Dana Point Sues Developer Over ‘Strandsgate’ Legal Fees

Thy Vo/Voice of OC

A surfer heads through a gate into the Strand at Headlands community in Dana Point.

An ongoing legal battle in Dana Point featuring the time-honored issue of the public’s beach access rights versus those of wealthy property owners has taken another turn, with the city suing an influential developer for more than a half million dollars in unpaid legal bills.

The city and Sanford Edward, the developer of a community of multimillion-dollar homes known as the Strand at Headlands, had been allies in a case that began almost seven years ago when the city decided to fight the California Coastal Commission for the right to set public access hours on a trail that cuts through the community, which sits on a cliff overlooking Strand Beach.

As the Strand development neared completion, the city passed an ordinance to limit the hours that the trail — which connected a public park above the residential community to Strand Beach — would be open to the public, locking a set of gates between 10 p.m. and 5 a.m.

When the Coastal Commission objected to the gates and new hours, insisting that the city would need a coastal development permit to install the gates, the city declared a public nuisance in the residential community. The declaration, city officials said, gave them the right to bypass Coastal Commission requirements and keep the gates.

The city filed a lawsuit claiming the Coastal Commission did not have jurisdiction over the development, and that the gates were required to mitigate crime in the area.

In their defense of the nuisance declaration, city officials said the development was generating an unprecedented number of police calls — 130 calls in 13 months, more than any other area of the city.

A city law enforcement officer later testified at trial that the gates were necessary to prevent “vandalisms, burglaries, thefts, trespassing…teenage drinking, teenage smoking, sex parties, sex, drugs, rock and roll.”

An appeals court eventually punted the case down to a San Diego trial court judge to determine whether the city’s declaration of a nuisance was justified.

In 2015 Judge Randa Trapp ruled against the city, finding that many of those crimes occurred during the day when the gates were open, and that the city’s statistics excluded hundreds of police calls for service over the same time period from another part of town.

In her scathing ruling, Trapp said the city presented “specious” arguments and concluded the nuisance declaration was a pretext used to avoid complying with Coastal Commission requirements.

After losing the lawsuit – which has been dubbed “Strandsgate” by many residents – and agreeing to a settlement with the Coastal Commission, the city is now re-applying for permission keep the gates up and set public access hours.

Once Allies, Now Adversaries

Now the city and Edward are fighting over who should pay for the cost of more than six years of litigation, leaving some residents wondering if taxpayers will end up footing the bill for what they see as a wealthy developer’s cause.

The city filed its lawsuit on Aug. 29 alleging that Edward owes them more than $553,754 in unpaid legal fees. The suit claims Edward was obligated to reimburse taxpayers for the cost of the lawsuit based on previous contracts and verbal promises he made to city staff.

Edward reimbursed the city for the bills from 2009 until September 2015, when he stopped payments altogether.

Edward claims he is only required to reimburse the city for costs related to legal actions against city permits for his developments, and says he stopped paying the invoices when he realized the city was over billing him. Edward filed a claim with the city in February.

According to the Dana Point Times, the city, as of March, has spent at least $947,100 on the lawsuit against the Coastal Commission and Surfrider Foundation, which also filed an action against the city.

The city has characterized its lawsuit against Edward as a fight for taxpayer dollars. In a press release, Dana Point Mayor John Tomlinson lambasted Edward for failing to reimburse the legal fees “for a project that directly affects and benefits his development, and the public.”

“The legal fees in this effort should not be borne by taxpayers, but the company that agreed to ‘hold harmless’ the city and its taxpayers from legal entanglements rising from the Headlands project,” said Tomlinson in a news release.

Edward counters by saying the city pursued the lawsuit of its own accord; and called the city’s nuisance ordinance and the crime statistics used to justify it as fraudulent.

“This is a joke. We have no legal responsibility to pay the city for independent actions they pursued, and especially for their misconduct,” Edward wrote in an email to ‘supporters’ that was forwarded to media. “This would be laughable except that the city will waste about one million of your tax dollars pursuing a case it cannot win.”

In their lawsuit, the city claims that earlier agreements with Edward contain sections that require Edward to indemnify them for costs, including legal fees, incurred while developing or constructing on the property.

They also claim that Edward “made multiple statements to Dana Point staff that he and Headlands would be responsible for the litigation costs and damages” and appeared to follow that verbal contract himself – paying invoice after invoice until he suddenly stopped in September 2015.

There is no separate written contract between the city and Headlands Reserve specifically obligating the company to reimburse the city for the lawsuits related to the Strand gates.

“Over and above the language found in these contracts, there were verbal promises made to the City while the litigation was ongoing that Headlands would honor its indemnity obligations,” wrote Darren Aitken, the city’s outside attorney, in an email responding to question from Voice of OC. “Mr. Edward also created a new obligation to the City when he promised the City that he would also be personally responsible to reimburse the City.”

Aitken is the son of attorney Wylie Aitken, who is Voice of OC’s board chairman and a major donor to the organization.

The city declined to answer further questions about the lawsuit.

Read the full complaint filed by the city. 

Edward argues that while his company was responsible for developing the property, including public spaces, once the development was complete and the land was transferred, the city would be fully responsible for the management and operation of the public trails, including any legal fees incurred.

Edward claims his company has paid the city $1.54 million since 2003 toward legal actions against permits for his development. Furthermore, he claims an accounting firm he hired to review the bills found the city had overbilled Headlands in excess of $667,000, Edward claims.

“We did not agree to reimburse the city for its independent operating rules or regulations because that is the city’s business, not ours,” Edward wrote in his email.

Steve Stewart, a resident who has followed the dispute between the city and Headlands closely, criticized both sides’ handling of the issue. He questioned why the city did not execute a written contract with the company, and why Edward has only now refused to make payments.

“From day one with the first check he ever wrote, he was agreeing to pay those bills,” said Stewart. “To say that he was overcharged, that’s just not the right word to use when you voluntarily write checks until you say you don’t want to write checks anymore.”

Contact Thy Vo tvo@voiceofoc.org or follow her on Twitter @thyanhvo.

  • enoble

    just deserts for yet another combination of wealthy landowner and fawning city trying to restrict rightful public access to California beaches. kudos to Surfrider, the Coastal Commission and our courts for shaming the pair of them. greed, in this case, has had a stiff price.

  • gazoo

    Where was outside council when this started???? Must have used law office of dummy & dummy…