OAKLAND, Calif. (CN) — A developer who battled the city of Oakland for years in court over a long-stalled plan for a bulk shipping terminal at Port of Oakland will see just $317,683 of the nearly $160 million he sought in damages for lost profits.
Alameda County Superior Court Judge Noël Wise ruled Oakland Global Rail Enterprises developer Phil Tagami is entitled to a tiny fraction of his company’s claim for $159 million in damages from a breached agreement to develop a parcel of public land adjacent to the Port of Oakland and the San Francisco Bay Bridge. Tagami claimed his company missed out on massive profits when the city of Oakland terminated a ground lease on the land in 2018 because his company did not meet initial construction deadlines.
While Wise found the city liable for violating the lease, she said in a statement of decision handed down Friday that Tagami is only due $317,683, unless he chooses to instead resume building the terminal by July 2026. She found the calculation of lost profits flawed, based on an expert testimony from a witness with no expertise in development of bulk commodities terminals, the rail industry or the commodity markets for coal and soda ash, who did not conduct a comparative market analysis of any other bulk commodities terminals.
“OBOT’s claim for $13,900,000 as ‘actual damages’ from June 2018 through December 2023 is not recoverable because OBOT failed to demonstrate with any reasonable probability that it would have received those amounts; instead, the evidence demonstrated those projections were uncertain, moving targets,” Wise said. “The minimal evidence the court received was based on layers of unsound assumptions, unsubstantiated and incorrect data, and unexplained conclusions.”
Wise said she finds that Oakland Global is not in default of the ground lease for failure to meet initial project milestones by Aug. 14, 2018, and if it takes the deal for $317,683 in damages it relinquishes rights to develop the project. She also removed from the extension of deadlines a provision in the lease requiring the city to seek third-party funding of certain improvements, relieving the city of obligations to join the effort if the developer chooses to resume construction.
Attorneys for the city did not respond immediately to requests for comment. But the plaintiffs' attorney Barry Lee said Wise's decisions in his clients' favor "spoke for themselves."
The developer's attorney Barry Lee said the judge's decisions in favor of the plaintiff spoke for themselves.
"The court found that the city improperly terminated the ground lease and acted in bad faith. Plaintiffs intend to proceed as they deem appropriate," Lee said.
The order effectively finalizes more than three months of trial and a seven-year political battle over the city’s desire to keep coal from being shipped through the terminal.
Oakland Global Rail testified it lost more than $148 million in profits after the city introduced an ordinance to ban coal at its terminals which a federal judge and the Ninth Circuit subsequently ruled could not stand at the proposed terminal. To date, the city has not passed a new resolution. 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.
Judge Wise ruled in October that the city was responsible for breaching the ground lease agreement with Oakland Global. The developer asked Wise in November for the choice of two remedies — either an extension of the project construction deadline by at least two years and five months, with approximately $20 million award for damages due to delay, or awarding approximately $150 million for “lost profits," now reduced to just under $318,000.
Oakland Global has until Jan. 5 to select a remedy, after which Wise will issue a final judgment. The developer can then file for attorneys’ fees and costs and either side may appeal any piece of the judgment.
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