SunCal Defeats City of Alameda in Federal Court

SAN FRANCISCO, Oct. 25, 2011 /PRNewswire/ -- 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.

SunCal's suit asserts that the City of Alameda violated the terms of their exclusive negotiating agreement by acting in bad faith in an effort led by former Interim City Manager Ann Marie Gallant to have the City replace SunCal and develop Alameda Point itself. SunCal incurred over $17 million in planning and development costs over a three-year period while shaping the plans for a new mixed-use community at the former Air Station. In the suit, SunCal also asserts it suffered damages of over $100 million in lost profits.

Judge Breyer refused the City's request to limit damages, allowing SunCal's damage claim to move ahead. A separate claim alleges that Alameda has failed to produce City emails that contain evidence that SunCal was fraudulently terminated. SunCal is therefore seeking court sanctions against Alameda for spoliation of evidence since it has not provided copies of the requested emails to and from key city staff, pursuant to state law.

The judge did not immediately decide the destruction of evidence but instead kept that motion alive for further consideration. The City of Alameda has a policy of deleting emails after 30 days, yet this practice is inconsistent with California codes that require governmental agencies to preserve records and correspondence for at least two years.

SunCal requested that sanctions be imposed against Alameda because it believes City staff destroyed emails that support its claims. Judge Breyer commented that the missing emails are "…a serious claim."

The judge also ruled on other key points in the case. An attempt by Alameda to have SunCal's breach of contract claim for damages dismissed from the case also fell by the wayside. "With respect to the City's motions to dismiss the contract claim, that's denied," said Judge Breyer.

The matter of the fraud claim concerning former Interim City Manager Gallant is also continuing as the judge noted that more specific information about this matter is needed from SunCal, and allowed SunCal's attorneys to add further details in an amended complaint that will be filed within 20 days.

SunCal acquires, entitles and develops major residential properties and commercial developments. The company specializes in creating distinctive master-planned and mixed-use communities that emphasize quality of life, environmental sensitivity and recreational opportunities. SunCal is the largest privately held land developer in the U.S. For more information, please visit www.suncal.com.

SOURCE SunCal