Tom Butt
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  Setback for City of Richmond in Point Molate Litigation
August 4, 2017
After a previous complete victory in the United States District Court of Northern California, the City of Richmond was dealt a setback today when the Ninth Circuit Court of Appeals announced the Decision from the Ninth Circuit in the Upstream Pt Molate litigation. In summary the Ninth Circuit Court of Appeals:
  • Reversed the district court’s grant of the Motion for Judgment on the Pleadings and remanded the case for further proceedings regarding whether the City violated the LDA by interfering with the Tribe’s ability to fulfill a condition precedent.
  • Affirmed the district court’s dismissal of the express breach of contract claims.
  • Reversed the district court’s order denying leave to amend the Proposed Fourth Amended Complaint. Appellants may file the Proposed Fourth Amended Complaint.
  • Vacated the district court’s amended judgment and remanded the case for further proceedings, including consideration of a legal fee award against the Tribe.

The City of Richmond has not lost the case, but the victory in the trial court and award of attorneys’ fees, from Judge Yvonne Gonzelz-Rogers has been reversed.  The case has been remanded back to Judge Gonzalez-Rogers for further proceedings. The Court of Appeals ruled that the trial court erred in denying Upstream and the Tribe the right to amend their complaint again. The Ninth Circuit expressly ruled that the Tribe could proceed on its claim that the City violated the implied covenant of good faith and fair dealing by interfering with the Tribe’s efforts to gain federal approval for the casino, as evidenced by actions by then-Mayor McLaughlin urging the federal government to deny the requested approvals (see Decision at pages 4-7). This does not mean that the Tribe wins on this claim, but it does mean that the Tribe alleged enough in its complaint to continue with the case.

It appears the trial court victory resulted in a surfeit of optimism that proved to be unreliable.

At best, this could mean many months, or more likely years, before the case is ultimately resolved, and at worst, it could mean the City of Richmond could lose it all.

It’s no secret that the City Council previously considered but did not pursue settlement with the Plaintiffs in this case. An East Bay Times article, “Richmond: Closed-door negotiations over Point Molate draw suspicions,” described resistance to a settlement by former Mayor and Council member Gayle McLaughlin:

Now some at City Hall are considering settling with Upstream in hopes of accelerating development in the area. Councilwoman Gayle McLaughlin, who was mayor when Upstream sued the city, has criticized the closed-session City Council negotiations, saying she was “not willing to go back to the days of backdoor deals.”

“Should a settlement be reached, any open session (City Council) discussion will be simply a dog and pony show with the majority of the council having already agreed to the terms of settlement,” McLaughlin recently wrote in an email to her supporters. “The public deserves more than an opportunity to tweak an already settled-upon development proposal for this treasured site.”
Other RPA members who were also members of the Point Molate Citizens Advisory Committee also resisted settlement. Paul Carman stated:

“From what we are to understand about the terms of the settlement, the plan is outsize for the property,” said Paul Carman, a member of the Point Molate Community Advisory Committee, formed in 2010 to help steer the city’s plans for the peninsula. “It cherry-picks all the prime locations for privatization, includes far more housing … than the public wants, and destroys the last open space from shoreline to hilltop in the Bay Area.”
Another RPA member, Pam Stello criticized any settlement attempt:

“There’s a desire to bring in quick cash,” said Pam Stello, also a member of the Point Molate Community Advisory Committee. “Jim Levine wants to recoup his losses, and Tom (Butt) has a vision that housing here can offset lower property values elsewhere in the city.”
But Stello and others worry that by hammering out the details of any plan in private, it grants land rights to one or two companies, instead of allowing an open bid, as is usually done with development projects. They also say that by not considering alternatives, Richmond could be shortchanging itself for decades to come.
On the other hand, former Council Member Vinay Pimple thought the City should at least keep its options open:

Councilman Vinay Pimple counters that the city is simply keeping its options open.

“The city has said it is exploring a settlement, but if the terms aren’t beneficial, we will say no,” said Pimple, who is also an attorney. “There is no downside to exploring this possibility.”

Part of the reason the U.S. Navy turned over Point Molate to Richmond was to spur economic development in the city, Pimple

“If we don’t do that, it could be taken away,” he said, adding that the time to consider building new housing is now. “If we miss the business cycle, any development can be pushed out another eight to 10 years.”
And I agreed, advocating at least pursuing a settlement that would cost the city nothing and would create jobs and revenue for the City:

Mayor Tom Butt agrees, adding that the city is losing out on vital revenue while waiting for litigation to wrap up. Point Molate has at least 40 historic buildings, meaning they can’t be demolished, and they contribute to the $500,000 a year it costs to maintain the area.

“Those buildings are continuing to deteriorate, and the city doesn’t have any funds to maintain them,” Butt said. “The sooner we get started doing something out there, the less risk of the buildings falling apart. We are not getting any benefits by waiting, including no jobs and no taxes.”
This is a good example of the RPA proclivity to never compromise, putting idealism above pragmatism. No RPA City Council members have ever had business experience in the private sector, and they have no experience in legal matters, in litigation, in construction or in real estate development that could have informed a strategic settlement. If we had been able to settle this lawsuit, it is possible that today construction of housing would have been underway at Point Molate, jobs would have been created, and deterioration of the historic Point Molate Village would have been arrested. Instead, we are going back to court with an uncertain future. See TOM BUTT E-FORUM: McLaughlin - "Pt Molate Process Deeply Offensive to the Public."