A lawsuit contending that a Eureka Redevelopment Agency deal for a waterfront development violated conflict of interest laws has been thrown out. The First District Court of Appeal upheld a trial court judge, who ruled the lawsuit was filed after the statute of limitations had expired.

The First District said that the lawsuit should have been filed within one year of the agency's approval of the contract in question. The contract was signed in December 2001. Not until September 2005 was the lawsuit filed.

The contract is a disposition and development agreement between the city's redevelopment agency and developer Dolores Vellutini. The agreement grants Vellutini the right to acquire and develop property along the Old Town Eureka waterfront. Vellutini's Eureka Pier proposal calls for restaurants, retail shops, condominiums and recreational facilities. However, the Eureka Pier project and another waterfront development stalled because of the lawsuit.

The lawsuit, originally filed by the Humboldt Taxpayers League, argued that the agreement is illegal because Vellutini was a member of the agency's redevelopment advisory board from 1994 until shortly before the lawsuit was filed. The group contended the deal violates Government Code § 1090's prohibitions against public official self-dealing.

Although Vellutini and developer Glenn Goldan, who signed a similar agreement for the second waterfront project, were members of the advisory board, they recused themselves from discussions relating to their project. But the redevelopment agency's defense against the lawsuit was simply that the taxpayers group had filed too late. The Humboldt County Superior Court agreed with the agency and did not rule on the merits.

The First District opinion contains a lengthy discussion about which of three potential statutes of limitations apply. Plaintiff Sue Brandenburg, a local political activist who has taken over the litigation for the taxpayers group, argued that a four-year "catch-all" statute of limitations in Code of Civil Procedure § 343 applies.

Instead, the First District determined that the one-year time limit in § 340, subdivision (a) applies because that statute concerns "an action upon a … forfeiture." Here, the plaintiff was asking that the developer forfeit her right to enforce the disposition and development agreement, the court determined.

The court rejected the argument that a forfeiture is not involved because the agreement was simply "executory" and no money or property had changed hands.

"The distinction is unavailing," the court ruled, "because, as used in § 340, subdivision (a), a ‘forfeiture' is not limited to the divesture of money or property without compensation. It also includes the ‘loss of a right, privilege, or property because of a crime, breach of obligation, or neglect of duty.'" The court cited Marin Healthcare Dist. v. Sutter Health, (2002) 103 Cal.App. 4th, 861.

In August, Brandenburg told the Eureka Times-Standard that she would ask the state Supreme Court to accept the case because she still wants a ruling on the merits.

The Case:
Brandenburg v. Eureka Redevelopment Agency, No. A114366, 07 C.D.O.S. 7923. Filed July 2, 2007.
The Lawyers:
For Brandenburg: Neil Shapiro, (831) 372-3700.
For the agency: Juliet Cox, Goldfarb & Lipman, (510) 836-6336.
For Dolores Vellutini: Philip Aktins-Pattenson, Mullin, Richter & Hampton, (415) 434-9100.