Oakland is still on the hook for damages after losing a court battle two months ago with a developer who wanted to build a coal export terminal near the port. But the amount of money Oakland might be forced to pay the developer won’t bankrupt the city.
Alameda County Superior Court Judge Noël Wise issued a proposed statement of decision on Monday laying out the alternative remedies for developer Phil Tagami and his company Oakland Bulk and Oversized Terminal, or OBOT.
In October, Wise ruled that Oakland had breached its contract with Tagami, who leads several affiliated companies, including OBOT. The judge found that the city wrongfully delayed and hindered OBOT in building a coal export terminal in West Oakland. Following Wise’s October decision, the parties debated damages and remedies during a second trial.
In her tentative decision, which was first reported on by the advocacy group No Coal in Oakland, Wise wrote that OBOT didn’t fail to deliver on its obligations spelled out in a lease it agreed to with the city several years ago for a parcel of land near the West Oakland Army Base.
Wise ruled OBOT can choose to keep its lease and have it extended for almost 2 ½ years to try to restart the project. Alternatively, OBOT can relinquish the lease and receive $317,683 in damages.
This falls far short of what Tagami was seeking. During the damages phase of the trial in November, OBOT’s attorneys said they wanted either $19.1 million in damages and reinstatement of the lease, or no lease but $159.6 million. OBOT argued it was owed these “lost profits” it would have earned if the city hadn’t interfered with the project.
Tagami told The Oaklandside that the court’s proposed statement of decision in the first and second phases of the trial speak for themselves.
“Simply put, the City of Oakland breached the lease and acted in bad faith,” he said. Tagami added that prior rulings in federal court, which have been upheld by an appeals court, determined that Oakland breached its development agreement.
Tagami did not respond to a question about whether he would accept the judge’s proposed remedies.
Oakland City Attorney Barbara Parker said the city is pleased that the court’s proposed statement of decision found that OBOT is not entitled to the “astronomical damages” they were after.
“We are continuing to review the substance of the trial court’s decisions in this matter and Oakland will continue to make our case that OBOT is not entitled to any monetary damages,” Parker said.
In her proposed decision, Wise said there were many issues that caused her to doubt the reliability of OBOT’s claims for lost profits. She said the court received “minimal evidence” that was based on “layers of unsound assumptions, unsubstantiated and incorrect data, and unexplained conclusions.”
As an example, she noted that an accounting expert used by the developers failed to analyze the profits and losses of other bulk commodity terminals, which could have better informed his findings about OBOT’s projected revenues and expenses.
“For these reasons, the Court separately finds that OBOT’s claim for lost profits is speculative and not reasonably certain,” Wise said in her decision.
The parties have a short time to file comments or objections to Wise’s decision. The court will then issue a final decision. In coming weeks OBOT will be required to choose a remedy offered by the court.
