SAN JUAN CAPISTRANO : Owners of 4 Displaced Shops Sue City for Compensation

The owners of four businesses that were forced to move from a group of historic downtown buildings have sued the city, contending that they are owed money for relocation and other expenses.

The city sold the El Peon Complex last year to a private developer, who then served eviction notices to tenants before beginning a $2-million renovation project.

The lawsuit, which names the city and its redevelopment agency, seeks punitive damages and general damages for loss of business goodwill. The suit was filed last week on behalf of the owners of Cafe Capistrano, M&M; Jewelers, The Cat’s Meow and Cynthia’s Bakery and Tea Room.

Richard L. Franck, a Los Angeles-based lawyer representing the merchants, said that the city is responsible for compensating his clients for taking away their businesses.

City Atty. Richard K. Denhalter could not be reached for comment Thursday. He has said before that the city is not obligated to pay the tenants but would be willing to discuss assistance in finding the merchants new locations.

Two of the four businesses have since reopened in San Juan Capistrano and Dana Point.

City officials and the four merchants agreed in late April to meet with a mediator in an attempt to resolve differences.

Franck said that discussions are continuing and that a settlement could still be reached.

“We’ve always been talking,” Franck said. “That’s never been a problem. But the talks haven’t gone anywhere.”