L. A. Is Denied Delay in Trial : Warner Ridge: A judge says the city had ample time to prepare its defense against a lawsuit charging that development plans were illegally rejected.

The city of Los Angeles, fighting a lawsuit over its rejection of a commercial development on Warner Ridge in Woodland Hills, will not get the five-month delay the city said is needed to develop a case that the thwarted developers took a big gamble and can’t complain that they lost.

Superior Court Judge Kathryn Doi Todd on Monday denied a request by the city attorney’s office, saying the city has had ample time to prepare for trial in the case, now scheduled to begin Jan. 27.

The extra time was needed to discover whether Warner Ridge Associates--whose project the city blocked--tried to buy Pierce College’s support for the controversial project, how much money was spent on lobbyists and what banks turned down the partnership’s loan applications, Deputy City Atty. Tony Blain said.

If it cannot probe these issues in pretrial depositions of witnesses and have access to additional documents, it would “severely hamper us at trial,” Blain told the judge.

The Warner Ridge Associates lawsuit claims that the city, led by Councilwoman Joy Picus, illegally quashed plans to build an 810,000-square-foot commercial project on 21.5 acres in Woodland Hills. The suit seeks $100 million in damages.

In January, 1990, the council changed the site’s zoning to allow no more than 60 single-family houses to be built there, a move that destroyed the value of the investment, the developer has claimed.

Robert McMurry, attorney for the developer, portrayed the city’s request for a delay as a “desperate effort” to exhaust the partnership’s financial resources by delaying the trial.

Although siding with the partnership, Todd refused to grant a motion by McMurry asking that she fine the city for making a bad-faith request for the delay to waste the partnership’s time and money.

Todd said the city did not appear to be acting in bad faith.

The city’s request for additional time highlights its defense strategy.

The city’s key defense argument is that the development partnership knew that it was gambling when it paid $20.5 million for Warner Ridge, an appropriate price only if a commercial project could be built. And now that Warner Ridge’s gamble has not paid off, the city should not be made to pay for the developers’ mistake, the city’s argument concludes.

On Monday, Blain asserted that the city needs to know how the development company spent $13.5 million of the $43.5 million it borrowed from Morgan Guaranty Trust Co., a New York City-based bank.

The city suspects that the missing $13.5 million might include payments to Pierce College and to City Hall lobbyists in addition to those the city has already identified were made to those parties, Blain said in an interview.

Records obtained by the city show that Warner Ridge Associates paid $4,500 to Pierce College.

Also, Jack Spound, a partner in the Warner Ridge project, has indicated that the developer was ready to pay $200,000 to the college for the right to dump fill dirt on its property, which adjoins Warner Ridge.

Finally, Blain argued, the developer paid about $400,000 to lobbyists and $1 million to attorneys before filing its lawsuit against the city.

Such payments, Blain contends, show that the developer was engaged in a speculative real estate venture. If the project was not speculative, why would the developer need to “buy the support” of Pierce College and hire “an army of lobbyists and attorneys to assist it in getting this project approved at City Hall,” Blain asked.

Spound maintains that his project was not speculative.

He asserts that he had strong reason to believe in 1985 that the partnership’s plans to develop Warner Ridge with a commercial project were endorsed by Picus and that is why he was willing to pay $20.5 million for the property at the time.

In November, 1988, Picus came out in opposition to the project. The developer sued the city in the spring of 1990.

The judge also denied a city request to obtain depositions from executives of Wells Fargo Bank and First National Bank of Chicago, who turned down the Warner Ridge partnership’s applications for loan funds in the mid-1980s.

“This was the heyday of outrageous real estate loans, and these banks wouldn’t lend to them,” Blain said.

“That shows how speculative all this really was.”