Boondoggle Claim is Libel, Developer Says

PHOENIX (CN) – A California developer claims the Arizona City Sanitation District defamed him by telling its 4,500 customers he had sold off the city’s groundwater rights for $5 million. Michael Tennenbaum, owner of the Arizona City Development Corp., claims the Sanitation District sent a letter that accused him taking public amenities such as Arizona City’s golf course, park, lake, and racquet club, and selling them for his own benefit.




     In April 1979, the Arizona City Sanitary District entered into an agreement with Arizona City Development Corp. to “provide reclaimed water at no charge to the California developer to irrigate the golf course, the park, the lake and the racquet club,” according to Tennenbaum’s federal complaint.
     Tennenbaum claims that the district’s letter, drafted by co-defendant attorney Francis Slavin, falsely claimed that all of the amenities Tennenbaum agreed to maintain for public use in return for free irrigation water “are gone and now belong to private owners.”
     The letter also stated that Tennenbaum had said that the sanitation district “must provide free reclaimed water forever!!” and that the district “will continue to fight for your rights, ensuring they will not stay forever in the hands of golf course owners and out-of-state developers who have their own interests-and bank accounts-in mind,” according to the complaint.
     Tennenbaum says the letter falsely accused him of “profiteering and gouging” and impeached his “honesty, integrity or reputation.”
     The letter also was published in the Arizona City Independent TriValley newspaper, “and it is possible that someone outside of Arizona City could have read the newspaper articles,” Tennenbaum says.
     William Miller, chairman of the sanitation district’s board, later acknowledged in a deposition that “most (if not all) of the statements in the letter … are false,” according to the complaint. (Parentheses in complaint.)
     Miller said that the purpose of the letter was “to let the people of Arizona City know that the district was not going to shut off the water to the golf course, the golf course was not going to go brown, [and] the district was not trying to bankrupt the golf course,” the complaint states.
     Tennenbaum claims that “Miller repeatedly admitted that (i) he does not know how any of the statements in the letter that refer to Tennenbaum by name or as a California developer served the alleged purpose of the letter, (ii) he does not know whether a purpose of the statements in the letter that refer to Tennenbaum was to paint Tennenbaum in a bad light, and (iii) he does not know the purpose of many of the statements set out in the letter.”
     And he claims that “Miller admitted that although the letter was conveying the message that Tennenbaum sold the Paradise Lake for a profit, he (Miller) knew that message was not true, and he knew it before the letter was sent.” (Parentheses in complaint.)
     Tennenbaum seeks more than $1 million for libel, slander and invasion of privacy. He is represented by David Weatherwax with Sherman and Howard.

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