By Kristina Pritchett
Headlands Reserve, LLC filed a counter lawsuit against the city on Monday stating the city has “fraudulently billed” the developer more than $600,000.
Sanford Edward, developer of the Headlands, said the city overbilled the Reserve $667,661.60 since the first invoice in 2003 after the developer and the city agreed to a development agreement.
In August, the city filed a lawsuit against the Reserve and Edward stating an indemnity agreement was not upheld.
According to the counter lawsuit, the development agreement had a very specific—and limited—indemnity provision.
“Which only applied under two circumstances: when there was a direct legal challenge to the project permits, or if a death or injury occurred during project construction,” the lawsuit stated.
Edward said the agreement also allowed for the Reserve to select legal counsel and a specific control establishing when the city attorney would be involved.
The third thing the agreement did, the lawsuit said, was create a negotiation between the Reserve and the city, which would cap the hourly rate that the city could bill when seeking reimbursement for city legal fees at the city’s standard municipal litigation rate.
According to the counter complaint, the Reserve first noticed the over-billing in September 2015.
Edward said the alleged outstanding legal fees the city claims falls within the indemnification include the creation of a nuisance ordinance that established the operational hours and maintenance provisions for public beach access paths and a settlement agreement that the city separately negotiated with the California Coastal Commission related to the fines incurred after the ordinance was implemented.
The lawsuit said the activities were unrelated to the project permits and did not involve Headlands in any of the legal proceedings or settlement negotiations.
“The litigation is senseless; this is the type of issue that should be mediated, but the city has left us no choice,” Edward said in a statement. “We will vigorously pursue this case to its conclusion unless, and until, the Council gets some common sense.”
City officials did not comment on the lawsuit.