The owners of an office tower under construction in Beverly Hills have filed a lawsuit seeking $40 million in damages for the city’s rejection of a request to convert the building to medical office space.

Kobor Family Trust, the owners of the building at 8767 Wilshire Blvd., which is at Robertson Boulevard, had planned a four-story office project. But financing fell through after the financial meltdown of late 2008 and the lender said it would only consider financing the project if it were converted to medical office space.

However, Beverly Hills city officials at the time were considering a cap on medical office space in the city, so they rejected Kobor’s bid to convert the building. Kobor appealed to the City Council, but earlier this year, the council rejected the appeal on a 3-2 vote.

At the time, Benjamin Reznik, attorney for the Kobor Family Trust, said the trust was considering filing a lawsuit to force the city to overturn their decision.

Meanwhile, construction continued, financed through the Kobor family’s own resources.

On April 20, Kobor filed the lawsuit against the city in Los Angeles Superior Court, although word of the lawsuit only came out late Tuesday. The lawsuit challenges the city’s assertion that converting the building to medical office space would create adverse traffic conditions and claims the city was biased against any further medical office projects within its borders. The lawsuit seeks $40 million in damages from the city.

In reaction to the lawsuit, City Attorney Larry Wiener told the Business Journal that the developer had requested that the Beverly Hills City Council remove what the city considers an important land use restriction from the project’s development conditions.

“The City Council considered the matter on its merits and concluded that removing the condition was not in the public interest for several reasons. The developer is now asking the court to substitute its judgment for the City Council,” Wiener said. “We believe that the court will recognize that this is a land use matter that is appropriately left with the City Council and that the City Council acted properly when considering and denying the developer’s request to change the rules for this development.”