Jul 29, 2014
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City Wins Partial Judgment Against SunCal

SunCal cannot recover its $17 million claim for out-of-pocket costs in relation to a potential development at Alameda Point, but it can pursue a claim for return of its $1 million deposit, a U.S. District Court judge has ruled.

City Wins Partial Judgment Against SunCal

From a City of Alameda press release:

[Editor's note: A discussion with legal counsel about strategy in the SunCal litigation is on the agenda for Tuesday night's special closed city council meeting.]

 United States District Court Judge Charles Breyer has granted the City of Alameda’s motion for partial summary judgment, dismissing SunCal’s $17 million claim for recovery of its out-of-pocket costs. The decision limits SunCal's monetary claim to return of its one million dollar deposit. SunCal sued Alameda two years ago, claiming the City failed to act in good faith when it ended exclusive negotiations with SunCal relating to development at Alameda Point, the former Naval Air Station.

SunCal originally sought damages amounting to over $117 million ($100 million in lost profits and $17 million in out-of-pocket costs) for breach of contract. On January 20, 2012, Judge Breyer granted a motion by the City to dismiss SunCal’s $100 million lost profits claim. The judge required the parties to engage in further discovery on the issue of possible recovery of out-of-pocket costs of $17 million. 

In his 23-page decision, Judge Breyer analyzed the law and facts, which included depositions of members of the negotiating teams for both SunCal and the City. The judge found that the facts and the plain reading of the relevant sections of the Exclusive Negotiation Agreement did not allow for recovery of out-of-pocket costs. The Exclusive Negotiation Agreement does allow for SunCal to obtain reimbursement of its $1 million deposit if the agreement is found to have been wrongfully terminated by the City.

“I am very pleased by this decision,” said Mayor Marie Gilmore.  “We understand litigation is a lengthy process, and this is a positive step for us.”

City Attorney Janet Kern lauded the decision.

“The judge painstakingly reviewed the facts, extrinsic evidence and testimony of the persons who were at the negotiating table as to the intent of the parties and the meaning of the contract language,” said Kern. “He found that SunCal’s argument ran afoul of one of the fundamental rules of contract interpretation, and granted the City’s Motion for Partial Summary Judgment. We are heartened by this decision as we proceed to trial.”

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