Facts

On Aug. 4, 2003, plaintiffs Mai Tai Investors and Trader Vic's Management Corp. entered into a 10-year lease with Richard Kramer and Josef Betz to rent property in San Francisco. In 2007, the plaintiffs learned of defendants city and county of San Francisco's (together San Francisco) intent to tear down and reconstruct the property. San Francisco told the tenants that they would receive compensation for harm to their interest in the leasehold. Thus, the plaintiffs closed the restaurant on the property. When the plaintiffs had not heard from San Francisco for some time, they secured a subtenant and consent from the landlord to the subtenancy. However, in 2009, San Francisco began preparing for construction, which caused the subtenant to revoke its offer to sublease. Next, San Francisco agreed to provide a license agreement, which would give them authority to access the property. On Feb. 10, when barriers were placed in front of the property, the plaintiffs demanded that San Francisco eliminate them and notified San Francisco that the license agreement required their consent. On Feb. 18, the parties negotiated a Temporary Roof Access Agreement whereby San Francisco would give the plaintiffs notice of any needed access to the property. However, the plaintiffs did not agree to entry within the air space above the property. Later, the plaintiffs noticed signs posted to block the street by the property, scaffolding on the property's wall, and a crane swinging construction material above the roof line. Thus, the plaintiffs sued San Francisco.

PLAINTIFFS' CONTENTIONS:
The plaintiffs alleged that San Francisco should have acquired permits to perform construction and failed to supply proof of insurance with the plaintiffs as additional insureds. Further, they claimed that the property was not viable for any reasonable commercial use due to the construction, which meant that they could no longer sublease at market rates.

Result

The parties reached a settlement.

Other Information

FILING DATE: March 12, 2009.