OAKLAND, Calif. (CN) — After winning in a contract liability showdown against the city of Oakland, a major developer wants the judge to let it choose its own remedy — ultimately either demanding damages or finishing its long-stalled plan for a bulk shipping terminal at Port of Oakland.
Attorneys for Oakland Global Rail Enterprise began a new phase of a lengthy trial before Alameda Superior Court Judge Noël Wise on Tuesday. The judge ruled tentatively Oct. 30 that Oakland officials breached a ground lease agreement to develop a parcel of public land adjacent to the port and the San Francisco Bay Bridge.
Following this phase Judge Wise will either order Oakland to pay damages to the developer or instruct the project to move forward, if she doesn't allow the company to make the decision itself.
Oakland Global Rail attorney Barry Lee told the judge his witnesses, among them two plaintiffs, will demonstrate why the proposed multi-commodity “ship to rail” terminal at the port had presented "a unique opportunity not likely to be possible again in Oakland or the state of California.”
His prerogative is to prove his client should get damages based on profit loss, since the city allowed the ground lease agreement to expire. The enterprise spent $20 million, and will prove that over the six-year ground lease it lost $150 million in profits, he said.
“The viability of this project was understood by the city,” Lee said. “They wanted to stop the project, and they thought it was going to be viable.”
Danielle Leonard, an attorney for Oakland, posited that the developer faces an uphill task in proving profit loss and took aim at its evidence.
“The bar is very high,” Leonard said. “The evidence plaintiffs just referred to is almost entirely inadmissible. The admissible evidence will not hold up what has just been promised.”
Lee called as his first witness the company’s CEO, Phil Tagami, who alongside company president Mark McClure has led federal and state litigation against the city’s handling of the terminal project. McClure and Peter Brown, a forensic accountant experienced in quantifying damages in commercial litigation, will also testify this week.
Tagami explained why he thought the project was financially viable: Investors promised more than $100 million after he traveled to many countries to ascertain governments' interests in and the value of the terminal.
“There was ample supply of coal to satisfy the project requirements, primarily in Japan,” Tagami said.
He also said that since Wise’s tentative ruling, his company has held meetings to determine if the terminal project should resume and which contractors could be tapped to “rebuild the team.”
Wise and Leonard repeatedly interrupted Lee’s line of questioning, saying that Tagami’s testimony can only be accepted as insight into his reasoning, not as expert opinion or fact. Lee grew increasingly frustrated as many questions and Tagami’s responses were blocked.
This second phase of the trial will conclude Friday. It signals the end of more than three months of trial and a seven-year political battle over the city’s goal to avoid any possibility that coal could be shipped through the terminal. Oakland Global Rail testified that it lost more than $148 million in profits after the city introduced an ordinance to ban coal at its terminals. Oakland, which countersued for breach of contract in 2020, said the developers hurt the project by missing construction milestones while scheming to close a lucrative coal export deal.
The developer asked Wise in a Nov. 22 pretrial brief for the choice of two remedies. Those are either extending the project construction deadline by at least two years and five months, with approximately $20 million award for damages due to delay, or approximately $150 million for “lost profits.”
The city filed a motion to exclude evidence of damages not disclosed by the developer's damages expert and said Wise should not allow evidence for lost profits because the project ground lease waives “consequential damages."
Ted Franklin, co-coordinator of the activist group No Coal in Oakland — which has opposed the bulk terminal for years — and activist Steve Masover said they were disappointed that the judge often bars the public from discussions of different pieces of the case. They said that in a case management conference Nov. 16, Wise’s staff barred members of the public from entering the courtroom for 90 minutes, and such delays have been frequent.
“The paranoid assumption is that the judge was afraid we were going to do something bizarre,” Franklin said. No Coal In Oakland has attended nearly every federal and state legal proceeding involving OBOT and Oakland as silent observers.
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