Wednesday, June 7, 2006 | An appeals court tentatively threw out a $94.5 million verdict Tuesday against the city of San Diego in its dispute with South Bay developer Roque de la Fuente, potentially swiping away a sizable burden that has long loomed over the city’s already cloudy financial future.
The city and the developer are set to argue the tentative decision in a Riverside County court in the next 30 to 60 days, at which time the three-judge panel will issue a final judgment on the city’s appeal of the January 2001 jury verdict that threatened to bust the city’s tight budget.
Mayor Jerry Sanders said the ruling is favorable, but it is not yet the day to celebrate.
“This appears to be a victory on all fronts for the city of San Diego. Again, nothing is final until the ruling is made final by the panel,” Sanders said at an evening press conference. “But we are cautiously optimistic about this tentative ruling.”
In 2001, de la Fuente won his suit on claims the city breached its 1986 development agreement and took his property without compensation, thereby ruining his planned Border Business Park in Otay Mesa. The city claimed de la Fuente was merely the victim of a real estate recession.
Tuesday’s ruling from the California Court of Appeals would eliminate three jury rulings against the city totaling $94.5 million and would toss another $29.2 million verdict back for a new trial. Taking interest into account, the ruling could save the city more than $150 million, city officials said.
In a press conference with various city officials, the mayor credited the work of City Attorney Mike Aguirre and Kristine Wilkes, a representative from the city’s outside legal help, Latham & Watkins.
The 2001 court loss was a major embarrassment to the city and then-City Attorney Casey Gwinn, as the office had chosen to argue the case itself rather than utilize outside counsel. In present-day city affairs, many in and around City Hall had looked at the potential court enforcement of the jury’s 2001 payment as the final shove that would push the city into bankruptcy.