Border Business Park v. City of San Diego – $136M

Business Litigation

Case Summary:

A breach of contract and inverse condemnation action against the city of San Diego resulting in a $94,500,000.00 jury verdict. Post verdict the judge granted fees and interest bringing the result for our client to above $132,000,000.00

Plaintiff’s Technical Expert Witnesses:
Patrick F. Kennedy; John Mawhinney; Albert Schlarmann; Bruce Kelton; Richard Dixon

Defendant Insurance: AIG

Date, Time and Place of Incident (s):

DATE: 1986 through 2000

PLACE: Otay Mesa near the border crossing between San Diego and Tijuana, Mexico Patrick F. Kennedy John Mawhinney Albert Schlarmann Bruce Kelton Richard Dixon

Facts and Background:

On November 10, 1986, the City of San Diego and Border Business Park, Inc. executed a Development Agreement. This agreement pertained to anticipated and approved development of 312 acres in Otay Mesa (the “business park”). This parcel is located within a larger parcel of property which was annexed to the City, known as the Otay Mesa Community Plan area. The Agreement contained two significant promises. The first promise gave Border Business Park, Inc. the benefit of then-existing rules and regulations pertaining to the development of its land. The second promise prohibited the CITY from treating any other property in the Plan area more favorably. These promises were intended to insure that BORDER would not be placed in an ?unfair, disadvantageous or non-competitive situation. Specifically, the CITY promised not to enforce any post-Agreement changes in the applicable general plan, specific plan, or subdivision or building regulations. The Agreement also promised that the City rules, regulations, ordinances, laws, general plans and official policies governing development, density, permitted uses, growth management, etc., would be those in force at the time the agreement was entered into. The Agreement specifically contemplated that the subject property would be developed into a light industrial business park. Yet, the City then went on to breach nearly every term of the agreement. In 1988, the City Council imposed a residential building moratorium in Otay Mesa in anticipation of a joint U.S. /Mexico airport which was prohibited under the agreement. The City released a SANDAG report and there was much publicity over the prospect of the airport. Unfortunately, the proposed runway was essentially through the business park. Not until 1993, did the City ever contact Mexican officials to ask whether they were even interested in a “Twin Port” concept in Otay Mesa. When they finally did ask, Mexico said they had no interest whatsoever in a joint effort.

Plaintiff’s Contentions, Allegations:
The City breached the Development agreement by all of the above conduct. In addition, by re-routing the truck traffic in and around the business park, the City had effectuated a “taking” in inverse condemnation. There was a second “taking” for the blight caused on the property by the publicity and building moratorium surrounding Twin Ports. The trial judge, just prior to closing arguments, determined there had been a taking on each of these issues.

Injuries and/or Damages:
Loss of property to foreclosure; loss of development potential; and loss of use during the inverse condemnation takings.

Specials: $136,000,000.00

Offer:
By Plaintiff: CCP 998 for $25 million By Defendant: CCP 998 for $1,000 plus foregiveness of $44,000 promissory note, and waiver of costs.

Settlement Amounts: Jury Verdict

Verdict or Award: $94,500.000

Post Trial Motions and Post Verdict Settlements:
Reversed by the Ninth Circuit Court of Appeal in an unpublished decision. Original decision, see Sweeney v. Bert Bell NFL Player Retirement Plan, et al. 961 F.Supp.1381 (1997); Reversal, see Sweeney v. Bert Bell NFL Player Retirement Plan, et al. 156 F3d 1238, 1998 WL 480125 (9TH Cir. (Cal.)) (1998).

Attorney for client:
Vincent J. Bartolotta, Jr. from Thorsnes, Bartolotta & McGuire and David B. Casselman from Wasserman, Comden & Casselman

Attorney for defendant: Anthony Shanley, Rick Ostrow from the San Diego City Attorney Office

Individual Defendants:
A breach of contract and inverse condemnation action against the city of San Diego resulting in a $94,500,000.00 jury verdict. Post verdict the judge granted fees and interest bringing the result for our client to above $132,000,000.00.

Civil Trial Lawyers

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