New Appeals Threaten to Stall Sunnyvale Town Center Redevelopment For Years

By Sharon Simonson

Both parties to a dispute over ownership of the Sunnyvale Town Center have appealed a Dec. 21 court judgment, ending plans for a July trial that had promised to end the bitter affair.

Forum at Sunnyvale 06Attorneys for bank Wells Fargo & Co. and for Silicon Valley developer Peter Pau have filed documents with the Santa Clara County Superior Court giving notice of appeal from Judge Peter Kirwan’s December ruling, which split in favor of the bank on four causes of action and in favor of Pau on one.

The appeals are likely to delay resolution of the case by at least two years given the speed with which the appellate court responds, said attorney Ron Rossi of Rossi, Hamerslough, Reischl & Chuck. Rossi represents Pau. Legal briefs explaining the appeals would likely not be filed until this summer, according to the bank. At the appeals’ conclusion, there would still have to be a trial.

The reconstruction of the Sunnyvale Town Center has been on hold since late 2008, first struck low by the financial crisis and now immobilized by the legal dispute. The center’s stall contrasts sharply with events all around it in Sunnyvale, which has seen a burst of new office and housing development. Two large apartment complexes—one developed by BRE Properties Inc. and the second by Carmel Partners, both of San Francisco—are coming to life next door to the Town Center, even as the Town Center buildings, partially constructed when the financial crises descended in late 2008, remain incomplete.

At Wells Fargo’s request, Judge Peter Kirwan in December dismissed four of Pau’s five claims against the bank in a lawsuit that Pau filed in April 2012.

The bank said its activities were undertaken under the aegis of a court-appointed receiver and are therefore protected from Pau’s claims of misconduct. The judge agreed with the bank regarding Pau’s first four claims, which sought to set aside an August 2011 trustee sale of the center to the bank.

But on a final breach of contract claim, the judge agreed with Pau, saying it was not clear that Pau’s complaints against the bank stemmed from activities the bank undertook in the service of the receivership.

Kirwan told the parties in early January that he intended to set a trial date for the final cause. He directed the parties to return to court March 5, at which time he intended to set the date for no more than 18 weeks later.

Rossi sought to persuade the bank not to appeal the judge’s Dec. 21 decision to uphold the breach of contract claim, noting that the trial on that claim could go forward even if Pau appealed the judge’s ruling on the other four causes of action. Based on the judge’s proposed timeline, Rossi estimated the case could have gone to trial by early July and have been resolved by the end of that month.

After the bank filed its appeal, Rossi sent a letter to the bank and Sunnyvale city council members that accused the bank’s attorney Katherine Ritchey of Jones Day of doing all that she could to delay trial even as the bank and the city blamed his client for the stranded project. “Incredibly, you simply hide behind your mantra that Pau’s claims ‘have no merit.’ If that were true, why would you appeal an order that allowed the case to go to trial?”

A spokesperson for the bank in an email message said it is difficult to predict appeal timelines. The bank hopes to avoid trial altogether by persuading the appellate court to affirm the lower court’s ruling on the first four causes and to overturn the ruling on the fifth, the spokesperson said.

Pau is seeking general, special, punitive and exemplary damages plus attorney’s fees and costs.

Despite years of litigation, the bank has successfully thwarted nearly all attempts by Pau to gather evidence from it though the discovery process, which would force the bank to produce documents and allow witness depositions, among other things.

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