The City of Los Angeles is not financially liable for losses a would-be developer suffered when the city pulled the plug on the First Street North redevelopment project, according to a Los Angeles Superior Court decision.
Judge Daniel Curry last month ruled against a group headed by developer Michael Barker, which had filed a breach of contract lawsuit when the city opted not to go ahead with the 1.25 million-square-foot mixed-use project once slated for downtown L.A.’s Little Tokyo district.
The Barker-led FSPP Limited Partnership had spent six years and $12 million pursuing the development before the city pulled out in October 1994.
In the summary judgment signed Jan. 17, Curry ruled that the city had the right to terminate negotiations with FSPP and dismissed the case.
Barker said his group and other related plaintiffs will appeal a ruling “we found to be totally without justification and which clearly did not address the issues of the case. It was totally unexpected, and we fully expect it to be reversed when all the facts are considered.”
Patricia Tubert, a senior assistant city attorney, said Curry essentially adhered to previous legal rulings that an evolving agreement between a developer and a city is not a binding contract without the specific approval of the city council and city attorney.
Barker’s development group had contended that a 1991 unanimous L.A. City Council vote approving the “negotiated scope and direction of the project” and authorizing the City Administrative Officer to proceed with documentation constitutes an implied contract.
But Tubert said that state law makes it “pretty clear” that government bodies shouldn’t be legally bound by actions of a staff person.
In 1988 when downtown real estate was hot and Tom Bradley was mayor the city selected FSPP to develop the 7.8-acre site bounded by Temple, First, San Pedro and Alameda streets.
Plans called for a $150 million, 600,000-square-foot office tower to house city employees, a multi-tenant office building, a 500-room hotel, 300-some affordable housing units, substantial retail and parking facilities, and a renovated/expanded Japanese American National Museum.
According to the original breach of contract suit FSPP filed in October 1994, the city required the would-be developer to pay for numerous related endeavors, such as an environmental impact report, a zoning change, conditional use permits all tied to property owned by the city.
But in 1993, with downtown real estate having gone into a severe slump, new Mayor Richard Riordan “began a public and private campaign to discredit the project and to get rid of FSPP,” the developers’ complaint charged.
The City Council voted 11-2 in October 1994 not to participate in the development of First Street North after hearing testimony that renting or leasing existing offices would be less costly than developing new facilities.
The Barker group’s subsequent Superior Court complaint sought at least $26 million in damages and asked the court to require the city to perform all of its obligations under the alleged agreements. An amended complaint sought just monetary damages.