Attempt to jumpstart coal terminal development nixed by court
West Gateway project on hold (for now) while City appeals
Developers have been attempting to jumpstart an Oakland coal terminal following a ruling against the City of Oakland, but those efforts were derailed today by a ruling from the judge who presided over last year’s bench trial OBOT v Oakland. Her January 2024 judgment reinstating the developers’ lease has been automatically stayed – that is, put on hold – by the City’s appeal contesting the judgment. Alameda County Superior Court Judge Noël Wise confirmed the stay in Tuesday’s ruling, which responded to a motion filed by developers in late May aiming to compel the City to permit coal terminal development to restart immediately.
Following Judge Wise’s ruling, unless and until the City loses its appeal the City will not have to respond to a set of demands that developer Phil Tagami’s Oakland Bulk and Oversized Terminal LLC (OBOT) has made to advance the West Gateway coal terminal project. Among other demands, Tagami wants the City to provide assurances that would enable hedge-fund operator and West Gateway sublessee Jon Brooks to control the future of the property.
After a six-month trial last year, Tagami won his lawsuit contesting the City’s termination of his lease for failure to meet construction deadlines set forth in the contract. The court accepted Tagami’s argument that the City’s actions – especially, its enactment in 2016 of a ban on coal, which was set aside by a federal judge in 2018 – caused Tagami’s companies to miss the deadlines. In January 2024, the court ruled that the City’s termination of the lease was improper and gave Tagami a 2-½ -year extension to get construction underway.
The stakes could not have been higher in Judge Wise’s decision on OBOT’s motion to force the City’s hand. Without a stay, the developers would have been allowed to move forward with their plans to construct a coal terminal, or sell their development rights to the highest bidder. With the automatic stay now confirmed by Judge Wise, the project remains on hold.
In what she referred to as a “close call” prior to issuing her final ruling, Judge Wise determined that the doctrine of the automatic stay applies to this case because a stay is needed to preserve the status quo while a losing party (the City of Oakland) pursues an appeal. An injunction that “mandates,” rather than “prohibits,” action by a defendant is automatically stayed to preserve the status quo until the defendant’s appeal is resolved. Judge Wise wrote in her denial of OBOT’s motion:
The Court finds that the effect of the judgment is mandatory in substance. The Court must look not just to the words, but more importantly to the effect of its judgment in this case. Through that lens, the character of the judgment is clear: The judgment compels the City to disregard its November 22, 2018 termination, and to perform its contractual obligations under the Ground Lease and the Development Agreement.
In reaching this conclusion, the Court is guided by the underlying principle that the parties should not irreversibly alter the West Gateway while the Court of Appeal considers the merits of the City’s appeal. If OBOT were permitted to resume construction of the highly technical, complex, and expensive bulk commodity marine terminal and the Court of Appeal or the Supreme Court found this Court erred in its judgment, the parties would find themselves in the difficult, if not impossible position of having to spend enormous amounts of time and money to try to reverse changes or improvements OBOT made to the West Gateway (both to the land and the appurtenant marine areas). The City is entitled to know whether this Court’s judgment is correct before the West Gateway is altered.
The City’s appeal could take 18 months or more in the Court of Appeal, and whichever party loses the appeal can then seek review in the California Supreme Court. The automatic stay thus prevents construction of a massive coal export facility on the Oakland waterfront from beginning any time soon. A final decision that would end the automatic stay could be years away.
Image credit: Red traffic light, released into the public domain by the Open Clip Art Library (via WikiMedia Commons).