03.03.2022 | 9:00 AM | SANTA ANA – City officials sued to prevent what they allege is a cunning ploy to strip them of the ability to purchase a property that houses a homeless shelter, according to a lawsuit filed Thursday.
The lawsuit filed against the owners of 1815 East Carnie Avenue, a property with a 29,503 square-foot building that houses an emergency homeless shelter with 200 beds, alleges they engaged in a “cunning ploy to strip the [c]ity of the option to purchase the property.”
At the center of the lawsuit is a lease agreement between the city and the owners of the property providing for the operation of an emergency homeless shelter. That agreement provides the city with the option to purchase the property for $9,200,000, the city claims.
But, apparently realizing that the property was worth more than had been negotiated under the lease agreement, the owners engaged in a ploy to prevent the city from purchasing the property, the city claims.
As part of the ploy the owners tried to coax the city into signing an amendment to the lease that removed the purchase option.
When the city discovered the changes they declined to sign the amendment and, in what the city called an extraordinary sleight-of-hand, the owners alleged the city had violated the lease.
To that end the owners demanded the city pay over $1,600,000 in fees based on an erroneous accounting of payments and misapplied late charges, the lawsuit claims.
Those fees and alleged breaches of the contract were brought to light only after the city rebuffed the owners attempt to strip them of the purchase option, the lawsuit added.
The city is seeking a court order declaring their rights under the lease agreement and ordering the owners to perform their duties outlined in the agreement, namely to allow the city to purchase the property for the agreed upon price.
County News Service’s Courthouse News Reports are based on filings available through the Orange County Superior Court’s Media Access Portal. These reports are based on filings made by one party and only reflect allegations and claims made by one side of a lawsuit. Such filings are often the first step in litigation and do not reflect an order or finding of the Court.