suncal v alameda second amended complaint

I I!9i21O

LOUIS R. MILLER, State Bar No. [email protected] OR IG 1 NAL

2 DANIEL S. MILLER, State Bar No. 218214 [email protected]

3 BRIANPROCEL, State Bar No. 218657bproce1mi11erbarondess.com 2,9 2010

4 MILL BARONDESS, LLP1999 Avenue of the Stars, Suite 1000

5 Los Angeles, California 90067Telephone: (310) 552-4400

6 Facsimile: (3 10) 552-8400

7 Attorneys for PlaintiffSCC ALAMEDA PONT, LLC

8

9 UNITED STATES DISTRICT COURT

10 NORTHERN DISTRICT OF CALIFORNIA

11

12 SCC ALAMEDA POINT, LLC, a limited CASE NO. 3:10-cv-05178-BZliability company,

13Plaintiff, SECOND AMENDED COMPLAINT

14 FOR:V.

15 1) VIOLATION OF THECITY OF ALAMEDA, a municipa1 CONTRACT CLAUSE OF

16 corporation; ALAMEDA REUSb AND UNITED STATESREI)EVELOPMENT AUTHORITY, a CONSTITUTION/IN3TJNCTIVE

17 Joint Powers Authority; COMMUNITY RELIEF/SPECIFICIMPROVEMENT COMMISSION OF PERFORMANCE;

18 THE CITY OF ALAMEDA apublicbody corporate and politic; ANN MARIE 2) BREACH OF CONTRACT!

19 GALLANT, an individual; and DOES 1 MANDATORY IN.JUNCTIVE• through 10, inclusive, RELIEF AND SPECIFIC

20 . PERFORMANCE;Defendants,

21 3) BREACH OF CONTRACT!DAMAGES;

224) ACTUAL FRAUD!

23 CORRUPTiON/DAMAGES;

24 5) ESTOPPEL/DAMAGES; AND

25 6) DECLARATORY RELIEF

26Dv1AND lOjRYTPIAL

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Case3:10-cv-05178-BZ Document26 Filed11/29/10 Page1 of 39

1 Plaintiff SCC Alameda, LLC (“SCC Alameda”) alleges claims against

2 Defendants the City of Alameda (the “City”), the Alameda Reuse and Redevelopment

3 Authority (“Redevelopment Authority”), the Community Improvement Commission

4 of the City of Alameda (“Improvement Commission,” and together with the City and

5 the Redevelopment Authority, “Alameda”), Anne Marie Gallant and Does 1 through

6 10, inclusive (collectively, “Defendants”), as follows:

7 INTRODUCTION

8 1. When a governmental entity unilaterally attempts to renege on the

9 material terms of a contract, the United States Constitution, the United States Supreme

10 Court and the lower federal courts repeatedly have held that such impairment or

11 destruction of contract rights is unconstitutional. Through a dishonest and

12 surreptitious scheme, ongoing and undiscovered for several months prior to the

13 actions in issue here, that is what occurred and gives rise to the claims in this case.

14 2. Government is precluded from impairing contracts between private

15 parties and is also, and especially, precluded from such impairment where government

16 itself is a party to the contract. Article I, section 10, clause 1, the Contract Clause of

17 the United States Constitution, explicitly provides that “No State shall. . . pass

18 any.. . law impairing the obligation of contracts.” The Supreme Court has held that

19 impairment or destruction of a governmental entity’s own contract, as occurred here,

20 is subject to even more stringent review under the Contract Clause than a contract

21 between private parties.

22 3. As explained below, the parties hereto entered into an extensive and

23 detailed contract providing for exclusive good faith negotiations and cooperation

24 toward approval of entitlements for development of a maj or residential/commercial!

25 retail project adjacent to San Francisco Bay. In furtherance of that contract, SCC

26 Alameda has expended in excess of $17 million, thousands of hours and a great deal

27 of work over the preceding three plus years.

28

SECOND AMENDED COMPLAINT73861.5


1 4. While it is anticipated that defendants will contend that they could deny

2 SCC Alameda’s entitlement application and kill the project at any time, that is not

3 what the good faith exclusive negotiation contract here allows. To the contrary, that

4 contract requires the governmental entities to cooperate and negotiate in good faith

5 and in a commercially reasonable manner to complete the entitlement process

6 including, among other things, the critically-important environmental review under

7 California law.

8 5. Until last year, the parties cooperated and negotiated in good faith toward

9 completion of the entitlement process. But recently, everything changed. Instead of

10 cooperation and good faith negotiations, defendants changed course and ultimately

11 destroyed the project.

12 6. SCC Alameda, on the other hand, tried over and over again to work

13 through the process, not knowing that defendants had resolutely determined to reverse

. 14 course and kill the project. In the process, defendants continued to accept millions of

15 dollars from SCC Alameda while defendants worked on their “secret” alternative to

<I :16 SCC Alameda’s project.

17 7. The contract in issue here explicitly provides that the parties “shall

18 negotiate diligently and in good faith” and in a “commercially reasonable” manner

19 toward completion of the project. But certain members of City government including,

20 among others, Interim City Manager Anne Marie Gallant have acted in bad faith,

21 portraying SCC Alameda in a false light and vilifying and disparaging SCC Alameda

22 and its development plan.

23 8. SCC Alameda was supposed to “partner” with the City in the

24 development of Alameda Point for the benefit of the community. But the Interim City

25 Manager—who is paid $250,000 a year plus $75,000 more in perks—has gone in the

26 opposite direction, sabotaging the process and failing and refusing to negotiate in

27 good faith.

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2SECOND AMENDED COMPLAINT

73861.5


1 9. The motive of the Interim City Manager, previously concealed, has now

2 been exposed: She and others want to oust SCC Alameda as the developer, make the

3 project a “public” development and effectively take it over. She, and others, are

4 seeking to put themselves in charge of a complex multi-year, multi-million dollar

5 project, despite having no development experience or expertise, so they can perpetuate

6 themselves in public office and receive remuneration for “services rendered”

7 indefinitely.

8 10. The real victim here, in addition to SCC Alameda, is the community. By

9 their scheme, Gallant and others are seeking to destroy a development that will

10 significantly enhance the environment and add value to the community. SCC

11 Alameda is highly qualified and experienced in land development; and is ready,

12 willing and able to move forward in good faith and develop Alameda Point.13 11. The actions of the Interim City Manager here are especially egregious

. 14 because SCC Alameda has spent millions of dollars and thousands of hours working

15 on the project, paying for City staff including Interim City Manager Gallant and for

16 third party consultants and contractors, all of which has greatly benefited the project.

17 12. This is a case of a governmental bureaucrat gone out of control and

18 taking advantage to enrich herself. The success of this development relies on the

19 efficiency and expertise of SCC Alameda. Governmental officials such as Interim

20 City Manager Gallant have neither the experience nor expertise to develop a project

21 like this and should not be permitted to manipulate, disrupt and exploit the project for

22 their own ends.

23 13. SCC Alameda has satisfied each and all of the milestones specified in the

24 contract, except for one which defendants prevented, thereby excusing SCC

25 Alameda’s satisfaction of that milestone; and as a result, the contract has been

26 automatically extended by its terms and remains in effect.

27 14. Realizing that SCC Alameda had satisfied the contractual milestones, the

28 City of Alameda prematurely and precipitously accelerated the entitlement process on3



1 July 20, 2010, by voting to reject SCC Alameda’s entitlement application. The vote

2 occurred before the contractually mandated components of the application, including

3 environmental review and good faith negotiation, could be completed.

4 15. Alameda’s actions effectively destroyed SCC Alameda’s contract rights.

5 They are the epitome of bad faith and the polar opposite of the cooperation and good

6 faith negotiations defendants agreed to in their very own contract. As such, there has

7 been breach of contract and a violation of SCC Alameda’s constitutional rights under

8 the Contract Clause of the United States Constitution.

9 16. Gallant’s fraud and corrupt secret plan have caused damages to SCC

10 Alameda, including out-of-pocket expenses in excess of $17 million and

11 consequential damages in excess of $100 million, including lost profits. Gallant’s

12 fraud was done intentionally with complete disregard of SCC Alameda’s rights,

13 constituting oppression, fraud and/or malice. SCC Alameda is entitled to exemplary

14 and punitive damages in an amount appropriate to punish Gallant, and to deter such

15 despicable conduct in the future.

16 FACTS

17 A. The Prolect—Alameda Point

18 17. This action seeks to remedy the improper attempt by the City of Alameda

19 to destroy a major real estate development project with the developer, plaintiff SCC

20 Alameda. The development of this project—Alameda Point—is of critical importance

21 to SCC Alameda and the community, and has undergone a great deal of planning and

22 work.

23 18. Alameda Point is a master-planned development consisting of

24 approximately 918 acres of prime water-front land on the east side of San Francisco

25 Bay with views of the Golden Gate Bridge and the downtown San Francisco skyline

26 (“Alameda Point”). Alameda Point is owned by the United States Department of the

27 Navy (“Navy”), with the City exercising land use control. The land formerly housed

28 the Alameda Naval Air Station.4



1 19. The Naval Air Station was decommissioned in 1997, and Alameda has

2 been trying to redevelop the property since that time. The property is one of the last

3 remaining opportunities for a large-scale mixed use development in the Bay Area.

4 20. There are extensive environmental issues with respect to the project. The

5 Naval Air Station was listed as a Superfund cleanup site in 1999; and no less than 25

6 locations on the base were identified as needing remediation. The property has soil

7 and groundwater contamination, including two landfills that require remediation. A

8 large portion of Alameda Point sits just above the water level, so hydrological analysis

9 and accommodation must be done to avoid flooding. Portions of the property have

10 been designated as a historic district determined eligible for listing on the National

11 Register of Historic Places. There are also geotechnical and traffic issues, and a

12 myriad of other development issues.

13 21. The City has been trying to have the property developed for 17 years.

14 Most recently, Alameda Point Community Partners, a partnership comprised of

15 Morgan Stanley, Shea Homes and Centex Homes, sought to develop the project. In

16 July 2006, the City of Alameda announced a deal with the Navy, but in September

17 2006, Alameda Point Community Partners withdrew from the development.

18 22. In October 2006, the Redevelopment Authority authorized the selection

19 of another qualified developer to create a master-planned community. SCC Alameda

20 was chosen on May 8, 2007 as master developer of Alameda Point.

21 23. In large scale master-planned developments, it is customary for the

22 developer and City to enter into an agreement to negotiate exclusively to completion

23 of the entitlement process; such developments require millions of dollars of costs,

24 countless hours and years of planning before entitlements are approved and a

25 development agreement can be finalized. Good faith negotiation contracts are critical

26 in this industry and are legally enforceable under governing law.

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73861.5


1 B. The Exclusive Negotiation Agreement’

2 24. SCC Alameda is an experienced land developer specializing in

3 developing major master-planned communities. SCC Alameda entered into an

4 Exclusive Negotiation Agreement on July 18, 2007 (the “Exclusivity Agreement”)

5 with the Redevelopment Authority, the Improvement Commission and the City.

6 25. Under the Exclusivity Agreement, Alameda must negotiate exclusively

7 with SCC Alameda concerning the project. Section 9.2.1 of the Exclusivity

8 Agreement states, “It is because of the qualifications and identity of [SCC Alameda]

9 that Alameda is entering into this Agreement with {SCC Alameda].”

10 26. The project contemplated by the Exclusivity Agreement would create

11 much needed jobs and additional housing in the Bay Area, including low-income

12 affordable housing. Under the Exclusivity Agreement, the property would be

13 conveyed first by the Navy to Alameda, and then to SCC Alameda.

14 27. A good faith requirement was of paramount importance to SCC Alameda

15 because it was agreeing to expend millions of dollars and thousands of hours of time

1!: 16 in pursuit of the project. Specifically, section 3 of the Exclusivity Agreement requires

17 Alameda to “negotiate diligently and in good faith” and “use commercially reasonable

18 efforts” to complete the following tasks, among others:

19 • negotiation of a Finalized Navy Term Sheet among the

20 Redevelopment Authority, SCC Alameda and the Navy (Section

21 3.1);

22 • joint preparation by SCC Alameda and Alameda of a project pro

23 forma containing all financial considerations of the project

24 (Section 3.2.4);

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26

27 The Exclusivity Agreement is attached hereto as Exhibit A. The First Amendment tothe agreement entered into on March 6, 2008 is attached hereto as Exhibit B and the

28 Second Amendment entered into on October 7, 2008 is attached hereto as Exhibit C.6



1 • submission of entitlement application and subsequent approvals

2 (Section 3.2.6);

3 • preparation of documents required for environmental review as

4 required by CEQA (Section 3.4);

5 • ensure the continuity of its staff throughout the life of the project

6 (Section 3.7.1.1); and

7 • respond to each submission of SCC Alameda required under the

8 Exclusivity Agreement within a reasonable time (Section

9 3.7.1.2).

10 28. SCC Alameda agreed to pay all third party pre-development costs and to

11 reimburse City staff working on the project. It has invested in excess of $17 million

12 in Alameda Point in reliance on Alameda’s promise to act in good faith, cooperate and

13 be commercially reasonable in negotiating to completion of the entitlement process.

14 29. Given the importance of the term sheet with the Navy, the parties agreed

15 that the Redevelopment Authority would not meet with the Navy without giving SCC

16 Alameda a chance to participate in the meeting:

17 20.2 Alameda Contract. [The Redevelopment Authority]

18 agrees that it will not meet, or engage in negotiations, with

19 any governmental officials or staff whose approval is

20 required to a Transaction Document2,concerning the Project

21 or the Project Site without reasonable prior notice to [SCC

22 Alameda]. [The Redevelopment Authority] shall keep [SCC

23 Alameda] informed of the substance of any such meetings

24 and negotiations and shall permit [SCC Alameda] to

25 participate in the same. Subject to this Section 20.2,

26

272 “Transaction Documents” includes virtually all documents, plans and agreements

28 provided for in the Exclusivity Agreement (Section 3).7



1 Alameda may, in the routine course of governmental affairs,

2 contact (or be contacted by), discuss, or meet with the Navy

3 or any other governmental entity, and [SCC Alameda]

4 acknowledges that such contact, discussions, meetings, or

5 responses may pertain in whole, or in part, to the Project

6 and/or the Project Site.

7 30. Alameda further agreed not to communicate with the Navy in a manner

8 that would prejudice SCC Alameda’s rights:

9 20.3 Prejudice Parties Interests. Alameda and [5CC

10 Alameda] agree to refrain from knowingly engaging in

11 contacts or communications with government officials

12 (other than Alameda staff) in a manner reasonably expected

13 to prejudice the interests of the other Party.

14 C. SCC Alameda Performed Under The Agreementz15 31. SCC Alameda was and is committed to this project. Starting in August

<< : 16 2007, SCC Alameda held multiple community meetings. These meetings were well

17 attended by city residents, city staff and elected officials. Upon finalizing the

18 community planning process, the plan was presented to City sanctioned commissions

19 throughout Alameda, which included the Redevelopment Authority and the Planning

20 Commission. During 2008/2009, the Mayor and other City Councilmembers spoke

21 out in favor of the plan.

22 32. SCC Alameda met the first milestone under the Exclusivity Agreement

23 by submitting its draft development master plan in September 2008. After the City

24 expressed support for the plan, SCC Alameda sought input from the Redevelopment

25 Authority, the Housing Commission, Transportation Commission, Historical Advisory

26 Board, Sports Commission, Economic Development Commission, Recreation and

27 Parks Commission and Board of Education, among others.

28


73861.5


1 33. After receiving extensive additional community input, SCC Alameda

2 submitted a detailed master plan in December 2008 (the “Master Plan”). The Master

3 Plan encompasses all aspects of the project, including the layout of the project,

4 transportation, open space, implementation and infrastructure. The Master Plan also

5 contains an extensive proposal regarding environmental sustainability for all phases of

6 the development, including issues relating to water, carbon neutrality, use of

7 sustainable materials and minimizing waste.

8 34. As part of the Master Plan, SCC Alameda agreed to dedicate and develop

9 approximately 146 acres of park and recreational space. This would include a San

10 Francisco Bay trail, park and recreational facilities, a gymnasium, baseball and soccer

11 fields, basketball and tennis courts, a football/lacrosse field, schools, infrastructure,

12 traffic mitigation, a picnic area, as well as community and neighborhood parks.

13 35. In accordance with the milestones in the Exclusivity Agreement,

. 14 Alameda and SCC Alameda agreed on a joint project pro forma in December 2008.

15 The pro forma contained the financial considerations of the project and was created by

<< : 16 Alameda’s financial consultant.

S 17 36. The agreed upon pro forma was jointly submitted to the Navy for review

18 in January 2009. The parties were cooperating and acting in good faith to provide the

19 Navy with an agreed upon pro forma and working towards finalizing a term sheet with

20 the Navy.

21 37. When SCC Alameda was chosen to develop this project,

22 Councilmembers referred to the development as a “public — private” partnership and

23 assured SCC Alameda that it would be treated accordingly. Despite an extremely

24 difficult real estate and credit market, SCC Alameda worked diligently to keep the

25 project on track.

26 38. As the real estate market deteriorated, SCC Alameda and Alameda

27 agreed to extend the timing of certain milestones provided for in the Exclusivity

28 Agreement. A First Amendment to the Exclusivity Agreement was executed on9



1 March 6, 2008, and a Second Amendment to the Exclusivity Agreement was executed

2 on October 7, 2008. The Second Amendment extended the exclusive negotiating

3 period until July 20, 2010.

4 39. As the parties negotiated and (at least insofar as SCC Alameda was

5 concerned) worked through the issues, they encountered problems that had to be

6 addressed including, among other things, a City Charter provision that prohibited

7 multi-family development in the City and at Alameda Point. Accordingly, after

8 consultation and at the direction of the City, it was decided to put a measure on the

9 ballot to change the density requirement, but the measure was voted down.

10 40. Thereafter, SCC Alameda made adjustments, continued on and, in fact,

11 redoubled its efforts to move forward with the Alameda Point project. While a

12 temporary setback, rejection of the ballot measure did not affect the overall viability

13 of the project.

14 41. Not knowing the secret agenda of the Interim City Manager and her

15 cohorts, it appeared to SCC Alameda that the project, like most complex real estate

16 development projects, was proceeding in due course pursuant to the good

17 faithlcooperation!commercially reasonable contract between the parties.18

D. The Process Is Corrupted—Ann Marie Gallant

19 42. On April 1, 2009, the City hired Anne Marie Gallant as its Interim City

20 Manager. After Gallant was hired, things changed.

21 43. After becoming Interim City Manager, Gallant reversed course on the pro

22 forma and claimed the parties never reached an agreement. After repudiating the prior

23 agreed upon pro forma, she stonewalled SCC Alameda’s attempts to negotiate the pro

24 forma in good faith.3

25

_________________________

26Ann Marie Gallant has jumped from job to job leaving a trail of questionable conduct

27 in her wake. In 2000, Gallant “resigned” from the Los Angeles CommunityRedevelopment Agency (“CRA”) amid controversy surrounding her role in the City’s

28 purchase of land at twice its market value. In seeking board approval, Gallantconcealed an appraisal valuing the property at half the purchase price. When asked if

SECOND AMENDED COMPLAINT73861,5


1 44. Gallant has recruited Alameda City Attorney Terry Highsmith to her

cause; Highsmith has stated: “We’re starting to think we would be better off without

a developer.” That sentiment was expressed despite the fact that Alameda had an

obligation to cooperate in good faith and move forward in a commercially reasonable

manner with the project.

45. The Exclusivity Agreement provides that so long as SCC Alameda meets

certain milestones, the exclusive negotiation period would automatically extend

beyond the expiration date of July 20, 2010. SCC Alameda satisfied these milestones

including, among other things, submitting a Master Plan for the property, an

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infrastructure plan, a sports complex master plan, the Development and Disposition

Agreement (“DDA”) and an entitlement application, which includes a project

description.

46. SCC Alameda satisfied all of the milestones required for automatic

extension of the exclusive negotiation period, except for one that could not be

performed due to Alameda’s intransigence and bad faith lack of cooperation. The

only remaining milestone provides that SCC Alameda must agree on a term sheet

this controversy was a factor in Gallant’s resignation, the CRA administrator stated,“You can read between the lines.” In addition, Gallant was suspended from the CRAfor submission of a disputed expense account claim.

From 2000 to 2003, Gallant worked at the City of Carson, experiencing attendanceissues and frequent unexplained absences (25%-50% of the time). After being placedon involuntary leave, she filed suit against the City. During her time at Carson, herdriver’s license was suspended twice for misdemeanor failure to appear; and the Cityrequested the refund of the $400 a month car allowance she took during the period ofher license suspension.

In 2004, Gallant signed a 3-year contract as City Manager of the City of GustineCalifornia; she left that job after serving less than a year. In 2005, she became dityManager of King City, California; but after less than a year, she left to become CityManager of Desert Hot Springs. She resigned from Desert Hot Springs in 2007 in aclosed session meeting ot the City Council addressing her job performance.

The relevant question is: Did the City of Alameda conduct due diligence and learnabout the foregoing before promoting Ms. Gallant to City Manager and putting her incharge of the Alameda Point project (and the City)?

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73861.5SECOND AMENDED COMPLAINT


1 between the Navy and the Redevelopment Authority. By its own admission, Alameda

2 blocked satisfaction of that milestone.

3 E. Alameda’s Bad Faith

4 47. Alameda has made satisfaction of this final milestone impossible by

5 repudiating the prior agreed upon pro forma, secretly meeting with the Navy,

6 providing the Navy with false information, failing and refusing to work cooperatively

7 with SCC Alameda and the Navy, and preventing SCC Alameda from entering into a

8 term sheet with the Navy. By doing so, Alameda acted contrary to Section 19 of the

9 Exclusivity Agreement which states:

10 Cooperation. In connection with this Agreement, the Parties

11 shall reasonably cooperate with one another to achieve the

12 objectives and purposes of this Agreement, including

13 cooperating with each other in preparing and negotiating the

14 Transaction Documents with third parties identified inz

15 Section 3 above. In so doing, the Parties shall each refrain

16 from doing anything that would render its performance

17 under this Agreement impossible.

18 48. As such, satisfaction of this milestone has been frustrated and prevented

19 and is, therefore, excused. Because Alameda has prevented satisfaction of the Navy

20 Term Sheet milestone, it cannot assert that failure as a bar to extension of the

21 Exclusivity Agreement.

22 49. The City was having weekly calls with the Navy without SCC Alameda.

23 This constitutes a violation of section 20.2 of the Exclusivity Agreement, which

24 requires Alameda to give SCC Alameda prior notice of any negotiations/meetings so

25 it could participate. Alameda further failed to inform SCC Alameda of the substance

26 of the meetings/negotiations with the Navy, which also is a breach of Section 20.2.

27 Alameda’s disregard of SCC Alameda’s contractual rights is evidence of the

28 Defendants’ bad faith.12



1 50. Alameda also agreed to the “best of its ability” to maintain continuity of

2 its staff throughout the life of the project (Section 3.7.1.1). Alameda brought in

3 Interim City Manager Gallant in April 2009; the City Manager plays a substantial role

4 with respect to not only Alameda Point, but also as to city operations generally. The

5 City of Alameda’s website defines the role of the City Manager as follows: “As chief

6 executive officer, the City Manager provides the leadership and direction for the

7 operation and management of all City departments.”

8 51. Far from maintaining continuity, Gallant has done everything in her

9 power to disrupt and destroy SCC Alameda’s project, in contravention of the

10 Exclusivity Agreement. Among other things, she reshuffled the staff of the City, the

11 Redevelopment Authority and the Improvement Commission—effectively stacking

12 the deck to reconfigure a staff she could control.

13 52. Gallant has undermined SCC Alameda’s ability to move forward with the

. 14 Exclusivity Agreement; has impaired and impeded the entitlement process; has

15 prematurely cut off state-mandated environmental review; and has destroyed SCC

16 Alameda’s right to a full, fair and complete review of its application for entitlements.

17 53. She, and others, have spoliated and destroyed evidence; and have

18 corrupted the entitlement process and prevented its completion.

19 54. There are five Alameda City Councilmembers (including the Mayor).

20 Councilmember Lena Tam has been supportive of SCC Alameda’s project. In an

21 attempt to impugn SCC Alameda’s reputation and intimidate Tam from voting on any

22 SCC Alameda-related matter, Gallant hired attorneys to report Tam to the Alameda

23 County District Attorney’s Office. The attorneys wrote letters on May 26 and July 2,

24 2010 accusing Tam of providing confidential information to SCC Alameda in criminal

25 violation of the Brown Act.

26 55. Gallant wrapped SCC Alameda into the character assassination of

27 Councilmember Lena Tam, in order to co-opt any vote by Ms. Tam regarding the

28 project (Tam abstained from the vote on July 20th) Gallant is using intimidation13



1 tactics to have her way. The District Attorney rejected thecharges against Tam and

2 criticized them as being racially and politically motivated.

3 56. Gallant has shown she will stop at nothing to derail SCC Alameda’s

4 project. SCC Alameda is informed and believes that she has been secretly supplying

5 information to opponents of Alameda Point, and Gallant has admitted destroying

6 emails and spoliating substantive evidence regarding the project. Gallant was also

7 caught trying to over-bill SCC Alameda on the project, including for her own time

8 (Gallant billed SCC Alameda for 20% of her time, yet admitted that she only spent

9 10-15% of her time).

10 F. The City Council Vote

11 57. On July 16, 2010, without advance warning, Gallant caused a Staff

12 Report to be sent to the Redevelopment Authority, the Improvement Commission, the

13 Mayor and the other Alameda Councilmembers (the “Staff Report”). The Staff

3 14 Report virtually admitted that the City had prevented SCC Alameda from negotiating

15 a term sheet with the Navy. It states:

16 Finalized Navy Term Sheet. As discussed at the June 15,

17 2010 meeting (Exhibit 5), Alameda has not engaged the

18 Navy in negotiations ofthe Navy Term Sheet related to the

19 Modified OEA because of the need for a well-defined

20 project description, a thoughtftil phasing plan and a mutually

21 agreed upon project proforma for the Density Bonus Option.

22 As discussed at previous Alameda meetings, staff has

23 serious concerns with key assumptions in the project

24 proforma and could not negotiate the project’s ability to

25 support a significant land payment to the Navy until these

26 issues of financial infeasibility were resolved. As a result,

27 the Navy Term Sheet was not agreed to by the Navy,

28 Alameda, and [5CC Alameda] and [5CC Alameda] failed to14

SECOND AMENDED COMPLAINT73861,5


1 satisfy the Navy Term Sheet mandatory performance

2 milestone by July 20, 2010 per the [Exclusivity Agreement]

3 (Italics added).

4 58. Because she prevented the Navy Term Sheet and thus knew that the

5 Exclusivity Agreement would be extended by operation of law, Gallant came up with

6 a new tactic—an end run around that Exclusivity Agreement.

7 59. To that end, and without any prior discussion with SCC Alameda,

8 Gallant put on the agenda for July 20, 2010 a vote to deny SCC Alameda’s

9 entitlement application. Gallant stated that even if SCC Alameda is correct and that

10 the Exclusivity Agreement is extended and remains in effect, the City Council should

11 deny SCC Alameda’s pending entitlement application and kill the project once and for

12 all.o

- U?

13 60. SCC Alameda filed an Entitlement Application as provided for in the

. 14 Exclusivity Agreement in March 2010 (the “Entitlement Application”). CEQA

15 environmental review was proceeding as contemplated, and SCC Alameda had

16 committed to spend approximately $4 million to complete the process over the next

17 year. It was never contemplated that Alameda could, or would, refuse to negotiate

18 further, or that it would summarily and prematurely (without completion of the

19 environmental impact report required by state law) deny the entire Entitlement

20 Application and destroy the project.

21 61. The California Environmental Quality Act (“CEQA”) requires that

22 Alameda perform an analysis of the environmental impact of its actions. Alameda’s

23 decision will impact the local environment and will have a significant impact on

24 Alameda Point—which has multiple serious environmental impacts including, among

25 others, being recognized as a “historic district.”

26 62. The City, the Redevelopment Authority and the Improvement

27 Commission are obligated to proceed in good faith under the Exclusivity Agreement

28 including completion of CEQA review, and completion of the good15



1 faithlcommercially reasonable negotiation process with respect to the Entitlement

2 Application, before making a final determination. This has not taken place.

3 63. Instead, the City Council vote on July 20, 2010 was premature and a rush

4 to judgment, in contravention of the Exclusivity Agreement. Alameda made no effort

5 to cooperate and work out issues with SCC Alameda in a commercially reasonable

6 good faith manner as required by the Exclusivity Agreement.

7 64. SCC Alameda has negotiated in good faith and performed all of its

8 obligations under the Exclusivity Agreement. SCC Alameda put another $720,000

9 into escrow accounts on July 20, 2010 to pay City staff salaries associated with the

10 project and other pre-development costs provided for in the Exclusivity Agreement.

11 65. The motivation behind Alameda’s decision to destroy the Exclusivity

12 Agreement is evident: Interim City Manager Gallant wanted SCC Alameda removed13 as the developer of Alameda Point and the project taken over by the City, through a

14 public development corporation, with her in charge. Gallant had, and has, a “secret

15 plan” for development of the project. She is a blatantly corrupt public official seeking

<< : 16 to line her own pockets.

66. While Gallant pursued her “secret plan,” SCC Alameda continued to put

18 millions of dollars into Alameda Point to pay City salaries and consultants associated

19 with the project. The City continued to accept money from SCC Alameda but,

20 unknown to SCC Alameda, stopped negotiating in good faith and cooperating with

21 SCC Alameda.

22 67. The July 20th vote on SCC Alameda’s Entitlement Application destroyed

23 SCC Alameda’s rights under the Exclusivity Agreement. In bad faith, Alameda

24 created a phony list of “justifications” for voting down the application. For example,

25 the Staff Report stated that negative traffic impact was a reason for denial of SCC

26 Alameda’s Entitlement Application; but the environmental impact report was not

27 close to being finished, so this conclusion is premature at best. Furthermore, Alameda

28


73861.5


1 agreed with the traffic impact in 2008, and the assumptions from then did not change

2 in the Entitlement Application.

3 68. The Staff Report also cited “Risk of Project Infeasibility and Adverse

4 Outcomes,” stating that City consultant Economic & Planning Systems and City staff

5 “believe that the assumptions in [SCC Alameda’s] project pro forma do not take into

6 account significant changes in the real estate market since 2006, overestimate project

7 revenues, and underestimate project costs.” But the City and its consultant previously

8 agreed to the pro forma and all revenue/cost assumptions in December 2008.

9 69. The Staff Report also stated that the Entitlement Application “does not

10 commit to developing a balance ofjobs and housing....” This is another trumped up

11 excuse. Pre-Gallant, Alameda agreed with the jobs/housing balance provided for in

12 the phasing plan in 2008. The March 2010 Entitlement Application actually increased

13 the commercial component of the project (because of the City’s request for more jobs

14 at the site).z

15 70. The Staff Report also provided that the impact on endangered species is a

16 reason to deny the Entitlement Application. But City staff attended meetings with the

17 Fish and Wildlife Service and other organizations and approved of SCC Alameda’s

18 plan in 2008; and the Sierra Club supported SCC Alameda’s plan.

19 71. In derogation of the good faith negotiation agreement, and at the urging

20 of Gallant, the City Council voted to deny SCC Alameda’s Entitlement Application on

21 July 20, 2010. Just a few hours later, a City official allied with Gallant stated:

22 “The expiration of the Exclusive Negotiating Agreement

23 (ENA) with [SCC Alameda] provides a great opportunity to

24 sensibly re-use the former NAS Alameda with sound

25 development at Alameda Point. . .As an alternative to having

26 a Master Developer, I am requesting the

27 Council/fRedevelopment Authority] to evaluate an approach

28 that has a non-profit local development corporation,17



1 chartered and mandated by the City ofAlameda, to facilitate

2 implementing the planfor Alameda Point.” (Italics added).

3 72. Since Gallant became Interim City Manager, she and certain others have

4 put one over on the public with their hidden scheme to take over the project.

5 Unbeknownst to SCC Alameda, the City Council vote on July 20, 2010 was a set-up;

6 the scheme to deny the project was put in place months before; and the vote was the

7 culmination of that scheme. As such, it should be set aside so the good faith

8 negotiationlcooperation process can be completed.

9 73. The City Council vote sought to extinguish the ability of SCC Alameda

10 to obtain redress under the contract. As such, it is unconstitutional and an unlawful

11 impairment under the Contract Clause; and it should be declared null and void.

12 74. By this action, SCC Alameda seeks declaratory and injunctive relief

13 requiring Alameda to perform under the terms of the Exclusivity Agreement.

14 Injunctive relief is appropriate. In the Exclusivity Agreement, the parties expressly

15 bargained for “mandatory or injunctive relief’ as a remedy in the event that Alameda

16 reneged.

S 17 75. SCC Alameda also seeks declaratory relief that the Exclusivity

18 Agreement remains in effect by its terms; and it seeks injunctive relief requiring that

19 Alameda negotiate exclusively with SCC Alameda toward completion of

20 environmental review and the entitlement process. In addition, SCC Alameda seeks

21 injunctive relief preventing Alameda from otherwise pursuing development of

22 Alameda Point unless and until Alameda complies with the Exclusivity Agreement.

23 76. SCC Alameda also seeks specific performance of the Exclusivity

24 Agreement requiring Alameda to negotiate diligently and in good faith, including

25 engaging the Navy so the parties can finalize the Navy Term Sheet. Alameda has

26 impaired SCC Alameda’s contractual rights by improperly and prematurely voting to

27 deny the Entitlement Application, thereby destroying its own agreement.

28


73861.5


1 77. In the alternative to injunctive relief/specific performance, SCC Alameda

2 seeks recovery of damages, including without limitation out-of-pocket expenses in

3 excess of $17 million and lost profits in excess of $100 million against all Defendants.

4 In addition, SCC Alameda is entitled to exemplary or punitive damages against

5 Gallant personally.

6 G. Spoliation Of Evidence

7 78. California Government Code Section 34090 requires that city records be

8 maintained for at least two years and allows the destruction of records only upon

9 legislative approval and written permission of the city attorney after that time has

10 passed.

11 79. In spite of this law, the City of Alameda has a policy of destroying emails

12 after 30 days. Each City department is supposed to maintain hard copies of emails.

13 However, in a recent deposition, Interim City Manager Gallant admitted that she did

14 not save or make hard copies of any emails regarding SCC Alameda or the project

15 during the time period from April 2009 to June 2010. The emails related to the

16 project during this time period were deleted and not saved.

17 80. In her deposition, Gallant also acknowledged that she communicated

18 frequently by email with SCC Alameda, City Staff and Council Members about the

19 project; and that many of those emails and attachments related to substantive issues

20 pertaining to entitlements, environmental review, the Exclusivity Agreement and the

21 City’s negotiations with SCC Alameda.

22 81. Gallant testified that she knew about the City’s policy of destroying

23 emails after 30 days. Gallant did not save any project related emails despite knowing

24 that disputes had arisen with SCC Alameda as early as 2009.

25 82. Because of the foregoing, SCC Alameda cannot obtain critical

26 emails/documents which are necessary to prove its claims in this lawsuit and, as a

27 result, has been severely and irreparably prejudiced. SCC Alameda reserves the right

28


73861.5


1 to seek appropriate redress from the Court for this spoliation of evidence and violation

2 of law.

3 H. The City Endorses the SCC Alameda Transportation Plan That It

4 Previously Rejected

5 83. The July 20, 2010 Staff Report made a finding that SCC Alameda has

6 made limited progress concerning transportation. However, the City had, and has, in

7 its possession a 57-page document entitled “Alameda Point Transportation Strategy

8 2009.” In creating this Transportation Strategy, SCC Alameda worked closely with

9 Fehr & Peers, the consultant used by the City on other projects and specifically chosen

10 by the City for Alameda Point.

11 84. After SCC Alameda provided Fehr & Peers with the “Land Map” and

12 other information on Alameda Point, Fehr & Peers over the course of several months

13 developed the Alameda Point Transportation Strategy. SCC Alameda and Fehr &

14 Peers collaborated closely and worked long and hard on the Transportation Strategy,

15 which provides a detailed analysis and proposal for ferry and bus services, az

16 residential “EcoPass” system and a car-sharing plan, among other things.

17 85. On August 10, 2010, just a few weeks after the July 20, 2010 decision to18

oust SCC Alameda, the City participated in The Association of Defense Communities

19 Annual Conference. City officials gave a presentation on behalf of the City relating to

20 transportation on Alameda Point.

21 86. Incredibly, the City relied on and presented the unique concepts found in

22 the SCC Alameda!Fehr Transportation Strategy. City officials even utilized the most

23 critical documents therein developed by SCC Alameda; and they appropriated for

24 themselves months, and thousands of dollars, of work by SCC Alameda (copies

25 thereof are attached as Exhibit D).

26 87. The City touted and took credit for the same strategy on which it

27 criticized SCC Alameda; and the City embraced the strategy on which it earlier relied

28 to expel SCC Alameda from the Alameda Point project.20



1 88. At the conference, a top City official described the transportation plan

2 exactly as SCC Alameda proposed:

3 As we redevelop the base, let’s do what we can to create a mixed-use,transit-oriented development. From day one, the issue has been: how do

4 we deal with the transportation issues, were at the forefront of thecommunity of Alameda s mind. Promoting sustainable development,

5 development that will not have a huge environmental impact and issustainable, cost-effective and is green, has always been a major principle

6 underlying everything we do at Alameda Point. As I keep saying, atevery single community meeting, the first question that comes up on

7 every single plan: what are you going to do about the transportation

8problem?

9 We don’t need to build the entire transit services from day one, you canphase them in. So, we have a system of phases which we envision, where

10 you build the first phase, begin integrating your transit services, shuttleservices, the things you can afford to do with a limited amount ofdevelopment. Then, as you build the second phase and add to AlamedaPoint, you also improve your transit services and transportation

12 programming and make them more and more robust. And then the thirdphase, you have the full transportation program.

So not only are you increasing the transit services and facilities on the14 base? but each phase, car share programs bike share programs, shuttle

services to the various BART stations, offsite improvements,15 improvements to the transportation system city-wide are also improving

with each phase. So that by the time you get to the year 2025 when you16 have full build-out, you have the full impact of all these new homes and

17

employees, you also have all the benefits of your transportation strategy.

18 89. This action by the City is the height of hypocrisy and dishonesty, and it

19 further demonstrates the City’s bad faith herein.

20 PARTIES

21 90. SCC Alameda is a Delaware limited liability company with its principal

22 place of business in Orange County, California.

23 91. The City of Alameda is a charter law city duly organized under the laws

24 of the State of California.

25 92. The Alameda Reuse and Redevelopment Authority is a Joint Powers

26 Authority established by the City of Alameda and the Community Improvement

27 Commission under the California Joint Exercise of Powers Act.

28


73861.5


1 93. The Community Improvement Commission of the City of Alameda is a

2 public body corporate and politic.

3 94. Ann Marie Gallant is an individual residing in the City of Alameda and

4 currently serves as the Interim City Manager of Alameda.

5 95. SCC Alameda is informed and believes, and on that basis alleges, that

6 Defendants DOES 1 through 10, inclusive, are individually and/or jointly liable to

7 SCC Alameda for the wrongs alleged herein. The true names and capacities, whether

8 individual, corporate, associate or otherwise, of Defendants DOES 1 through 10,

9 inclusive, are unknown to SCC Alameda at this time. Accordingly, SCC Alameda

10 sues Defendants DOES 1 through 10, inclusive, by fictitious names and will amend

11 this Complaint to allege their true names and capacities after they are ascertained.

12 JURISDICTION- U? 13 96. The jurisdiction of this Court is invoked pursuant to Article 3, Section 2,

14 of the United States Constitution and 28 U.S.C. Section 1331, in that the action arisesz

15 under the Contract Clause of the United States Constitution. SCC Alameda’s right to

<16 relief depends on resolution of substantial questions of federal law. Jurisdiction is

17 also invoked pursuant to 28 U.S.C. Section 1367 and principles of supplementary and

18 ancillary jurisdiction.

- 19 VENUE

20 97. SCC Alameda initially brought this action in the Central District of

21 California (Santa Ana) pursuant to 28 U.S.C. Section 139 1(b)(2) and (c). Alameda

22 objected to the venue, and to avoid further dispute, the parties resolved all issues

23 related to venue by stipulating to transfer this action to the Northern District of

24 California.

25

26

27

28


73861.5


1 FIRST CAUSE OF ACTION

2 Violation of The Contract Clause of the United States Constitution!

3 Injunctive Relief/Specific Performance

4 (Against City of Alameda, Alameda Reuse and Redevelopment Authority and

5 Community Improvement Commission of The City of Alameda)

6 98. SCC Alameda repeats and realleges each and every foregoing and

7 subsequent allegation contained in the Complaint as though fuiiy set forth herein.

8 99. SCC Alameda hereby seeks declaratory, equitable and injunctive relief to

9 prevent Alameda from violating, and continuing to violate, the Contract Clause of the

10 United States Constitution. This claim is also brought pursuant to 42 U.S.C. Section

11 1983.

12 100. Alameda and SCC Alameda have an existing contractual relationship that

13 provides SCC Alameda with valuable contractual rights. Among other things, SCC

: . 14 Alameda has the right to good faith negotiation of the Exclusivity Agreement and

15 cooperation in carrying out the tasks provided for therein.

16 101. Acting under color of state law, Alameda has caused SCC Alameda to

17 suffer a substantial deprivation of its contract rights in violation of the federal

18 constitution. By voting to deny the entire Entitlement Application prematurely and

19 while the Exclusivity Agreement is in effect, Alameda destroyed SCC Alameda’s

20 contractual rights.

21 102. By voting to deny the Entitlement Application, Alameda has interfered

22 with and destroyed its own contract, subjecting its actions to heightened scrutiny and a

23 more stringent examination under the Contract Clause than with laws affecting

24 contractual relationships between private parties.

25 103. The July 20, 2010 vote to deny the Entitlement Application was improper

26 and unconstitutional; as such, it is, and should be declared, null and void.

27

28


73861.5


1 SECOND CAUSE OF ACTION

2 Breach of Contract/Mandatory Injunctive Relief and Specific Performance




6 subsequent allegation contained in the Complaint as though fully set forth herein.

7 105. Alameda breached its obligations under the Exclusivity Agreement by

8 failing and refusing to cooperate and negotiate in good faith. Specifically, Alameda

9 has violated the Exclusivity Agreement by, among other things: (1) failing and

10 refusing to negotiate a Finalized Navy Term Sheet in good faith; (2) repudiating the

11 pro forma previously agreed to by the parties and then refusing to work cooperatively

12 with SCC Alameda to prepare the project pro forma; (3) failing and refusing to ensure. . . . . .

13 the continuity of its staff throughout the life of the project; (4) failing and refusing to

14 respond to SCC Alameda’s document submissions within a reasonable time; and (5)

15 refusing to undertake the environmental review in good faith and failing to complete

< : 16 the CEQA review and entitlement process.

17 106. Alameda further breached the Exclusivity Agreement by conducting

18 regular meetings and calls with the Navy without providing SCC Alameda the

19 opportunity to participate in such meetings/calls, not disclosing the substance of such

20 meetings/calls with the Navy and making false statements to the Navy to prejudice

21 SCC Alameda’s contractual rights.

22 107. SCC Alameda performed under the terms of the Exclusivity Agreement,

23 except where performance was excused by Alameda’s breach.

24 108. SCC Alameda is entitled to a mandatory injunction and/or specific

25 performance of the Exclusivity Agreement.

26 109. Alameda breached the terms of the Exclusivity Agreement. SCC

27 Alameda seeks specific performance of the Exclusivity Agreement, including, but not

28


73861.5


1 limited to, an order requiring Alameda to comply with the contractual terms that it

2 breached.

3 110. Pursuant to the express terms of the Exclusivity Agreement, SCC

4 Alameda is entitled to “mandatory or injunctive relief’ as a result of Alameda’s

5 breach.

6 111. SCC Alameda seeks an order requiring Alameda to perform under the

7 terms of the Exclusivity Agreement, including the obligations to: (1) negotiate a

8 Finalized Navy Term Sheet in good faith; (2) work cooperatively with SCC Alameda

9 to prepare the project pro forma; (3) ensure the continuity of its staff throughout the

10 life of the project; (4) respond to SCC Alameda’s document submissions within a

11 reasonable time and process the project entitlements; and (5) undertake the

12 environmental review in good faith and complete the CEQA review and entitlement

13 process.cJ-

14 THIRD CAUSE OF ACTIONzC

15 Breach of Contract/Damages





20 113. As an alternative to injunctive relief/specific performance, SCC Alameda

21 is entitled to damages for breach of the Exclusivity Agreement.

22 114. Alameda breached its obligations under the Exclusivity Agreement by

23 failing and refusing to cooperate and negotiate in good faith. Specifically, Alameda

24 has violated the Exclusivity Agreement by, among other things: (1) failing and

25 refusing to negotiate a Finalized Navy Term Sheet in good faith; (2) repudiating the

26 pro forma previously agreed to by the parties and then refusing to work cooperatively

27 with SCC Alameda to prepare the project pro forma; (3) failing and refusing to ensure

28 the continuity of its staff throughout the life of the project; (4) failing and refusing to25



1 respond to SCC Alameda’s document submissions within a reasonable time; and (5)

2 refusing to undertake the environmental review in good faith and failing to complete

3 the CEQA review and entitlement process.

4 115. Alameda further breached the Exclusivity Agreement by conducting

5 regular meetings and calls with the Navy without providing SCC Alameda the

6 opportunity to participate in such meetings/calls, not disclosing the substance of such

7 meetings/calls with the Navy and making false statements to the Navy to prejudice

8 SCC Alameda’s contractual rights.

9 116. SCC Alameda performed under the terms of the Exclusivity Agreement,

10 except where performance was excused by Alameda’s breach. Upon entering into the

11 Exclusivity Agreement, SCC Alameda expected, at a minimum, that Alameda would

12 not engage in unlawful conduct.

13 117. The limitation of liability clause in section 7.4 of the Exclusivity

. 14 Agreement is null and void, and does not apply, because contracts shielding unlawful

15 conduct from liability are against public policy. Alameda’s unlawful conduct includes

i 16 failing to allow completion of CEQA review and summarily and prematurely denying

17 SCC Alameda’s Entitlement Application.

18 118. California Civil Code Section 1668 provides: “CERTAIN CONTRACTS

19 UNLAWFUL. All contracts which have for their object, directly or indirectly, to exempt

20 anyone from responsibility for his own fraud, or willful injury to the person or

21 property of another, or violation of law, whether willful or negligent, are against the

22 policy of the law.” Defendants’ bad faith and unlawful conduct prevents Alameda

23 from hiding behind the limitation on damages in the Exclusivity Agreement.

24 119. SCC Alameda fully complied with the administrative claim process.

25 SCC Alameda filed an administrative claim against Alameda for damages on

26 September 27, 2010. Alameda rejected SCC Alameda’s administrative claim on

27 November 12, 2010.

28


73861.5


1 120. SCC Alameda is entitled to damages according to proof at trial,

2 including out-of-pocket expenses in excess of $17 million and lost profits in excess of

3 $100 million.

4 FOURTH CAUSE OF ACTION

5 Actual Fraud/Corruption/Damages

6 (Against Anne Marie Gallant)



9 122. Commencing in 2009, Interim City Manager Anne Marie Gallant

10 repeatedly told SCC Alameda representatives that the project was on track andlor that

11 any issues would be worked through. While saying one thing, she was covertly doing

12 just the opposite, working to oust SCC Alameda from, and set herself up as the person

13 in charge of, the project.

, 14 123. Gallant fraudulently concealed from SCC Alameda her “secret plan” to

15 oust SCC Alameda and create a public project. She undertook this scheme corruptly,

16 for the self-serving purpose of perpetuating herself in office (her current contract

17 expires in four months).

18 124. While Gallant pursued her “secret plan,” SCC Alameda continued to put

19 millions of dollars into Alameda Point to, among other things, pay City salaries

20 (including Gallant’s) and consultants associated with the project. Gallant induced

21 SCC Alameda to continue funding the project and to do work on the project knowing

22 that all of the money/work done by SCC Alameda would be appropriated in pursuit of

23 Gallant’s “secret plan.”

24 125. Despite Gallant’s secret plan, she told SCC Alameda to move forward

25 and conduct an environmental impact report on the project. Gallant was encouraging

26 SCC Alameda to spend money on the project while pursuing her secret plan

27 surreptitiously behind SCC Alameda’s back.

28


73861.5


1 126. Gallant spearheaded the effort to oust SCC Alameda from the project.

2 She worked on amassing facts she believed to be harmful to SCC Alameda on

3 completely unrelated matters in order to kill the project.

4 127. SCC Alameda is also informed and believes that Gallant uses her

5 personal computer to conduct Alameda City business in order to conceal her

6 fraudulent activity from discovery and Public Records Act requests. Gallant caused

7 or at least acquiesced in the destruction of critical emails from her City email account

8 related to the project.

9 128. Despite claiming that she spent 20% of her time on Alameda Point, only

10 one email from Gallant’s City account prior to May 2010 has been produced in SCC

11 Alameda’s Public Records Act lawsuit against Alameda. Gallant’s emails have been

12 destroyed.13 129. After saying that everything was on track or would be worked out,

. 14 Gallant orchestrated the creation of a phony list of “justifications” to support voting

15 down SCC Alameda’s entitlement application. For example, Alameda agreed with the

16 traffic impact of the Project in 2008, and the assumptions from then did not change in

17 the Entitlement Application. Yet Gallant listed this as a justification for voting down

18 the application.

19 130. The Staff Report also cited “Risk of Project Infeasibility and Adverse

20 Outcomes,” stating that City consultant Economic & Planning Systems and City staff

21 “believe that the assumptions in [SCC Alameda’s] project pro forma do not take into

22 account significant changes in the real estate market since 2006, overestimate project

23 revenues, and underestimate project costs.” But in late 2008, the City and its

24 consultant previously agreed to the pro forma and all revenue/cost assumptions.

25 131. The Staff Report also stated that the Entitlement Application “does not

26 commit to developing a balance ofjobs and housing....” This is another trumped up

27 excuse. Alameda previously agreed with the jobs/housing balance provided for in the

28 phasing plan in 2008. The March 2010 Entitlement Application actually increased the28



1 commercial component of the project (because of the City’s request for more jobs at

2 the site).

3 132. The Staff Report also provided that the impact on endangered species is a

4 reason to deny the Entitlement Application; but City staff attended meetings with the

5 Fish and Wildlife Service and other organizations and approved of SCC Alameda’s

6 plan in 2008.

7 133. Having accomplished her scheme to oust SCC Alameda from the project,

8 Gallant is now appropriating SCC Alameda’s work product and passing it off as her

9 own.

10 134. Unbeknownst to SCC Alameda, the City Council vote on July 20, 2010

11 was a set-up; the scheme to deny the project was put in place months before by

12 Gallant; and the vote was the culmination of that scheme. Gallant’s corrupt self-13 serving motivation was to entrench herself as head of a public agency in charge of the

14 multi-year complex project.

15 135. The July 20, 2010 Staff Report confirms the fraud and corruption of

16 Gallant. Virtually every one of the items cited in the Report either had been, or was in

17 the process of being, satisfied. In fact, Gallant and her lackeys in Alameda

18 represented just that to SCC Alameda, thereby inducing SCC Alameda’s reliance and

19 continuing work on the project. Specifically:

20 (a) The Report cites a supposed “Lack of Commitment to Mixed-Use

21 Transit-Oriented Development,” when Gallant knew full well and previously had

22 acknowledged that this was not an issue.

23 (b) The Report cites “Jobs/Housing Imbalance” as a basis for denial of

24 the entitlements, but again, Gallant and her staff previously had acknowledged that

25 there was no such problem.

26 (c) The Report claims as a basis for denial that there is a “Need for

27 Economic Development Strategy,” but omits that this very matter had been discussed

28 with Gallant and satisfied.29



I (d) The Report cites “Traffic Impacts” as a reason for denial, but as

2 with respect to the other items therein, this issue had been previously addressed and

3 acknowledged to be on track by Gallant.

4 (e) The Report references “Impacts to Endangered Species” as a

5 reason for denial; this is yet another about-face and ambush, contrary to the repeated

6 discussions and prior assurances from Gallant and others that there was no such

7 impediment.

8 (f) The Report relies on “Risk of Project Infeasibility and Adverse

9 Incomes” in claiming that the project pro formas were inadequate, but fails to

10 acknowledge that Gallant and the City previously had reviewed and approved the very

11 same financial pro formas.

12 (g) Last, and perhaps most galling, the Report references “Lack of

13 Community Support” as a reason for denial, but omits that it was the Redevelopment

14 Authority Board (led by Gallant) which insisted on putting the initiative on the ballot

15 that Gallant now claims evidences lack of community support.

16 136. For over a year leading up to SCC Alameda’s ouster, Gallant laid in wait

17 and lied to and sandbagged the plaintiff, then ambushed them with the Staff Report of

18 July2O,2010.

19 137. Gallant’s fraud and secret plan have caused damages to SCC Alameda,

20 including out-of-pocket expenses in excess of $17 million and lost profits in excess of

21 $100 million. Gallant’s fraud was done intentionally with complete disregard of SCC

22 Alameda’s rights, constituting oppression, fraud and/or malice. SCC Alameda is

23 entitled to exemplary and punitive damages in an amount appropriate to punish

24 Gallant, and to deter such despicable conduct in the future.

25

26

27

28


73861.5


1 FIFTH CAUSE OF ACTION

2 Estoppel





7 139. Gallant/Alameda induced and required SCC Alameda to put millions of

8 dollars into Alameda Point through July 2010. SCC Alameda was unaware that

9 Gallant had been carrying out her secret plan to oust SCC Alameda and take over the

10 project since April 2009.

11 140. SCC Alameda relied on Alameda negotiating in good faith and

12 cooperating as required under the Exclusivity Agreement. Unbeknownst to SCC

13 Alameda, Gallant was doing just the opposite in furtherance of her own self-serving

14 and self-enriching scheme. Alameda is responsible for City Manager Gallant’s bad

15 faith conduct.

<16 141. SCC Alameda also relied on Alameda’s agreement to maintain continuity

S 17 of staff on the project. To the contrary, Gallant installed a staff she could control to

18 carry out her plan to oust SCC Alameda from the project.

19 142. Alameda used SCC Alameda’s lack of progress on transportation issues

20 as a justification for the July 20, 2010 vote to deny the Entitlement Application. Then

21 Alameda relied on and presented the unique concepts found in the SCC AlamedalFehr

22 Transportation Strategy; utilized the most critical documents therein developed by

23 SCC Alameda; and appropriated thousands of dollars of work by SCC Alameda.

24 143. SCC Alameda also expected that Alameda would not engage in unlawful

25 conduct. Alameda has also violated the California Government Code by destroying

26 critical emails and documents.

27 144. SCC Alameda suffered harm as a result of Alameda’s conduct, including

28 millions of dollars expended in reliance on Alameda’s agreement to negotiate in good31



1 faith and cooperate. SCC Alameda is entitled to recoup its out-of-pocket damages of

2 $17 million spent in reliance on Alameda’s representations and agreements. SCC

3 Alameda relied on Alameda and Gallant’s promise to negotiate in good faith.

4 145. Alameda should also be estopped from asserting that the City Council

5 vote on July 20, 2010 has any validity. The vote on July 20, 2010 is null and void and

6 should be set aside because of Alameda’s bad faith conduct.

7 SIXTH CAUSE OF ACTION

8 Declaratory Relief





13 147. Alameda has prevented SCC Alameda’s performance under the

14 Exclusivity Agreement. SCC Alameda has satisfied all other conditions requiring

15 automatic extension of the Exclusivity Agreement except as excused by Alameda’sz

16 breach.

17 148. An actual controversy has arisen and now exists between SCC Alameda18

and Alameda concerning their respective rights and duties.

19 149. SCC Alameda requests a judicial determination of the parties’ rights and

20 duties as set forth herein. A judicial declaration is necessary and appropriate in order

21 that the parties may ascertain their respective rights, duties and obligations.

22 150. Specifically, SCC Alameda requests a declaration that Alameda breached

23 the Exclusivity Agreement by repudiating the pro forma previously agreed to by the

24 parties and failing and refusing to: (1) negotiate a Finalized Navy Term Sheet in good

25 faith; (2) work cooperatively with SCC Alameda to prepare the project pro forma;

26 (3) ensure the continuity of its staff throughout the life of the project; (4) respond to

27 SCC Alameda’s document submissions within a reasonable time and process the

28


73861.5


1 project entitlements; and (5) undertake the environmental review in good faith and

2 complete the CEQA review and entitlement process.

3 151. SCC Alameda further requests a declaration that (1) the Exclusivity

4 Agreement is automatically extended past July 20, 2010, until such time that Alameda

5 complies with its contractual obligations, and that the defendants be precluded and

6 estopped from contending to the contrary; and (2) that the July 20, 2010 vote to deny

7 the Entitlement Application was improper and unconstitutional, and that the vote be

8 set aside.

9 PRAYER FOR RELIEF

10 WHEREFORE, SCC Alameda respectfully prays for judgment against

11 Defendants, and each of them, as follows:

g 12 FIRST CAUSE OF ACTION-

13 1. For a declaration that the July 20, 2010 vote to deny the Entitlement

14 Application was improper and unconstitutional; and that the vote be declared null and

c 15 void and set aside.

16 SECOND CAUSE OF ACTION

17 2. For specific performance and declaratory relief as specified below.

18 3. For specific performance, including an order requiring Alameda to:

19 (1) negotiate a Finalized Navy Term Sheet in good faith; (2) work cooperatively with

20 SCC Alameda to prepare the project pro forma; (3) ensure the continuity of its staff

21 throughout the life of the project; (4) respond to SCC Alameda’s document

22 submissions within a reasonable time and process the project entitlements; and

23 (5) undertake the environmental review in good faith and complete CEQA review and

24 the rest of the entitlement process.

25 THIRD CAUSE OF ACTION

26 4. For compensatory damages in excess of $100 million, or an amount

27 according to proof at trial.

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73861.5


1 FOURTH CAUSE OF ACTION



4 6. For punitive and exemplary damages against Gallant.

5 FIFTH CAUSE OF ACTION




9 Application be declared null and void and set aside.

10 SIXTH CAUSE OF ACTION

11 9. For declaratory relief, including a declaration that Alameda breached the

12 Exclusivity Agreement by repudiating the pro forma previously agreed to by the

13 parties and failing and refusing to: (1) negotiate a Finalized Navy Term Sheet in good. 6

. 14 faith; (2) work cooperatively with SCC Alameda to prepare the project pro forma;

15 (3) ensure the continuity of its staff throughout the life of the project; (4) respond to

16 SCC Alameda’s document submissions within a reasonable time; and (5) undertake

17 the environmental review in good faith and complete CEQA review and the rest of the

18 entitlement process.

19 10. For a declaration that the Exclusivity Agreement is automatically

20 extended past July 20, 2010, until such time that Alameda complies with its

21 contractual obligations; and that the defendants be precluded and estopped from

22 contending that the contract is no longer in effect.


24 Application was improper and unconstitutional; and that the vote be declared null and

25 void and set aside.

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73861.5


1 FOR ALL CAUSES OF ACTION

2 12. For attorneys’ fees and costs of suit.

3 13. For such other and further relief as the Court may deem just and proper.

4

5 DATED: November 29, 2010 MILLER BARONDESS, LLP

By:LLoi4is R. Miller8 Attbrnevs for Plaintiff

9 SCC AfAMEDA POINT, LLC

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DEMAND FOR JURY TRIAL

If and to the extent available at law, Plaintiff SCC Alameda Point, LLC hereby

demands a jury trial pursuant to Rule 38(a) of the Federal Rules of Civil Procedure.

DATED: November 29, 2010 MILLER BARONDESS, LLP

Loi4is R. MillerAttrneys for PlaintiffSCC ALAMEDA POINT, LLC

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73861.5


PROOF OF SERVICE1

STATE OF CALIFORNIA, )2 ) SS

COUNTY OF LOS ANGELES )3

I am a citizen of the United States and employed in the County of Los Angeles,4 State of California. I am over the age of eighteen (18) years and not a party to the within

action. I am employed by MILLER BARONDESS, LLP and my business address is5 1999 Avenue of the Stars, Suite 1000, Los Angeles, California 90067.

6 On November 29, 2010, I served C the original li a true copy of the within

7document(s) described as SECOND AMENDED COMPLAINT on all interestedparties in this action:

8ll PERSONAL DELIVERY: I caused such envelope to be delivered by hand to

9 the offices of the above named addressee(s).

10 BY MAIL: I am readily familiar with the business practice for collection andprocessing of correspondence for mailing with the United States Postal Service.

11 This correspondence shall be deposited with the United States Postal Service thissame day in the ordinary course of business at our Firm’s office address in Los

12 Angeles, California. Service made pursuant to this paragraph, upon motion of aparty served, shall be presumed invalid if the postal cancellation date of postage

13 meter date on the envelope is more than one day after the date of deposit formailing contained in this affidavit.

z0 14

? 15C BY OVERNIGHT DELIVERY SERVICE: I served the foregoing document

by Federal Express, an express service carrier which provides overnight delivery,

16as follows. I placed true copies of the foregoing document in sealed envelopes orpackages designated by the express service carrier, addressed to each interested

17party as set forth above, with fees for overnight delivery paid or provided for.

18 BY FACSIMILE: I caused such envelope to be delivered via facsimile to theoffices of the addressee(s) at the facsimile numbers listed below. I certify that said

19 transmission was completed and that all pages were received and that a report wasgenerated by the facsimile machine which confirms said transmission and receipt.

20BY ELECTRONIC MAIL: by transmitting via electronic mail a true copy of the

21 above listed document(s) to the email addresses set forth below on this date before 5:00p.m.:

22 (State) I declare under penalty of perjury under the laws of the State of

23California that the above is true and correct.

Li (Federal) I declare that I am employed in the office of a member of the State Bar24 of this Court at whose direction the service was made.

25Executed on November 29, 2010, at Los Angeles, California.

26 Carole Conklin

__________________________

27 Type or Print Name Signature

2871427.1


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SERVICE LIST

David B. Newdorf, [email protected] F. Van Fleet, Esq.vicki@newdorf. cornNewdorf Legal220 Montgornery Street, Suite 1850San Francisco, CA 94104-4238Telephone: (415) 357-1234Facsimile: (866) 954-8448

Attorneysfor Defendants City ofAlameda, Alameda Reuse andRedevelopment Authority andCommunity Improvement Commissionof the City ofAlameda

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2871427.1


suncal v alameda second amended complaint

Documents

llc scc alameda

breach of contract

detailed contract

alameda reuse

plaintiff scc alameda

destruction of contract

scc alamedas project

united states supreme