HomeMy WebLinkAbout09 SETTLEMENT AG 04-05-04
AGENDA REPORT
Agenda Item
9
Reviewed: ..-£.
City Manager í~
Finance Director ~
MEETING DATE: APRIL 5, 2004
TO:
HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM:
LOIS JEFFREY, CITY ATTORNEY
SETTLEMENT AGREEMENT WITH TUSTIN HEALTH SPA, INC. AND
MYONG CHA OM
SUBJECT:
SUMMARY:
The City Attorney's office has been working with the Community Development
Department to settle a dispute with the owner of Tustin Health Spa, Inc. regarding her
operation of a massage facility. A Settlement Agreement has been reached in which
Myong Cha Om will sell the facility and agree to step out of management of the facility.
RECOMMENDATION:
Recommend City Council approve the Settlement Agreement.
ATTACHMENTS:
Settlement Agreement
cc: William A. Huston, City Manager
183649.1
,...
SETTLEMENT AGREEMENT
Myong Cha Om. Owner/Operator
Tustin Health Spa, Inc.
This SETTLEMENT AGREEMENT ("Agreement") is made and entered
into this - day of , 2004 by and between the CITY OF
TUSTIN, a California municipal corporation ("City"), MYONG CHA OM. an
individual ("Om"), and TUSTIN HEALTH SPA, INC., a California Corporation.
RECITALS
A. City is authorized, by virtue of California Constitution article XI,
section 7, and Government Code section 51030 et seq., to regulate massage
establishments by imposing reasonable conditions on the operation of massage
establishments and reasonable standards relative to the skill and experience of
massage operators and technicians.
B. City has adopted and enacted a comprehensive set of permit
restrictions, requirements, and regulations governing massage operators and
technicians, and the operation and management of massage establishments
within City, which are codified in Article 3, Chapter 6, Part 2, of the Tustin City
Code, section 3621 et seq.
C. City initially issued a massage operator permit to Om on November
24, 1997, which authorized Om to operate and manage the Tustin Health Spa,
Inc., massage establishment located at 650 EI Camino Real, Tustin. City also
issued a massage technician permit to Om on March 26, 1998, which authorized
Om to perform massage at the Tustin Health Spa, Inc. At the time of issuing Om
her massage operator and technician permits, City's massage regulations did not
require annual renewal of permits, and therefore, Om was able to operate and
manage, and perform massage at, the Tustin Health Spa. Inc., without having to
renew her permits.
E. In May of 2003, the Tustin Police Department's Special
Investigations Unit (Vice Investigators) received complaints that Om was allowing
unlicensed massage therapists to work, thaI employees were allegedly engaging
in prostitution, and that employees were allegedly living in the establishment after
closing. Vice Investigators subsequently conducted multiple undercover
inspections of the Tustin Health Spa, Inc., massage establishment. City Code
Enforcement also inspected the Tustin Health Spa, lric. As a result of the police
investigation into the business practices of the Tustin Health Spa, Inc., and, more
particularly, its inspections made in May, June, and September 2003, Vice
Investigators conducted a sting operation on Thursday, September 18, 2003, and
Om was issued a misdemeanor citation for allowing employees to perform
massage without massage technician licenses (Tustin City Code, § 3624) and
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1 Myong Cha Om. OwnerlOperalor, Tustin Health Spa. Inc.
Sell"'menl Agreemenl
three (3) Tustin Health Spa. Inc., employees were issued misdemeanor citations
for performing massage without massage technician permits (Tustin City Code, §
3621).
F. In accordance with City's new massage regulations effective July 1,
2002, on July 1, 2003, Om submitted a Massage Operator Permit Renewal
Application with City seeking to renew her massage operator permit for the
Tustin Health Spa, Inc., massage establishment. She also submitted a Massage
Technician Permit Renewal Application.
G. On October 30, 2003, City served Om with an Amended Denial of
Massage Operator Permit Renewal Application, wherein the City's Director of
Community Development advised Om that pursuant to Tustin City Code sections
3712(1), 3623(4), 3623(6)(g), and 3624, City refused to renew her massage
operator permit. A copy of City's October 30,2003, Amended Denial of Massage
Operator Permit Renewal Application, is attached hereto as Exhibit "Au and by
this reference is made a part of this Agreement. Because City refused to renew
her massage operator permit, and therefore, Tustin Health Spa, Inc., effectively
had no operator, City did not act on Om's Massage Technician Permit Renewal
Application.
H. The Director of Community Development's Amended Denial of
Massage Operator Permit Renewal Application was made on the grounds that
Om had failed to comply with the permit conditions and other requirements of
Tustin City Code, Article 3, Chapter 6, Part 2, section 3621 et seq. Specifically,
Om omitted material information in violation of Tustin City Code section 3712(1),
she did not provide residence addresses for seven (7) employees in violation of
Tustin City Code section 3623(4), she allowed three (3) employees to perform
massages without having massage technician permits in violation of Tustin City
Code section 3624, she did not report the employment of the three (3) individuals
in violation of Tustin City Code section 3623(4) and 3624, and she did not
provide her massage permit history in violation of Tustin City Code section
3623(6)(g).
I. On November 5, 2003, Om served City with a timely notice
requesting an appeal of the Director of Community Development's decision to
issue the Amended Denial of Massage Operator Permit Renewal Application.
J. On December 29.2003, Om pled guilty to one (1) count of violating
Tustin City Code section 3624, employing unlicensed massage technicians. On
the same date, the three (3) Tustin Health Spa, Inc., employees each pled guilty
to one (1) count of violating Tustin City Code section 3621, operating without a
massage technician license.
K. On January 5, 2004, Om served City with notification that she had
entered into escrow with another individual regarding the sale of Tustin Health
1819203
2 Myong Cha Om, Owna,IOperata,. Tuslin Health Spe. Inc.
Selllement Agreement
Spa, Inc., and that Om was withdrawing her appeal and surrendering her
massage operator permit. In exchange, City agreed to allow the individual that
Om had previously entered into escrow with for the sale of Tustin Health Spa,
Inc., to submit a massage operator permit application.
L. On February 19, 2004, City received a Massage Operator Permit
Application from applicant Steven Shin, which seeks to assume operation of the
Tustin Health Spa, Inc., massage establishment at the 650 EI Camino Real,
Tustin, California location. Steven Shin now seeks to purchase the Tustin Health
Spa, Inc., massage establishment from Om and to own and operate the massage
business under new management.
M. In accordance with the mutually agreed upon terms and conditions
set forth herein, City, Om, and Tustin Health Spa, Inc., (hereinafter collectively
referred to as the "Parties") now desire to settle this matter.
NOW, THEREFORE, in consideration of the foregoing recitals, which are
incorporated herein by reference, and the mutual promises, covenants, and
conditions contained herein, and for other good and valuable consideration, the
receipt ànd sufficiency of which is hereby acknowledged, the Parties do hereby
acknowledge and expressly agree as follows:
AGREEMENT
1.
Om.
a. Except as otherwise provided for in Section 2.e, Om agrees
absolutely and irrevocably to cease operating and managing the Tustin Health
Spa, Inc., massage establishment within City upon execution of this Agreement.
b. Om agrees absolutely and irrevocably to surrender all
massage operator and massage technician permits issued to her by City in
connection with the Tustin Health Spa, Inc., massage establishment upon
execution of this Agreement.
c. Om agrees absolutely and irrevocably that she will never
apply for, seek, or obtain either a massage 'operator permit or a massage
technician permit from City in connection with any existing or future massage
establishment located within City.
d. Om agrees absolutely and irrevocably that City will never
again issue to her either a massage operator permit or a massage technician
permit in connection with any existing or future massage establishment located
within City.
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3 Myong Cha Om, OwnarlOp.,ator, Tustin Health Spa. Inc.
Samomon/ Agreamon1
e. Om agrees absolutely and irrevocably that she will never
have any type of interest whatsoever in any existing or future massage
establishment located within City.
f. Om agrees absolutely and irrevocably that she will never
serve as an owner, operator, general partner, limited partner, officer, member,
manager, employee, agent, representative, consultant, and/or independent
contractor of any existing or future massage establishment located within City.
g. Om agrees absolutely and irrevocably to hereby withdraw
her July 1, 2003, Massage Operator Permit Renewal Application and her
November 5, 2003, written notice requesting an appeal of the Director of
Community Development's October 30, 2003, Amended Denial of Massage
Operator Permit Renewal Application, and Om agrees absolutely and irrevocably
to waive her right to administrative and judicial review of said Amended Denial of
Massage Operator Permit Renewal Application.
2.
9r¿.
a. City agrees to hereby accept Om's request to withdraw her
July 1, 2003, Massage Operator Permit Renewal Application and her November
5, 2003, written notice requesting an appeal of the Director of Community
Development's October 30, 2003, Amended Denial of Massage Operator Permit
Renewal Application.
b. City agrees to not place a massage operator/massage
technician permit revocation, denial, suspension, and/or refusal to renew for
cause status or designation on Om's City code enforcement record.
c. City agrees to approve and issue a massage operator permit
to applicant Steven Shin, provided he satisfies the City's code requirements, in
connection with the Tustin Health Spa, Inc., massage establishment, which is
located at 650 EI Camino Real, Tustin, California, upon proof to the satisfaction
of City, which is to be tendered to City by Om within ninety (90) days of execution
of this Agreement, that Om has, in fact, sold or otherwise transferred her entire
interest in the Tustiri Health Spa, Inc., massage establishment to applicant
Steven Shin. City further agrees that Om shall be permitted to consult with
Steven Shin during this same ninety (90) day period for purposes of effectuating
the ownership transfer.
d. City agrees to transfer all existing and valid massage
technician permits that were previously issued in connection with Tustin Health
Spa, Inc., to the new Tustin Health Spa, Inc., massage establishment, which is to
be under the exclusive operation, control, and management of Steven Shin,
within thirty (30) days of receiving proof to the satisfaction of City that Om has, in
fact, sold or otherwise transferred her entire interest in the Tustin Health Spa,
"'9293
4 Myong Cha Om. Owna,¡Opa,ator, Tustin HeaUh Spa. Inc
Se/lhlmenl Agreement
Inc., massage establishment to applicant Steven Shin and Steven Shin has been
issued a City massage operator permit. The massage establishment business
shall be allowed to remain open during the ownership transfer period set forth in
subsection (c) above, as well as during the thirty (30) day mal;sage technician
permit transfer period. .
e. During the ownership transfer period Om may continue to
operate the Tustin Health Spa, Inc. If after ninety (90) days from the date of
execution of this Agreement, Om has failed to demonstrate to the satisfaction of
City that she has sold or otherwise transferred her entire interest in the Tustin
Health Spa, Inc., massage establishment to applicant Steven Shin, the Director
of Community Development's October 30, 2003, refusal to renew Om's massage
operator permit shall hereby immediately become effective, and City shall be
under no obligation to issue a massage operator permit to applicant Steven Shin
as set forth herein. If after ninety (90) days from the date of execution of this
Agreement, Om has not transferred her entire interest in the Tustin Health Spa,
Inc., to applicant Steven Shin, the Director of Community Development's October
30, 2003, refusal to renew Om's massage operator permit shall immediately
become effective, and Om shall cease operating the Tustin Health Spa, Inc.,
immediately. In the event of such a denial, Om shall have no right to operate the
Tustin Health Spa, Inc., while she searches for a new buyer. Pursuant to such a
denial, Om agrees absolutely and irrevocably to waive her right to administrative
and judicial review of said denial.
3. No Admission of Liabilitv. This Agreement pertains to disputed
claims and does not constitute an admission of liability on the part of any Party,
all liability having been denied, at all relevant times, and which continues to be
denied.
4. Attornevs' Fees for Enforcement Action. In the event any action is
filed to enforce or defend this Agreement, the prevailing party in such action shall
be entitled to, in addition to any other damages or relief available to them, an
award of reasonable attorneys' fees and costs incurred in connection with such
action, including any appellate proceeding. The entitlement to such fees and
costs shall accrue as of the commencement of the litigation and shall be
enforceable regardless of whether the matter is resolved thereafter by voluntary
or involuntary dismissal, settlement, judgment, or otherwise.
5. Advice of Counsel. In executing this Agreement, each Party hereto
acknowledges that it has consulted with and had the advice of counsel of its own
choosing in negotiations for and preparation of this Agreement and was fully
advised by counsel with respect to all rights which are affected by this
Agreement.
6. Independent InvestiQation. Each Party represents that it has
executed this Agreement after independent investigation and has not relied and
'81929'
5 Myong Cha Om. OwnarlOperalor. Tustin Hoallh Spa. Inc.
SoWomon/ Mreamenr
does not rely upon any representation or statement made by any other Party
hereto or any of their representatives with regard to the subject matter, basis, or
effect of this Agreement, other than as expressly set forth herein.
7. Choice of Law and Forum Selection. This Agreement is made and
entered into in the State of California and shall in all respects be interpreted,
enforced, and governed under the laws of the State of California. The language
in all parts of this Agreement shall in all cases be construed as a whole according
to its fair meaning and not strictly for or against any of the Parties. Any dispute
with respect to the performance or enforceability of this Agreement shall be filed
in the Superior Court for the County of Orange, State of California.
8. After-AcQuired Facts. Each of the Parties acknowledges it
might hereafter discover facts different from or in addition to those it now knows
or believes to be true with respect to a claim or claims released herein, and it
expressly agrees to assume the risk of possible discovery of additional or
different facts, and agree that this Agreement shall be and remain effective in all
respects regardless of such additional or different discovered facts, or any
change in circumstances.
9. Entire Aareement. This is the entire agreement among the Parties
with respect to the subject matter hereof. It includes all of the terms, promises,
representations, and understandings made by the Parties, and it supersedes any
earlier written or oral understandings or agreements between the Parties. No
Party hereto nor its respective attorneys or advisors or agents have made any
promise, representation, or warranty, whether express, implied, or statutory, not
contained herein, concerning the subject matter of this Agreement in order to
induce the Parties hereto to execute this Agreement, and each signatory
acknowledges that such Party has not executed this instrument in reliance on
any promise, representation, or warranty not contained herein. No amendment
or waiver of this Agreement shall be effective unless in writing and signed by the
Party to be charged.
10. Authoritv. Each of the Parties represents, warrants, and
cov!!nants that its respective signatories have the power to enter into this
Agreement, and settle and release fully and completely all claims, causes of
action, demands, charges, and liabilities as provided herein.
11. Review of AQreement. Each Party to this Agreement certifies
that it has read all of this Agreement and fully understand all of the same.
12. Cooperation in Implementation. Each Party to this Agreement will
cooperate and diligently perform any further acts, requirements, and obligations
and execute and deliver any documents that may from time to time be
reasonably necessary or otherwise reasonably required to consummate,
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6 Myong Cha Om. Owner/Operator. Tustin Health Spa. Inc.
Sell/ement AgrBemonr
evidence, confirm, and/or carry out the intent and provisions of this Agreement,
all without undue delay or expense and without further consideration.
13. Severabilitv. In the event that any term, covenant, condition. or
provision of this Agreement shall be held by a court of competent jurisdiction to
be invalid or against public policy, the remaining provisions shall continue in full
force and effect to the extent that the basic intent of the Parties as set forth in this
Agreement can be implemented.
14. Bindina Effect. This Agreement shall be binding upon and
inure to the benefit of the Parties hereto and their respective representatives,
successors, and assigns; provided, however, the foregoing shall not be deemed
or construed to confer any right, title, benefit, cause of action, or remedy upon
any person or entity not a Party hereto, which Party would not nor did not
otherwise possess.
15. Waiver of Trial Bv Jurv. The Parties hereby irrevocably waive their
respective rights to a jury trial of any claim or cause of action based upon or
arising out of this Agreement. This waiver shall apply to any subsequent
amendments, renewals, supplements, or modifications to this Agreement. In the
event of litigation, this Agreement may be filed as written consent to a court trial.
16. No Waiver. The provisions of this Agreement may be waived,
altered, amended, or repealed, in whole or in part, only upon the written consent
of all Parties to this Agreement. The waiver by one Party of the performance of
any covenant, condition, or promise shall not invalidate this Agreement, nor shall
it be considered as a waiver by such Party of any other (or of the enforcement for
subsequent breaches or failures of the same) covenant, condition, or promise.
The delay in pursuing any remedy or in insisting upon full performance for any
breach or failure of any covenant, condition, or promise shall not prevent a Party
from later pursuing remedies or insisting upon full performance for the same or
similar breaches or failures.
17. HeadinQs. The headings, subheadings, and numbering of the
different sections of this Agreement are inserted for convenience and reference
only, and are not to be taken as part of this Agreement or to control or affect the
meaning, construction, or effect of the same.
18. Necessary Acts. Each Party to this Agreement agrees to
perform any further acts and execute and deliver any further documents that may
be reasonably necessary to carry out the provisions of this Agreement.
19. Notices. All notices, requests, demands, and other
communications required or permitted to be given under this Agreement shall be
in writing and shall either be delivered in writing personally or be sent by regular
or certified first class mail, postage prepaid, deposited in the United States mail,
181UU
7 Myong Cho Om. OwnorlOporotor. Tus,," Heetth Spa. Ine
SoWemen, Agreement
and properly addressed to the Party at its address set forth below, or at any other
address such Party may designate by written notice to the other Party:
To City:
CltyofTustin
Attn: City Manager
300 Centennial Way
Tustin, CA 92780
To Om:
Myong Cha Om, Owner/Operator
Tustin Health Spa, Inc.
650 EI Camino Real
Tustin, CA 92780
Myong Cha Om
235 S. Calle Grande
Orange, CA 92869
20. Counteroarts. This Agreement may be executed in
counterparts, each of which shall be deemed an original and, when taken
together with the other signed counterparts, shall constitute one agreement,
which shall be binding upon and effect as to all Parties.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of
the day and year first set forth hereinabove.
CITY OF TUSTIN
CITY OF TUSTIN, a California municipal
corporation
By:
Tony Kawashima
Mayor
By:
ATTEST:
By:
Pamela Stoker
City Clerk
'.'.21.3
8 Myon¡¡ Ch. Om, Owner/Op8rato~ Tultin Hoellll Spa, Ino.
SeltJement Agreement
Myong Chi Om
Myong Cha Om, an individual
By: C-- ,..,
MY~h~ Ii"""""""'"
TUSTIN HEALTH SPA, INC.
TUSTIN HEALTH SPA, INC., a California
Corporation
By: é- ~ ,-c - .
Myong a Om, Owner/Opërator
181921.3
9 Myong Cha Om. OwnsrlOpsrator. Tustin Heallh Spa. Inc.
Ss"ement Agr..emen1