Dalidio eyes RICO lawsuit against development foes, alleges unfair business practices

March 21, 2008

By KAREN VELIE

Local developers illegally interfered with the development of Ernie Dalidio’s property, costing him millions of dollars in lost revenue, the San Luis Obispo farmer claimed in court declarations filed earlier this month.

At the same time, Dalido’s lawyers hinted at alleged racketeering by the yet-unidentified developers. The recent declarations do, however, focus on Copeland and Madonna family property developers.

These declarations are written statements submitted under penalty of perjury in response to the defendants’ motions.

Dalidio’s own declaration outlines a timeline of alleged conversations and negotiations he conducted with numerous city and county officials, as well as developer Tom Copeland.

“Tom Copeland made it clear that he did not want any further development in the city other than what he was planning for downtown San Luis Obispo,” Dalidio said in his declaration.

Copeland did not respond to requests for comment.

A federal judge in Los Angeles will hear pretrial motions March 24.

The Downtown Association, one of Dalidio’s fiercest critics, was named in the civil lawsuit, along with Responsible County Development LLC, alleging conspiracy and unlawful business practices including illegal interference in Dalidio’s lease negotiations by opponents of the Dalidio project.

The action further alleges defendants violated various federal laws “and are now subject to the enhanced civil penalties contained in the Racketeer Influenced and Corrupt Organization Act (commonly known as the RICO Act).”

The Downtown Association has declined to comment and the members of the LLC are currently undisclosed.

The current court action is the latest chapter in an almost 20-year battle to prevent Dalidio from erecting a 131-acre mixed-use-development on his land off highway 101near Madonna Road in San Luis Obispo.

Attorneys for Dalidio contend that the delays in the development are related to hurdles inflicted by competing developers and that the Downtown Association and the LLC were “straw men” for those developers.

“The heart of our lawsuit is tortuous interference with our clients,” said Mike Pick, an attorney with James McKiernan Lawyers. “Those actions could be perceived as an attempt to create a monopoly; an agreement by a couple of developers to keep Dalidio out. They used straw men to do the heavy lifting. The environmental cause was used as a ruse.”

No on Measure J spokesperson Alan Thomas contends his opposition to Dalido’s project stems from concerns of negative impacts he relates to the project.

“There were also many other legit environmental concerns that were identified by Terry Watt, an independent expert who works for an environmental law firm in San Francisco and who carefully examined Measure J,” Thomas said.

A second declaration, by Sean McCain, a lead tenant negotiator, outlines alleged communications with numerous potential tenants including Old Navy, Circuit City, PetSmart, Costco, The Vitamin Shop, and Pick Up Stix. Many had executed leases or letters of intent to lease on the Dalidio property, and subsequently canceled those agreements to sign leases with Madonna family properties.

“At an International Council of Shopping Centers Conference, the broker representing Pick Up Stix, Inc. was told by Madonna’s broker (John Rossetti of Rossetti Company) that Pick Up Stix, Inc. should relocate elsewhere as the Dalidio property would never be built,” McCain says in his declaration. “On October 5, 2005, I received notice that Pick Up Stix, Inc. was terminating its lease due to the failure to deliver.”

In response to the allegations, Madonna Enterprises Real Estate Manager Clint Pearce said that he had not courted any of Dalidio’s contracted properties, adding that he is unsure what actions his brokers might have taken.

“We have been careful to mind our own business,” Pearce said. “We had nothing to do with No on J or the LLC.”

Rossetti contends he is not contracted by the Madonna family as a retail property broker.

“In regards to the Madonna family, I don’t represent them on leasing any of their retail properties. I do represent the leasing at Madonna Plaza,” Rossetti said. “I have been asked by respective tenets on numerous occasions what I think the future of the Dalidio property will be, and my standard comment is that there is no way to know if or when it will be built, though it will probably take a while.”

Attorneys for the defendants contend Dalidio’s lawsuit should be dismissed due to anti-SLAPP statutes allowing a judge to dismiss a suit at the onset. SLAPP or “Strategic Lawsuits Against Public Participation” refer to lawsuits often filed by developers and government officials against individuals and community groups for speaking out on civic or government issues.

If the judge rejects the anti-SLAPP claims, the case will move on to the discovery phase in which Dalidio’s attorneys plan to request the unveiling of the LLC’s elusive members.

“The lawsuit isn’t about punishing and revenge; it is about trying to get back what has been lost,” Pick added. “There are real damages. Dalidio has been trying to build for 20 years. He needs to be reimbursed for losses due to the delay. It is very similar to the Caruso case”

In 2004, Caruso Affiliated Holdings sued General Growth Properties for trying to block the Cheesecake Factory chain from opening a store at Caruso’s property in Glendale California. Caruso claimed General Growth illegally interfered in his lease negations with store chains. General Growth also collected enough signatures to hold a referendum on the project, though voters eventually approved the project. The unfair competition held up the project for approximately four years.

In November, 2007, a jury in a Los Angeles federal court awarded Caruso $76 million in compensatory damages.

Tags:, Copeland, Dalidio