X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

SAN FRANCISCO-The lawyer representing two Marin County architects says they are considering a further appeal of a state appellate court ruling that struck down their $41.8 million jury award from a bank that foreclosed on an Oakland redevelopment project.

The state Court of Appeal in San Francisco on Monday overturned the award won in Alameda County Superior Court in 2000 by Glenn and Richard Storek, owners of the architecture and development firm of Storek & Storek Inc.

The award was assessed against Citicorp Real Estate Inc., a subsidiary of Citibank. The bank granted Storek & Storek a loan of $8.9 million to help pay for a project called Old Oakland, but declined to pay the last $900,001 after concluding the project was financially shaky and was not meeting the terms of the loan agreement.

The purpose of Old Oakland was to convert several 19th century Victorian buildings in downtown Oakland to offices and stores. In 1990, Citibank foreclosed on the property. An affiliate of the bank bought the property in a bankruptcy court sale for $6 million and resold it to another developer last year.

The Alameda County jury awarded the brothers $900,001 from Citicorp Real Estate for breach of good faith in the contract plus $40.9 million on their fraud claim.

In February, the state Court of Appeal struck down all but $900,001 of the award. Both sides then asked the court to reconsider.

In the new ruling issued on Monday, a three-judge panel set aside the entire award. The court said the trial jurors should not have been instructed to consider whether the bank acted in good faith and that the issue should have been whether Citicorp acted reasonably in deciding whether the contract was met.

Justice Lawrence Stevens wrote, “We conclude that Citicorp was required to make only an objectively reasonable determination that the project budget was not in balance; Citicorp had no duty to act in subjective good faith when making that determination.”

The court said the fraud part of the award should be set aside because it was also based on the claim of lack of good faith. Elliot Bien, a lawyer for the Storeks, says his clients are reviewing the opinion to decide whether to appeal. Bien says the next step in an appeal could be either a request to the appeals court for a second reconsideration of the case or a petition to the California Supreme Court.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.