$1B lawsuit filed by Insight Terminal Solutions against City of Oakland

  • Demonstrators hold a banner during the 2012 Republican National Convention. Text: "Greed Isn't Green Ⓐ Earth Isn't for Sale". Image credit, Lig Ynnek, Creative Commons license CC BY 2.0 DEED Attribution 2.0 Generic.

Yesterday, Insight Terminal Solutions (ITS), a shell company owned by hedge fund operator Jon Brooks, filed a frivolous lawsuit against the City of Oakland claiming losses of over a billion dollars stemming from the City’s termination of Phil Tagami’s lease in 2018.

ITS negotiated a sublease of the 19-acre West Oakland site days before the City declared Tagami’s lease terminated for failure to meet his deadline to get construction of a marine export terminal underway. A state court judge ruled in January that the City acted prematurely and should have given Tagami’s Oakland Bulk and Oversized Terminal LLC (OBOT) an extension of time.

ITS’s lawsuit follows in the wake of a California Superior Court decision denying Tagami’s claims that his companies lost $159 million as a result of the City’s premature action. The Court offered Tagami a choice between $318,000 in damages or reinstatement of his lease. Tagami chose the latter.

Although Tagami continues to portray himself as indifferent to what commodity ships through the West Gateway, this dispute between the would-be developers and the City remains all about coal. Settlement talks between Tagami and the City broke down in 2022 over Tagami’s refusal to provide an iron-clad agreement that coal would not ship through the terminal. In the recent trial of Tagami’s lawsuit, exorbitant damage claims rested on projections that millions of tons of coal would ship through the terminal annually through 2082. The judge rejected the massive claims of losses as “speculative and unreliable.”

The new lawsuit was filed in the same U.S. Bankruptcy Court — in Louisville, Kentucky — where Brooks and his hedge fund manager Vikas Tandon gained control of ITS and the West Gateway sublease. In its complaint, ITS is claiming that the shell company was worth between $1.3 and $2.0 billion when its sublease was negotiated, but that this value collapsed to $20 million a few weeks later, when the City terminated the master lease. The City is appealing the recent decision in California Superior Court that its 2018 termination of the lease was invalid. If the City succeeds on its appeal, and termination of OBOT’s lease of the West Gateway is ruled valid, the new suit will fail because ITS’s rights under its sublease, if any, depend entirely on the survival of Tagami’s (OBOT’s) lease.

Legal experts predict that, even if ITS’s new lawsuit were to survive the City’s appeal, the Kentucky court would reject ITS’s grandiose claims of lost profits/value just as Judge Noël Wise of the Alameda County Superior Court rejected OBOT’s claims.

The East Bay Times’ reporting on this story is available here: City faces new suit in battle over coal.




Image credit: Lig Ynnek, via Wikimedia Commons, Creative Commons license CC BY 2.0 DEED Attribution 2.0 Generic.