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‘Time to move on,’ or is Ash Street lease illegal? City presses diverging arguments

San Diego city lawyers told a Superior Court judge on Friday that it was “time to move on” from the disputed Ash Street lease because the mayor and City Council have already settled with the primary defendants in a civil lawsuit.

Hours later in a nearby courtroom, the same legal team argued before a different judge that the Ash Street lease and a similar agreement for the Civic Center Plaza were illegal.

They told the second judge that a jury should decide how much money taxpayers are entitled to recover as a result of what they said was a criminal conspiracy between the landlord for both properties and a real estate broker who had been advising city officials.

The apparently contradictory positions put forward by lawyers working for City Attorney Mara Elliott underscore how convoluted the litigation over the city’s 2016 acquisition of the former Sempra Energy headquarters at 101 Ash St. has become.

Both judges took their matters under submission, and final rulings are expected soon. Even though trials are scheduled to begin early next year in lawsuits filed by and against the city, neither case is likely to be resolved anytime soon.

“There is something called due process,” said Judge Joel Wohlfeil, who is overseeing the lawsuit San Diego taxpayer John Gordon filed over the Ash Street lease. “I’ll take another look at matters. I’ll figure out what makes sense.”

The proceedings Friday were both held to debate separate motions for dismissing defendants in separate Ash Street-related lawsuits.

At the morning hearing, Ash Street and Civic Center Plaza landlord Cisterra Development asked to be removed as a defendant from the Gordon case, which argues the Ash Street lease violated the state constitution.

Earlier this week, Wohlfeil issued a final ruling allowing Cisterra’s lender representative, Wilmington Trust, out of that suit.

The Friday afternoon hearing in the city-led litigation was held to consider a summary-judgment motion filed by Jason Hughes, the real estate broker and former mayoral adviser who collected almost $10 million for his work on the two city leases.

Hughes is one of the remaining defendants in two lawsuits the city filed against Cisterra, Wilmington Trust, Hughes and several contractors.

Hughes attorney Michael Attanasio said the cases should be dismissed because the four-year statute of limitations had expired. He said the clock began ticking in 2014, which is when he said Hughes told up to six city officials that he planned to seek payment for his work on the leases.

Judge Timothy Taylor rejected the motion in a tentative ruling Thursday but said Friday he would issue a final ruling soon.

In July, under a settlement proposed by Mayor Todd Gloria, the City Council agreed to buy out the Ash Street and Civic Center Plaza leases for $132 million and resolve the claims against Cisterra and Wilmington Trust.

Elliott publicly opposed the resolution negotiated by Gloria, and the City Council approved the deal against her legal recommendation.

Despite the settlement, city lawyers continue to argue in the cases they filed that the two leases were illegal and that Hughes and Cisterra broke the law by hiding millions of dollars in profits they received from the two leases.

“The violation of (state anti-corruption laws) committed by Mr. Hughes was him having a financial interest in the lease that he advised the city to enter into,” said Michael Williams, another attorney representing the city.

“When Mr. Hughes and Cisterra were asked if he got paid, they flat-out lied,” he added.

At the morning hearing Friday, Cisterra lawyer Michael Riney asked Wohlfeil to grant his motion for summary judgment in the Gordon case because Wilmington Trust was removed from the case earlier this week.

“It is completely impractical to suggest that you should have to wade through another 7-inch motion to make the same ruling,” Riney said. “It makes no sense whatsoever.”

But Gordon lawyer Maria Severson said Riney had neglected to file paperwork required under law before a judge can grant a motion for summary judgment, which effectively prevents a case from going to trial.

The law “says a motion shall be supported,” she said. “The motion must contain and be supported by a separate statement. Here, there is no separate statement, and that is a failure to comply with (the law).”

Attorney Dick Semerdjian, another of the private-sector lawyers hired by the city to defend and prosecute the Ash Street litigation, urged Wohlfeil to uphold a tentative ruling he issued late Thursday approving the Cisterra motion.

“We ask that your tentative be the (final) ruling of the court,” Semerdjian said. “The bottom line, your honor, is it’s time to move on from the Gordon case.”

However, in pressing their lawsuits against Hughes, city lawyers argue that both the Ash Street and Civic Center Plaza leases are illegal — and that Hughes should pay back what they call his “ill-gotten gains” even though the city settled with Cisterra.

“There is overwhelming evidence that Hughes, with the assistance of Cisterra, fraudulently concealed the payments to Hughes,” city lawyers wrote in a Sept. 16 court filing.

“Without litigation, the city would never have known that Hughes — the city’s fiduciary on these transactions — was paid,” the brief said.

In his tentative ruling, Wohlfeil granted Cisterra’s motion to be dismissed from the Gordon case, saying there is not sufficient evidence to proceed to trial with the Ash Street landlord as a defendant.

In the city’s lawsuit continuing against Hughes, Taylor reached the opposite conclusion. In his tentative ruling, the judge said there are enough factual disputes to allow a jury to decide if the city suffered damages due to actions by Hughes and Cisterra.

The city has filed its own summary-judgment motion in the Gordon case. That request will be considered at a hearing scheduled next month.

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