City to Pay $450,000 to Settle Contract Dispute : Burbank: Action to avoid going to court over aborted property sale is the closing chapter in a complex deal that went sour.

The City Council has agreed to pay $450,000 to a property owner who alleged in a lawsuit that the city breached a contract when it backed out of a deal to buy his land four years ago.

In a 5-0 vote Tuesday night, the city agreed to the settlement with Martin Stayden, closing the final chapter of a complex deal that went awry and over the years has cost the city nearly $2 million.

“It was a very troubled project and it’s very disappointing how it all came out,” City Atty. Joseph Fletcher said.

Stayden, who sold the property on San Fernando Boulevard last year, was satisfied with the settlement, his lawyer said.

“We feel it’s a reasonable compromise considering all the circumstances of this case,” Paul Epstein said.

The settlement stems from a controversy involving the previous City Council and developer Thomas Tunnicliffe. In 1988, the council, acting as the Redevelopment Agency, agreed to help Tunnicliffe develop a three-story building at Angeleno Avenue and San Fernando Boulevard.

Tunnicliffe owned one-third of the site, the city owned another third and Stayden owned the remaining parcel.

At that time, Stayden’s collection agency occupied his parcel, Epstein said.

In an executive session in September, 1990, the Redevelopment Agency approved a complicated plan to purchase Stayden’s property, then sell it to Tunnicliffe.

Tunnicliffe’s plan called for the Redevelopment Agency to also purchase the city-owned portion, a parking lot, and turn it over to him.

In exchange, Tunnicliffe offered to build a parking structure for city parking.

Two council members “felt that wasn’t fair and adequate compensation for the city,” Fletcher said. “The bottom line is the city wasn’t getting anything for its parking lot.”

At a meeting, the two council members, Mary Lou Howard and Tim Murphy, voted against the proposal for the Redevelopment Agency to purchase the city-owned parking lot. The transfer required at least four yes votes to pass, rather than a simple majority. The council, as well as the Redevelopment Agency, needed to approve the project.

Without the parking lot, the plan collapsed.

“Right before escrow was going to close, the city decided not to go ahead,” Epstein said.

Stayden sued for breach of contract, and a trial date was set for March 14 this year. Although the city has not admitted liability, city officials decided to settle the lawsuit because the city faced the possibility of being required to pay significantly more if it lost the case, Fletcher said.

“On balance, we felt it’s prudent,” he said. “If this went to a jury, the odds were getting more likely of some judgment against the city.”

Attorneys’ fees on the case have already reached $150,000, he said.

Tunnicliffe filed a lawsuit against the city for $10 million and in 1992 was awarded $1.5 million in a settlement agreement.