Judge denies OBOT’s “speculative” lost profits claim

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Judge Wise awards fraction of a penny on Tagami’s imaginary “losses”

Judge Noël Wise issued a “(Proposed) Statement of Decision re: Damages” in OBOT v Oakland today, December 11, 2023.

In it, she “finds that OBOT’s claim for lost profits is speculative and not reasonably certain.”

As reported earlier, in seeking damages, “Tagami is seeking to choose between two alternative remedies that he has proposed: (1) $19.1 million in damages and reinstatement of his lease with 2½ years to commence construction ; or, (2) $159.6 million in damages to walk away from the project.” In the second alternative, $154.4 million of the $159.6 million are the claimed “lost profits.” Judge Wise has, instead, offered the developers $317,683 as damages in the second alternative/scenario. In the first alternative, Judge Wise has offered OBOT an “extension of two years and five months from the date of judgement” to meet the initial construction milestones that were not met by the original “Initial Milestone Date” of August 14, 2018.

The following are the scenarios that are offered to the developers — from which they may pick one — as Judge Wise laid them out on page 28 of her (Proposed) Statement of Decision re: Damages:

A. Equitable Remedy

The Court enters judgment in favor of OBOT as follows:

  • OBOT is not in default of the Ground Lease or the Development Agreement;
  • The City’s termination of the Ground Lease was unlawful and invalid;
  • The Ground Lease and the Development Agreement are in effect; and
  • Section 6.1.1.1 (Initial Milestone Date) and section 6.3.1 (Pursuit of Additional Funds) of the Ground Lease shall be extended, due to events of Force Majeure, by a period of two years and five months from the date of judgment.

B. Legal Remedy

The Court enters judgment in favor of OBOT as follows:

  • OBOT is not in default of the Ground Lease or the Development Agreement;
  • The City’s termination of the Ground Lease was unlawful and invalid;
  • OBOT releases and relinquishes its rights to develop the Project pursuant to Development Agreement, the Ground Lease, and the related contracts; and
  • The Court awards OBOT $317,683.00 for actual damages incurred from June 2018 through December 2023

At this point, the parties have until the close of business on Monday, December 18, 2023 to file any comments or objections to the (Proposed) Statement of Decision. Quoting from prior reporting, “After the court issues a final statement of decision, OBOT will be required to prepare a proposed judgment by January 5, 2024 or 7 calendar days after the final statement of decision, whichever is later. By that point, the Oakland community will know the outcome of the trial, as plaintiffs will have to choose their remedy from the alternatives offered by the court.”

There will be more to report following further analysis of both Judge Wise’s proposed decision, and additional briefs and documents filed last week and today. Stay tuned.