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California Tries to Weasel Out of a Deal

LOS ANGELES (CN) - California First sued the California Department of General Services for trying to weasel out of its agreement to sell 11 public buildings - including the Department of Justice and Attorney General buildings in Sacramento - for $2.3 billion. "A deal is a deal," California First says, adding that it's already made a $55 million down payment.

California First, a Delaware LP, says it submitted the winning bid for the 11 buildings "in the face of what is considered to be the worst financial crisis this state has ever experienced."

Ironically, one of the buildings at issue is named for Gov. Jerry Brown's father, former Gov. Edmund Brown; Gov. Jerry Brown repudiated the sale in February.

The state and California First entered a contract, in the final weeks of Gov. Schwarzenegger's term, "to sell the eleven properties for the undisputed fair market price of $2.33 billion and lease them back to the state," according to the Superior Court complaint.

Gov.-elect Jerry Brown "repeatedly affirmed the binding nature of the contract in legal filings," and California First says it made a $55 million deposit.

"Yet, on Feb. 9, 2011, in a sudden and unprovoked turn of position, Gov. Brown announced via a televised press conference that the state would not go through with the contract and even went so far as to declare the contract 'dead,'" the complaint states. "No matter what political motivations inspired Gov. Brown to repudiate the contract, a deal is a deal and defendants bear the legal obligation to remediate the harm caused to California First LP for their breach."

The 11 buildings include the Capital Area East End Complex, the Franchise Tax Board Complex and the California Emergency Management Agency Building, all in Sacramento; the Judge Joseph Rattigan Building, in Santa Rosa; the Edmund G. Brown/Public Utilities Commission Building in San Francisco; the San Francisco Civic Center; and the Junipero Serra State Building and the Ronald Reagan State Building in Los Angeles.

California First seeks specific performance, or damages, and costs. It is represented by Stuart Liner with Liner Grode Stein Yankelevitz Sunshine Regenstreif & Taylor.

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