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This post has been updated to reflect new numbers provided by the city attorney’s office.
It’s elderly, yes, but it’s apparently not dead yet.
The legal dispute between the city and South Bay developer Roque de la Fuente was declared dead in 2008. But still more appeals and lawsuits have revived the case, which now holds the dubious title of the city’s oldest active lawsuit.
That means a massive liability still hangs over the heads of city leaders and attorneys who are working feverishly to settle and avoid yet another trial, which could come as soon as 2016, said Gerry Braun, spokesman for City Attorney Jan Goldsmith.
Tying the city up in decades of litigation is a tale of partnership and betrayal.
A deal struck between the city of San Diego and de la Fuente in 1986 for a new 260-acre industrial business park near the border was supposed to lead the way for the newly annexed region in dire need of infrastructure, jobs and commerce. (The property was initially purchased by Roque de la Fuente, and his son, Roque de la Fuente Jr. The elder de la Fuente died in 2002, and his son has long controlled the business.)
Today, that initial vision can be hard to see through the stream of semi-trucks headed to and from the border that surround de la Fuente’s Border Business Park. On the other side of the kicked-up dust is an area dotted with parking lots and companies that offer freight shipping, fruit distribution and auto auctions.
At issue is whether or not the city violated the terms of the 1986 development pact, as well as an agreement that Border Business Park would build a sewer main and the city would eventually reimburse the costs. Over the years, both sides have managed to convince judges they’re the wronged party.
De la Fuente won more than $122 million in 2001. With interest the liability once topped $150 million, an amount officials feared could cause the city to go bankrupt.
The verdict was overturned and numerous appeals and new lawsuits by businesses partly owned by de la Fuente or affiliated with the business park followed. The case has ping-ponged between trial and appellate courts and five lawsuits remain active.
The city’s previous offers to settle have ranged from $45,000 to $50 million, according to media reports here and here.
Border Business Park had also sued over the city’s decision to reroute truck traffic and plans for a cross-border airport, arguing those moves amounted to what’s called inverse condemnation, or the taking of private land by the government, but those claims are now gone.
Border is still seeking damages for the truck traffic though, and a new inverse condemnation claim over the city’s failure to build a drainage system is moving forward.
Representatives for Border Business Park declined to comment.
Attorneys for the company and the city told a judge last year that meeting with new Mayor Kevin Faulconer “has invigorated the movement towards settlement,” court records show.
Felipe Monroig, Faulconer’s deputy chief of staff, is hopeful a new deal to end the dispute is near.
“All parties have been working together to try and find a solution that works without having to go through another trial,” Monroig said. “The cases are complicated and any settlement requires agreement on a large number of issues. We have made good progress in the past year and I am hopeful we can get this resolved in the next few months.”
Goldsmith did not respond to requests for an interview, but Braun offered a statement: “The city attorney thinks the case should be resolved and the property cleaned up. Both sides have made that effort but, unfortunately, decades of litigation makes settlement more difficult.”
Braun said it’s impossible to put an exact cost on the case to date, partly because the case is so old and partly because work done in-house isn’t billed and staff hours spent on the case aren’t tracked.
Since 2001 though, the city has relied on the firm to do the heavy lifting, work that comes with clear legal bills. The city has racked up more than $12.2 million in outside legal bills on the case to date. At least $9.8 million, or 80 percent, is covered by insurance, Braun said. A “portion” of the balance ($2.45 million) is also covered by other insurance groups but Braun couldn’t say how much.
Both sides have won attorney’s fees and costs, some for millions of dollars, but nothing was paid and the awards are now void as the litigation continues.
Here is a condensed timeline of the dispute over Border Business Park: