering Paragraph 21 of the Complaint, City Defendants admit that St. Helena City Council members include Vice Mayor Paul Dohring, Anna Chouteau, Lester Gardy, and Eric Hall. City Defendants admit that these members have collectively represented the City Council since November 2020. City Defendants deny that Vice Mayor Dohring has served on the City Council since 2018. City Defendants admit that Anna Chouteau has served on the City Council since 2018. City Defendants admit that the City Council is a legislative and policy-making body for the City of St. Helena. City Defendants admit that the City Council bears responsibility for setting City policy and for adopting ordinances, resolutions and other orders as necessary for governing the City. Except as admitted, City Defendants deny each and every other allegation in Paragraph 21 of the Complaint.
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JURISDICTION AND VENUE

22. In answering Paragraph 22 of the Complaint, City Defendants assert that the allegations contain Plaintiffs’ legal theories and/or legal conclusion to which no response is required. To the extent a response is required, City Defendants deny each and every allegation in Paragraph 22 of the Complaint.

23. In answering Paragraph 23 of the Complaint, City Defendants assert that the allegations contain Plaintiffs’ legal theories and/or legal conclusion to which no response is required. To the extent a response is required, City Defendants deny each and every allegation in Paragraph 23 of the Complaint.

GENERAL ALLEGATIONS

24. In answering Paragraph 24 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 24 of the Complaint.

25. In answering Paragraph 25 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 25 of the Complaint.

26. In answering Paragraph 26 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 26 of the Complaint.

27. In answering Paragraph 27 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 27 of the Complaint.

28. In answering Paragraph 28 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 28 of the Complaint.

29. In answering Paragraph 29 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 29 of the Complaint.

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30. In answering Paragraph 30 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 30 of the Complaint.

31. In answering Paragraph 31 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 31 of the Complaint.

32. In answering Paragraph 32 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 32 of the Complaint.

33. In answering Paragraph 33 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 33 of the Complaint.

34. In answering Paragraph 34 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 34 of the Complaint.

35. In answering Paragraph 35 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 35 of the Complaint.

36. In answering Paragraph 36 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 36 of the Complaint.

37. In answering Paragraph 37 of the Complaint, to the extent Plaintiffs have accurately quoted the ordinance, City Defendants admit that the ordinance reads as such. Except as admitted, City Defendants deny each and every other allegation in Paragraph 37 of the Complaint.

38. In answering Paragraph 38 of the Complaint, to the extent Plaintiffs have accurately quoted the ordinance, City Defendants admit that the ordinance reads as such. Except as Case 3:21-cv-02493-WHO Document 20 Filed 06/01/21 Page 6 of 30

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KRIEGER LLP ATTORNEYS AT LAW 18101 VON KARMAN AVENUE, SUITE 1000 IRVINE, CALIFORNIA 92612 admitted, City Defendants deny each and every other allegation in Paragraph 38 of the Complaint.

39. In answering Paragraph 39 of the Complaint, to the extent Plaintiffs have accurately quoted the ordinance, City Defendants admit that the ordinance reads as such. Except as admitted, City Defendants deny each and every other allegation in Paragraph 39 of the Complaint.

40. In answering Paragraph 40 of the Complaint, to the extent Plaintiffs have accurately quoted the ordinance, City Defendants admit that the ordinance reads as such. Except as admitted, City Defendants deny each and every other allegation in Paragraph 40 of the Complaint.

41. In answering Paragraph 41 of the Complaint, City Defendants deny each and every allegation in Paragraph 41 of the Complaint.

42. In answering Paragraph 42 of the Complaint, to the extent Plaintiffs have accurately quoted the July 2020 Report, City Defendants admit that the Report reads as quoted. Except as admitted, City Defendants deny each and every other allegation in Paragraph 42 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what is written in the July 2020 Report.

43. In answering Paragraph 43 of the Complaint, to the extent Plaintiffs have accurately quoted the July 2020 Report, City Defendants admit that the Report reads as quoted. Except as admitted, City Defendants deny each and every other allegation in Paragraph 43 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what is written in the July 2020 Report.

44. In answering Paragraph 44 of the Complaint, to the extent Plaintiffs have accurately quoted the July 2020 Report, City Defendants admit that the Report reads as quoted. Except as admitted, City Defendants deny each and every other allegation in Paragraph 44 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what is written in the July 2020 Report.

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45. In answering Paragraph 45 of the Complaint, to the extent Plaintiffs have accurately quoted the July 2020 Report, City Defendants admit that the Report reads as quoted. Except as admitted, City Defendants deny each and every other allegation in Paragraph 45 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what is written in the July 2020 Report.

46. In answering Paragraph 46 of the Complaint, to the extent Plaintiffs have accurately quoted the July 2020 Report, City Defendants admit that the Report reads as quoted. Except as admitted, City Defendants deny each and every other allegation in Paragraph 46 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what is written in the July 2020 Report.

47. In answering Paragraph 47 of the Complaint, to the extent Plaintiffs have accurately quoted who said what during the July 14, 2020 Meeting, City Defendants admit that the person said the accurately quoted material during the Meeting. Except as admitted, City Defendants deny each and every other allegation in Paragraph 47 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what was said during the July 14, 2020 Meeting.

48. In answering Paragraph 48 of the Complaint, to the extent Plaintiffs have accurately quoted who said what during the July 14, 2020 Meeting, City Defendants admit that the person said the accurately quoted material during the Meeting. Except as admitted, City Defendants deny each and every other allegation in Paragraph 48 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what was said during the July 14, 2020 Meeting.

49. In answering Paragraph 49 of the Complaint, to the extent Plaintiffs have accurately quoted who said what during the July 14, 2020 Meeting, City Defendants admit that the person said the accurately quoted material during the Meeting. Except as admitted, City Defendants deny each and every other allegation in Paragraph 49 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what was said during the July 14, 2020 Meeting.

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50. In answering Paragraph 50 of the Complaint, to the extent Plaintiffs have accurately quoted the July 2020 Report, City Defendants admit that the Report reads as quoted. Except as admitted, City Defendants deny each and every other allegation in Paragraph 50 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what is written in the July 2020 Report.

51. In answering Paragraph 51 of the Complaint, to the extent Plaintiffs have accurately quoted the July 2020 Report, City Defendants admit that the Report reads as quoted. Except as admitted, City Defendants deny each and every other allegation in Paragraph 51 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what is written in the July 2020 Report.

52. In answering Paragraph 52 of the Complaint, to the extent Plaintiffs have accurately quoted the July 2020 Report, City Defendants admit that the Report reads as quoted. Except as admitted, City Defendants deny each and every other allegation in Paragraph 52 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what is written in the July 2020 Report.

53. In answering Paragraph 53 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 53 of the Complaint.

54. In answering Paragraph 54 of the Complaint, City Defendants deny each and every allegation in Paragraph 54 of the Complaint.

55. In answering Paragraph 55 of the Complaint, City Defendants deny each and every allegation in Paragraph 55 of the Complaint.

56. In answering Paragraph 56 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 56 of the Complaint.

57. In answering Paragraph 57 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 57 of the Complaint.

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58. In answering Paragraph 58 of the Complaint, to the extent Plaintiffs have accurately quoted who said what during the July 14, 2020 Meeting, City Defendants admit that the person said the accurately quoted material during the Meeting. Except as admitted, City Defendants deny each and every other allegation in Paragraph 58 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what was said during the July 14, 2020 Meeting.

59. In answering Paragraph 59 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 59 of the Complaint.

60. In answering Paragraph 60 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 60 of the Complaint.

61. In answering Paragraph 61 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 61 of the Complaint.

62. In answering Paragraph 62 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 62 of the Complaint.

63. In answering Paragraph 63 of the Complaint, City Defendants deny each and every allegation in Paragraph 63 of the Complaint.

64. In answering Paragraph 64 of the Complaint, to the extent Plaintiffs have accurately quoted the ordinance, City Defendants admit that the ordinance reads as alleged. Except as admitted, City Defendants deny each and every other allegation in Paragraph 64 of the Complaint.

65. In answering Paragraph 65 of the Complaint, City Defendants deny each and every allegation in Paragraph 65 of the Complaint.

66. In answering Paragraph 66 of the Complaint, City Defendants deny each and every allegation in Paragraph 66 of the Complaint.

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67. In answering Paragraph 67 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 67 of the Complaint.

68. In answering Paragraph 68 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 68 of the Complaint.

69. In answering Paragraph 69 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 69 of the Complaint.

70. In answering Paragraph 70 of the Complaint, City Defendants deny each and every allegation in Paragraph 70 of the Complaint.

71. In answering Paragraph 71 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 71 of the Complaint.

72. In answering Paragraph 72 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 72 of the Complaint.

73. In answering Paragraph 73 of the Complaint, to the extent Plaintiffs have accurately quoted who said what during the July 14, 2020 Meeting, City Defendants admit that the person said the accurately quoted material during the Meeting. Except as admitted, City Defendants deny each and every other allegation in Paragraph 73 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what was said during the July 14, 2020 Meeting.

74. In answering Paragraph 74 of the Complaint, to the extent Plaintiffs have accurately quoted who said what during the July 14, 2020 Meeting, City Defendants admit that the person said the accurately quoted material during the Meeting. Except as admitted, City Defendants deny each and every other allegation in Paragraph 74 of the Complaint, including, but not limited Case 3:21-cv-02493-WHO Document 20 Filed 06/01/21 Page 11 of 30

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KRIEGER LLP ATTORNEYS AT LAW 18101 VON KARMAN AVENUE, SUITE 1000 IRVINE, CALIFORNIA 92612 to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what was said during the July 14, 2020 Meeting.

75. In answering Paragraph 75 of the Complaint, City Defendants assert that the documents/meeting speak for themselves and that no response is otherwise required.

76. In answering Paragraph 76 of the Complaint, City Defendants deny each and every allegation in Paragraph 76 of the Complaint.

77. In answering Paragraph 77 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 77 of the Complaint.

78. In answering Paragraph 78 of the Complaint, City Defendants deny each and every allegation in Paragraph 78 of the Complaint.

79. In answering Paragraph 79 of the Complaint, City Defendants admit the allegations asserted.

80. In answering Paragraph 80 of the Complaint, City Defendants admit that a response, dated May 19, 2020 was sent, and assert that the document speaks for itself. Except as admitted, City Defendants deny each and every other allegation in Paragraph 80 of the Complaint.

81. In answering Paragraph 81 of the Complaint, City Defendants admit that Ms.

DeRosa sent a written response, dated May 22, 2020, and assert that the document speaks for itself. Except as admitted, City Defendants deny each and every other allegation in Paragraph 81 of the Complaint.

82. In answering Paragraph 82 of the Complaint, City Defendants deny each and every allegation in Paragraph 82 of the Complaint.

83. In answering Paragraph 83 of the Complaint, City Defendants admit that a response, dated May 26, 2020 was sent, and assert that the document speaks for itself. Except as admitted, City Defendants deny each and every other allegation in Paragraph 83 of the Complaint.

84. In answering Paragraph 84 of the Complaint, City Defendants deny that the City represented that Pacaso’s operations were permitted. City Defendants are without sufficient Case 3:21-cv-02493-WHO Document 20 Filed 06/01/21 Page 12 of 30

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KRIEGER LLP ATTORNEYS AT LAW 18101 VON KARMAN AVENUE, SUITE 1000 IRVINE, CALIFORNIA 92612 knowledge or information to form a belief as to the truth of the remaining allegations contained therein, and, on that basis, deny each and every other allegation in Paragraph 84 of the Complaint.

85. In answering Paragraph 85 of the Complaint, City Defendants assert that the allegations contain Plaintiffs’ legal theories and/or legal conclusion to which no response is required. To the extent a response is required, City Defendants deny each and every allegation in Paragraph 85 of the Complaint.

86. In answering Paragraph 86 of the Complaint, City Defendants deny each and every allegation in Paragraph 86 of the Complaint.

87. In answering Paragraph 87 of the Complaint, City Defendants admit that Ms.

DeRosa sent a letter, dated January 25, 2021, and assert that the document speaks for itself.

Except as admitted, City Defendants deny each and every other allegation in Paragraph 87 of the Complaint.

88. In answering Paragraph 88 of the Complaint, City Defendants deny each and every allegation in Paragraph 88 of the Complaint.

89. In answering Paragraph 89 of the Complaint, City Defendants deny each and every other allegation in Paragraph 89 of the Complaint.

90. In answering Paragraph 90 of the Complaint, City Defendants admit that Pacaso contacted Maya DeRosa. City Defendants assert that the other allegations contain Plaintiffs’ legal theories and/or legal conclusion to which no response is required. To the extent a response is required, City Defendants deny each and every other allegation in Paragraph 90 of the Complaint.

91. In answering Paragraph 91 of the Complaint, to the extent that Plaintiffs have accurately quoted who said what during the February 9, 2021 meeting, then City Defendants admit that such person(s) said what they are alleged to have said during the meeting. Except as admitted, City Defendants deny each and every allegation in Paragraph 91 of the Complaint.

92. In answering Paragraph 92 of the Complaint, City Defendants admit that City Attorney Walsh sent a letter to Pacaso on February 10, 2021, and assert that the document speaks Case 3:21-cv-02493-WHO Document 20 Filed 06/01/21 Page 13 of 30

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KRIEGER LLP ATTORNEYS AT LAW 18101 VON KARMAN AVENUE, SUITE 1000 IRVINE, CALIFORNIA 92612 for itself. Except as admitted, City Defendants deny each and every other allegation in Paragraph 92 of the Complaint.

93. In answering Paragraph 93 of the Complaint, City Defendants admit that City Attorney Walsh sent a letter to Pacaso on February 10, 2021, and assert that the document speaks for itself. Except as admitted, City Defendants deny each and every other allegation in Paragraph 93 of the Complaint.

94. In answering Paragraph 94 of the Complaint, City Defendants admit that City Attorney Walsh sent a letter to local real estate agents, dated March 16, 2021, and assert that the document speaks for itself. Except as admitted, City Defendants deny each and every other allegation in Paragraph 94 of the Complaint.

95. In answering Paragraph 95 of the Complaint, City Defendants admit that City Attorney Walsh sent a letter to local real estate agents, dated March 16, 2021, and assert that the document speaks for itself. Except as admitted, City Defendants deny each and every other allegation in Paragraph 95 of the Complaint.

96. In answering Paragraph 96 of the Complaint, City Defendants assert that the allegations contain Plaintiffs’ legal theories and/or legal conclusion to which no response is required. To the extent a response is required, City Defendants deny each and every allegation in Paragraph 96 of the Complaint.

97. In answering Paragraph 97 of the Complaint, City Defendants deny each and every allegation in Paragraph 97 of the Complaint.

98. In answering Paragraph 98 of the Complaint, City Defendants deny each and every allegation in Paragraph 98 of the Complaint.

99. In answering Paragraph 99 of the Complaint, City Defendants admit that Pacaso responded to City Attorney Walsh on March 17, 2021 and that Mr. Walsh did not respond to Pacaso’s letter by April 1, 2021. City Defendants assert that the documents/meeting speak for themselves and that no response is otherwise required.

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KRIEGER LLP ATTORNEYS AT LAW 18101 VON KARMAN AVENUE, SUITE 1000 IRVINE, CALIFORNIA 92612 100. In answering Paragraph 100 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 100 of the Complaint. 101. In answering Paragraph 101 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 101 of the Complaint. 102. In answering Paragraph 102 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 102 of the Complaint. 103. In answering Paragraph 103 of the Complaint, City Defendants deny each and every allegation in Paragraph 103 of the Complaint.
104. In answering Paragraph 104 of the Complaint, City Defendants assert that the allegations contain Plaintiffs’ legal theories and/or legal conclusion to which no response is required. To the extent a response is required, City Defendants deny each and every allegation in Paragraph 104 of the Complaint.
105. In answering Paragraph 105 of the Complaint, City Defendants deny each and every allegation in Paragraph 105 of the Complaint.
106. In answering Paragraph 106 of the Complaint, to the extent that Plaintiffs have accurately quoted the July 2020 Report, City Defendants admit that the report reads as alleged.

Except as admitted, City Defendants deny each and every allegation in Paragraph 106 of the Complaint.
107. In answering Paragraph 107 of the Complaint, to the extent that Plaintiffs have accurately quoted what Ms. Ueda said during the July 14, 2020 meeting, City Defendants admit she said what Plaintiffs allege. Except as admitted, City Defendants deny each and every allegation in Paragraph 107 of the Complaint.
108. In answering Paragraph 108 of the Complaint, to the extent that Plaintiffs have accurately quoted who said what during the July 14, 2020 meeting, City Defendants admit those persons said what Plaintiffs allege. Except as admitted, City Defendants deny each and every Case 3:21-cv-02493-WHO Document 20 Filed 06/01/21 Page 15 of 30

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KRIEGER LLP ATTORNEYS AT LAW 18101 VON KARMAN AVENUE, SUITE 1000 IRVINE, CALIFORNIA 92612 allegation in Paragraph 108 of the Complaint, including any attempts by Plaintiffs to interpret, distort, misconstrue or take out of context what was said during the July 14, 2020 meeting. 109. In answering Paragraph 109 of the Complaint, to the extent that Plaintiffs have accurately quoted the July 2020 Report, City Defendants admit that the report reads as alleged.

Except as admitted, City Defendants deny each and every allegation in Paragraph 109 of the Complaint.
110. In answering Paragraph 110 of the Complaint, City Defendants deny each and every allegation in Paragraph 110 of the Complaint.
111. In answering Paragraph 111 of the Complaint, City Defendants deny each and every allegation in Paragraph 111 of the Complaint.
112. In answering Paragraph 112 of the Complaint, City Defendants assert that the allegations contain Plaintiffs’ legal theories and/or legal conclusion to which no response is required. To the extent a response is required, City Defendants deny each and every allegation in Paragraph 112 of the Complaint.
113. In answering Paragraph 113 of the Complaint, City Defendants deny each and every allegation in Paragraph 113 of the Complaint.
114. In answering Paragraph 114 of the Complaint, City Defendants assert that Government Code § 65850 speaks for itself, and that no response is otherwise required. To the extent a response is required, City Defendants deny each and every allegation in Paragraph 114 of the Complaint.
115. In answering Paragraph 115 of the Complaint, to the extent that Plaintiffs have accurately quoted the July 2020 Report, City Defendants admit that the report reads as alleged.

Except as admitted, City Defendants deny each and every allegation in Paragraph 115 of the Complaint.
116. In answering Paragraph 116 of the Complaint, City Defendants deny each and every allegation in Paragraph 116 of the Complaint.
117. In answering Paragraph 117 of the Complaint, to the extent that Plaintiffs have accurately quoted the July 2020 Report, City Defendants admit that the report reads as alleged.

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KRIEGER LLP ATTORNEYS AT LAW 18101 VON KARMAN AVENUE, SUITE 1000 IRVINE, CALIFORNIA 92612 Except as admitted, City Defendants deny each and every allegation in Paragraph 117 of the Complaint.
118. In answering Paragraph 118 of the Complaint, City Defendants deny each and every allegation in Paragraph 118 of the Complaint.
119. In answering Paragraph 119 of the Complaint, to the extent that Plaintiffs have accurately quoted what Ms. Ueda said during the July 14, 2020 meeting, City Defendants admit she said what Plaintiffs allege. Except as admitted, City Defendants deny each and every allegation in Paragraph 119 of the Complaint.
120. In answering Paragraph 120 of the Complaint, City Defendants deny each and every allegation in Paragraph 120 of the Complaint.
121. In answering Paragraph 121 of the Complaint, City Defendants deny each and every allegation in Paragraph 121 of the Complaint.
122. In answering Paragraph 122 of the Complaint, City Defendants assert that the allegations contain Plaintiffs’ legal theories and/or legal conclusion to which no response is required. To the extent a response is required, City Defendants deny each and every allegation in Paragraph 122 of the Complaint.
123. In answering Paragraph 123 of the Complaint, to the extent that Plaintiffs have accurately quoted the May 22, 2020 letter and July 2020 Report, City Defendants admit that the letter and/or report read as alleged. Except as admitted, City Defendants deny each and every allegation in Paragraph 123 of the Complaint.
124. In answering Paragraph 124 of the Complaint, to the extent that Plaintiffs have accurately quoted who said what during the July 14, 2020 meeting, City Defendants admit those persons said what Plaintiffs allege. Except as admitted, City Defendants deny each and every allegation in Paragraph 124 of the Complaint, including any attempts by Plaintiffs to interpret, distort, misconstrue or take out of context what was said during the July 14, 2020 meeting. 125. In answering Paragraph 125 of the Complaint, to the extent that Plaintiffs have accurately quoted who said what during the July 14, 2020 meeting, City Defendants admit those persons said what Plaintiffs allege. Except as admitted, City Defendants deny each and every Case 3:21-cv-02493-WHO Document 20 Filed 06/01/21 Page 17 of 30

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KRIEGER LLP ATTORNEYS AT LAW 18101 VON KARMAN AVENUE, SUITE 1000 IRVINE, CALIFORNIA 92612 allegation in Paragraph 125 of the Complaint, including any attempts by Plaintiffs to interpret, distort, misconstrue or take out of context what was said during the July 14, 2020 meeting. 126. In answering Paragraph 126 of the Complaint, City Defendants deny each and every allegation in Paragraph 126 of the Complaint.
127. In answering Paragraph 127 of the Complaint, City Defendants deny each and every allegation in Paragraph 127 of the Complaint.
128. In answering Paragraph 128 of the Complaint, City Defendants deny the allegations asserted.
129. In answering Paragraph 129 of the Complaint, to the extent that Plaintiffs have accurately quoted the July 2020 Report, City Defendants admit that the report reads as alleged.

Except as admitted, City Defendants deny each and every allegation in Paragraph 129 of the Complaint.
130. In answering Paragraph 130 of the Complaint, to the extent that Plaintiffs have accurately quoted who said what during the July 14, 2020 meeting, City Defendants admit those persons said what Plaintiffs allege. Except as admitted, City Defendants deny each and every allegation in Paragraph 130 of the Complaint, including any attempts by Plaintiffs to interpret, distort, misconstrue or take out of context what was said during the July 14, 2020 meeting. 131. In answering Paragraph 131 of the Complaint, to the extent that Plaintiffs have accurately quoted who said what during the July 14, 2020 meeting, City Defendants admit those persons said what Plaintiffs allege. Except as admitted, City Defendants deny each and every allegation in Paragraph 131 of the Complaint, including any attempts by Plaintiffs to interpret, distort, misconstrue or take out of context what was said during the July 14, 2020 meeting. 132. In answering Paragraph 132 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 132 of the Complaint. 133. In answering Paragraph 133 of the Complaint, City Defendants deny each and every allegation in Paragraph 133 of the Complaint.

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KRIEGER LLP ATTORNEYS AT LAW 18101 VON KARMAN AVENUE, SUITE 1000 IRVINE, CALIFORNIA 92612 134. In answering Paragraph 134 of the Complaint, City Defendants deny each and every allegation in Paragraph 134 of the Complaint.
135. In answering Paragraph 135 of the Complaint, City Defendants deny each and every allegation in Paragraph 135 of the Complaint.
136. In answering Paragraph 136 of the Complaint, City Defendants admit that the City adopted a General Plan, and assert that the document speaks for itself. To the extent a further response is required, City Defendants deny each and every allegation in Paragraph 136 of the Complaint.
137. In answering Paragraph 137 of the Complaint, City Defendants deny each and every allegation in Paragraph 137 of the Complaint.
138. In answering Paragraph 138 of the Complaint, City Defendants deny each and every allegation in Paragraph 138 of the Complaint.
139. In answering Paragraph 139 of the Complaint, City Defendants deny each and every allegation in Paragraph 139 of the Complaint.

CLAIM 1
DECLARATORY RELIEF: INAPPLICABILITY OF SECTION 17.112.130 (AGAINST THE CITY)
140. The City Defendants reasserts the answers to Paragraphs 1-139. 141. In answering Paragraph 141 of the Complaint, the City Defendants asserts that the allegations contain Plaintiffs’ legal theories and/or legal conclusion to which no response is required. To the extent a response is required, City Defendants deny each and every allegation in Paragraph 141 of the Complaint.
142. In answering Paragraph 142 of the Complaint, the City Defendants admit that Pacaso sent a letter dated March 17, 2021, requested a response by April 1, 2021, and that the City Defendants did not respond before April 1, 2021. Except as admitted, City Defendants deny each and every allegation in Paragraph 142 of the Complaint. 143. In answering Paragraph 143 of the Complaint, City Defendants deny each and every allegation in Paragraph 143 of the Complaint.

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KRIEGER LLP ATTORNEYS AT LAW 18101 VON KARMAN AVENUE, SUITE 1000 IRVINE, CALIFORNIA 92612 144. In answering Paragraph 144 of the Complaint, City Defendants deny each and every allegation in Paragraph 144 of the Complaint.
145. In answering Paragraph 145 of the Complaint, the City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 145 of the Complaint. 146. In answering Paragraph 146 of the Complaint, the City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 146 of the Complaint. 147. In answering Paragraph 147 of the Complaint, the City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 147 of the Complaint.

CLAIM 2
DUE PROCESS VIOLATION: DEFENDANTS’ APPLICATION OF SECTION 17.112.130

TO PACASO IS UNCONSTITUTIONALLY VAGUE AND AMBIGUOUS
(AGAINST ALL DEFENDANTS)
148. City Defendants reassert the answers to Paragraphs 1-147. 149. In answering Paragraph 149 of the Complaint, City Defendants deny each and every allegation in Paragraph 149 of the Complaint.
150. In answering Paragraph 150 of the Complaint, City Defendants deny each and every allegation in Paragraph 150 of the Complaint.
151. In answering Paragraph 151 of the Complaint, City Defendants deny each and every allegation in Paragraph 151 of the Complaint.
152. In answering Paragraph 152 of the Complaint, City Defendants deny each and every allegation in Paragraph 152 of the Complaint.
153. In answering Paragraph 153 of the Complaint, City Defendants deny each and every allegation in Paragraph 152 of the Complaint.
154. In answering Paragraph 154 of the Complaint, City Defendants deny each and every allegation in Paragraph 154 of the Complaint.

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KRIEGER LLP ATTORNEYS AT LAW 18101 VON KARMAN AVENUE, SUITE 1000 IRVINE, CALIFORNIA 92612 155. In answering Paragraph 155 of the Complaint, City Defendants deny each and every allegation in Paragraph 155 of the Complaint.
156. In answering Paragraph 156 of the Complaint, City Defendants deny each and every allegation in Paragraph 156 of the Complaint.
157. In answering Paragraph 157 of the Complaint, City Defendants deny each and every allegation in Paragraph 157 of the Complaint.
158. In answering Paragraph 158 of the Complaint, City Defendants deny each and every allegation in Paragraph 158 of the Complaint.
159. In answering Paragraph 159 of the Complaint, City Defendants deny each and every allegation in Paragraph 159 of the Complaint.
160. In answering Paragraph 160 of the Complaint, City Defendants deny each and every allegation in Paragraph 160 of the Complaint.
161. In answering Paragraph 161 of the Complaint, City Defendants deny each and every allegation in Paragraph 161 of the Complaint.
162. In answering Paragraph 162 of the Complaint, City Defendants deny each and every allegation in Paragraph 162 of the Complaint.

CLAIM 3

SELECTIVE AND DISCRIMINATORY ENFORCEMENT
(AGAINST ALL DEFENDANTS)
163. City Defendants reassert the answers to Paragraphs 1-162. 164. In answering Paragraph 164 of the Complaint, City Defendants deny each and every allegation in Paragraph 164 of the Complaint.
165. In answering Paragraph 165 of the Complaint, City Defendants deny each and every allegation in Paragraph 165 of the Complaint.
166. In answering Paragraph 166 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 166 of the Complaint.

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KRIEGER LLP ATTORNEYS AT LAW 18101 VON KARMAN AVENUE, SUITE 1000 IRVINE, CALIFORNIA 92612 167. In answering Paragraph 167 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 167 of the Complaint. 168. In answering Paragraph 168 of the Complaint, City Defendants deny each and every allegation in Paragraph 168 of the Complaint.
169. In answering Paragraph 169 of the Complaint, City Defendants deny each and every allegation in Paragraph 169 of the Complaint.
170. In answering Paragraph 170 of the Complaint, City Defendants deny each and every allegation in Paragraph 170 of the Complaint.
171. In answering Paragraph 171 of the Complaint, City Defendants deny each and every allegation in Paragraph 171 of the Complaint.
172. In answering Paragraph 172 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 172 of the Complaint. 173. In answering Paragraph 173 of the Complaint, City Defendants deny each and every allegation in Paragraph 173 of the Complaint.
174. In answering Paragraph 174 of the Complaint, City Defendants deny each and every allegation in Paragraph 174 of the Complaint.
175. In answering Paragraph 175 of the Complaint, City Defendants deny each and every allegation in Paragraph 175 of the Complaint.
176. In answering Paragraph 176 of the Complaint, City Defendants deny each and every allegation in Paragraph 176 of the Complaint.
177. In answering Paragraph 177 of the Complaint, City Defendants deny each and every allegation in Paragraph 177 of the Complaint.
178. In answering Paragraph 178 of the Complaint, City Defendants deny each and every allegation in Paragraph 178 of the Complaint.
179. In answering Paragraph 179 of the Complaint, City Defendants deny each and every allegation in Paragraph 179 of the Complaint.

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KRIEGER LLP ATTORNEYS AT LAW 18101 VON KARMAN AVENUE, SUITE 1000 IRVINE, CALIFORNIA 92612 180. In answering Paragraph 180 of the Complaint, City Defendants deny each and every allegation in Paragraph 180 of the Complaint.
181. In answering Paragraph 181 of the Complaint, City Defendants deny each and every allegation in Paragraph 181 of the Complaint.
182. In answering Paragraph 182 of the Complaint, City Defendants deny each and every allegation in Paragraph 182 of the Complaint.

CLAIM 4
DECLARATORY RELIEF: INVALID USE OF MUNICIPAL AUTHORITY
(AGAINST THE CITY)
183. The City reasserts the answers to Paragraphs 1-182. 184. In answering Paragraph 184 of the Complaint, City Defendants deny each and every allegation in Paragraph 184 of the Complaint.
185. In answering Paragraph 185 of the Complaint, City Defendants deny each and every allegation in Paragraph 185 of the Complaint.
186. In answering Paragraph 186 of the Complaint, City Defendants deny each and every allegation in Paragraph 186 of the Complaint.
187. In answering Paragraph 187 of the Complaint, City Defendants deny each and every allegation in Paragraph 187 of the Complaint.
188. In answering Paragraph 188 of the Complaint, City Defendants deny each and every allegation in Paragraph 188 of the Complaint.
189. In answering Paragraph 189 of the Complaint, City Defendants deny each and every allegation in Paragraph 189 of the Complaint.
190. In answering Paragraph 190 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 190 of the Complaint. 191. In answering Paragraph 191 of the Complaint, City Defendants deny each and every allegation in Paragraph 191 of the Complaint.

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INTENTIONAL INTERFERENCE WITH PROSPECTIVE ECONOMIC ADVANTAGE (AGAINST THE CITY AND CITY ATTORNEY ETHAN WALSH)
192. The City Defendants reassert the answers to Paragraphs 1-191. 193. In answering Paragraph 193 of the Complaint, City Defendants deny each and every allegation in Paragraph 193 of the Complaint.
194. In answering Paragraph 194 of the Complaint, the City and City Attorney admit that City Attorney Walsh sent a letter in March 2021 to real-estate offices in the City. Except as admitted, City Defendants deny each and every other allegation in Paragraph 194 of the Complaint.
195. In answering Paragraph 195 of the Complaint, City Defendants admit that Ms.

DeRosa sent a letter on May 15, 2020 notifying a homeowner that, if a house was used as a timeshare in violation of the Municipal Code, then that would be a violation of the Municipal Code.
196. In answering Paragraph 196 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 196 of the Complaint. 197. In answering Paragraph 197 of the Complaint, Defendants deny each and every allegation in Paragraph 197 of the Complaint.
198. In answering Paragraph 198 of the Complaint, City Defendants deny each and every allegation in Paragraph 198 of the Complaint.
199. In answering Paragraph 199 of the Complaint, City Defendants deny each and every allegation in Paragraph 199 of the Complaint.
200. In answering Paragraph 200 of the Complaint, City Defendants deny each and every allegation in Paragraph 200 of the Complaint.
201. In answering Paragraph 201 of the Complaint, City Defendants deny each and every allegation in Paragraph 201 of the Complaint.

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KRIEGER LLP ATTORNEYS AT LAW 18101 VON KARMAN AVENUE, SUITE 1000 IRVINE, CALIFORNIA 92612 202. In answering Paragraph 202 of the Complaint, City Defendants deny each and every allegation in Paragraph 202 of the Complaint.

AFFIRMATIVE DEFENSES
City Defendants assert the following affirmative defenses against each and every claim and cause of action alleged by Plaintiffs. By asserting the following defenses, City Defendants do not assume the burden of proof on any essential element of Plaintiffs’ claims.

FIRST AFFIRMATIVE DEFENSE
(Failure to State a Claim)
City Defendants incorporate by reference the answers and allegations stated above.

As a separate and distinct affirmative defense to all claims in the Complaint, City Defendants allege that the Complaint fails to allege facts sufficient to state a claim against the City Defendants.

Plaintiffs fail to state sufficient facts to state a claim for declaratory relief (Claim 1) because Section 17.122.130 of the St. Helena Municipal Code does apply to Pacaso. On information and belief, Pacaso markets properties in the City under the guise of “co-ownership” arrangements; in-fact, Pacaso is selling timeshares prohibited by Section 17.122.130 of the St.

Helena Municipal Code. Plaintiffs are not entitled to declaratory relief because they were violating the City’s municipal ordinance.

Plaintiffs fail to state sufficient facts to state a claim for due process violation (Claim 2) because Section 17.112.130 of the St. Helena Municipal Code is not unconstitutionally vague or ambiguous. On information and belief, Pacaso was provided fair notice of Section 17.112.130, its specific terms, and its application to partial or fractional ownership structures, such as those marketed by Pacaso in the City. On information and belief, Pacaso attempted to sell timeshares as fractional ownership/co-ownership properties in the City in violation of Section 17.122.130 of the St. Helena Municipal Code.

Plaintiffs fail to state a selective and discriminatory enforcement claim (Claim 3) because the City Defendants enforce all violations of Section 17.122.130 in the City in the same manner, and do not take a different approach with those related to Pacaso. The City Defendants allege Case 3:21-cv-02493-WHO Document 20 Filed 06/01/21 Page 25 of 30

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KRIEGER LLP ATTORNEYS AT LAW 18101 VON KARMAN AVENUE, SUITE 1000 IRVINE, CALIFORNIA 92612 that there was no selective enforcement of Section 17.112.130 of the St. Helena Municipal Code against Pacaso.

Plaintiffs fail to state a claim for Invalid Use of Municipal Authority (Claim 4) because Section 17.112.130 of the St. Helena Municipal Code does not exceed the City’s scope of a municipal zoning authority and police power under Cal. Government Code § 65850(a). Section

17.112.130 of the St. Helena Municipal Code is not arbitrary or unreasonable as it has a substantial relation to the public health, safety, morals, and general welfare of the residents of the City. The City’s enforcement of Section 17.112.130 against Pacaso is reasonable, warranted, and a valid land use ordinance under California Government Code § 65850(a).

Plaintiffs fail to state a claim for Intentional Interference with Prospective Economic Advantage (Claim 5) because Plaintiff’s fifth claim arises from protected speech and is a strategic lawsuit against public participation (“SLAAP”). Plaintiffs’ claim is based on privileged communications and are subject to a special motion to strike under California Code of Civil Procedure §425.16. A special motion to strike (anti-SLAAP motion) was filed by the City and City Attorney on May 17, 2021 [Doc. 18.]. City Defendants further allege, on information and belief, that Plaintiffs cannot demonstrate that they incurred an actual loss or disruption to a prospective economic advantage in which they had a sufficiently reasonable expectation of future business or income.

SECOND AFFIRMATIVE DEFENSE
(Governmental Immunity For Exercise of Discretion – California Government Code § 820.2)
City Defendants incorporate by reference the answers and allegations stated above.

As a separate and distinct affirmative defense to all claims in the Complaint, City Defendants allege that no relief may be obtained under the Complaint pursuant to California Government Code § 820.2. City Defendants allege that the decisions in the Complaint were an exercise of governmental discretion immune from challenge under California Government Code § 820.2, and as such, all of Plaintiffs’ claims are barred.

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THIRD AFFIRMATIVE DEFENSE
(Governmental Immunity for Administrative Proceeding Within Scope of Employment – California Government Code § 821.6)
City Defendants incorporate by reference the answers and allegations stated above. As a separate and distinct affirmative defense to all claims in the Complaint, City Defendants allege that no relief may be obtained under the Complaint pursuant to California Government Code § 821.6. City Defendants allege that the enforcement actions alleged in the Complaint were part of an administrative proceeding within the scope of employment, immune from challenge under California Government Code § 821.6, and, as such, all of Plaintiffs’ claims are barred.

FOURTH AFFIRMATIVE DEFENSE
(Estoppel)
City Defendants incorporate by reference the answers and allegations stated above. As a separate and distinct affirmative defense to all claims in the Complaint, City Defendants allege that no relief may be obtained under the Complaint by reason of the doctrine of estoppel. On information and belief, City Defendants allege Plaintiffs willfully violated Section 17.112.130 of the St. Helena Municipal Code by owning and/or marketing ownership of timeshares in the City.

FIFTH AFFIRMATIVE DEFENSE
(Unclean Hands)
City Defendants incorporate by reference the answers and allegations stated above. As a separate and affirmative defense to all claims in the Complaint, City Defendants allege that no relief may be obtained under the Complaint by reason of the doctrine of unclean hands. On information and belief, City Defendants allege Plaintiffs willfully violated federal, state and/or local laws in connection with their sale of fractional interests in real property, including, but not limited to, federal and state securities laws, state laws governing the marketing and sale of time shares, and Section 17.112.130 of the St. Helena Municipal Code. ///
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SIXTH AFFIRMATIVE DEFENSE
(Privileged Communications)
City Defendants incorporate by reference the answers and allegations stated above. As a separate and affirmative defense to all claims in the Complaint, City Defendants allege that no relief may be obtained under the Complaint because Plaintiffs’ claims are based on privileged communications. City Defendants allege that the enforcement actions alleged in the Complaint were part of City employees official duties, and were conducted as part of an official proceeding concerning a matter of common interest. City Defendants further allege that Plaintiffs claims are based on privileged communications under California Civil Code § 47.

SEVENTH AFFIRMATIVE DEFENSE
(Illegality)
City Defendants incorporate by reference the answers and allegations stated above. As a separate and affirmative defense to all claims in the Complaint, City Defendants allege that no relief may be obtained under the Complaint by reason of the doctrine of illegality. On information and belief, City Defendants allege Plaintiffs willfully violated federal, state and/or local laws in connection with their sale of fractional interests in real property, including, but not limited to, federal and state securities laws, state laws governing the marketing and sale of time shares, and Section 17.112.130 of the St. Helena Municipal Code.

EIGHTH AFFIRMATIVE DEFENSE
(Failure to Exhaust Remedies)
City Defendants incorporate by reference the answers and allegations stated above. As a separate and affirmative defense to all claims in the Complaint, City Defendants allege that no relief may be obtained under the Complaint because Plaintiffs failed to exhaust their administrative remedies before filing their Complaint. On information and belief, City Defendants allege that Plaintiffs did not participate in any administrative hearing prior to the filing of the Complaint.
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NINTH AFFIRMATIVE DEFENSE
(Failure to Comply With the California Tort Claims Act - California Government Code §§ 810, et seq.)
City Defendants incorporate by reference the answers and allegations stated above. As a separate and affirmative defense to all claims in the Complaint, City Defendants allege that no relief may be obtained under the Complaint because Plaintiffs failed to comply with the California Tort Claims Act (California Government Code §§ 810, et seq.). On information and belief, the City never received a government claim from Plaintiffs prior to the filing of the Complaint.

TENTH AFFIRMATIVE DEFENSE
(Statute of Limitations - Government Code § 65009)
City Defendants incorporate by reference the answers and allegations stated above. As a separate and affirmative defense to all claims in the Complaint, City Defendants allege that Plaintiffs’ action is barred, in whole or in part, by the statute of limitations set forth in California Government Code § 65009. On information and belief, City Defendants allege that Plaintiffs’ Complaint was not brought within ninety (90) days of the enactment of Sections 17.112.130 and

17.134.010-17.134.100 of the St. Helena Municipal Code.

PRAYER FOR RELIEF
WHEREFORE, Defendant prays that:

1. That the Complaint be dismissed with prejudice;

2. That Plaintiffs take nothing by this proceeding;

3. That City Defendants be awarded their costs of suit incurred in the defense of this action;
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4. That City Defendants be awarded their reasonable attorneys’ fees incurred in the defense of this action as permitted by law; and

5. For such other and further relief as the Court deems just and proper.

Dated: June 1, 2021 BEST BEST & KRIEGER LLP
By: /s/ Damian N. Northcutt
DAMIAN M. MOOS
DAMIAN A. NORTHCUTT
TYLER D. ANTHONY
Attorneys for Defendants
CITY OF ST. HELENA; PLANNING &

BUILDING DIRECTOR MAYA
DEROSA; MAYOR GEOFF
ELLSWORTH; and CITY ATTORNEY

ETHAN WALSH
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KRIEGER LLP ATTORNEYS AT LAW 18101 VON KARMAN AVENUE, SUITE 1000 IRVINE, CALIFORNIA 92612 DAMIAN M. MOOS, Bar No. 240030
[email protected]
DAMIAN A. NORTHCUTT, Bar No. 258183
[email protected]
TYLER D. ANTHONY, Bar No. 305652
[email protected]

BEST BEST & KRIEGER LLP
18101 Von Karman Avenue
Suite 1000
Irvine, California 92612
Telephone: (949) 263-2600
Facsimile: (949) 260-0972
Attorneys for Defendants
CITY OF ST. HELENA; PLANNING & BUILDING
DIRECTOR MAYA DEROSA; MAYOR GEOFF
ELLSWORTH; and CITY ATTORNEY ETHAN
WALSH

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA
PACASO INC. and PAC 6 CA 2021 LLC,
Petitioner,
v.

THE CITY OF ST. HELENA; PLANNING &
BUILDING DIRECTOR MAYA DEROSA;
MAYOR GEOFF ELLSWORTH; CITY
ATTORNEY ETHAN WALSH; and DOES 1-
5,
Defendants.

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KRIEGER LLP ATTORNEYS AT LAW 18101 VON KARMAN AVENUE, SUITE 1000 IRVINE, CALIFORNIA 92612 Defendants, CITY OF ST. HELENA (“City”), PLANNING & BUILDING DIRECTOR MAYA DEROSA; MAYOR GEOFF ELLSWORTH; CITY ATTORNEY, and CITY ATTORNEY ETHAN WALSH (“City Attorney”) (collectively the “City Defendants”) hereby answer Plaintiff PACASO INC. and PAC 6 CA 2021 LLC (collectively “Plaintiffs”) Complaint for: (1) Declaratory Judgment; (2) Due Procession Violation; (3) Selective Enforcement; (4) Invalid Use of Municipal Authority; and (5) Intentional Interference with Prospective Economic Advantage (“Complaint”). City Defendants answers as follows: (hereafter “City” or “Defendant” hereby answers the allegations in the Complaint of PACASO INC. and PAC 6 CA 2021 LLC (“Plaintiffs”), as follows:

INTRODUCTION

1. In answering Paragraph 1 of the Complaint, City Defendants deny each and every allegation in Paragraph 1 of the Complaint.

2. In answering Paragraph 2 of the Complaint, City Defendants deny each and every allegation in Paragraph 2 of the Complaint.

3. In answering Paragraph 3 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 3 of the Complaint.

4. In answering Paragraph 4 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 4 of the Complaint.

5. In answering Paragraph 5 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 5 of the Complaint.

6. In answering Paragraph 6 of the Complaint, City Defendants deny each and every allegation in Paragraph 6 of the Complaint.

7. In answering Paragraph 7 of the Complaint, City Defendants deny each and every allegation in Paragraph 7 of the Complaint.

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8. In answering Paragraph 8 of the Complaint, City Defendants admit that a Report to the City Council was prepared on July 14, 2020 and that local residents expressed concerns about a residential property, which one of the Plaintiffs owns. City Defendants deny each and every other allegation in Paragraph 8 of the Complaint.

9. In answering Paragraph 9 of the Complaint, to the extent that Plaintiffs have accurately quoted portions of the July 2020 Report, City Defendants admit that the July 2020 Report reads as alleged. City Defendants deny each and every other allegation in Paragraph 9 of the Complaint, including, but not limited to, any conclusions, meaning or interpretation that Plaintiffs derive or seek to insert into the July 2020 Report.

10. In answering Paragraph 10 of the Complaint, to the extent that Plaintiffs have accurately quoted portions of the July 2020 Report, City Defendants admit that the July 2020 Report reads as alleged. City Defendants deny each and every other allegation in Paragraph 10 of the Complaint, including, but not limited to, any conclusions, meaning or interpretation that Plaintiffs derive or seek to insert into the July 2020 Report.

11. In answering Paragraph 11 of the Complaint, to the extent that Plaintiffs have accurately quoted what was said during the July 2014 Meeting, City Defendants admit that such statements were made. City Defendants deny each and every other allegation in Paragraph 11 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what was said during the July 2014 Meeting.

12. In answering Paragraph 12 of the Complaint, City Defendants deny each and every allegation in Paragraph 12 of the Complaint.

13. In answering Paragraph 13 of the Complaint, City Defendants deny each and every allegation in Paragraph 13 of the Complaint.

14. In answering Paragraph 14 of the Complaint, City Defendants deny each and every allegation in Paragraph 14 of the Complaint.
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THE PARTIES

15. In answering Paragraph 15 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 15 of the Complaint.

16. In answering Paragraph 16 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 16 of the Complaint.

17. In answering Paragraph 17 of the Complaint, City Defendants admit the allegations asserted.

18. In answering Paragraph 18 of the Complaint, City Defendants admit the allegations asserted.

19. In answering Paragraph 19 of the Complaint, City Defendants deny that the City Attorney acts under the Mayor’s direction. Except as denied, City Defendants admit the allegations asserted.

20. In answering Paragraph 20 of the Complaint, City Defendants admit the allegations asserted.

21. In answering Paragraph 21 of the Complaint, City Defendants admit that St. Helena City Council members include Vice Mayor Paul Dohring, Anna Chouteau, Lester Gardy, and Eric Hall. City Defendants admit that these members have collectively represented the City Council since November 2020. City Defendants deny that Vice Mayor Dohring has served on the City Council since 2018. City Defendants admit that Anna Chouteau has served on the City Council since 2018. City Defendants admit that the City Council is a legislative and policy-making body for the City of St. Helena. City Defendants admit that the City Council bears responsibility for setting City policy and for adopting ordinances, resolutions and other orders as necessary for governing the City. Except as admitted, City Defendants deny each and every other allegation in Paragraph 21 of the Complaint.
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JURISDICTION AND VENUE

22. In answering Paragraph 22 of the Complaint, City Defendants assert that the allegations contain Plaintiffs’ legal theories and/or legal conclusion to which no response is required. To the extent a response is required, City Defendants deny each and every allegation in Paragraph 22 of the Complaint.

23. In answering Paragraph 23 of the Complaint, City Defendants assert that the allegations contain Plaintiffs’ legal theories and/or legal conclusion to which no response is required. To the extent a response is required, City Defendants deny each and every allegation in Paragraph 23 of the Complaint.

GENERAL ALLEGATIONS

24. In answering Paragraph 24 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 24 of the Complaint.

25. In answering Paragraph 25 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 25 of the Complaint.

26. In answering Paragraph 26 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 26 of the Complaint.

27. In answering Paragraph 27 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 27 of the Complaint.

28. In answering Paragraph 28 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 28 of the Complaint.

29. In answering Paragraph 29 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 29 of the Complaint.

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30. In answering Paragraph 30 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 30 of the Complaint.

31. In answering Paragraph 31 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 31 of the Complaint.

32. In answering Paragraph 32 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 32 of the Complaint.

33. In answering Paragraph 33 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 33 of the Complaint.

34. In answering Paragraph 34 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 34 of the Complaint.

35. In answering Paragraph 35 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 35 of the Complaint.

36. In answering Paragraph 36 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 36 of the Complaint.

37. In answering Paragraph 37 of the Complaint, to the extent Plaintiffs have accurately quoted the ordinance, City Defendants admit that the ordinance reads as such. Except as admitted, City Defendants deny each and every other allegation in Paragraph 37 of the Complaint.

38. In answering Paragraph 38 of the Complaint, to the extent Plaintiffs have accurately quoted the ordinance, City Defendants admit that the ordinance reads as such. Except as Case 3:21-cv-02493-WHO Document 20 Filed 06/01/21 Page 6 of 30

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39. In answering Paragraph 39 of the Complaint, to the extent Plaintiffs have accurately quoted the ordinance, City Defendants admit that the ordinance reads as such. Except as admitted, City Defendants deny each and every other allegation in Paragraph 39 of the Complaint.

40. In answering Paragraph 40 of the Complaint, to the extent Plaintiffs have accurately quoted the ordinance, City Defendants admit that the ordinance reads as such. Except as admitted, City Defendants deny each and every other allegation in Paragraph 40 of the Complaint.

41. In answering Paragraph 41 of the Complaint, City Defendants deny each and every allegation in Paragraph 41 of the Complaint.

42. In answering Paragraph 42 of the Complaint, to the extent Plaintiffs have accurately quoted the July 2020 Report, City Defendants admit that the Report reads as quoted. Except as admitted, City Defendants deny each and every other allegation in Paragraph 42 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what is written in the July 2020 Report.

43. In answering Paragraph 43 of the Complaint, to the extent Plaintiffs have accurately quoted the July 2020 Report, City Defendants admit that the Report reads as quoted. Except as admitted, City Defendants deny each and every other allegation in Paragraph 43 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what is written in the July 2020 Report.

44. In answering Paragraph 44 of the Complaint, to the extent Plaintiffs have accurately quoted the July 2020 Report, City Defendants admit that the Report reads as quoted. Except as admitted, City Defendants deny each and every other allegation in Paragraph 44 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what is written in the July 2020 Report.

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45. In answering Paragraph 45 of the Complaint, to the extent Plaintiffs have accurately quoted the July 2020 Report, City Defendants admit that the Report reads as quoted. Except as admitted, City Defendants deny each and every other allegation in Paragraph 45 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what is written in the July 2020 Report.

46. In answering Paragraph 46 of the Complaint, to the extent Plaintiffs have accurately quoted the July 2020 Report, City Defendants admit that the Report reads as quoted. Except as admitted, City Defendants deny each and every other allegation in Paragraph 46 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what is written in the July 2020 Report.

47. In answering Paragraph 47 of the Complaint, to the extent Plaintiffs have accurately quoted who said what during the July 14, 2020 Meeting, City Defendants admit that the person said the accurately quoted material during the Meeting. Except as admitted, City Defendants deny each and every other allegation in Paragraph 47 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what was said during the July 14, 2020 Meeting.

48. In answering Paragraph 48 of the Complaint, to the extent Plaintiffs have accurately quoted who said what during the July 14, 2020 Meeting, City Defendants admit that the person said the accurately quoted material during the Meeting. Except as admitted, City Defendants deny each and every other allegation in Paragraph 48 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what was said during the July 14, 2020 Meeting.

49. In answering Paragraph 49 of the Complaint, to the extent Plaintiffs have accurately quoted who said what during the July 14, 2020 Meeting, City Defendants admit that the person said the accurately quoted material during the Meeting. Except as admitted, City Defendants deny each and every other allegation in Paragraph 49 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what was said during the July 14, 2020 Meeting.

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50. In answering Paragraph 50 of the Complaint, to the extent Plaintiffs have accurately quoted the July 2020 Report, City Defendants admit that the Report reads as quoted. Except as admitted, City Defendants deny each and every other allegation in Paragraph 50 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what is written in the July 2020 Report.

51. In answering Paragraph 51 of the Complaint, to the extent Plaintiffs have accurately quoted the July 2020 Report, City Defendants admit that the Report reads as quoted. Except as admitted, City Defendants deny each and every other allegation in Paragraph 51 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what is written in the July 2020 Report.

52. In answering Paragraph 52 of the Complaint, to the extent Plaintiffs have accurately quoted the July 2020 Report, City Defendants admit that the Report reads as quoted. Except as admitted, City Defendants deny each and every other allegation in Paragraph 52 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what is written in the July 2020 Report.

53. In answering Paragraph 53 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 53 of the Complaint.

54. In answering Paragraph 54 of the Complaint, City Defendants deny each and every allegation in Paragraph 54 of the Complaint.

55. In answering Paragraph 55 of the Complaint, City Defendants deny each and every allegation in Paragraph 55 of the Complaint.

56. In answering Paragraph 56 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 56 of the Complaint.

57. In answering Paragraph 57 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 57 of the Complaint.

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58. In answering Paragraph 58 of the Complaint, to the extent Plaintiffs have accurately quoted who said what during the July 14, 2020 Meeting, City Defendants admit that the person said the accurately quoted material during the Meeting. Except as admitted, City Defendants deny each and every other allegation in Paragraph 58 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what was said during the July 14, 2020 Meeting.

59. In answering Paragraph 59 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 59 of the Complaint.

60. In answering Paragraph 60 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 60 of the Complaint.

61. In answering Paragraph 61 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 61 of the Complaint.

62. In answering Paragraph 62 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 62 of the Complaint.

63. In answering Paragraph 63 of the Complaint, City Defendants deny each and every allegation in Paragraph 63 of the Complaint.

64. In answering Paragraph 64 of the Complaint, to the extent Plaintiffs have accurately quoted the ordinance, City Defendants admit that the ordinance reads as alleged. Except as admitted, City Defendants deny each and every other allegation in Paragraph 64 of the Complaint.

65. In answering Paragraph 65 of the Complaint, City Defendants deny each and every allegation in Paragraph 65 of the Complaint.

66. In answering Paragraph 66 of the Complaint, City Defendants deny each and every allegation in Paragraph 66 of the Complaint.

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67. In answering Paragraph 67 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 67 of the Complaint.

68. In answering Paragraph 68 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 68 of the Complaint.

69. In answering Paragraph 69 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 69 of the Complaint.

70. In answering Paragraph 70 of the Complaint, City Defendants deny each and every allegation in Paragraph 70 of the Complaint.

71. In answering Paragraph 71 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 71 of the Complaint.

72. In answering Paragraph 72 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 72 of the Complaint.

73. In answering Paragraph 73 of the Complaint, to the extent Plaintiffs have accurately quoted who said what during the July 14, 2020 Meeting, City Defendants admit that the person said the accurately quoted material during the Meeting. Except as admitted, City Defendants deny each and every other allegation in Paragraph 73 of the Complaint, including, but not limited to, any conclusions, meaning or (mis)interpretation that Plaintiffs derive or seek to insert into what was said during the July 14, 2020 Meeting.

74. In answering Paragraph 74 of the Complaint, to the extent Plaintiffs have accurately quoted who said what during the July 14, 2020 Meeting, City Defendants admit that the person said the accurately quoted material during the Meeting. Except as admitted, City Defendants deny each and every other allegation in Paragraph 74 of the Complaint, including, but not limited Case 3:21-cv-02493-WHO Document 20 Filed 06/01/21 Page 11 of 30

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75. In answering Paragraph 75 of the Complaint, City Defendants assert that the documents/meeting speak for themselves and that no response is otherwise required.

76. In answering Paragraph 76 of the Complaint, City Defendants deny each and every allegation in Paragraph 76 of the Complaint.

77. In answering Paragraph 77 of the Complaint, City Defendants are without sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and, on that basis, deny each and every allegation in Paragraph 77 of the Complaint.

78. In answering Paragraph 78 of the Complaint, City Defendants deny each and every allegation in Paragraph 78 of the Complaint.

79. In answering Paragraph 79 of the Complaint, City Defendants admit the allegations asserted.

80. In answering Paragraph 80 of the Complaint, City Defendants admit that a response, dated May 19, 2020 was sent, and assert that the document speaks for itself. Except as admitted, City Defendants deny each and every other allegation in Paragraph 80 of the Complaint.

81. In answering Paragraph 81 of the Complaint, City Defendants admit that Ms.

DeRosa sent a written response, dated May 22, 2020, and assert that the document speaks for itself. Except as admitted, City Defendants deny each and every other allegation in Paragraph 81 of the Complaint.

82. In answering Paragraph 82 of the Complaint, City Defendants deny each and every allegation in Paragraph 82 of the Complaint.

83. In answering Paragraph 83 of the Complaint, City Defendants admit that a response, dated May 26, 2020 was sent, and assert that the document speaks for itself. Except as admitted, City Defendants deny each and every other allegation in Paragraph 83 of the Complaint.

84. In answering Paragraph 84 of the Complaint, City Defendants deny that the City represented that Pacaso’s operations were permitted. City Defendants are without sufficient Case 3:21-cv-02493-WHO Document 20 Filed 06/01/21 Page 12 of 30

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85. In answering Paragraph 85 of the Complaint, City Defendants assert that the allegations contain Plaintiffs’ legal theories and/or legal conclusion to which no response is required. To the extent a response is required, City Defendants deny each and every allegation in Paragraph 85 of the Complaint.

86. In answering Paragraph 86 of the Complaint, City Defendants deny each and every allegation in Paragraph 86 of the Complaint.

87. In answering Paragraph 87 of the Complaint, City Defendants admit that Ms.

DeRosa sent a letter, dated January 25, 2021, and assert that the document speaks for itself.

Except as admitted, City Defendants deny each and every other allegation in Paragraph 87 of the Complaint.

88. In answering Paragraph 88 of the Complaint, City Defendants deny each and every allegation in Paragraph 88 of the Complaint.

89. In answering Paragraph 89 of the Complaint, City Defendants deny each and every other allegation in Paragraph 89 of the Complaint.

90. In answering Paragraph 90 of the Complaint, City Defendants admit that Pacaso contacted Maya DeRosa. City Defendants assert that the other allegations contain Plaintiffs’ legal theories and/or legal conclusion to which no response is required. To the extent a response is required, City Defendants deny each and every other allegation in Paragraph 90 of the Complaint.

91. In answering Paragraph 91 of the Complaint, to the extent that Plaintiffs have accurately quoted who said what during the February 9, 2021 meeting, then City Defendants admit that such person(s) said what they are alleged to have said during the meeting. Except as admitted, City Defendants deny each and every allegation in Paragraph 91 of the Complaint.

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