Politics & Government

Beating Briercrest: How City Attorneys Saved La Mesa City Hall $10.5 Million

Glenn Sabine and Gregory Lusitana fended off a lawsuit from senior-citizen housing developer.

Glenn Sabine and Gregory Lusitana are La Mesa’s city attorney and assistant city attorney, respectively.  But after two years of fending off a bitter civil suit, they might as well be Santa Claus.

Thanks to their efforts, the city of La Mesa was spared having to pay a senior-housing developer possible damages totaling $10.5 million.

And a late Christmas present came Jan. 13 when an East County judge let La Mesa recover more than $147,000 in attorney fees, according to court records (see attached).

In a trial held Aug. 8-11, 2011, before Judge Joel Wohlfeil in El Cajon Superior Court, developers of a $23 million project called The Village at Briercrest argued that the city breached its contract and failed to finance a combination skilled nursing facility and assisted-living center.

The city owned the 2½-acre property at 9000 Murray Drive near Sharp Grossmont Hospital, but Briercrest Development suffered setback after setback and couldn’t get a loan to build the project.

In September 2004, according to the city’s trial brief, La Mesa and Briercrest entered into a “ground lease.”  At first, Briercrest planned to build 76 senior-citizen condominiums—meeting a city desire for more senior housing.

“Unfortunately, by late 2007, … condominium sales lagged and construction on the residential buildings had yet to start,” the city told Judge Wohlfeil.

“By late 2008, as we all know, a major meltdown in the real estate and financing sectors of the national economy took place. [Briercrest] soon realized it could not satisfy its contractual obligations to obtain project financing from private sector sources and asked the city to approve, once again, another project change.”

Hoping to get a loan from the federal Department of Housing and Urban Development, Briercrest got the city to tear up its old lease and write a new one.  But that May 2009 “agreement to ground lease” never bore fruit either.

In August 2009, HUD rejected Briercrest’s financing application—even after the developer said it had spent $4 million of investors’ funds on grading and underground utility improvements.

Briercrest tried to modify the lease deal—this time with a downsized project starting with a skilled-nursing facility. The developer even tried to show it had a $7.5 million loan in the works from Comerica Bank.

But the city argued—and the judge eventually agreed—that Comerica Bank’s “term sheet” letter of Jan. 25, 2010, wasn’t a loan commitment.

Exasperated with Briercrest, the La Mesa City Council on Feb. 9, 2010, met in closed session and rejected a bid for a revised lease, “effectively ending the contractual relationship between [Briercrest] and the city,” said the city’s trial brief.

On Feb. 18, 2010, Briercrest sent the city a letter that made a “blatant attempt to intimidate and otherwise bully the city into changing its mind,” the brief said.  “Moreover, if the city failed to agree [to new terms], plaintiff threatened legal action.”

That lawsuit came March 18, 2010, alleging “breach of contract and breach of implied covenant of good faith and fair dealing.”

Paul Zimmer, the developer’s financial expert, ultimately said the company suffered “business opportunity damages” of $6.22 million and “out-of-pocket” damages of $4.28 million—for a total possible claim of $10.5 million.

Briercrest picked another fight as well—arguing over what information it had to reveal to the city.

It got so bad that Judge Randa Trapp on Aug. 27, 2010, granted a city motion to “compel further responses” from Briercrest.  And when Assistant City Attorney Lusitana noted that he’d spent close to 22 hours on the case at $155 an hour, the judge landed hard on Briercrest.

“Based on plaintiff’s misuse of discovery process,” she wrote, “an award of monetary sanctions is justified in the amount of $3,828.50 to reimburse the city for its reasonable attorney’s fees.”

Hundreds of pages later—in a court record that takes two thick folders to accommodate—the case went to trial.

In August 2011, Gregory Markow and Joshua Sonne of the downtown San Diego law firm Hecht, Solberg, Robinson, Goldberg and Bagley went to bat for Briercrest Development. Sabine and Lusitana represented La Mesa.

Closing arguments before Wohlfeil—who once worked on behalf of 9/11 victims’ families—were presented Aug. 26, 2011, in El Cajon.

Five days later, Wohlfeil delivered his “Statement of Intended Decision,”  handing La Mesa a resounding victory.  On Sept. 30, the judge “overruled all of plaintiff’s objections” and issued a final “Statement of Decision” the same day. It went on for 12 pages.

Finally on Nov. 2, 2011, in eight separate rulings, Wohlfeil found in favor of the city every time—and noted that “defendant may seek recovery of its reasonable attorney’s fees incurred in defending this action.”

Eighteen days ago, Lusitana wrote the court a four-page memo saying it wanted Briercrest to pay the city $149,371 in attorney fees.

On Jan. 13 came Wohlfeil’s answer: You can have $147,233 back. The judge denied La Mesa’s request to be compensated for a defense witness at trial who was paid $2,138.

What became of The Village at Briercrest?

On the Internet, it lives on.

“We are proud to announce a new development in La Mesa for active seniors featuring all the amenities of a Continuing Care Retirement Community and the security of home ownership,” says a description at cavareratings.com.

“The community will be built in central La Mesa near Grossmont Center shopping, Grossmont Hospital and adjacent to the new Briercrest Park.”

An entity calling itself Health Care group boasted of its “quality care and services for seniors and their families.”

It said: “To meet the needs of every individual, we offer housing and health care choices—choices that best accommodate your unique and changing needs.”

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