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Transbay Powers must pay Millennium Partners’ legal bills [Updated]

Fortunes sinking in tower suits

Millennium Tower in San Francisco’s Yerba Buena neighborhood. Photo by Patricia Chang

Update: On Monday, TJPA released a statement on the ruling saying that in fact, “San Francisco Superior Court Judge Curtis Karnow rejected MSD’s request that the Court require the TJPA to defend MSD in six lawsuits.”

Apparently there has been some difficulty on this point, as the statement continues:

Any suggestion that the ruling opens the possibility that the TJPA must pay the plaintiffs’ alleged damages due to the excessive settlement and tilt of the Tower is a misreading of the Court’s order. [...] The ruling did not examine or determine who caused the excessive settlement and tilt of the Millennium Tower, which will not be determined until trial in June 2019.

TJPA does say that the court held they must pay some of Millennium Partners’ costs, but just for “two claims in one case filed by the Homeowners Association for the tower.”

Last Thursday, a San Francisco Superior Court judge ruled that the Transbay Joint Powers Authority [TJPA]—the public body that oversaw the creation of the new Transbay Transit Terminal next to Salesforce Tower—must pay some of Millennium Partners’ legal bills over the fallout from the developer’s sinking building across the street.

In the case of Laura S. Lehman vervus TJPA, Judge Curtis Karnow decided last week that a 2009 easement agreement between the developers and the Transbay Authority puts TJPA on the hook for a half dozen of the suits against Millennium Partners.

According to the 2009 agreement:

TJPA shall, to the maximum extend permitted by law, indemnify, protect, and hold harmless MSD, its employers, officers, managers, directors, representatives, agents, employees, transferees, successors, and assigns [...] from and against all claims, expenses, and liabilities of whatever kind or nature, which arise from the occupancy or use of the easement area.

TJPA took on that liability in exchange for being allowed to do construction work around and under Millennium Partners’ property.

Photo by Patricia Chang / Curbed SF

Karnow ruled Thursday that TJPA is not necessarily responsible for all of the developer’s legal fees related to the many, many Millennium Tower lawsuits, writing that, “it is not a reasonable reading [...] to hold that TJPA agreed to defend MSD from MSD’s own fault in committing fraud.”

That is to say, if Millennium Partners knew about the building’s sinking foundations and didn’t warn homeowners right away—as several owner lawsuits allege—that’s on them.

Since fault on that front is ambiguous right now, Karnow declined to make a decision relating to those cases.

But the judge did rule that for six of the suits, including one brought by 49ers Hall of Famer Joe Montana, the decade-old contract applies, and TJPA “owes a duty to pay for MSD’s defense” in those suits, fees that will presumably run well into the millions.

This case is actually the same one in which the city itself sued Millennium Partners in 2016.

City Attorney Dennis Herrera filed a cross complaint “alleging that the developer knew the 58-story building was sinking further and faster than expected but did not disclose that information to potential home buyers as required by law.”

The court has yet to make a determination on that part of the suit.