U-T San Diego
16 Nov

U-T San Diego

City offers de la Fuente $50 million settlement

In an attempt to settle a potentially devastating lawsuit, the city of San Diego has offered Otay Mesa developer Roque de la Fuente II $50 million – paid out over 30 years – to settle all his litigation against the city.

The offer was authorized in closed session by the City Council yesterday. It will expire by the end of the week – a move that appears calculated to pressure de la Fuente and his lawyers.

Vincent Bartolotta Jr., one of de la Fuente’s attorneys, said the deadline is an unreasonable demand by the city. However, he said, he and his client are willing to sit and discuss a settlement with city officials.

“We’re certainly not going to kowtow to a 72-hour notice on this,” said Bartolotta.

De la Fuente said meeting the 72-hour deadline is “mathematically impossible,” but also left the door open to more talks.

“I’m looking forward to working with Mayor-elect (Jerry) Sanders and City Attorney (Mike) Aguirre,” he said.

Sanders does not take office until Dec. 5.

The offer is the latest development in the long-running legal dispute over de la Fuente’s Border Business Park near the international border, just southeast of Brown Field.

In 2001, a jury awarded de la Fuente $94.5 million in a suit over the park, which he built under an agreement with the city.

The developer contended that the city took a number of punitive actions that devalued his property, chased away tenants and financially harmed his family.

The award was later reduced by about one-third by a judge who also adjusted the amount by tacking on interest while the city appealed the judgment.

Since then, de la Fuente attorneys estimate that interest – by one calculation averaging $385,000 a month – has pushed the total potential judgment to about $110 million.

The case is on appeal in front of a panel of state judges in Riverside.

No date for a hearing has been set.

But Executive Assistant City Attorney Don McGrath, who is handling the high-stakes case for the city, said yesterday the justices could issue a tentative opinion giving their view of the case by the end of the year.

Given the city’s precarious financial situation on other fronts, an adverse ruling from that court could push the city’s fiscal crisis to a new level.

By the same token, if the court rules against de la Fuente or orders a new trial, the developer could be out millions.

McGrath held a news conference to announce the offer and said it is the highest that the city has made so far during settlement talks.

The offer would settle the case on appeal and two other suits de la Fuente has filed with similar allegations over the same piece of property. Those two cases are pending in Superior Court.

McGrath said the city wants a global resolution – one that will resolve all the cases.

The $50 million conforms to recommendations on the case made by retired federal judge Lawrence Irving, who is the latest judge to try to mediate a settlement between the sides.

But Bartolotta said the offer is less than half of the judgment his client has already won and would require him to give up two other “viable lawsuits.”

He was critical of the city “waiting until the 11th hour” – while a decision from the appeals court looms – to go public with an offer.

“Personally, I think this offer is a perfect example of why this city is in so much trouble,” he said.

Mediation efforts continued last week in a series of telephone conferences among Irving, Bartolotta and McGrath.

“That’s the top number we’ve ever offered,” said McGrath. He said the city has been frustrated during the negotiations because the de la Fuente side has not made an offer to settle all the suits at once.

De la Fuente said he also was frustrated because he has made about 40 offers over the past several years to settle the judgment he won.

If the offer is accepted, even a lengthy payout could pose problems for the city. A tight budget compounded by a deficit of at least $1.4 billion in the city pension fund has made the city’s finances a shambles.

“I don’t think this will be an easy pill to swallow,” McGrath said. But he said it is as good an offer as the city can make.

“There’s nothing more we can do,” he said.

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