LaSociete Generale Immobiliere v. Minneapolis Community Development Agency

44 F.3d 629, 1994 WL 715079
CourtCourt of Appeals for the Eighth Circuit
DecidedDecember 22, 1994
DocketNo. 93-3123, 93-2920
StatusPublished
Cited by12 cases

This text of 44 F.3d 629 (LaSociete Generale Immobiliere v. Minneapolis Community Development Agency) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eighth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
LaSociete Generale Immobiliere v. Minneapolis Community Development Agency, 44 F.3d 629, 1994 WL 715079 (8th Cir. 1994).

Opinion

McMILLIAN, Circuit Judge.

The Minneapolis Community Development Agency and the City of Minneapolis appeal from a final judgment entered in the United States District Court for the District of Minnesota upon a jury verdict finding them liable to La Societe Generale Immobiliere and LSGI, Inc., for the breach of a development contract and for injury to the developer’s reputation in violation of the,Due Process Clause of the Fourteenth Amendment. La Societe Generale Immobiliere v. Minneapolis Community Dev. Agency, 827 F.Supp. 1431 (D.Minn.1993) (Order). For reversal, appellants argue that the district court erred in holding that: (1) the development contract at issue was ambiguous, (2) the City or the Mayor breached the contract, and (3) the claims brought under 42 U.S.C. § 1983 were cognizable as a matter of law. Appellants [632]*632have also raised a number of issues with regard to damage calculation. La Societe Generale Immobiliere and LSGI, Inc., filed a cross-appeal on the issue of damages. For the reasons discussed below, we reverse the judgment of the district court.

I. BACKGROUND

In mid-1985, the Minneapolis Community Development Agency (MCDA)1 and the City of Minneapolis (jointly, the “City”) granted La Societe Generale Immobiliere (LSGI), a French real estate company, exclusive rights' to negotiate the development of a new shopping center on Nicollet Mall in downtown Minneapolis. The project contemplated 900,-000 square feet of retail shops and stores, a 400,000 square foot office building, and an underground parking garage. The development rights extended over three and one-half blocks with the project’s center on the City’s north-south axis street, Nicollet Mall.

LSGI’s plans envisioned a dome over the Nicollet Mall and the depression of the street into a tunnel (the so-called “dome and tunnel” design). This proposed design was immediately the subject of controversy, and a number of city officials and local businesspersons expressed reservations about the concept. As part of this debate, on July 25, 1986, the City Council commissioned a Committee on the Future of the Nicollet Mall (Mall Committee). The overall design of the project was among the issues that the Mall Committee was to consider. John Cairns, an attorney for LSGI, served on the Mall Committee as an LSGI representative. On the same day the City Council created the Mall Committee, it also approved the sale of seventy-three million dollars of tax increment bonds for the project “subject to final design approval of the project’s treatment of the Nicollet Mall by the City Council.” Minneapolis Mayor Donald M. Fraser did not approve of this City Council action because, among other things, he had concerns about the project’s design. However, the City Council’s action became effective on July 31, 1986, because of the Mayor’s inaction.

By September 1986, negotiators for MCDA and LSGI had largely completed the drafting of a Development Agreement as well as a lease and related documents. Attached to the Development Agreement were various exhibits, including a set of LSGI’s preliminary plans for the dome and tunnel design. Before the Development Agreement could be executed, the MCDA Board and the Mayor were required to approve it. This approval would have authorized the Executive Director of the MCDA to sign the Development Agreement. On September 26, the Board gave its authorization, but on October 2, the Mayor vetoed this resolution and expressed his concern that LSGI would market the proposed project using the dome and tunnel design concept. The Mayor specifically stated:

If we sign this contract [the Development Agreement] we will be telling [LSGI] that we are prepared to go ahead with the basic design which [they have] proposed for the south end of the mall. It is true that we have final design approval over the treatment of the mall, but clearly LSGI will be marketing their project based on their current design.

The Mayor requested a six-week delay in the execution of the Development Agreement to enable the Mall Committee to finish its work. He also expressed the view that the Development Agreement should clearly recognize the City’s prerogative to take into account the conclusions of the Mall Committee before making a final decision about the dome and tunnel design concept. Public debate over the dome and tunnel design concept continued throughout this period.

Before the Mall Committee’s process had run its course, LSGI responded to the May- or’s concern by' proposing the addition of language to the Development Agreement that clarified the City Council’s continuing control over the project’s design. This language was to be added to Section 2.02 of the Development Agreement. Section 2.02 was [633]*633titled “MCDA Approval” and was included under Article II of the Development Agreement which was titled “Plan Approval.” The original version of Section 2.02 stated in relevant part:

It is understood by the Developer and the MCDA that no action of the Minneapolis City Council shall be necessary to approve the form or content of any of the proposed Project Plans or Specifications except for final design approval of the Project’s treatment of the Nicollet Mall by the City Council.

The revision added the following language to the end of the above-quoted sentence:

and further except that any such proposed Project Plans or Specifications shall be modified by the Developer to comply with any and all design guidelines or any and all other requirements related to the treatment of the Nicollet Mall adopted by the Minneapolis City Council prior to the final approval by the MCDA of the Proposed Project Plans and Specifications-

The Mayor was satisfied with this additional specific recognition of the City’s continuing control over the dome and tunnel design concept. He therefore invited the MCDA Board to override his. veto and to authorize execution of the Development Agreement. The Development Agreement was executed and became effective on November 3, 1986. In the Development Agreement, LSGI promised to obtain the commitments of two major department stores, or “anchor” tenants. LSGI also promised to secure financing, present detailed final project plans, produce a number of other agreements, and resolve certain issues related to the project. During the year following execution of the Development Agreement, LSGI’s design continued to create public controversy. In December 1986, the Mall Committee issued a report which recommended that transportation on the Nicollet Mall should remain at grade. The Mall Committee also recommended that the historical environmental.feeing of openness of the Mall should be retained. Meanwhile, LSGI showed preliminary plans for the project, which included the dome and tunnel design concept, to numerous department stores throughout the country.

On November 3, 1987, the anniversary of the execution date of the Development Agreement and the date set for closing, LSGI had delivered the commitment of only one anchor tenant, Nordstrom’s. LSGI produced only a letter of possible interest from the Neiman-Mareus chain. LSGI also failed to comply with a number of the other contractual obligations that were to be accomplished by November 3, 1987. LSGI, therefore, sought an extension of the Development Agreement in the form of a Post^Closing Agreement.

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44 F.3d 629, 1994 WL 715079, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lasociete-generale-immobiliere-v-minneapolis-community-development-agency-ca8-1994.