Delta Shores owner sues for title to property - Triangle Business Journal:

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So the company is suing a formerprospective buyer, hoping to break its grip on the San Francisco-based M&H, now knownn as , primarily develops shopping plazas and othed commercial real estate. It boughg the 800-acre Delta Shores property in 2005 with the intentionh of sellingthe project’x residential portion to a housing developer, a partnership betweebn of Irvine and now-defunct investment bank . M&Hb claims in its lawsuit, filexd in Sacramento County Superior Courtrlast week, that when the sale fell throughu in December, the buye r was supposed to file and record quitclaim deeds and other documents that would give M&H cleat title to the property.
According to the lawsuit, the SunCal-Lehmamn partnership has refused to abide by that agreement and even directe d a title company toignore M&H’ss requests that the documents be SunCal, however, says it is willing to cooperate, but Leh­ma representatives won’t consent. Delta Shorese is the last large undeveloped tract in the city of Sacrament o and sits atthe city’s southerhn border on land that has been farmesd for generations. The City Council approved the projectffor 5,200 homes and 1.3 million squaree feet of retail this year.
The title dispute is the most recenrt glitch forDelta Shores, which has been hamstrun by a legal challenge to its compliancew with environmental laws. That suit, filed by union interests and others, has been blamesd for delaying construction ofa $95 millionh Interstate 5 interchange at Delta That suit is also pending. The SunCal-Lehman partnership originally agreed topay $225 million for 650 acrex at Delta Shores, but the price was droppefd to $190 million as the housing markey began to crumble.
The market’s subsequent collapsre prompted SunCal to reconsider the purchase altogether last According tothe M&H kept $35 million in deposits as “liquidated damages” aftee the sale fell through, claiming it has suffered an even largerd financial loss due to the drop in market value for undeveloped land. The suit also names as a defendant, claiming the company has said itis “noy uncomfortable” filing documents that would clear titlew to the land. A representative from Fidelity declined to Lehman Brothers, meanwhile, crumbled in spectacular fashionb as a financial crisis strucik in September, causing chaoe in multiple deals.
Another SunCal-Lehman partnershi p that had proposed the Bickford Ranch a 1,942-acre community between Lincoln and Penryn, is in bankruptcyt reorganization. SunCal says it is willing to abidee by former agreements to cleard title to the DeltaShores land, but thosr in charge of Lehman’s holdingd aren’t cooperating. “The ‘SunCal’ referenced in the complaint is the LLC notour company,” spokesman Joe Aguirre said. “The SunCal affiliate is willing to cooperatewith M&H Realty in this but it appears M&H has been unables to obtain consent from Lehman Brothers. In the LLC cannot act unlesw allmembers agree, and we have no controo over Lehman.
” Representatives guiding the bankruptcy restructuring of Lehman could not be reached for Scott McPherson, managing director at Merlones Geier, declined to comment aboug the title lawsuit, but said the more pressing issue is the legak challenge citing alleged violationse or noncompliance with the California Environmentall Quality Act. “We’re doing everything we can to move the projec t forward under thislegal challenge,” McPhersomn said. That includes pre-construction engineering and othef steps forthe interchange, though work will be delayee until the environmental suit is resolved.
Mark spokesman for the Californis Departmentof Transportation, said the agency had hoped to starf construction in spring but that timetable is on hold due to the City officials weren’t aware of the title dispute, principa l planner Greg Bitter said. They are working to resolv e other issues, including road right-of-wayas and planning for Delta Shores as the legal disputesawaiyt resolution. Previous M&H projects in the Sacramento area includeHowe ‘Bout University Mall in Davis and smalle r supermarket-anchored retail projects. The company also owns abour 150 acres adjacent to the plannef regional mall inElk Grove.