A Superior Court judge last week ordered the city to refile its lawsuits against a former city real estate adviser after concluding that the city’s settlement with its ex-landlord didn’t clearly exclude the broker its landlord paid millions of dollars.
Judge Timothy Taylor ruled Friday that settlement language made it necessary for the city to clarify in new complaints that it isn’t arguing that broker Jason Hughes was an agent of ex-landlord Cisterra Development, which paid Hughes $9.4 million for his work on the city’s 101 Ash St. and Civic Center Plaza leases.
The city has accused Hughes of violating a state conflict-of-interest law barring officials from financially benefiting from contracts they work on. Cisterra and its lenders were also named in the two civil lawsuits until the City Council approved a controversial settlement in July allowing the city to buy out the two leases and collect some of Cisterra’s net profits.
The cases now focus on Hughes, and his attorneys are attacking the suits ahead of planned April trials. Hughes’ attorneys asked the court to rule on its argument that the city settlement released Hughes from liability by not specifically excluding him from a list of possible Cisterra entities.
Attorneys for the city maintained the settlement plainly excludes Hughes, a point officials including Mayor Todd Gloria have emphasized since the controversial deal was announced. Indeed, the agreement itself notes that it doesn’t have the effect of dismissing city claims against Hughes.
But Taylor decided an argument from Hughes’ attorneys that the broker wasn’t explicitly excluded as an agent of the ex-city landlord was valid.
“Here’s a heavily lawyered settlement agreement with the glare of the Union-Trib, NBC 7 and every other media outlet shining on this major public debacle, and no one thinks to add one sentence that would have cured this problem?” Taylor said.
Taylor remained convinced of that conclusion following a series of arguments and citations from the settlement itself offered by a lawyer representing the city.
“I’m handing you a life preserver here,” Taylor said to the city’s attorneys.
In a Friday statement, a spokeswoman for City Attorney Mara Elliott wrote that the city will heed Taylor’s direction and refile the complaints.
“Today’s ruling does not prevent the city from obtaining a trial at which Mr. Hughes can be held accountable for his actions,” spokeswoman Leslie Wolf Branscomb wrote.
Hughes’ attorneys, meanwhile, were celebrating.
“We anticipate the city will try again with yet another complaint, all in an effort to scapegoat Mr. Hughes for the city’s own failures and egregious mistakes at 101 Ash, mistakes that continue to this day with the city’s hopeless legal theories,” attorney Michael Attanasio wrote in a statement.
Elliott’s office has argued it has a strong case against Hughes.
Hughes in 2013 volunteered to advise then-mayor Bob Filner on real estate issues and later told multiple city officials he wanted to be paid by someone other than the city amid negotiations on a real estate deal more than a year later, a dynamic Hughes’ attorneys have emphasized.
Last year, it was publicly revealed that Cisterra paid Hughes for his work on the Ash and Civic Center leases and later, that he had previously undisclosed agreements with the city’s landlord. The revelation of the landlord’s payments to Hughes triggered city legal efforts to void the now-cancelled leases.
Hughes has produced a letter he says the city’s former real estate director signed giving him the go-ahead to seek compensation for complex city lease deals. Yet the former real estate official and other former city officials have said that they didn’t know the city’s landlord paid Hughes.
Hughes’ attorneys have previously argued that Hughes’ statements to multiple city officials put the city on notice and could have triggered further investigation and thus a statute of limitations. Taylor ruled in October that there were “triable issues of material fact” on the matter.
The county District Attorney’s Office is continuing to criminally investigate the city real estate debacle.
Well that’s just great. As far as I can see, this was the citizens last chance to recover any money from this Gloria’s disastrous deal for 101 Ash Street. So here’s how it sits now. Gloria gave Cisterra $132 million to settle. Of course the city doesn’t have $132 million, so they had to issue bonds to pay for it. The bonds raise the cost of the settlement to close to a third of a billion dollars. Oh, but there’s more. The building is worthless and has to be demolished. $90 million more is needed to remove the building. That makes the total close to half a billion dollars. All this and Gloria still hasn’t testified under oath about his involvement. Hmm… makes me wonder if we’re paying all this money so Gloria can avoid incriminating himself on the stand.
Oops, I almost forgot about all the money spent on lease payments and futile attempts to make the building habitable. Let’s just say the total is around two thirds of a billion dollars.