Redevelopment Agency of the City of San Diego v. Ahmad Mesdaq (SDSC Case No. GIC 829293)(condemnation), consolidated with Ahmad Mesdaq v. Centre City Development Corporation (SDSC Case No. 828361)(inverse condemnation) – $7.8M

Condemnation & Eminent Domain

Case Summary:

A $7,785,131.83 jury verdict for an inverse condemnation case involving an Afghan refugee who owned the Gran Havana Cigar Company in the Gas Lamp district of San Diego. After a rags-to-riches success story following Ahmad Mesdaq’s family’s fleeing Afghanistan in the 1980’s, the City of San Diego at the behest of developers condemned his business. A complicated case involving consolidated actions, the City actually allowed the developers to pay for the attorneys used to enforce the condemnation action. A fascinating and relevant case that illustrates just how far local government will go to pacify big money developers in the light of the recent Kelo v. New London Supreme Court ruling.

Plaintiff’s Technical Expert Witnesses:
For the Property Owner: Michael Barney Business Relocation Expert Nevin Sanli Goodwill Valuation Expert Al Schlarmann Property Valuation Expert

Defendants Technical Expert Witnesses:
For the Condemnors: Peter Curry Structural Engineering Expert Jonathan Segal Architectural Expert Robert Caringella Property Valuation Expert Aaron Amster Goodwill Valuation Expert

Date, Time and Place of Incident(s):
April 27, 2004 Resolution of Necessity adopted by the Redevelopment Agency of the City of San Diego

Facts and Background:

Ahmad Mesdaq and his family sought political asylum in the United States in 1983 after his father, an Afghan air force general who was cooperating with the United States to fight the Soviet invasion of Afghanistan, was threatened repeatedly with death if he remain in Afghanistan. The family left with what they could carry and lived first in Texas then in El Cajon, California. Ahmad attended high school in El Cajon. While in school, he worked two jobs to support the family and to save money for college and for the business he hoped to start after college. After high school, he attended first Grossmont Community College, then San Diego State University. He finished at SDSU in 1992 and immediately opened a small coffee shop in the Gaslamp called the Avignon. The Avignon grew along with the Gaslamp and by 2000, it offered a full range of coffees, teas, pastries, and had an on-site and mail order cigar business. Ahmad was looking to expand, with a strong preference for property ownership, when one of his employees called him about a ‘for sale’ sign at 502 J Street. Ahmad closed escrow on 502 J Street in January 2001 and, between January 2001 and April 2003, worked on renovating the dilapidated warehouse then located on the property. The expanded business, now called the Gran Havana Cigar and Coffee Lounge, opened at 502 J Street on April 15, 2003. What had been a good business quickly became a phenomenal business. Growth rates between 2003 and 2005 were high. Unfortunately, while Ahmad was building a strong business at 502 J Street, the City was negotiating an agreement with two individuals – Ramin Samimi and Ed Himmelberg – to condemn Ahmad’s property so that Samimi and Himmelberg could locate the lobby of their planned hotel on that location. That agreement, which agreement included a provision that Samimi and Himmelberg would pay for all costs and fees related to the condemnation, was finalized in January 2004, just before the City’s 12-year power of condemnation in the Gaslamp expired. Following the execution of that agreement, the City sent Ahmad an offer to purchase for $3.1 million. Additionally, with full knowledge that Samimi and Himmelberg were engaged in private negotiations with Ahmad, and with the purposes of aiding Samimi and Himmelberg in those negotiations, the City served Ahmad with a toxic waste notice, requiring him to investigate whether toxins existed on his property within 60 days or risk being liable to the City for all fees and costs incurred by the City in investigating that issue. Ahmad spent over $77,000 trying to investigate while his building remained intact. Following that investigation, the City sued him for their fees and costs anyway. At trial, the City’s toxic waste expert admitted that there was no way Ahmad could have investigated those issues while the building remained on the site because Ahmad had no access to the dirt. Over Ahmad’s challenges to the right to take, the Court permitted the City to take the property on June 15, 2005. In August 2005, in a second bench trial, the Court ruled that the City’s conduct in serving a toxic waste notice in April 2004 in order to aid the developers in their private negotiations was unreasonable. Beginning in August 2004, Ahmad searched for a suitable relocation site for his business. Unfortunately, he discovered that the Gaslamp market was extremely difficult. The good deals just were not available to a small business owner without a big bankroll. As a result, when the Gran Havana was displaced on June 15, 2005, it was unable to re-open at another location. Ahmad did attempt to keep his mail order business alive at a property owned by a friend at 319 Market Street but recently received a letter from the City advising him that zoning restrictions prohibited such a use at that location. The valuation trial was heard by a jury between October 20 and 27, 2005. Ahmad requested $4.25 million as compensation for the condemned property, $3,361,208 as compensation for the condemned business, and $77,823.83 as compensation for the money he spent as a result of the City’s unreasonable conducted related to the toxic waste notice. The City argued that the property was only worth $4 million and that Ahmad was entitled to no compensation for the lost business and the toxic waste expenses. The parties stipulated that the immovable fixtures entitled Ahmad to compensation of $96,100. The jury agreed with Ahmad and awarded him the full compensation he had requested, a total of $7,785,131.83.

Plaintiff’s Contentions, Allegations: See Facts and Background

Injuries and/or Damages: See Facts and Background

Defense:
The City’s defense was that Ahmad could have relocated his business to three nearby locations. The first two, known as the Trellis and the Octopus Gardens, would not deal with Ahmad directly because he did not have substantial assets. The owners would only deal with Ahmad through Samimi, who would then sublet to Ahmad. Ahmad, perceiving that Samimi had gotten him evicted from two prior locations, did not believe these alternatives as prudent business opportunities. The third relocation site forwarded by the City, the Rent X building, was even more risky. The Rent X building is a small one-story building in a redevelopment area surrounded by new high-rise construction. Mr. Barney, Ahmad’s relocation expert, testified that there is a very strong chance that the Rent X building will be targeted for redevelopment within the next few years and Ahmad would be on the street again.

Demand: Prior to trial, Ahmad offered to settle for $6 million.

Offer: The City offered to settle for $4 million.

Verdict or Award: $7,785,131.83

Other Verdict Details:
Verdict breaks out as follows: Value of property (with improvements) = $4,250,000.00 Loss of Good Will = $3,361,208.00 Toxic Waste Study Expenses = $ 77,823.83 Loss of Immovable Fixtures = 96,100.00 (by stipulation)

Length of Trial: 8 days

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. Karen R. Frostrom Thorsnes Bartolotta McGuire

Attorney for defendant: Bruce Beach Karen Freeman Best Best & Krieger

Individual Defendants:
A $7,785,131.83 jury verdict for an inverse condemnation case involving an Afghan refugee who owned the Gran Havana Cigar Company in the Gas Lamp district of San Diego. After a rags-to-riches success story following Ahmad Mesdaq’s family’s fleeing Afghanistan in the 1980’s, the City of San Diego at the behest of developers condemned his business. A complicated case involving consolidated actions, the City actually allowed the developers to pay for the attorneys used to enforce the condemnation action. A fascinating and relevant case that illustrates just how far local government will go to pacify big money developers in the light of the recent Kelo v. New London Supreme Court ruling.

Civil Trial Lawyers

619-236-9363
800-577-2922