O8. RECEIVED Civil Clk' Office. JUN Superior Court of th District of Cohmibja

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1 C C IN THE SUPERIOR COURT FOR THE DISTRICT OF COLUMBIA CIVIL DIVISION 1111 PENNSYLVANIA HOLDINGS LLC, A Delaware Limited Liability Company By and Through Its Managing Member 1111 Penn Holdings-i LLC A Delaware Limited Liability Company By and Through Its Managing Member SRI Six Operating Company A Delaware General Partnership do of Its Registered Agent Diversified Corporate Services Int'l, Inc H Street, N.W., Suite 840 Washington, D.C and RECEIVED Civil Clk' Office JUN Superior Court of th District of Cohmibja Civil Action No. Judge (Class Action) O8 ATLANTIC FREEHOLDS, A Nevada General Partnership, By and Though Its General Partner Grosvenor International (Atlantic Freeholds) Limited, a Nevada Corporation, do Its Registered Agent Nevada Corporate Research, Ltd Vermont Avenue, N.W., Suite 910 Washington D.C and HARRINGTON HOTEL CO., INC., A Delaware Corporation do Its Registered Agent CT Corporation System th Street, N.W. Suite 100 Washington, D.C v. Plaintiffs,

2 C I DISTRICT OF COLUMBIA, ) a Municipal Corporation ) John A. Wilson Building ) 1350 Pennsylvania Ave., N.W., ) Washington, D.C ) ) PLEASE SERVE: ) The Hon. Adrian Fenty ) do Office of the Secretary ) 1350 Pennsylvania Ave., N.W., ) Suite4l9, ) Washington, D.C ) ) PLEASE SERVE: ) Office of the Attorney General ) do Gale Rivers, Tonia Robinson or ) Darlene Fields ) Office of Risk Management ) Government of the District of Columbia ) 441 4th Street, NW, Suite 800 South, ) Washington, DC ) Defendant. ) CLASS ACTION COMPLAINT The named plaintiffs, 1111 Pennsylvania Holdings LLC, Atlantic Freeholds and Harrington Hotel Co., Inc., by and through counsel, bring this class action complaint for declaratory and injunctive relief and monetary damages against the District of Columbia and in support thereof state as follows: Preliminary Statement 1. Plaintiffs, 1111 Pennsylvania Holdings LLC, Atlantic Freeholds and Hanington Hotel Co., Inc. bring this class action against the District of Columbia ("District") for themselves and all other similarly situated lessors of sub-surface public space. Plaintiffs seek for themselves and all other putative class members various forms of relief for injuries suffered as 2

3 C C a result of the District's breach of valid and binding rental agreements as well as its unlawful derivation, computation and levy of rents paid by Plaintiffs for the use of sub-surface public space (also known as vault space). As a result of this unlawful action, the District wrongly billed Plaintiffs for rent in excess of that permitted by law and as called for under the agreement. This breach and unlawful derivation, computation and levy of vault rental charges has, upon information and belief, been ongoing for the last three years and likely longer. 2. Plaintiffs bring this action on their own behalf and on behalf of all other entities similarly situated who were injured as a result of the District's unilateral decision to change the manner in which derived, computed and levied vault rental charges for the use of subsurface public space. Jurisdiction 3. This Court has jurisdiction over this matter pursuant to D.C. Code and Super. Ct. Civ. R. 23-I and 57. Named Parties 4. Plaintiff, 1111 Pennsylvania Holdings LLC, a Delaware limited liability company, by and through its managing member 1111 Penn Holdings-i LLC, a Delaware limited liability company, by and through its managing member, SRT Six Operating Company, a Delaware general partnership, do its registered agent Diversified Corporate Service International, Inc., 1100 H Street, N.W., Suite 840, Washington, D.C , as lessee of certain sub-surface public space, is legally obligated to pay all Public Space Rental Bills issued for the use of subsurface public space, identified by the District as Vault ID No in Lot 20, Square 322, chartered abutting liii Pennsylvania Avenue. Petitioner is the owner of the land and the improvements thereon known as liii Pennsylvania Avenue, N.W. (Square 322, Lot 20), situated in the

4 District of Columbia. Plaintiff 1111 Pennsylvania Holdings LLC has paid at least one excessive rental bill for use of sub-surface public space that was unlawfully computed under the scheme alleged herein. 5. Plaintiff, Atlantic Freeholds, a Nevada general partnership, by and through its general partner Grosvenor International (Atlantic Freeholds) Limited, a Nevada corporation, do its registered agent Nevada Corporate Research, Ltd., 1090 Vermont Avenue, N.W., Suite 910, Washington, D.C , as lessee of certain sub-surface public space, is legally obligated to pay all Public Space Rental Bills issued for the use of sub-surface public space, identified by the District as Vault ID No in Lot 32, Square 166, abutting 1701 Pennsylvania Avenue. Petitioner is the owner of the land and the improvements thereon known as 1701 Pennsylvania Avenue, N.W. (Square 166, Lot 32), situated in the District of Columbia. Plaintiff Atlantic Freeholds has paid at least one excessive rental bill for use of sub-surface public space that was unlawfully computed under the scheme alleged herein. 6. Plaintiff, Harrington Hotel Co., Inc., a Delaware Corporation, do its registered agent CT Corporation System, th Street, N.W., Suite 1000, Washington, D.C , as lessee of certain sub-surface public space, is legally obligated to pay all Public Space Rental Bills issued for the use of sub-surface public space, identified by the District as Vault ID No. 400 in Lot 813 Square 322, abutting th Street, N.W. Petitioner is the owner of the land and the improvements thereon known as th Street, N.W. (Square 322, Lot 813), situated in the District of Columbia. Plaintiff Harrington Hotel Co., Inc has paid at least one excessive rental bill for use of sub-surface public space that was unlawfully computed under the scheme alleged herein. 4

5 C C Facts Common to All Counts and All Plaintiffs 7. Plaintiffs are the legal owners of certain parcels of land with improvements thereon, located in the District of Columbia, who lease from the District of Columbia certain subsurface public spaces. 8. Abutting each parcel of land owned by Plaintiffs is a publicly owned structure or an enclosure of space beneath the surface of the public space, commonly referred to as a "vault". 9. Owners of abutting land typically rent vault space to extend underground parking or to house utility transformers or fuel storage containers. 10. Each of the named Plaintiffs paid at least one Public Space Rental Bill ("Bill") for use of sub-surface public space that was unlawfully computed under the scheme alleged herein. A) Terms and Conditions of "Vault Agreements" 11. Upon information and belief, each individual Plaintiff, or its predecessor in interest, executed a document entitled "Agreement Relating to the Occupation of Sub-Surface Public Space (Vaults)" with the Government of the District of Columbia for the purpose of renting vault space abutting their respective properties (a "Vault Agreement"). See Exhibit 1, typical Vault Agreement. 12. Upon information and belief, the terms and conditions of each Vault Agreement entered into by Plaintiffs are materially identical. 13. Upon information and belief, the Vault Agreements provide that the Agreement shall constitute a covenant running with the land and are executed under seal. 14. Pursuant to the Vault Agreements, in consideration for the issuance of a permit to use the vault abutting their property, Plaintiffs agreed to pay rent and all other charges related to 5

6 (I I the occupation of the vault in accordance with D.C. Code et seq. (formerly etseq.). 15. In accordance with D.C. Code (a) (formerly ), rent is to be paid annually, in advance, for the period July 1st though June 3 0th. 16. Upon information and belief, Public Space Rental Bills ("Bills") are issued annually each June, payable June 30th of the year in which the bill was issued, for the vault rental period commencing July 1st of that year through June 30th of the subsequent year. 17. Pursuant to D.C. Code (c), rent "shall be computed on the basis of the assessed value ("A.V.") per square foot of the abutting land multiplied by the area of the vault level in square feet ("Area") multiplied by a utilization factor ("U.F.")." (Emphasis added). B) History of Vault Rental Legislation 18. The utilization factor was initially set by D.C. Council Res. No , 16 DCR 72, effective September 16, 1969, at 1% for first level vaults and 1/4 of 1% for second and lower level vaults. 19. The utilization factor was revised by D.C. Council Res. No , effective May 12, 1992, to 1.5% for first level vaults and 1/4 of 1.5% for second and lower level vaults. 20. On August 8, 2006, the Council of the District of Columbia enacted the Public Space Rental Fees Amendment Act of 2006, D.C. Law , repealing D.C. Res. No , amending D.C. Official Code , and further revising the utilization factor. Pursuant to D.C. Law , for the period beginning July 1, 2006, through the present, the utilization factor was set at 1.8% for first level vault space and 1/4 of 1.8% for all lower-level vault space. 6

7 C C C) History of Vault Rental Practice 21. Upon information and belief, for decades the District used the "assessed value" of the tax year in which the Bills were computed to calculate the rent payable under the Vault Agreements. For example, Bills computed on or around June 1997 for the period of July 1, June 30, 1998 were computed using Tax Year 1997 assessed land values. 22. Upon information and belief, on or about June 2002 the District unilaterally changed its long established practice regarding its computation of rent payable under the Vault Agreements. Rather than the rent being based upon the assessed value of the abutting land when the Bills were computed, the District based the rent upon the proposed assessed value for the tax year subsequent to the tax year in which the Bills were computed. For example, Bills computed on or around June 2008 for the period of July 1, June 30, 2009 were computed using the proposed Tax Year 2009 assessed land values, rather than the assessed land values (i.e., Tax Year 2008). See Exhibit 2A-C, Vault Bills of the named Plaintiffs issued for the vault rental period July 1, June 30, 2009 computed by the District using the future proposed assessed land value for Tax Year Upon information and belief, the District failed to notify entities subject to Vault Agreements of its decision to change the manner in which it computed rent payable under the Vault Agreements. 24. The statutory provision incorporated into the Vault Agreements by reference requires the District to compute rents payable under the Vault Agreements based upon the "assessed value" of the abutting land at the time the Bills are computed, not upon a proposed assessed value for a future year. 7

8 C C Class Action Allegations 25. Plaintiffs bring this action on their own behalf and on behalf of all other persons or entities similarly situated pursuant to Super Ct. Civ. R. 23(a), 23(b)(1)(A), and 23(b)(3). The putative class is composed of all persons or entities who: a. upon information and belief, comprise the approximately 1,000 lessees of certain sub-surface public spaces who have executed or are successors in interest to a prior owner who executed a document entitled "Agreement Relating to the Occupation of Sub-Surface Public Space (Vaults)" with the Government of the District of Columbia for the purpose of renting sub-surface public space abutting their respective properties (known as a "Vault Agreement"); and b. at any time since June 2001 received and paid a Public Space Rental Bill ("Bill") issued by the District of Columbia which computed the rent payable under the Vault Agreement based upon the proposed assessed value of the abutting land for the tax year subsequent to the tax year in which the Bill was computed. 26. There are questions of law and fact common to the Class, including: a. Whether the District of Columbia should be enjoined from harming the putative class in the future by ordering the District to compute the annual vault rent based upon each abutting property's actual assessed land value at the time the vault bill is computed rather than computing the vault rental bill based upon a proposed future land assessment; 8

9 ( ( b. Whether the District of Columbia breached its contract with putative class members; c. Whether the District of Columbia should be ordered to remit to the putative class all of the monies paid by Plaintiffs that have unjustly enriched Defendant; d. Whether the District of Columbia breached its covenant with putative class members; e. Whether members of the putative class are entitled to other remedies for the harm caused by the District of Columbia; and f. The appropriate class-wide measure of damages. 27. Plaintiffs are members of the class and Plaintiffs' claims are typical of the claims of members of the putative class. Plaintiffs and all putative class members were injured by the same wrongful conduct of the District alleged herein. Plaintiffs paid at least one Public Space Rental Bill that was unlawfully computed under the scheme alleged herein and their interests are coincident with, and not antagonistic to, those of other members of the Class. 28. The putative class is so numerous that joinder of all members is impracticable. Upon information and belief there are approximately 1,000 entities that have been subject to vault rent under a Vault Agreement. 29. The representative parties will fairly and adequately protect the interest of the class because they have the putative class members' interests in mind, their individual claims are coextensive with and identical to those of the putative class, and because they are represented by qualified counsel. 9

10 C 30. The prosecution of separate actions by individual members of the Class would create a risk of inconsistent or varying adjudications, establishing incompatible standard of conduct for Defendants. 31. The questions of law and fact common to the members of the Class predominate over any questions affecting only individual members, including legal and factual issues relating to liability and damages. 32. A class action in this instance is superior to other available methods for the fair and efficient adjudication of the controversy. Treatment of the action as a class action will allow a large number of similarly situated lessees to prosecute their common claims in a single forum simultaneously and efficiently and will alleviate the cumbersome burden that would be placed on both Defendant and the Court if these claims were to be litigated individually. Individual litigation increases the time and expense of resolving a common dispute concerning the District's actions toward an entire group. Class action procedures allow for far fewer management difficulties in matters of this type and provide the unique benefits of unitary adjudication, economies of scale and comprehensive supervision over the entire controversy by a single court. There are no difficulties likely to be encountered in the management of this class action that would preclude its maintenance as a class action and no superior alternative exists for the fair and efficient group-wide adjudication of this single controversy. Claims for Relief Count I (Declaratory and Injunctive Relief) 33. Plaintiffs adopt and incorporate by reference herein the allegations contained in J 1-32, above. 10

11 C. 34. There is an actual justiciable controversy between Plaintiffs, on the one hand, and the Defendants, on the other hand, as to whether Defendant violated the Vault Agreements when the Defendant unilaterally and without notice or force of law decided to change the longstanding manner in which it computed rent payable pursuant to the Vault Agreements. WHEREFORE, Plaintiffs respectfully request that the Court: A. Enter a Judgment in favor of Plaintiffs and members of the putative class declaring that Defendant is obligated under the Vault Agreements to compute the vault rent by using the assessed value of the abutting property for the tax year in which the Bills are computed; B. Enter a judgment enjoining Defendant from using a proposed assessed value of the tax year subsequent to the tax year in which the Bills are computed when calculating rent due pursuant the Vault Agreements; C. Award Plaintiffs all attorney's fees and other costs and expenses incurred in bringing this action D. Grant an award of such other relief in law and equity to which Plaintiffs and the members of the putative class may be entitled. Count II (Breach of Contract) 35. Plaintiffs adopt and incorporate by reference herein the allegations contained in J 1-34, above. 36. Each Plaintiff, or its predecessor in interest, individually entered into a contract (i.e., a Vault Agreement) with the District of Columbia for the use of sub-surface public space. 11

12 C 37. Each Vault Agreement entered into by Plaintiffs requires the District to use the "assessed value" of the abutting land in computing the amount of rent payable under the Vault Agreement. 38. Upon information and belief, for the vault billing period July 1, June 30, 2009, and payable June 30, 2008, Defendant breached the Vault Agreements by using the Proposed Tax Year 2009 land assessment in computing the vault rent payable for that period. Pursuant Year 2008 assessed land value. 39. Upon information and belief, for the vault billing period July 1, June 30, 2008, and payable June 30, 2007, Defendant breached the Vault Agreements by using the Proposed Tax Year 2008 land assessment in computing the vault rent payable for that period. Pursuant Year 2007 assessed land value. 40. Upon information and belief for the vault billing period July 1, 2006 June 30, 2007, and payable June 30, 2006, Defendant breached the Vault Agreements by using the Proposed Tax Year 2007 land assessment in computing the vault rent payable for that period. Pursuant Year 2006 assessed land value. 41. Upon information and belief for the vault billing period July 1, June 30, 2006, and payable June 30, 2005, Defendant breached the Vault Agreements by using the Proposed Tax Year 2006 land assessment in computing the vault rent payable for that period. Pursuant Year 2005 assessed land value. 12

13 ( 42. As a direct and proximate cause of Defendant's breach of the Vault Agreements, Plaintiffs have generally been damaged for each of the enumerated vault periods in the amount of the difference between the vault rent actually paid and the lower rent that should have been paid had the District used the assessed value of the abutting land when computing the rent payable. WHEREFORE, Plaintiffs respectfully request that the Court: A. Enter a judgment in favor of Plaintiffs and members of the putative class and against Defendant in the amount of rent collected in excess of that permissible under the Vault Agreements for the vault years (a) July 1, June 30, 2006; (b) July 1, June 30, 2007; (c) July 1, June 30, 2008; and (d) July 1, June 30, B. Award Plaintiffs all attorney's fees and other costs and expenses incurred in bringing this action C. Grant an award of such other relief in law and equity to which Plaintiffs and members of the putative class may be entitled. Count III (Unjust Enrichment) 43. Plaintiffs adopt and incorporate by reference herein the allegations contained in J 1-42, above. 44. Each Plaintiff, or their predecessor in interest, individually entered into a Vault Agreement with the District of Columbia for the use of sub-surface public space. 13

14 C ( 45. Each Vault Agreement entered into by Plaintiffs requires Defendant to use the "assessed value" of the property abutting the vault when calculating the amount of rent due pursuant to the Vault Agreement. 46. Upon information and belief, for the vault billing period July 1, June 30, 2009, and payable June 30, 2008, Defendant wrongly used the Proposed Tax Year 2009 land assessment in computing the vault rent. Pursuant to the Vault Agreement, the vault rent should have been computed using the Tax Year 2008 assessed land value. 47. Upon information and belief, for the vault billing period July 1, June 30, 2008, and payable June 30, 2007, Defendant wrongly used the Proposed Tax Year 2008 land assessment in computing the vault rent. Pursuant to the Vault Agreement, the vault rent should have been computed using the Tax Year 2007 assessed land value. 48. Upon information and belief for the vault billing period July 1, June 30, 2007, and payable June 30, 2006, Defendant wrongly used the Proposed Tax Year 2007 land assessment in computing the vault rent. Pursuant to the Vault Agreement, the vault rent should have been computed using the Tax Year 2006 assessed land value. 49. Upon information and belief for the vault billing period July 1, June 30, 2006, and payable June 30, 2005, Defendant wrongly used the Proposed Tax Year 2006 land assessment in computing the vault rent. Pursuant to the Vault Agreement, the vault rent should have been computed using the Tax Year 2005 assessed land value. 50. Defendant's collection of money generally in excess of that in which it was legally entitled unjustly enriched Defendant to the substantial detriment of Plaintiffs. WHEREFORE, Plaintiffs respectfully request the Court: 14

15 C C A. Enter a judgment in favor of Plaintiffs and members of the putative class and against Defendant in the amount of rent collected in excess of that permissible under the Vault Agreements for the vault years a) July 1, June 30, 2006; (b) July 1, June 30, 2007; (c) July 1, June 30, 2008; and (d) July 1, June 30, B. Award Plaintiffs all attorney's fees and other costs and expenses incurred in bringing this action C. Grant an award of such other relief in law and equity to which Plaintiffs and members of the putative class may be entitled. Count IV (Alternative - Breach of Covenant) 51. Plaintiffs adopt and incorporate by reference herein the allegations contained in J 1-50, above. 52. Each Plaintiff, or their predecessor in interest, individually entered into a covenant running with the land (i.e., a Vault Agreement) with the District of Columbia for the use of sub-surface public space. 53. Each covenant entered into by Plaintiffs requires Defendant to use the "assessed value" of the property abutting the vault when calculating the amount of rent due pursuant to the Vault Agreement. 54. Upon information and belief, for the vault billing period July 1, June 30, 2009, and payable June 30, 2008, Defendant breached the Vault Agreements by using the Proposed Tax Year 2009 land assessment in computing the vault rent payable for that period. Pursuant 15

16 ( Year 2008 assessed land value. 55. Upon information and belief, for the vault billing period July 1, June 30, 2008, and payable June 30, 2007, Defendant breached the Vault Agreements by using the Proposed Tax Year 2008 land assessment in computing the vault rent payable for that period. Pursuant Year 2007 assessed land value. 56. Upon information and belief for the vault billing period July 1, June 30, 2007, and payable June 30, 2006, Defendant breached the Vault Agreements by using the Proposed Tax Year 2007 land assessment in computing the vault rent payable for that period. Pursuant Year 2006 assessed land value. 57. Upon information and belief for the vault billing period July 1, June 30, 2006, and payable June 30, 2005, Defendant breached the Vault Agreements by using the Proposed Tax Year 2006 land assessment in computing the vault rent payable for that period. Pursuant Year 2005 assessed land value. 58. Upon information and belief, for the vault billing period July 1, June 30, 2005, and payable June 30, 2004, Defendant breached the Vault Agreements by using the Proposed Tax Year 2005 land assessment in computing the vault rent payable for that period. Pursuant chartered Year 2004 assessed land value. 16

17 7 ( 59. Upon information and belief for the vault billing period July 1, June 30, 2004, and payable June 30, 2003, Defendant breached the Vault Agreements by using the Proposed Tax Year 2004 land assessment in computing the vault rent payable for that period. Pursuant Year 2003 assessed land value. 60. Upon information and belief for the vault billing period July 1, June 30, 2003, and payable June 30, 2002, Defendant breached the Vault Agreements by using the Proposed Tax Year 2003 land assessment in computing the vault rent payable for that period. Pursuant Year 2002 assessed land value. 61. As a direct and proximate cause of Defendant's breach of the Vault Agreements, Plaintiffs have generally been damaged for each of the enumerated vault periods in the amount of the difference between the vault rent actually paid and the lower rent that should have been paid had the District used the assessed value of the abutting land, rather than the future proposed assessed land value, when computing the rent payable. WHEREFORE, Plaintiffs respectfully request that the Court: A. Enter a judgment in favor of Plaintiffs and members of the putative class and against Defendant in the amount of rent collected in excess of that permissible under the Vault Agreements for the vault periods (a) July 1, June 30, 2003; (b) July 1, June 30, 2004; (c) July 1, June 30, 2005 (d) July 1, June 30, 2006; (e) July 1, June 30, 2007; (f) July 1, June 30, 2008; and (g) July 1, June 30, 2009; 17

18 ( B. Award Plaintiffs all attorney's fees and other costs and expenses incurred in bringing this action. C. Grant an award of such other relief in law and equity to which Plaintiffs and members of the putative class may be entitled. Jury Demand Plaintiff and the putative class demand trial by jury on all claims for which there is a right to a jury trial. Dated: June 27, 2008 Respectfully submitted, WILKES ARTIS, CHARTERED T?J-4d David A. Fuss, Bar No Stanley J. Fineman, Bar No Charles A. Camalier, III, Bar No th Street, N.W. Suite 400 Washington, D.C Phone: (202) Fax: (202) Attorneys for Plaintiffs and the Putative Class v3 18

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