San Jose Ordered to Repay Developers $6MM for Not Fulfilling Planning Process

Jury Finds Breach of Contract to Expeditiously Process Development and Rezoning Applications

SAN FRANCISCO – June 8, 2012 – Last week a jury awarded several developers, including Berg & Berg Enterprises, $6,083,173 in a breach of contract dispute with the City of San Jose over planned developments in the Evergreen Development Policy (EDP) area.

Between 2002 and 2007, Berg & Berg Enterprises, LLC, and other local developers, paid millions of dollars to San Jose and committed themselves to contribute an additional $250,000,000 for infrastructure improvements based on the promise that the City would expeditiously process their development and rezoning applications for properties in the EDP area. The jury found that the City failed to expeditiously process the applications and bring then to the City Planning Department and/or the City Council for consideration. As a result, the jury found that the fees paid by the developers must be returned to all of the developers that participated in the lawsuit.

“There are inherent risks in getting development agreements processed by municipal agencies,” said Carl Berg of Berg & Berg Enterprises. “The City of San Jose took the unique approach of creating a contract with us, asking for money up front, in exchange for expediting our applications. They never implemented a process to even review our application and the jury agreed that City breached their agreement and should return the money they collected.”

“This was a significant victory because it sends a message to cities that they cannot ignore their contractual agreements when there is a change in administration,” said San Francisco attorney, Bob Moore of Allen Matkins, who argued on behalf of the plaintiffs. “In the period between 2002 and 2007, the politics around development changed in San Jose and the City ran roughshod over the rights of these developers.” In development districts like Evergreen, cities work with developers in public-private partnerships to fund infrastructure and improvements. In not abiding by the agreements, the City jeopardized this very useful tool of redevelopment.

Cupertino-based Berg & Berg Enterprises, LLC is one of Silicon Valley’s oldest and best-known private real estate development companies.

Allen Matkins Leck Gamble Mallory & Natsis LLP, founded in 1977, is a California-based law firm with approximately 220 attorneys with offices in four major metropolitan areas of California: Los Angeles, Orange County, San Francisco and San Diego. The firm’s core specialties include real estate, real estate finance, construction, land use, natural resources, environmental, corporate and securities, intellectual property, joint ventures, taxation, bankruptcy and creditors’ rights, employment and labor law, and dispute resolution and litigation in all these matters. For more than 30 years, Allen Matkins has helped clients turn opportunity and challenge into success by providing practical advice, innovative solutions and valuable business opportunities.

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