Taxi Firms in War of Words

The owner of a taxi firm that was removed from John Wayne Airport has accused a former employee and a prominent Orange County lobbyist of improperly starting a competing company that eventually won the airport contract.

Hossein Nabati, owner of A Taxi Cab, said he held the airport contract for three years without major problems but has suffered a severe business decline since the county’s airport director terminated the contract March 22 when Nabati’s cab company failed to provide a DMV certificate of insurance.

With his cabs gathering dust, Nabati alleged that the Department of Motor Vehicles certificate was a ruse and that his former manager, Richard Schorling, and Costa Mesa lobbyist Lyle Overby unfairly started their own company, called American Taxi, behind his back.

“Here I was paying Lyle [$1,000 a month] to represent me and he goes and starts his own company,” Nabati said.

Nabati has filed several lawsuits, including two in Superior Court, accusing Schorling of breach of fiduciary duty and fraud and accusing Overby of breach of contract, breach of fiduciary duty and intentional interference with economic relationships.

Both defendants denied wrongdoing. Their attorney, Maryann Cazzell, said she is considering filing a countersuit against Nabati.

Overby, who is considered one of the top lobbyists in the county, has for years earned a living representing firms seeking contracts with the county. In a telephone interview, Overby said that Nabati has no one but himself to blame for a “failure of compliance” with the county’s contract.

Of the allegations, Overby said: “I would characterize them as lies, fabrication and overstatements. [Nabati] imploded and it was only that implosion that allowed others to step in.”

Nabati’s company was recommended by the county’s Airport Commission as the top one to retain the airport contract a week before the Board of Supervisors was to vote on the contract.

But a day before the board’s March 21 meeting, A Taxi was removed from consideration and the firm owned by Schorling and Overby landed the contract. Schorling is listed as president of American Livery Inc., which operates American Taxi. Overby is the company’s chief financial officer.

The battle between the two companies highlights the competitiveness of the cab industry, especially when there is a lucrative airport contract at stake.

The new three-year contract calls for American Taxi to pay roughly $1.4 million over a three-year period to the county. The cab company is not required to tell the county how much profit it would make on the contract.

In court documents, Nabati alleged that Overby was first hired on April 8, 1996, to provide governmental relations, consulting and marketing services “to obtain and retain” the taxi cab license from the county.

Nabati alleges in his lawsuit that Overby breached the contract and had a conflict of interest by using information he gathered as a consultant to start his own company and then compete for the same contract as his client, according to Nabati. Nabati filed his lawsuit on Jan. 18, well before he lost the contract.

Nabati accused both men of undermining a $140,000 U.S. Department of Energy grant Nabati sought that offered low-interest financing through the Southern California Gas Co. linked to the lease/purchase of a fleet of about 70 natural gas-powered taxis.

But according to Schorling, the grant accusation is groundless because Nabati eventually turned it down. Schorling and Overby purchased a fleet of alternative-fuel vehicles using their own funds and never needed the grant, he said.

Schorling said he never quit A Taxi, but that Nabati fired him last June 15, the same day that American Livery Inc., doing business as American Taxi, incorporated.

*

“I never signed any sort of anti-competition or covenant not to compete. I know of no reason why I would not be allowed to set up a separate taxicab company,” he stated in a declaration filed with the court.

Nabati alleges that Overby worked for him until June 1999, the same month American Taxi incorporated. Overby said his consulting contract ended May 11, 1998, but at Nabati’s insistence, Overby continued with additional consulting services through April 1999.

Overby said in his court declaration: “It is absolutely false that I was still rendering consulting services for [Nabati] until June 1999.” He added that during his service “at no time,” did he ever discuss or even suggest to anyone, the idea of starting a taxicab company.

At the March 21 Board of Supervisors meeting, Alan Murphy, the airport director, said he could not recommend Nabati’s company because it failed to provide the DMV certificate guaranteeing that although the company was self-insured, it could financially meet its $100,000 deductible.

Robert Palmer, Nabati’s attorney, said his client never provided the county with a certificate “because [the county] never made a request for that certificate, and it’s not mandated by law.”

Nabati, who is from Iran, filed a separate lawsuit in federal court March 23 alleging that the county violated his civil rights by racially discriminating against him, and also breached the contract. However, the judge rejected Nabati’s request for a restraining order that sought A Taxi’s immediate reinstatement at John Wayne Airport.