09/07/2025
Case Summary – Novalk, LLC v. City of Imperial et al.
Court: U.S. District Court, Southern District of California
Plaintiff: Novalk, LLC (taxpayer and property owner in the City of Imperial)
Defendants: City of Imperial, Imperial Community Facilities Districts (2004-2 and 2004-3), PCG-Mayfield, Pacific Century Homes, Triple L Realty Partners, William W. Lo, Gazette Ranch, Inc., and unnamed Does.
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Core Allegations
• Improper Formation & Taxation of CFDs:
• Both CFDs were formed with only one “landowner vote,” creating unfair taxation schemes.
• Defendants conspired to impose Mello-Roos taxes on later buyers while original owners avoided payments.
• Failure to Enforce Delinquencies:
• PCG-Mayfield and Gazette Ranch stopped paying special taxes and property taxes years ago.
• The City failed to foreclose within required timelines, allowing debt to balloon with penalties and interest.
• These actions made parcels unmarketable and worthless.
• Deception at Tax Auctions:
• Plaintiff bought 97 parcels at county tax sales in 2020 (and others in 2025), after official notices stated “no taxing agency objected.”
• Later, the City demanded more than $2.5M (now $3.5M+) in “hidden” CFD assessments.
• Plaintiff claims this amounts to fraud and an unlawful “trap” for buyers.
• Denial of Rights:
• Plaintiff requested payoff options, elections, and public hearings, but the City refused.
• Plaintiff’s offers to pay legitimate principal assessments (without penalties/interest) were rejected.
• Alleged violations of constitutional rights to petition and due process.
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Legal Claims (Causes of Action)
1. Inverse Condemnation – unlawful taking of property without just compensation.
2. Violation of Due Process (CA Constitution).
3. Violation of Right to Petition Government.
4. Securities Fraud – false statements in bond offerings about indebtedness and enforcement.
5. Civil Conspiracy – scheme to shift tax burdens from original developers to later purchasers.
6. Declaratory Relief – to confirm plaintiff’s right to a referendum and repeal of unlawful assessments.