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Court Dismisses SunCal’s Fraud Claims Against Ann Marie Gallant

Yesterday, a federal court judge dismissed fraud claims against former Interim City Manager Ann Marie Gallant, in a lawsuit against the City of Alameda over the city’s termination of SunCal as the master developer for Alameda Point. The case is 10-cv-05178-CRB in the United States District Court for the Northern District of California.

Yesterday, Judge Charles R. Bryer issued an order granting Ms. Gallant’s motion to dismiss SunCal’s fraud claims against her in the case, without prejudice; SunCal has 20 days to amend the claims with something more substantive.

In their motion to dismiss the fraud claims, attorneys defending Gallant argued that “as to each instance of alleged fraud, Plaintiff [SunCal] has failed to allege facts in support of one or more of the require elements for fraud” and that Gallant was shielded from liability because she was not show to be motivate by corruption or actual malice. Additionally, Gallant’s attorney’s argued that SunCal’s claim for damages is barred by a clause in the Exclusive Negotiation Agreement – the agreement that the City of Alameda signed with SunCal regarding the development of Alameda Point – that waived damages in the event of the collapse of the agreement.

The case is likely to drag on into the new year as the court considers the matter of SunCal’s claim for liquidated damages from the City of Alameda.

7 comments to Court Dismisses SunCal’s Fraud Claims Against Ann Marie Gallant

  • Barb

    I take it that a demurrer was granted? Skippy cannot even open the form books and copy the right words? I guess this stuff is all on computer anyway. What a dip!!
    Someone can enlighten us. If this was not the granting of a demurrer, then surely she would be entitled to attorneys’ fees from SUNCAL.

  • 94502

    Good for AMG. Let’s get SunCal out of Alameda for good.

  • rembouillet

    love the way Latin rolls off your lips and fingertips, ms babs! How many lawsuits does this leave against our fair city? Are we down to single digits?

  • Vania

    SunCal has judge shopped and parked this Alameda case in Federal court by claiming the city violated the “civil rights” of SunCal as a “person” (42 USC 1983). For those who like to rant against corporate personhood, this is a good example. In essence, SunCal lawyer’s analogize the city’s conduct to that of a cop who beats the crap out of someone’s head with a billy club. The claim is rather insulting to humans whose civil rights really are abused by government agencies and cops, like those defended by Councilman Rob Bonta.

    SunCal’s complaint for “fraud” is still a California state law claim and because it’s being tried in Federal court, so the facts which constitute a fraud committed against SunCal by the ex-City Manager (as opposed to mere allegations like “she didn’t like us”) have to be plead with specificity, meaning that the complaint has to recite real evidence of fraud, be its documents or emails or statements in depositions, which fit each hole on the punch list of factual events which are required for fraud to be proven.
    Essentially, the Federal judge said SunCal didn’t plead real facts against the ex-City Manager, just unsupported allegations.

    As a result, SunCal gets a shot at using what it has found in terms of “new evidence” to re-write the fraud claim against the ex-City Manager. SunCal’s lawyers throughout the state operate on a ‘never say die’ basis, so don’t be surprised if they do try to file a new complaint for fraud against the ex-City Manager. Then the lawyer the City is paying to act on Ms. Gallant’s behalf gets to go to court, again, to try to get the new and improved allegations of fraud dismissed, again under the many grounds Federal judges are allowed to use to eliminate legal claims for financial recovery before they get to the jury.

    Separately, as far as I can tell the City’s outside attorneys are still defending against SunCal’s theories for recovery of money from the city in the same lawsuit.

    In the meantime, SunCal is in the final stages of its death match bankruptcy court fight with Lehman Brothers over Oak Knoll and 16 or so other properties. D.E. Shaw, SunCal’s vaunted financial backer, has completely retreated, and now SunCal’s owners claim that Colony Capital, a group of quirky investment funds out of L.A. are going to provide financing for SunCal to buy the most desirable Lehman/SunCal properties at an auction. SunCal’s first problem is that Lehman deposed the Colony Capital official decision-maker, who wouldn’t unconditionally commit to providing SunCal the money to buy the projects. SunCal’s second problem is that Colony Capital’s investment funds are having some problems lately, like failing to pay the mortgage on the Las Vegas Hilton which they own, so it will be “scary” to see if Colony Capital comes up with the cash to close escrow after the auction, if the bankruptcy court judge does let SunCal bid based on Colony Capital’s promise to provide purchase money funding.

    For residents of Oakland, Penryn and Bethel Island who have no input on who “wins” the properties, Lehman, SunCal or a third party bidder, the risk they face is that a presumptuous bankrupt Lehman (which now claims it has $6 Billion in cash) may be a worse neighbor than an energetic but financially hobbled SunCal.

    The Lehman/SunCal battle is relevant for Alamedans because if the City Council settles with SunCal and invites them back in to being the master developer of Alameda Point, Alameda residents may be right back where they started, dealing with a development company which bit off far more than it could chew, in terms of obtaining financing for all of its far-flung projects.

  • 94502

    Alameda can not settle with SunCal and invite then back. We must not let that happen.

  • Barb

    1st SUNCAL, then Cowan. These turkeys need to be recalled before they give away everything the City owns to fund the Firefighters’ retirement!

  • Vania

    FYI – Over the course of this past weekend, Lehman and SunCal settled their claims against each other, according to the Wall Street Journal and Bloomberg. Under the settlement’s “term sheet” Lehman, one of its affiliates, or some company they sell the property to is going to end up owning Oak Knoll in Oakland.

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