Judge Rules Against Builder in Suit Over Exclusion From Mall Project

Real estate developer Alvin Lesser, who created the Phillips Ranch housing development in Pomona, has failed to persuade a judge that the city owes him $1 million for excluding him from a regional mall project.

Leonard S. Wolf, a retired judge appointed to hear the case in Los Angeles Superior Court, ruled last week after a three-day trial that the city’s Redevelopment Agency is not obligated to include Lesser in such a project or pay him compensation for being left out.

Lesser and his company, Sonmik Inc., filed suit in December, 1990, accusing the city of breach of contract. Lesser contended that as part of his development of Phillips Ranch, which includes more than 4,000 homes, he began working with the city in 1980 to build a regional mall on a 74-acre parcel at the Pomona Freeway (60) and the Corona Expressway (71).

First, Carter Hawley Properties, associated with the Broadway chain, was going to build a regional mall.

Under a joint venture arrangement, Lesser would have received a 5% interest in the mall. But Carter Hawley Properties abandoned the project in 1986 after four years of preliminary work.

During that time, the Redevelopment Agency acquired the property for $12 million from a company associated with Lesser.

Then, May Centers, which is affiliated with the May Co., took over the project under an agreement with the Redevelopment Agency that would have paid Sonmik $1 million if May Centers, or any other developer recruited by Lesser, had built the mall.

That effort collapsed in 1989-90.

Lesser charged in his suit that May Centers gave up on the mall because of the “major upheaval, political and otherwise, in the city.”

The suit said the project was stalled while 16 department heads were fired, or resigned; the city administrator was replaced four times, and a recall campaign was under way against a councilman.

City Atty. Arnold Glasman, however, said the regional mall was not delayed by political problems. He said May Centers lost interest when it found out that the site contained contaminated soil.

In his written ruling, Wolf agreed, saying the Redevelopment Agency “made reasonable efforts” to complete the deal, but that May Centers withdrew because of land contamination.

Under his agreement with the Redevelopment Agency, Lesser contended, he should have been allowed to find another developer for the project. But, instead, the City Council handed the project to Forest City Development, a national builder of shopping centers, apartments and office towers.

Wolf said the city was legally entitled to seek another developer without waiting for Lesser to line up one.

Therefore, the judge said, Lesser and his company are not entitled to compensation.

Gerald A. Malat, attorney for Lesser and Sonmik, said Wolf’s decision, which is tentative, will probably be appealed.

“I think the decision was wrong as a matter of law and the appellate courts will have to decide it,” he said.

Meanwhile, whether a regional mall will be built in Pomona is still uncertain.

City Administrator Julio Fuentes said Forest City has obtained a commitment from one major tenant and is awaiting decisions from two other potential tenants.

The soil contamination problem--involving metal and glass on three acres once used as a dump--is being managed and will not stop the project, Fuentes said. But progress has been slowed by the recession, he added.

In addition, the Pomona mall is in competition with similar projects proposed in Chino and Chino Hills. Developers have said that only one of the three malls is likely to be built, but it is not yet clear which one it will be.