Earlier today, SunCal, the former master developer-in-waiting for Alameda Point, now suing the City of Alameda for over $100 million after being kicked-off the project, issued a press release headlined “SunCal Defeats City of Alameda in Federal Court.” Unsurprisingly, the City Attorney’s office characterized recent federal court developments differently.
SunCal’s press release opened with the following, “Federal Judge Charles R. Breyer denied the City of Alameda’s motion to dismiss SunCal’s breach of contract claims against the City and left open the court’s option to reinstate SunCal as master developer of the former Naval Air Station Alameda, now known as Alameda Point. The judge also refused to rule out the use of an injunction to prevent the City from moving forward with any alternative uses on the 770-acre parcel.”
Alameda Deputy City Manager Alexander Nguyen sent the following in response to SunCal’s press release:
The Alameda defendants successfully argued that the lawsuit should only go forward at this time on the very limited issue of whether the Exclusive Negotiating Agreement [ENA] precludes recovery of damages by Suncal. Judge Breyer made clear that any depositions or document requests must be focused only on that subject. The judge indicated it is too early in the dispute to come to a final conclusion.
The Alameda defendants also successfully persuaded the judge to dismiss Suncal’s claim that despite the existence of a contract, Suncal is entitled to a remedy based on an estoppel theory. The judge postponed making a decision on Suncal’s motion for sanctions regarding email retention, agreeing with the City that it is too early to decide.
The judge also said he has “a serious concern” regarding Suncal’s claimed $100 million in lost profits. Given that court cases do not allow a party to be awarded lost profits when all they have is an agreement to negotiate exclusively, Friday’s hearing centered on whether Suncal could successfully recover out-of-pocket costs. Suncal claims to have spent $17 million on pre-development. The City and Suncal agreed in the ENA that, even on breach of the agreement, SunCal’s monetary relief would be limited to the return of its $1 million deposit.
An order issued on Monday by Justice Bryer, a copy of which was obtained by Action Alameda News, orders the parties to move forward with “limited discovery” to resolve the question of whether or not, at the time it was negotiated, SunCal and the City of Alameda intended the language of the ENA to preclude the recovery of the damages that SunCal now seeks. Former city officials David Brandt and Leslie Little are expected to testify as the case moves towards trial.
SunCal’s press release made no mention of the court’s dismissal of their estoppel claims, which was previously ordered last Friday.
Friday’s court order also dismissed claims of fraud against former Interim City Manager Ann Marie Gallant, while allowing SunCal 20 days to amend their complaint to provide substantive evidence of fraud, beyond their allegations.