San Diego Settles Lawsuit With Otay Mesa Developer for $25M
Insurance companies will foot the bill to settle the suit with Roque de la Fuente II
A lawsuit that at one point had the city of San Diego on the hook for $154 million was settled Tuesday with an Otay Mesa developer for substantially less money.
City Attorney Jan Goldsmith announced the settlement in what was the oldest lawsuit against the city. And in an unusual twist, part of the deal calls for the city to get $8.2 million.
The settlement, which the City Council approved Tuesday, has insurance companies paying de la Fuente $25 million and the city $8.2 million. Of that city money, $3 million will go to attorney fees and the rest will go to the general fund.
Goldsmith said the remaining attorney fees have been paid by insurance, so "we should not be out of pocket for anything."
The deal also includes an assurance from both parties that neither can appeal the case further. If disputes arise, a judge will settle them, an agreement Goldsmith called a "safety valve" that guarantees the lawsuit is officially dead.
"We have ended it," Goldsmith said. "The safety valve ensures that if there are disputes, these parties can go down to the judge, who has graciously agreed to do this, and resolve it without new lawsuits and move on."
As part of the agreement, de la Fuente has to bring his Otay Mesa business park, which was at the heart of the lawsuit, up to code. The nearly two-decade dispute has meant there are street improvements and water and electrical connections left undone, so the property could not legally be developed.
De la Fuente now has five years to fix those problems. The bulk of his settlement money, about $18.75 million, will be held in escrow until those problems are fixed.
David Wick, CEO of de la Fuente Enterprises, said he's already made plans to build road improvements that would start in the next year.
Vincent Bartolotta, de la Fuente's lawyer, said the deal would not have been reached without Goldsmith's work.
"We do believe it to be a win-win situation for everyone. The city benefits from getting out from under some significant litigation," Bartolotta said. "We think it's a benefit for the Border Business Park and all the Otay Mesa neighbors for the significant fact that now they can move forward with the development of their properties."
It all started with a 1986 lease between the city and de la Fuente for his Border Business Park near the U.S.-Mexico border in Otay Mesa. De la Fuente contended the city ruined his land by allowing trucks to line up next to it as they waited to cross the border to Mexico.
He sued in the 1990s and initially won $94.5 million in 2001. An appeal that the city lost later that year raised the prize to $154 million, including attorney fees.
But the battle continued in courtroom back-and-forths and spinoff lawsuits, including a settlement offer from the city for $50 million that de la Fuente rejected.
Goldsmith said both sides were looking at another trial date this spring, but instead agreed that a settlement would be the best course.
"We turned coal into diamonds," he said. "There are no disputes today. What there is is a blueprint of how we will work together."
City Councilman David Alvarez praised Goldsmith for handling the case, which will improve the blighted land in his district.
Clearing the way for fixing the 312-acre lot is "one of the last missing pieces in order to be able to have that potential growth, that potential economic development" in Otay Mesa, Alvarez said.
De la Fuente, a Democrat, announced his run for president in a video posted to YouTube that showed him diving off a high platform into a swimming pool. In videos posted on his Facebook page, de la Fuente answers questions posed to the other Democratic candidates during televised debates.
De la Fuente, who goes by "Rocky" in campaign materials, wrote that he was not invited to participate in the debates.