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SunCal sues, again

Submitted by on 1, September 30, 2010 – 5:00 am29 Comments

Developer SunCal Companies has announced they plan to again sue the City of Alameda, this time for access to city officials’ e-mails. The company announced Wednesday that it was filing the suit in Alameda County Superior Court.

The company accused city officials of hiding or destroying e-mails SunCal had asked for in a massive public records request submitted on July 12, and they want the court to force the city to turn them over.

“These emails are public records that any citizen can request, but there is a deliberate attempt to conceal them. Everyone has a right to know what these communications to and from city officials contain,” the company’s spokesperson, David Soyka, was quoted as saying in a press release issued Wednesday.

The developer’s attorneys claim city officials refused to turn over e-mails written by Interim City Manager Ann Marie Gallant or any member of the City Council pursuant to their public records request, handing over only e-mails from Public Works Director Matt Naclerio and City Clerk Lara Weisiger. They said the city has not explained to them why the e-mails have not been produced.

They also accused city officials of using their private e-mail addresses to conduct city business in an effort to conceal correspondence, though lawsuit documents posted on a website the company had used for community outreach didn’t show any e-mails from city officials’ private accounts.

The suit cites a July 7 public records request blogger Lauren Do wrote about in August, in which she asked for six months’ worth e-mail correspondence from members of the City Council and a response from City Attorney Teresa Highsmith saying e-mails on the city’s internal mail system were considered “drafts” and exempt from public disclosure, and that they were purged every 30 days. Highsmith told Do the city had no e-mails sent by council members or Mayor Beverly Johnson on the city’s external system, used to communicate with members of the community, over the six-month period requested, the suit said.

City Attorney Teresa Highsmith called the suit’s claims “demonstrably false” and claimed the city has turned over 20,000 pages of documents, including e-mails from council members and Gallant, and that the document production process is ongoing. She said the developer “grossly mischaracterized” the city’s e-mail retention policy and that the city has told them they’re saving e-mails in light of SunCal’s suit. Per Highsmith:

Emails concerning city business, just like every other document, are public records unless some exemption under the Public Records Act applies. City staff and officials are advised that they are to retain, either in hard copy or in electronic form through archive, any emails which qualify as a public record. All other emails will be deleted as part of the routine maintenance performed by IT in order to save server space, because such documents are not meant to be retained in the normal course and scope of City business–in other words, they are preliminary drafts, notes, or memos not normally retained by a public entity, as allowed by Government Code Section 6254(a) of the Public Records Act.

The company filed a breach of contract suit against the city in August, a little more than a month after the City Council effectively fired them as master developer for Alameda Point. They’re accusing Gallant of hatching a secret plan to get rid of the developer so the city could develop the Point itself, and they are seeking saying they may seek $117 million in damages.

29 Comments »

  • Irene says:

    I’m confused.

    If it has to do with their breach of contract lawsuit, why aren’t they dealing with the discovery issue in the original court?

  • Lauren Do says:

    I believe because this has to do with compliance under the California Public Records Request Act, the appropriate court would be state, not federal, where the other suits are filed. The filing, the Writ of Mandate, is compelling performance by the City.

  • Irene says:

    I think a federal court can order the production of records if it has to do with the litgation before it. The court can even include state law to compel compliance.

    • Hey folks,

      Here’s what an attorney who read my post and Lauren Do’s on this matter had to say about the PRA vs discovery question:


      In any suit filed in federal or state court, a party can serve discovery requests – including a request for production of documents – on the other party. If the responding party fails to produce documents, the propounding party can move to compel a response. If successful, the motion results in a court order to the responding party that, if disobeyed, may result in sanctions.

      This is true in every case regardless of who the parties are and what their claims are.

      I have no idea whether SunCal served a discovery request in its federal-court suit against the City, but the mandamus action has nothing to with it.

      As Lauren correctly points out, in a mandamus action, the plaintiff is asking a court to order a governmental entity and/or one of its officials take an action the plaintiff alleges the law requires her to take but she has refused to take. See Code of Civil Procedure section 1085. (http://codes.lp.findlaw.com/cacode/CCP/3/3/1/2/s1085). Here, the allegation is that the City is obligated under the Public Records Act to provide the emails SunCal requested and has refused. If successful, the court will issue a writ of mandamus directing the City to comply.

      Note the distinction: A mandamus action can only be brought against governmental entities. And it must allege the existence of a legal obligation to take a particular action.

      Why would SunCal file a mandamus action when it could have taken the route of serving a discovery request in the federal suit and then move to compel if the City refused to produce documents? I can only speculate, but my guess is (1) given the parties and the claims, a mandamus action offers an alternative route to getting the emails, and lawyers love it when they can have “two bites at the apple” (some authorities say “cherry”); (2) it may be that SunCal can get the issue before the judge in the mandamus action more quickly than if it followed the discovery route in federal court, and (3) the City is now going to have defend itself in two different venues.

  • Richard Bangert says:

    Can someone please explain how the breach of contract issue comes into play with regard to SunCal? The ENA was an agreement between to parties to negotiate in good faith. The rights and responsibilities, as well as the consequences of not fulfilling obligations were spelled out in detail. The real or perceived failure on the part of one party, according to my reading of the ENA, left the other party with one and only one remedy: a default notice. A default notice is issued, and if not cured within the specified timeframe the agreement lapses/ends. And it went on to say that both parties agreed to not sue for damages if things didn’t work out. The city’s liability, if found to be in default, was limited to giving back SunCal their $1 million deposit.

    Remember, the shoe could have been on the other foot. What if negotiating had gone on for years and SunCal exhibited waning interest that made it appear they had thrown in the towel? Could the city have sued them for all the lost tax revenue? I doubt it.

    The way I see it, the ENA is kind of like a collective bargaining agreement. The only court remedy that I read in the ENA was one that allowed one party to go to court to get the other party to continue negotiating if it could be proven that negotiations ended due to bad faith. Even assuming that the supporters of SunCal are correct that the city exercised bad faith, where does it say that SunCal is entitled to damages, especially damages that cannot be accurately calculated because no official DDA exists from which discern lost profit?

  • Alameda2000 says:

    However this lawsuit goes, I really hope that the Council does something about not keeping records adequately. If you can spend $5,000 on motivational posters then you can buy enough server memory to hold everything the City does electronically for the next 5,000 years. On a weekly basis, I probably go back and pull up emails that are years old if I need a phone number or even just for information. But, I know the City likes to start fresh on things regularly which is why Alameda Point will never be redeveloped unless things change at the City.

  • David Howard says:

    Actually, SunCal is not suing the City for $117 million. Yesterday’s press release by SunCal was the height of sophistry.

    On the 27th, SunCal filed a claim with the City of Alameda for $117 million – $100 million in “lost profits” and $17 million in “out of pocket expenses.” Their press release also referenced the figure.

    However, SunCal’s court pleading makes no reference to the figure, because judges are harder to fool than journalists. SunCal’s attorney, Skip Miller knew better than to try to claim $117 million in damages in a suit filed via the public records act.

    That’s because the PRA, in Cal Gov’t Code Section 6259 allows the plaintiff to sue the agency in question to compel performance (provide the records) and to cover attorney fees incurred to file the suit to compel performance. It doesn’t have any provisions for the plaintiff to recover the sort of $117 million in “damages” that SunCal cited in their claim with the City, and their press release.

    Cal Gov’t Code 6259:

    (d) The court shall award court costs and reasonable attorney fees to the plaintiff should the plaintiff prevail in litigation filed pursuant to this section. The costs and fees shall be paid by the public agency of which the public official is a member or employee and shall not become a personal liability of the public official. If the court finds that the plaintiff’s case is clearly frivolous, it shall award court costs and reasonable attorney fees to the public agency.

    The press release yesterday was clearly an election ploy by SunCal to try to make the Interim City Manager look bad, and boost the fortunes of the SunCal Slate: Tam/Gilmore/Bonta.

  • David Howard says:

    Do these finer points of law even matter? SunCal’s suit is clearly an election tactic. And yet, SunCal’s apologists ask for proof of SunCal’s tampering in the election.

    Note also that in their pleading, and their press release, they say that the City’s policy of deleting e-mails after 30 days is a violation of State GUIDELINES and not State law. (The guidelines were set up pursuant to State law.) SunCal cites no statute to support their complaint over the 30-day rule, they can only cite un-enforceable guidelines.

  • ct says:

    Mr Bangert,

    If what you are saying is correct, how does a party issue a default notice for the other party’s failure to negotiate? Gallant seems unable to handle this aspect of her job, as she’s also failed to negotiate with the firefighters union, Alameda County health care officials, and the Alameda Junior Golf Association.

    Mr Howard,

    It seems that only the petition for writ of mandate (requesting the court to order the City to provide the public records requested — there’s no mention of $117 million) was filed in Alameda County Superior Court. The letter to the City (stating that SunCal “may seek $117 million in damages”) appears to be a message for the City.

  • dlm says:

    Following up comments re the ENA: The ENA was designed to *expire* on a certain date (7/20/10), for the specific purpose of forcing SunCal to perform and to meet certain “milestones” that were set forth in the ENA. The city’s staff reports on the ENA make that clear. SunCal failed to meet those milestones and consequently the city council declined to renew the ENA. That’s all.

    The comments about the city’s email policy and SunCal’s public records request on this blog and on this site in general are one-sided and misleading as always. It’s a wonder that SunCal can get such favorable press — PR — for free, but someone, I’m sure, stands to benefit in the long run.

    For starters, SunCal’s public records request was ridiculous, and anybody who read it would know that. They asked for every conceivable shred of information with the obvious intent to bog down the city’s limited resources. Why is there so much eagerness on this site to support SunCal’s attack on the city’s resources? We’ve seen so many self-righteous calls for auditing various city expenses, how about asking for a report on what SunCal’s public records request has cost the city so far?

    SunCal’s lawsuit is nothing but a delaying tactic, to keep them on hand until a new City Council is elected (with their money) and that Council then votes to “settle” SunCal’s lawsuit by giving them what they want — an extension of an ENA and a chance to carry out their sleazy plans to exploit Alameda Point, regardless of the community’s wishes.

    I see no point in supporting SunCal in this regard, let alone in quoting a lawyer in support of their position. Whose side are you on? Whether you agree with particular SunCal opponents or not, it’s obvious that any continued relationship with them portends nothing but harm for the community, and there’s no point in slitting our own throat.

  • dlm says:

    Action Alameda posted the link below today, and the gist is very simple: SunCal is in very bad shape financially, virtually on life support. The only thing we should be doing at the moment is running as fast as we can in the other direction.

    If they don’t get their emails, so what?

    http://online.wsj.com/article/SB10001424052748704791004575520200324565516.html

    Real Estate Stings a Backer
    CEO Faces $230 Million Hit Tied to Lehman’s Collapse

    The real-estate bust has taken down hundreds of banks and property companies. In most cases, the executives of those companies haven’t had to take personal financial hits. But Bruce Elieff could become a high-profile exception.

    Mr. Elieff is chief executive of SunCal Cos., a large, closely held California land developer and home builder. The company ran into trouble in 2008 when its biggest lender, Lehman Brothers Holdings Inc., filed for bankruptcy, forcing SunCal to suspend work on 20 large residential property developments.

    Bruce Elieff’s personal guarantee is attached to $56.5 million of bonds related to Marblehead Coastal property, above, court filings say.

    Now, if SunCal can’t complete the projects soon or sell them to a new developer who can, Mr. Elieff could be personally on the hook for as much as $230 million. Lehman has said it intends to hold him to his guarantees.

  • dlm says:

    And here’s a link on DE Shaw. No viable developer, no financial backer, again, there’s no purpose in dealing with SunCal.

    Read more: http://www.businessinsider.com/de-shaw-cuts-2010-9?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+businessinsider+%28Business+Insider%29#ixzz114jGew7v

    Source Reveals Why Hedge Fund DE Shaw Had To Cut 150 Staff

    News that the $21 billion hedge fund DE Shaw had cut 150 employees (10% of its staff) shook up the hedge fund world.

    Other reasons layoffs happened are:

    DE Shaw’s Composite International fund is down 2.6% so far this year. Its assets have dropped from $39 billion in mid-2008 to $29 billion under management in mid-2009, and $21 billion currently.

  • Jon Spangler says:

    DLM (#2) said “I see no point in supporting SunCal in this regard, let alone in quoting a lawyer in support of their position. Whose side are you on?”

    Michele is a reporter and her job is to report what is going on. It is irresponsible and unethical in her profession to ignore one side or another just because she or someone reading her stories might disagree with that side’s positions.

    ——–

    DH asked “Do these finer points of law even matter? SunCal’s suit is clearly an election tactic. And yet, SunCal’s apologists ask for proof of SunCal’s tampering in the election.”

    Yes, David, these “finer points” do matter, and everyone – even a developer who has made mistakes – has a right to due process and access to public records, just like you and I do. In general, public records are to be made available to anyone who asks for access to them for any reason.

    We are a nation of laws, in order that emotionalism and greed do not win out over the truth. And we have the Fair Political Practices Commission and campaign finance reports to help us find out if Suncal has, indeed, funded any campaigns in Alameda.

    I have been reading the reports so far and not found anything from SunCal, by the way. Have you? I am all ears (or perhaps eyes) if you do have proof that SunCal or any developer has made major contributions to any Alameda candidates.

  • DaveL. says:

    Doesn’t anyone find it interesting that the complaint was filed on the 23rd and the city is just responding now? Did Highsmith and Gallant keep this from the council?

    I’m not a lawyer, and I don’t know if anyone else is on this board, so it’s silly to comment with authority about law (unless of course David Howard’s comments were written by Highsmith).

    The excuse about server space and this nonsense about “drafts” won’t fly with voters.

    Mataresse/DeHaan/Johnson: Do you support the city manager’s actions?

  • David Howard says:

    The reason the City responded only on the 29th, was because they were responding to a press release issued by SunCal that morning:

    http://www.prnewswire.com/news-releases/gallant-and-alameda-violate-state-law-in-refusal-to-provide-records-requested-by-developer-scc-alameda-point-in-case-104022008.html

    Read the release – SunCal is trying to conflate a “$117 million” lawsuit with the public records act request.

    One doesn’t need to be an attorney to read the plain language of the statute. However, as it happens, I DO have a source who is an attorney, who confirmed for me the interpretation that SunCal’s tying the $117 million in “damages” to the PRA request is bogus.

    That attorney wrote to me:

    “By the way, I read the Press Release from SCC Alameda Point. Sokya is full of sh**. The Public Records Act and related statues don’t give them the right to damages, let alone $100 Million in damages. All that is prayed for in the Alameda Superior Court are the customary damages in PRA cases, e.g. attorneys fees.

    I also saw a claim by SCC Alameda Point in the Complaint that SunCal has never sued a city. That may be true but is disingenous. They sued Newhall County Water District when NCWD said they didn’t have enough water to serve their project.”

    As for proof of SunCal’s involvement in the campaign, what more do you need?

    The robocalls and push-polling are classic SunCal tactics, and SunCal used them in the Measure B campaign. And they are biased in favor of Tam, who gave City secrets to SunCal. (She admitted it.)

    The campaign statements that reflect the expenditures might not even be available until after the election. If at all. SunCal has millions of dollars to work with – surely they can hide their expenditures, no?

  • ct says:

    Mr Howard,

    It seems only the petition for writ of mandate (requesting the court to order the City to provide the public records requested — there’s no mention of $117 million) was filed in Alameda County Superior Court. The letter to the City (stating that SunCal “may seek $117 million in damages”) appears to be just a letter to the City, and it looks like you are “trying to conflate a ‘$117 million’ lawsuit with the public records act request.”

    Re your statement about SunCal having never sued a city: Is “Newhall County Water District” a city?

    And how can a bankrupt developer with downsizing financial backers have “millions of dollars to work with”?

  • David Howard says:

    It is SunCal’s PR team trying to confuse the public about the $117 million claim, not me. I’ve explained very clearly, many times, that the $117 million claim is un-related to the PRA lawsuit, because those “damages” cannot be attached to the PRA suit – they can only ask for costs incurred in forcing the agency to produce the records.

    It is SunCal, not me, who said “we never sued a City before” – while that’s technically true, they did sue the New Hall County Water District, and interfered in a board election there to get a favorable quorom which ultimately voted to give SunCal water for their development.

    As for SunCal interfering in Alameda’s election:

    Ron Mooney of the AUSD Board of Trustees took $5,000 from SunCal earlier this year, and recently he spent $20,000 with EMC Research, a polling firm. He confirmed the $5,000 donation with me directly, and the $20,000 expenditure is documented in city campaign filings available on the City’s website. Note that he accepted the campaign donation in a period where AUSD was supposed to be negotiating with SunCal over a mitigation payment to the District under SunCal’s plan for Alameda Point.

    Ron Mooney is a Lena Tam supporter, and I don’t recall him ever speaking out against the SunCal plan. Can Mr. Mooney come forth with documents to prove he didn’t spend SunCal’s money somehow in support of Lena Tam?

    http://www.action-alameda-news.com/2010/09/08/ronald-mooneys-keep-alameda-schools-excellent-pac-spent-over-20000-in-the-first-half-of-this-year/

    On the 27th of this month, SunCal issued a release saying the raised $20 million through the sale of a bunch of lots.

    http://www.prnewswire.com/news-releases/suncal-sells-residential-lots-to-kb-home-valued-in-excess-of-20-million-103881478.html

  • ct says:

    Mr Howard,

    As I’ve said before, the petition for writ of mandate appears to be the only document that was filed in Alameda County Superior Court on SunCal’s behalf, and it says nothing “about the $117 million claim.”

    Is there proof to support your assertion that SunCal “interfered in a board election” in Newhall? Your assertion that SunCal is “interfering in Alameda’s election” through Mr Mooney is specious at best.

    SunCal’s CEO “could be personally on the hook for as much as $230 million.” Isn’t it possible this $20 million raised “through the sale of a bunch of lots” might be used to pay down debt?

  • David Howard says:

    CT – You’re right! You got me dead to rights, I confess. SunCal’s public records act lawsuit has absolutely nothing to do with their $117 million claim. The supposed delay by the City in responding to SunCal’s records requests has absolutely nothing to do with the $117 million in “damages” that SunCal seeks. Nobody has any right or reason to try to blame the City’s alleged delay in responding to SunCal’s public records request for the $117 million claim of damages. No sir.

    The proof of SunCal’s interference in the New Hall election comes to me from a source I know, who posted here:

    http://www.action-alameda-news.com/2010/09/30/city-of-alameda-denies-suncal-charges-in-public-records-lawsuit/#comment-7376

    Before the election, SunCal sued the water District.
    http://www.argentco.com/htm/f20040701.324458.htm

    SunCal also targeted a councilmember in Albuquerque last year. One who didn’t support their tax-increment financing request:

    http://newmexicoindependent.com/37831/suncal-targets-cadigan-in-election-mailer

    Elieff could use the $20 million to take his wife to dinner if he wants, or on a vacation. He might use it to pay down the over $9 million that a jury verdict says he owes Gray 1 CPB LLC. But so far, he hasn’t.

    As for the $230 million, he hasn’t actually been asked to pay that amount yet – he keeps wriggling in court, trying to get released from those guarantees. But nobody has asked him to yet.

    As for Mooney, the money trail is obvious. I say he used the money to support Tam. The onus is on him to prove otherwise.

    Beyond that, as I’ve said before, the push-poll telephone surveys biased in favor of the SunCal Slate, which includes Tam, who admitted giving negotiating secrets to SunCal, are the sort of tactics SunCal used in Measure B.

    Only somebody idealogically or financially committed to SunCal would continue to argue against their obvious involvement in Alameda’s elections in the face of the evidence.

    But I’m glad we got the issue resolved about SunCal’s $117 million claim in no way being related to their public records act request. Whew!

  • ct says:

    Mr Howard,

    It’s been many months since I read the “Action Alameda” blog because much of what I’ve seen there misrepresents and distorts the facts while being touted as unbiased news. It’s completely agenda-driven.

    Is there proof to support your assertion that SunCal “interfered in a board election” in Newhall? Your link only states that SunCal sued the Newhall County Water District.

    The business about the Michael Cadigan mailers, which happened while SunCal was still attached to the Albuquerque project, was unfortunate.

    But your statement “I say [Mr Mooney] used the money to support Tam” isn’t a convincing argument proving that SunCal is “interfering in Alameda’s election.”

  • David Howard says:

    CT – you should be out celebrating! You won an argument on the Internet, after all! No mean feat. I will again concede to you that in no way did the actions of Interim City Manager Ann Marie Gallant pursuant to SunCal’s public records request contribute to SunCal’s $117 million claim against the City of Alameda.

    As for Mooney – he spent SunCal’s money with a political research firm based in Oakland and known to be active in Alameda’s elections. Who’s election are they interfering with then?

  • ct says:

    Mr Howard,

    I don’t consider my correction of your inaccurate statement to be an argument. This isn’t a contest.

    I said nothing about Interim City Manager Ann Marie Gallant obstructing the City’s response to a public records request.

    And the SunCal donation was made to the Yes on Measure E campaign earlier this year.

  • Desert Hot Springs says:

    If I had to put my money on who is in the right on this suit I would bet my money on Ann Marie Gallant. I read the complaint and it looks like SunCal got its panties in a bunch because the city no longer would jump through hoopes for it. Developer deals in our city cost our city milions and it was Ann Marie Gallant that finally started the work to put a stop to the bad deals. Look up Palmwood in Desert Hot Springs. That was the most corrupt deal and it is well documented that it alone has cost our city over $1.5 million. Ann Marie’s track record here was excellent when it came to finally stopping all the screwing of our city that has gone on.

  • Desert Hot Springs says:

    Sun Cal is running full page ads in the Palm Springs area newspaper (page 3 front section no less) asking for dirt on Ann Marie Gallant. It has a hot line phone number. What slime balls. Is there anyone in your city that is actually stupid enough to take SunCal’s side in this?

  • ct says:

    Desert Hot Springs,

    In August 2007, soon after Interim City Manager Ann Marie Gallant was asked to resign as city manager of Desert Hot Springs, she violated the terms of their agreement:

    http://www.mydesert.com/assets/pdf/J183302822.pdf

    As for the full-page ads, which Palm Springs newspaper are you referring to?

  • David Howard says:

    CT – you seem to be laboring under the delusion that I need you to admit or agree that SunCal is interfering in this year’s election for it to be true.

    The burden of proof in the Court of Public Opinion is much lower than that in actual criminal or civil courts. There is enough circumstantial evidence circulating and published that would allow a reasonable reader – someone un-affiliated with SunCal, Lena Tam, Rob Bonta, Marie Gilmore, or otherwise with some direct interest in the manner – to come to the logical conclusion.

    The “smoking gun” campaign filings that SunCal sympathizers insist upon may come after the election, if at all. The 1st pre-election filings are available on the City’s website. Let’s see if those explain all the robo calls and push-poll surveys.

    Aside from that, and with apologies to Shakespeare, The CT doth protest too much, methinks.

  • ct says:

    Mr Howard,

    In the real world, if you want people to believe what you say when what you say sounds like pure speculation or gossip, you generally need to back up such statements with facts.

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