The Rules Matter: Ninth Circuit Affirms Dismissal of Developer’s Claims for Breach of Contracts that Failed to Comply with the City Charter

We successfully defended on appeal the dismissal of certain claims asserted by a developer against the City of Los Angeles Harbor Department and City of Los Angeles. The claims arose from negotiations concerning the potential development of a terminal support facility in the Port of Los Angeles.

In 2016, our client, the City of Los Angeles Harbor Department (the Port), entered into negotiations with Harbor Performance Enhancement Center (HPEC) concerning the possible development of a terminal support facility. The facility was set to be built at the former Los Angeles Export Terminal and the former U.S. Customs House, both on Terminal Island in the Port of Los Angeles. In 2018, after years of unsuccessful negotiations, the Port ended negotiations. Since June 2019, HPEC has sought to contest that determination in three different cases in two different courts. The dispute centers on the validity and parties’ performance of a number of agreements–including an Exclusive Negotiating Agreement (ENA), Amendment to the ENA, and two Memoranda of Understanding (MOUs).

Initially, HPEC voluntarily dismissed a Petition for Writ of Mandate and Complaint for Declaratory Relief filed in the Los Angeles Superior Court, which requested a judicial determination that the termination of negotiations was improper. Then, HPEC filed an action in the U.S. District Court, Central District Court of California against the City, the Port, its executive director, Eugene D. Seroka, and the International Longshore and Warehouse Union and the ILWU Local 13 (ILWU) asserting claims based on antitrust, the Labor Management Relations Act (NLRA), 42 U.S.C § 1983, and relating to breach of contract.

The district court dismissed HPEC’s antitrust, 42 U.S.C § 1983, and breach of contract claims based on alleged breaches of the Amendment to the ENA and the MOUs, with prejudice. The district court held that the “Amendment was ineffective” because it was never approved in accordance with the terms of the Amendment or the City Charter, and rejected HPEC’s arguments that the Port was equitably estopped from denying the validity of the Amendment. The district court also held that the MOUs were “unenforceable.” Finally, the district court dismissed the antitrust claims on immunity grounds and found that HPEC could not state a 42 U.S.C § 1983 claim against the Port based on the NLRA because HPEC is neither an employer nor a union.

HPEC appealed the district court’s rulings based on the Amendment, the MOUs and 42 U.S.C § 1983 to the Ninth Circuit. Nossaman defended the district court’s dismissal of HPEC’s claims in the court of appeal. On March 31, 2022, the Ninth Circuit adopted Nossaman’s arguments and affirmed the district court’s decision.