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SunCal Threatens to Sue, Bankrupt, the City of Alameda

A week ahead of a key vote by Alameda City Council regarding continuing negotiations with SunCal over Alameda Point, an attorney for the developer sent a series of letters to the City of Alameda threatening to sue if the City doesn’t continue negotiations, and warning that “the damage to our client’s reputation and business is potentially great and far in excess of what the City treasury could sustain.”

SunCal is vying to consummate a 25-year long agreement to redevelop the former Naval Air Station Alameda, now called Alameda Point; the City of Alameda once estimated the project to be worth over $5 billion when complete.

In letters dated July 12, 2010, attorney Louis “Skip” Miller, of Miller Barondess, LLP of Los Angeles, wrote to the City that an Alameda City Council vote now schedule for tomorrow is “wholly unnecessary” because the Exclusive Negotiation Agreement (ENA) between SunCal and the City will automatically be extended “by its own terms and by operation of law.” Miller asserts that Alameda Interim City Manager Ann Marie Gallant has been negotiating in bad faith and that Gallant’s hiring of an outside attorney to investigate Councilmember Lena Tam “could subject the City to millions in liability.” The report on Councilmember Tam includes allegations that Tam wrongfully provided City of Alameda negotiation secrets to SunCal. Miller ends one of his letters with, “our client reserves all rights and remedies herein including, but not limited to, claims against ms. Gallant, the City of Alameda, the attorneys who authored the Letters, and all other responsible parties.”

Miller had not responded to an e-mail inquiry about the letters by press time.

As of late 2008, SunCal had 30 pending bankruptcies related to their various development projects. Earlier this year, a Delaware court dismissed a bankruptcy filing by SunCal for their Albuquerque, New Mexico project, allowing the chief lender, Barclay’s Capital, to move forward with foreclosure on the project; the project is now in receivership. SunCal’s financial partner on the Albuquerque project is D.E. Shaw, the same financial partner they chose for the Alameda Point redevelopment.

Alameda City Council meets tomorrow night to consider a proposed resolution to deny an alternate development plan proposed by SunCal in the wake of the failure of Measure B in February of this year. The City’s apparent position is that denying the alternate plan will mean that the ENA with SunCal will expire incomplete on the 20th.

17 comments to SunCal Threatens to Sue, Bankrupt, the City of Alameda

  • Hot R

    See how the attack is already forming against Gallant? Suncal may be underhanded, but the ICM and the City Attorney left our city vulnerable. Their job was to advise the city council to avoid exactly this situation.

  • Anyone hot under the collar about this should do a little more digging, investigate Skip Miller and his record, and see why the ICM, the City Attorney and none of us taxpayers have anything to worry about. Once SunCal is kicked to the curb by City officials, as it was by the voters, it will slink off into the night. Hasn’t won a lawsuit like this in decades! In the meantime, perhaps those experienced in city projects and development and legal matters, unlike the amateurs, will prevail!

  • And by the way, Michele Ellson, who runs a blog, “The Island,” she calls a “News Web Site,” is now blocking all my posts to her discussion threads. She allows all sorts of Ash Holes to comment, (including one JS), who have no direct experience in politics or have ever contributed anything more to Alameda than their reckless opinions, and as I told her, I don’t care, and won’t miss that “forum,” as it is so toxic you wouldn’t want to swim in her lagoon.

    Dennis Green

  • Barb

    “[O]ur client’s reputation and business is potentially great and far in excess of what the City treasury could sustain’

    I can see the worst case scenario now. Verdict SUNCAL. Damages $00.00 The Jury: “No reputation left to damage after 30 bankruptcies, dishonest dealings throughout the country.”

    Even the best case scenario, verdict City of Alameda, Damages $30,000,000 uncollectable and discharged in bankruptcy after 30 years of trying to collect after 30 years of litigation to win lawsuit.

    I can’t believe corporations stilil pay lawyers to write this kind of drivel. And I can’t believe in the lack of integrity that corporations and some people have. We don’t want SUNCAL! Ever.

  • Hot R

    Wow – you just don’t get it. Litigation is expensive, even if you do prevail. Dennis constantly harps on the expensive litigation AUSD had to engage in after being sued by his friends. Why in the world would the City of Alameda look forward to any kind of lawsuit, especially with our current City Attorney? The fact there is even a threat from someone who is a “partner” shows the City Manager and City Attorney did not do their jobs.

  • One gets the feeling that SunCal would find any excuse to threaten litigation if the ENA is not extended…

  • Barb

    As I understand it, SUNCAL has actually paid people in other cities to sue just to trigger a litigation extension of the ENA. We can expect that here as well. Check the legal case filings in the morning.

    SUNCAL is not a partner. It is a party to the ENA. It is here for the sole purpose of exploiting our City’s resources to maximize its profits, fill its corporate wallet, and take that money down to Irvine.

    SUNCAL is the one threatening litigation. Why in the world would the City of Alameda do business with an entity that is already threatening to bankrupt it because our officials are simply doing their jobs? I wouldn’t hire a roofer who threatened me before signing the contract (Let alone one with 30 bankruptcies and uncompleted jobs). Just an extremely bad idea and a portent of more very expensive litigation triggered by SUNCAL, to come. The ICM and CA may be fired by 3 council members. The Council is not firing either. They have only asked that TAM be investigated by the DA. Which investigation appears totally justified to restore faith in her motives and actions.

    I have asked over and over of all the “knowledgeable commentors to blogs” precisely which sections of which Code, they claim Gallant or Highsmith violated. To date, none has been able to cite a single statute, regulation, rule or policy. State, municipal or federal. So it isn’t tit for tat the way TAM supporters are trying to portray this. It is simply a strategy to deflect attention of the seriousness of that which TAM has been caught doing. If sending blind copies of attorney client closed session information to developers and unions doesn’t bother some (and the mere fact of doing it is a per se violation), why would those very same persons be bothered by the ICM and CA following their employers instructions, and the law? The commentors obviously haven’t done their research, and are simply parroting a deflection chant. One should ask, did SUNCAL pay them to do so?

  • Cynical Observer

    Hot R, I guess you don’t read or don’t understand. Highsmith WAS doing her job, advising the Council in closed session, and using attorney client privileged memos, to educate them about what SunCal was up to. Lena the Leaker, in the pocket of SunCal, illegally disclosed those attorney client communications. As a result, Highsmith did her job, to protect the City Council’s ability to receive candid legal advice without it being stolen by Tam and given to SunCal…hiring this attorney Colantuono to take action to protect the attorney client privilege, in the way California law requires it. Requiring a Grand Jury investigation.

    If the District Attorney does not have the balls to have her staff do the leg work to present the matter to the Grand Jury, then she’s got an obligation to ask the Attorney General’s office to handle the matter.

  • […] This post was mentioned on Twitter by ActionAlameda, Alameda Blogs. Alameda Blogs said: ActionAlameda: New post: SunCal Threatens to Sue, Bankrupt, the City of Alameda http://bit.ly/c5En87 #94501 http://url4.eu/676Se […]

  • Barb

    Still waiting for those code sections specifying the supposed violations of the ICM and the CA . . . . . . . . . . .

  • Naive

    Dennis do not so be so naive as to believe that Action Alameda News (Short-form news from and about Alameda city) does not block the comments of detractors of his site. Of course Dennis will never this comment, so David please forward to your cub reporter.

  • This is an untrue, baseless allegation.

  • Barb

    How could Action Alameda block comments when they appear almost instantly when one presses the Submit Comment?
    The sites that require “Awaiting Moderation” seem to be the only ones with an opportunity to so that.

  • It’s possible to delete them afterwards, but we don’t do that. Very rarely, the automated spam filter catches legitimate comments and prevents them from appearing. Routine scans of the spam folder ensure they ultimately get posted.

    At “The Island,” Michelle Ellson requires that comments are submitted for approval before they are posted.

  • Only about 3,000 voters said Yes to Measure B, SunCal’s cynical attempt to go around their partner, the City. That’s less than half as many who voted AGAINST Measure E. But you folks in that tiny minority .075 percent of the citizens of Alameda, are very noisy and contentious. I think we can continue to stand up to you.

    And no, I’ve never been censored by Action Alameda News, and encountered here on the discussion threads only one or two Snarks, all cute and bully-boy. Dozens on The Island and Blogging Bayport. But those sites/blogs are also rife with intellectual amnesia and journalistic felonies, even in their posts.

    DG

  • As usual, no one pays any attention to Hot R, (what was that he last said?), but he persists. I used to know a guy in our writers groups like that, but I doubt it’s this “Hot R.” He was brave enough, at least, to use his real name, as I do, and wouldn’t have hidden behind a tag like this one.

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