Rent Increase Survey

Have you submitted your latest rent increase data to the rent increase survey?

Bingham McCutchen to Represent City of Alameda in SunCal Lawsuit

At next week’s Alameda City Council meeting, City staff will ask Council to approve the retention of Geoff Robinson of the San Francisco law firm Bingham McCutchen as additional counsel to defend the City against SunCal’s lawsuit.

According to the staff report, the Alameda City Attorney’s Office has already retained David Newdorf of Newdorf Legal to work the case. Because of the complexity of the case, resulting from several years of negotiations with SunCal, the City has determined they require additional legal counsel – enter Geoff Robinson of Bing McCutchen. Both Robinson and Newdorf have 25 years of legal experience, according to City staff.

The City Attorney must seek City Council authorization before hiring special legal counsel when fees are expected to exceed $35,000, as they are in this case. The staff report says that the cost of the special legal counsel will come from the legal budget for the Alameda Reuse and Redevelopment Authority (ARRA) legal budget. The ARRA is a special agency set up to manage the redevelopment of Alameda Point and realizes over $10 million per year in lease revenue.

5 comments to Bingham McCutchen to Represent City of Alameda in SunCal Lawsuit

  • Barb

    Thank you SUNCAL. How much do we have to pay it to just go away? Will the debts never cease? What a disaster for any entity thinking about doing business with this souless entity and its insider councilmember TAM. Just think what will happen if BONTA, IZZY ASHCRAFT and TAm are elected. Alameda can have the tax collecor just start sending all of our Taxes to SUNCAL directly.

  • Vania

    @ Barb

    Except for their bogus “violation of our Federal civil rights” claim, SunCal’s complaint looks very much like the cross-complaint filed by SunCal against Gray1 CPB, LLC, which SunCal lost through a series of judge’s rulings in Orange County Superior Court. The City’s attorneys will have to chip away at the complaint, theory by theory, until they have destroyed it. They probably can, by the time they get to summary judgment/summary adjudication.

    The facts we’ve seen over the last year or so look much like the b.s. claims SunCal made in their lawsuit against Gray1 “You were mean to us. You wouldn’t extend our contract on the terms we wanted.” Boo hoo. That’s not a gripe which will go anywhere at trial.

    The big difference here is that SunCal was brave or dumb enough to file their lawsuit in Federal Court, to get the case out of Alameda and into a court where they could plead their pitifully ridiculous Federal Civil Rights Act complaint. The Federal trial judges tend to be a lot less tolerant of b.s., and bad cases tend to go away faster. So we’ll see how well SunCal does in Federal court.

    It’s one thing for a developer to sue a water agency, like SunCal did with Newhall County Water District, to obtain water rights despite their being an inadequate supply. It’s a whole different kettle of fish for SunCal or any other developer to try to browbeat a city into giving them a very economically favorable redevelopment contract by suing the city, simply because word gets around the state, during informal discussions between people attending League of Cities meetings concerning the identities of developers who are bad actors. The chit chat on SunCal already covers their stiffing a large number of cities on subdivision improvement agreements, and then SunCal’s bond insurers stiffing the cities on the surety bonds securing SunCal’s performance on those contracts.

    Thus, a lawsuit such as this one against the City of Alameda becomes a last Hail Mary pass. The developer burns his bridges with the senior municipal employee crowd in other communities. If the developer doesn’t succeed in browbeating the City into a settlement of the lawsuit, a loss at trial means the end. Period. The bridge burning is especially predictable if the developer fails to pay the city’s attorneys fees awarded against him after trial, which a city is usually entitled to recover because the developer sued on a contract claim with a prevailing party attorneys fees clause.

    In the Newhall County Water District case, knowing they could not prevail in their claims against the Water District at trial, the “friends of SunCal” succeeded in financing the campaigns of pro-developer candidates for the water district board, as well a vicious hate campaign against the candidate who voted against them. As soon as the election occurred, the new director majority voted to give SunCal the water that district could ill afford while still serving its already existing customers, and settled the case. That is clearly what SunCal wants to do in Alameda.

    On the bright side, SunCal never used the water, because that development entity ended up in bankruptcy even before SunCal got its land use entitlements.

    Even if SunCal succeeds in stealing the next Alameda City Council election, there are at least five means of attack against any settlement by the City with SunCal.

    First, the settlement agreement itself is a contract, which can be attacked through a reverse validation proceeding under the California Code of Civil Procedure. All the taxpayer/plaintiffs have to show is that any aspect of the contract violates any substantive or procedural California land use law.

    Second, is a straight up CEQA attack on the “project” described in the settlement contract, because substantively and procedurally the city has to go through the whole CEQA process before binding itself under the settlement contract, including any litigation to resolve the issues of the old Chinatown committee.

    Third is the old principle that the City cannot contract away its police power through the settlement contract, meaning that the CEQA process and the full public hearing processes under State and local law must be completed before the settlement agreement can be signed by and binding on the City.

    Fourth, any decision of the City Council which necessitates a legislative act, including but not limited to a Development Agreement, is a decision which can be referended, and if the voters disapprove the legislation, that part of the settlement deal is blown apart. Charter amendments are legislative acts. So are rezonings.

    Fifth is a separation of powers issue. Neither California nor Federal judges have the power to order City Councils (or the voters) to exercise their police powers in any particular way, including ordering them to alter or extend the term of a contract or to make a particular land use entitlement decision. Most sophisticated California trial judges know that. Federal bankruptcy judges know that. Most Federal trial judges are quick learners. So the chance that a trial judge, let alone a 3 judge appellate panel, are going to try to step into the California executive branch and wield the police power is slim to none.

    The dirty secret which most land use litigation lawyers won’t tell them is that the sort of legislation filed by SunCal against the City of Alameda is monumentally expensive and impossible to win, from a “developer gets what he wants” point of view, as long as the City will hang in there an litigate rather than settle. There are many developer’s land use litigation lawyers in California who have made a bundle of money by not honestly telling their developer clients (1) It is darn near impossible for a developer to prove his actual damages under the sort of breach of contract claim pled by SunCal, because speculative damages are not recoverable; (2) Upon prevailing on a Federal Civil Rights claim, the developer still must prove actual (not speculative or hypothetical) damages, and punitive damages cannot be awarded against a municipality; and (3) Because of the separation of powers issue, as well as the other five issues listed above, the judge does not have the power to order what a developer like SunCal really wants, a court to jam the desired land use entitlements and subsidies down the throats of the City of Alameda and its taxpayers.

    Does Skippy even have a clue about any of the foregoing? I have no idea.

    What I do know is that when the sort of lawsuits filed by SunCal were popular beginning in the 1980’s a lot of land use litigators made a whole lot of money, but when cities hung in there and went to trial the developers got nothing other than a gigantic legal bill from their own lawyers. For example, SunCal’s owner needs to start looking at what happened to Griffin Homes, economically, when it bought its land use lawyers’ b.s. and litigated with the City of Simi Valley all the way through multiple trials and appeals. Not a happy ending.

    The really interesting questions are whether Skippy got a big retainer for this case; whether it will be regularly replenished; and whether the money for the retainer is coming from D.E. Shaw who had seemed to be backing away from its involvement with SunCal?

    If it is some other “investor” paying the retainer, then the City of Alameda has a whole other issue to litigate…a party it never agreed to accept as master developer thinking it will step into SunCal’s and D.E. Shaw’s shoes under the now expired contract. Obviously, the vast majority of vulture/hedge funds whose managers might buy into SunCal’s lawsuit, in the hopes of becoming developers of Alameda Point, are clueless about the five difficult hurdles listed above. If they dump money into a lawsuit against the City of Alameda and separately its voter/activists they will be in for a rude awakening a year or two from now. It’s my thought that the issue of whether D.E. Shaw or some other hedge/vulture fund is financing this litigation is very relevant for the City to discover at this time. I think it would be important to get those names and addresses well BEFORE the election so that all candidates’ contributors and independent expenditure committees can be monitored for a match up with the money behind SunCal’s lawsuit, if there is any other than the Elieff family who own SCC Aquisitions, Inc. dba the SunCal Companies.

    As Spike Lee said in his latest movie title “God Willing and the Creek Don’t Rise” Alamedans will eventually be rid of SunCal, their investors and local politicians on the take from SunCal. The people of Alameda just have to hang in there and not be intimidated by b.s. and whining about attorneys fees.

  • Barb

    And preclude SUNCAL from buying a new City Council, BONTAM, EASY & CRAFTY. Hope the citizens can follow the money. Johnson is not my first choice, but good enough. Sweeney is wonderful! And a proven leader in the right direction. Question is, if Dehaan wins, there will be a 3rd seat. The remainder of his term. I think it is unavoidable to have a lesser of three evils on the council.
    Thank you Vania for your insights. I am sure that you have the unfortunate series of misadvents of dealing with SUNCAL somehow to provide all these fantastic legal insights. Just hope the City Attorney takes note. They are worth a fortune.

  • Betty

    Vania, thank you for the information.

  • Vania’s many professional insights prove once again why I value this news site above all the others which claim to cover Alameda politics and development. This Fall’s election will be critical for a number of reasons, including the AUSD Trustee attempt by Mike McMahon to secure a third term. But for council, I fully support Jean Sweeney, having once walked the Belt Line with her, as she described her vision for a parkland there. Some candidates for Mayor or Council would more likely sell off that land to developers, in spite of voters’ preferences to the contrary. But the real problem with the current slate is that, as Barb indicates, those who are partial to SunCal. With this site, however, we can remain well-informed, and that is our obligation as citizens of this community!