In a 2009 plan to raise immediate cash to combat its huge deficit, then-governor of California Arnold Schwarzenegger announced plans to sell off 11 state government buildings and lease them back from private owners. In October of 2010, California First LP, a real estate investment consortium created to bid on the buildings, announced it had won the bid over 300 other offers. The amount was $2.33 billion, which was more than the government of California was expecting.
The plan changed in February of 2011, when current Gov. Jerry Brown announced in a press conference that he was abandoning the arrangement. Now the investor group who had the winning bid is suing on a breach of contract claim.
In this case, California First is alleging they had a contract with the California Department of General Services and that by reneging on the contract they breached. The investors claim to have already made a $55 million down payment.
Proving a Breach of Contract
According to California jury instructions, in any trial for breach of contract the party suing must prove:
- A valid contract existed
- The party suing performed its side of the deal, unless they had a valid reason for not doing so
- The breaching party did not perform its side of the contract
- The breaching party caused economic harm to the non-breaching party
The party suing must meet all of these requirements, or there was no breach of contract.
Damages for Breaching a Contract
For a breach of contract claim, the party suing can receive compensatory damages, in which the non-breaching party is put back into the same place as they would have been if the contract had never been breached. The non-breaching party can sometimes be awarded interest payments as well. The non-breaching party can ask for specific performance, which means the court forces the breaching party to perform its side of the contract.
The investors are asking the state to either go through with the contract or pay damages. The investors are also seeking the cost of bringing the lawsuit. California First has not yet specified the amount of damages it's seeking.
If you feel you may have a breach of contract claim, contact a business litigation attorney to discuss your potential case.
