TEMECULA, Calif.--(BUSINESS WIRE)--An Orange County Superior Court judge has ruled that Temecula-based partnership, French Valley Business Center, LLC, may proceed with a $67 million breach of contract and interference lawsuit against Riverside County.
On April 28, 2011, Judge Derek W. Hunt overruled the county’s motion to dismiss, allowing the partnership to proceed with its claim that the county breached three ground leases and two office leases executed in April and May 2008. Trial is set for Nov. 28, 2011.
The project was to consist of two office buildings totaling approximately 140,000 square feet near the Southwest Justice Center in French Valley. The space was to be new offices for the county’s District Attorney and Public Defender.
“Both sides in a public-private partnership have a responsibility to deal fairly and reasonably with each other,” said Bruce Keeton, managing partner of French Valley Business Center. “We performed our agreements; unfortunately, Riverside County has not.”
In February 2006, the Riverside County Board of Supervisors approved an initial ground lease with French Valley Business Center on approximately 37 acres, according to the complaint. In April 2008, the initial ground lease was terminated and replaced by three ground leases to accommodate construction on about 9.5 acres. Office leases for the District Attorney and Public Defender were approved in May 2008. Under the lease agreements, the partnership was to build the offices and lease them back to the County.
By January 2009, the property had been graded, pads for the office buildings had been certified, and plans for the offices had been approved by the county.
“French Valley was ready and able to pull the building permits for the construction of the offices in conformance with the provisions of the leases,” the suit said.
According to the suit, in March 2009 the county refused to issue necessary building permits. Later, the county issued a notice stating that the partnership missed the deadline to pull permits in February. County records, public statements and county emails contradict the county’s position.
“The county breached the implied covenant of good faith and fair dealing by representing that French Valley Business Center, LLC had until April 1, 2009 to pull its permits and then attempting to claim the right to terminate the leases due to a ‘failure’ to pull permits by February 1, 2009,” the suit said. “We were given no notice of this ‘secret’ deadline,” Keeton says.
The project would have had a positive impact on the Riverside County economy.
“The buildings would have been built at prevailing wage and would have provided vital construction jobs for the County,” said Keeton. “Instead, French Valley Business Center was forced into default on its contracts with its many contractors and subcontractors who provided their services in good faith reliance on the county.”
Partners in French Valley Business Center, LLC collectively have nearly 70 years of experience developing and building major projects throughout the western United States.
Bruce Keeton is president of Keeton Construction Company, Inc., which he founded in 1986. During his career, Keeton has built or developed more than 10 million square feet of buildings for clients ranging from NASA and Scott’s Manufacturing to International Rectifier and Wells Fargo.
Managing partner David Phares, owner of D. L. Phares & Associate, has been active in Southwest Riverside County real estate and development involving retail, industrial, and office properties for more than three decades. He represented displaced/condemned property owners with their relocations and acquisitions prior to the construction of the Diamond Valley Lake, one of the largest reservoirs in Southern California.