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$23 Million Suit Against City Set for Trial By Jorge Casuso Feb. 2 -- A decade-old dispute over a prime site on the Santa Monica Pier that has sat vacant for more than a quarter century will go to trial this month after the City Council reportedly rejected two offers to settle developer Russell Barnard’s $23 million suit against the City. Filed two years ago, the suit charges that the City "materially breached" a 1993 lease for a 699-seat nightclub and restaurant on the old Sinbad’s site, costing Barnard more than $1 million in damages and nearly $22 million in lost profits. (The losses are based on the full term of the 10-year lease with three 10-year options.) Since the initial claim was filed in February 2002, Barnard, who signed the lease in 1993, and the City have been passing the blame for failing to develop the site next to the Pacific Park fun zone, which is widely viewed as a key to the future of the pier. “There’s no reason it had to come to this,” said Barnard, who owns Rusty’s Surf Ranch on the pier, adding that he is moving forward with the case because there is a “perception that the problems are all my fault. “I have a reputation in this community,” Barnard said. “I need to have the community know I was working in good faith. I made life decisions, I put aside business opportunities, went to investors. Even if I got a significant judgment, I’m not sure it would pay me back for the 15 years.” City officials have long contended that Barnard intentionally dragged his feet while he sought money to bankroll an ambitious project that kept growing. The City demanded that he perform under the lease after the claim was filed, and he refused, City officials said. “The evidence is still that his claims that the City has tried to derail his project are not true,” said Anthony Serritella, the lead attorney handling the case for the City Attorney’s office. “It seems Barnard had trouble financing it, and the evidence establishes that, and we don’t think he has a viable claim.” The City has filed a summary judgment motion on the basis of uncontroverted evidence that “shows the plaintiff is not entitled to go to trail” and a cross complaint claiming that Barnard is in breach of the lease, Serritella said. The motions are scheduled to be heard February 11, six days before jury selection is set to begin. In the suit, Barnard claims the City wrongfully refused to renew his building permit, continuously misrepresented the site boundaries as being smaller than originally agreed and failed to perform required work to strengthen the pier's substructure In fact, Barnard contends that evidence that recently came to light during discovery makes it clear that his project was “pulled in a surreptitious fashion.” Barnard claims that while he agreed to perform -- and in fact performed -- the substructure work in exchange for the City waiving any right to terminate the lease, Bill Spurgin, the pier official in charge of the resolving the boundary dispute, “had already decided to kill the project.” “When I found out that this was by plan… I was incredulous, frankly,” Barnard said. “There’s a certain assumption of good faith and fair dealing. You just don’t imagine they’d intentionally do this sort of thing.” Correspondence between to the two parties shows that Barnard repeatedly asked the City to expedite the process, Barnard said. In a letter dated November 4, 1997, he wrote: “It is imperative that the process is expedited or we will be unable to open the doors in the Spring of ’99, a situation that would be most distressing…. Time is of the essence, as we are quickly approaching the point at which we would not be able to open to the public as planned.” Three weeks later he wrote: “I really do not understand, given how close we are to actually beginning construction on this project after nearly 10 years of process, why there appears to be so little urgency in the response of the city and the PRC to resolving the open issues.” City officials, hampered by what they acknowledge was a vague, poorly written lease, were trying to force Barnard to show proof of his commitment to develop the site. A lease modification proposed by the PRC in June 1995 required that Barnard put up a $200,000 deposit, which would be refunded when the project was completed. Barnard, officials said, refused to sign. In December 1997, the PRC once again submitted a lease modification agreement requiring a deposit. Again, officials said, Barnard balked. Barnard has dropped his charges against Spurgin and the PRC. “During the discovery process, the City convinced us that Bill (Spurgin) and the PRC were working as agents of the City,” he said. But sources close to the case note that Barnard dropped the charges on the day he was scheduled to give a deposition to attorneys representing the two parties. “As the facts came out, it’s just sending a clear picture that Russ had his entire fate in his hands and failed to perform,” a source said. “This will be borne out in trial.” Barnard reportedly made two settlement offers to the City as the trial date neared. The first called for the City to lease him the former Arcadia nightclub adjacent to his Rusty’s Surf Ranch. Under the settlement the City would also have paid Barnard $500,000 that he would have then pumped into renovating the structure, which has failed under two previous operators and has been vacant for at least three years, except for occasional used by the City. The other settlement called for the City to give Barnard more than $2 million dollars. The offers were reportedly rejected by the council in closed session. Related Stories |
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