Other Pending Litigation Between the Parties

In addition to this complaint, proceedings between the parties are pending in both the state and federal courts:

MHC v. City of Santa Cruz, U.S. District Court, C-00-20630JF, filed June 7, 2000.

In this proceeding, MHC seeks damages on six separate causes of action. In the first cause of action, MHC alleges that the City's denial of MHC's water resale application violates the equal protection clause of the Fourteenth Amendment to the United States Constitution because other property owners have been treated differently.

In the second cause of action, MHC states that it has been denied its due process rights. Specifically, MHC contends that the differential treatment accorded them by the City, as compared to other property owners, violates both the procedural and substantive aspects of the due process clause of the Fourteenth Amendment.

MHC's third cause of action is based on inverse condemnation. MHC contends that the City's rent control ordinance (1) precludes mobilehome park owners from adjusting rents to market levels upon a change of ownership or occupancy, and (2) strips MHC of "the last vestige of private property ownership" without compensation as required by Fifth Amendment to the U.S. Constitution.

The fourth cause of action is breach of contract. MHC argues that it has an implied in law contract with the City for the purchase of water and sewer services. MCH further argues that the City has an absolute duty, created by its ordinances, to provide and sell water to all residents or entities that request delivery of such services where the requesting entity or resident is located within the municipal limits.

MHC seeks a declaratory ruling in its fifth cause of action. MHC lists six issues that it believes arise from the City's ordinances regarding water and sewer services and rent control. MHC asks the court to resolve all six issues in MHC's favor.

MHC's final cause of action is a petition for a writ of administrative mandamus. There, MHC alleges that the City's decision denying it water resale authority is in direct conflict with D.98-12-077 granting MHC its CPCN. MHC states that the City's action in denying the water resale application denies and frustrates MHC's ability to comply with the Commission-approved tariffs.

Rossman v. MHC, Santa Cruz Superior Court, CV 139825, filed December 6, 2000.

Plaintiff Rossman, and 13 other named plaintiffs, all residents of the mobilehome park, state four causes of action against MHC and its corporate affiliates.

First, the residents contend that by threatening to substantially raise their rents and interfering with their ability to sell their property, MHC acted with reckless disregard of the probability of causing emotional distress to the residents. The residents seek damages for their emotional distress. They also ask that the damages be trebled due to their status as senior citizens and disabled persons.

Second, the residents' accuse MHC of unlawful retaliation for their efforts against MHC through the Homeowners Association. The residents state that MHC has instituted or threatened substantial rent increases. Plaintiff Rossman was notified that his rent would increase from $720 to $5,000 per month. The plaintiffs allege that these rent increases were not based on market rates and were retaliatory.

The third cause of action argues that the rent increases imposed by MHC violate the Business and Professions Code prohibition on unfair competition, and constitute unlawful and fraudulent business practices.

The fourth cause of action seeks a declaratory ruling that MHC may only institute reasonable rent increases, and that MHC does not, as it contends, have an unfettered right to increase rates.