Manchester’s Suit Against Port District Tossed Out of Court

Hotel developer Doug Manchester’s lawsuit alleging that delays in construction of the San Diego waterfront convention center cost him at least $48 million has been dismissed by Superior Court Judge Mack Lovett, adding yet another twist to the ongoing feud between Manchester and the San Diego Unified Port District.

Attorneys for the Port District hailed the decision as a total victory, noting that it prevents Manchester from filing an amended suit. Lawyers for Manchester, though, said the legal wrangling is not over and promised to appeal the decision.

Lovett signed the order Feb. 11 but it only reached attorneys for both sides on Tuesday. In it, the judge turned down Manchester’s claim for a variety of reasons, including:

- Fundamentally, the contractual agreements between Manchester and the Port District never required the agency to build a convention center.

- The contracts state that, if the Port District decided to build a center, it had three years to complete the work. But under the terms of the agreements, official “commencement of construction . . . has not occurred.”

- Based on the contracts’ language, Manchester’s lawsuit was premature.

- In the event the Port District dropped construction of a convention center, Manchester was entitled only to lower rent at his two large hotels next to the convention center site.

“I think it was a substantial victory,” said Howard Finkelstein, a San Diego lawyer who represented the Port District in the lawsuit. “I think this has obviated the need for substantial and expensive litigation.”

Manchester’s attorney, Michael Thorsnes of San Diego, said that throughout the lawsuit it was clear that whatever side lost would appeal the decision. “It was evident that no matter who prevailed, the matter would be ultimately decided at the Court of Appeal,” Thorsnes said.

“We disagree very strongly with the aspects of the ruling,” he said. Specifically, Thorsnes said, Lovett relied on a narrow legal interpretation of the contracts. “It is a difficult decision to reach without the benefit of evidence (being entered) or calling witnesses,” said Thorsnes.

In addition, Thorsnes said, he disagrees with the judge’s rejection of any implied covenants in the contracts.

Both attorneys acknowledged that the contracts--specially two leases and an option agreement--were very complex. After listening to two days of oral arguments, Lovett took the case under submission on Dec. 15, taking almost two months to make a decision.

The lawsuit, filed in July, alleged that the Port District violated its contract with Manchester when port officials decided last year to rebid the convention center project in an attempt to cut construction costs. (New, lower construction bids were opened two weeks ago, and the port commissioners are scheduled to award a contract Tuesday.)

The resulting delay in the opening of the center, the suit claimed, posed a severe economic hardship for Manchester’s 681-room Hotel Inter-Continental, a second 683-room tower now under construction and a planned 800-to-1,200-room hotel nearby.

All along, construction of the center has been considered the most vital ingredient in the financial success of the hotels because of their proximity to the convention site.

Originally, the center was supposed to open in early 1988. The new construction schedule has the facility opening in May, 1989.

In the last few months, the Port District and Manchester have remained at odds over a variety of issues including Manchester’s attempt to sell his option for the third hotel; the Port District’s approval, over Manchester’s objections, of Seaport Village’s expansion plans, and the proposed rerouting of Harbor Drive.