SCC Alameda Point LLC v. City of Alameda

897 F. Supp. 2d 886, 2012 WL 4059884, 2012 U.S. Dist. LEXIS 131646
CourtDistrict Court, N.D. California
DecidedSeptember 14, 2012
DocketNo. C 10-05178 CRB
StatusPublished
Cited by2 cases

This text of 897 F. Supp. 2d 886 (SCC Alameda Point LLC v. City of Alameda) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
SCC Alameda Point LLC v. City of Alameda, 897 F. Supp. 2d 886, 2012 WL 4059884, 2012 U.S. Dist. LEXIS 131646 (N.D. Cal. 2012).

Opinion

ORDER GRANTING MOTION FOR PARTIAL SUMMARY JUDGMENT

CHARLES R. BREYER, District Judge.

This case arises out of ongoing efforts by the City of Alameda (“the City”) to develop a major residential, commercial, and retail project at the former Alameda Naval Air Station (“Alameda Point”). The City entered into an Exclusive Negotiation Agreement (“ENA”) with developer SCC Alameda Point (“SCC Alameda”) in 2007 under which both sides were obligated to negotiate in good faith toward approval of an entitlement application; the entitlements would give SCC Alameda the right to develop Alameda Point. After SCC Alameda spent over $17 million working on the project with the ultimate goal of obtaining entitlements, the City Council voted to reject SCC Alameda’s entitlement application.

SCC Alameda filed suit claiming, among other things, that Defendants City of Alameda, Alameda Reuse and Redevelopment Authority, and Community Improvement Commission (collectively, “the City”) breached the ENA. The City’s breach allegedly caused SCC Alameda to suffer damages amounting to over $117 million ($17 million in reliance damages and over $100 million in lost profits). The City claims the damages are limited to the return of a $1 million deposit. The Court granted the City’s motion to dismiss the claim for lost profits damages, as lost profits are not available for breach of an agreement to negotiate under California law. Dkt. 113.

The availability of reliance damages was the subject of a motion to dismiss by the City, and this Court preliminarily found that the damages clause in the ENA was potentially ambiguous, and allowed the parties to conduct discovery regarding the meaning of the damages clause. Dkt. 93 at 4 (“[T]he parties may conduct discovery only for the purpose of demonstrating their intent as to whether the damage waiver clause would preclude recovery of reliance damages.”). After completing such discovery, the City moved for partial summary judgment on the issue of whether the contract allows for reliance damages other than as specifically laid out in the contract. Since the extrinsic evidence demonstrates no meeting of the minds on the [888]*888issue of general reliance damages and does not support such a reading of the contract, the Court GRANTS the motion for partial summary judgment. •

I. FACTUAL BACKGROUND

The parties disagree over the meaning of the Remedies clause of the ENA. The City argues the ENA contains a damage waiver clause precluding recovery of general money damages, and thus, precludes SCC Alameda’s claim for general reliance damages. SCC Alameda, unsurprisingly, disagrees. The Remedies Clause of the ENA states:

7.4. Remedies. [Njeither Alameda nor Developer shall be entitled to damages or monetary relief other than as set forth in this Section 7.4. Permitted remedies shall include (i) mandatory or injunctive relief, (ii) writ of mandate, (iii) termination of this Agreement, or (iv) a contract Claim ... to recover money due to Alameda or Developer as a payment of Pre-Development Costs1 or reimbursement of excess Pre-Development Cost deposits under Section 6 of this Agreement; provided, however, neither Alameda nor Developer shall be liable, regardless of whether the Claim is based in contract or tort, for any special, indirect or consequential damages.

ENA § 7.4. The City argues that the clause precludes recovery of all but a specific subset of reliance damages; SCC Alameda argues that the clause allows for recovery of broad and comprehensive rebanee damages. The Court found in a prior discovery order that the clause was arguably facially ambiguous. The Court allowed discovery on this issue. The parties have now conducted discovery regarding the clause, and present evidence as to the drafting history to help the Court discern the meaning of the clause.

The Exclusive Negotiation Agreement (“ENA”) was heavily negotiated by both sides. The initial draft was produced by Alameda outside counsel JoAnne Dunec based on a “form” used in another transaction. Newdorf Decl. (dkt. 124) Ex. B (“Dunec Depo.” 38:11-21); Ex. F (“Potter Depo.” 40:18-21). The document went through “dozens” of drafts over two months before it was signed by both sides. Newdorf Decl. Ex. A (“Brandt Depo.” 43:24-44:1). This included the initial draft circulated on May 15, 2007 (Newdorf Decl. Ex. 5), and revisions circulated May 22, 2007 (Id. Ex. 22), June 4, 2007 (Id. Ex. 8); June 11, 2007 (Id. Ex. 6), June 16, .2007 (Id. Ex. 16), June 21, 2007 (Id. Ex. 21), July 3, 2007 (Id. Ex. 9.) and July 10, 2007 (Id. Ex. 24). Both sides made changes in the draft language, with the drafts going back and forth between them. Brandt Depo. 38:12-18; Newdorf Decl. Ex. C (“Freilich Depo.” 57:11-13); Potter Depo. 8:19-21. In addition, the parties met on a regular basis (weekly at times) to discuss changes in the draft versions of the ENA. Brandt Depo. 26:5-14; Potter Depo. 10:25-11:12. Each side was represented by both in-house and outside counsel. Freilich Depo. 26:9-12; Newdorf Decl. Ex. E. (“Myers Depo.” 6:1-6). The negotiations took approximately two months. Brandt Depo. 25:14-17; Freilich Depo. 15:8-9. The final ENA was signed and dated July 18, 2007, after being approved by the Alameda City Council. Newdorf Decl. Ex. 1.

[889]*889Dunec prepared the first ENA draft on behalf of the City. Miller Decl. at Ex. A (“Brandt Depo.”) at 28:5-9. The initial draft at Section 7.5 discussed remedies:

In any action at law or equity or other legal or administrative proceeding to remedy an event of default of this Agreement or otherwise enforce this Agreement, or that otherwise may arise out of this Agreement, the sole and unique remedies shall consist of (a) mandatory or injunctive relief, (b) writ of mandate, or (c) a contract Claim (as defined below) to recover money due to Alameda or Developer as a payment of Pre-development Costs or reimbursement of excess Pre-development Cost deposits under Section 5 of this Agreement. Neither Alameda nor Developer shall be liable, regardless of whether the Claim is based in contract or tort, for any special, indirect or consequential damages.

Newdorf Decl. Ex. 5 § 7.5 (emphasis added). Two days later, the parties met for a face-to-face discussion. In her deposition, Freilich stated she told the City that SCC Alameda should be able to recover reliance damages upon a breach by the City. Miller Decl. Ex. D (“Freilich Depo.”) at 13:23-14:25. The contemporaneous notes taken by Dunec (the City’s outside counsel) at the first meeting, stated in part:

§ 7.5 — Remedies
—costs incurred up until termination
—$1M
§ 7.2 — If Alameda defaults — recovery of costs by SunCal [SCC Alameda]
DB [David Brandt] — won’t agree

Newdorf Decl. Ex. 17 at 4. Brandt testified at his deposition regarding the early discussion of out-of-pocket cost recovery by SCC Alameda:

Q. And then under 7.2, which is default to Alameda in the draft, there’s a note [in Exhibit 17], “If Alameda defaults— recovery of costs by SunCal.” Do you recall who said that at the meeting?
A. That was either going to be Amy [Freilich of SunCal] or Charlie [Thornton, outside counsel for SunCal].
Q.

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897 F. Supp. 2d 886, 2012 WL 4059884, 2012 U.S. Dist. LEXIS 131646, Counsel Stack Legal Research, https://law.counselstack.com/opinion/scc-alameda-point-llc-v-city-of-alameda-cand-2012.