Facts

Licking Enterprises Inc. owned and operated Life Choices Treatment Services Inc., a drug treatment facility in San Jose. Licking Enterprises was denied a rezoning permit by the city council after the rezoning application had already been approved by the city planning commission. It sued the city and council members alleging violations of the Federal Fair Housing Act and other violations.

The city indicated its intent to exercise eminent domain over the property after the lawsuit was filed.

PLAINTIFF'S CONTENTIONS:
Plaintiff contended that the permit was denied because of the city's proposed construction of a drug treatment facility. Licking Enterprises performed its due diligence which revealed that the city had no plans for the site. However, the city counsel, in voting to deny the application, claimed that the city had alternative uses for the property. Licking Enterprises claimed that the alternative uses were mere excuses to unlawfully block its proposed facility.

DEFENDANTS' CONTENTIONS:
The city contended that it had alternative uses for the property and the denial of the application was lawful.

Settlement Discussions

The parties agreed to settle the case with the city agreeing to purchase the property for $2.023 million, lease the property back to Licking Enterprise for $1 per month until 2015 and resolve its other claim for economic losses through alternative dispute resolution. However, the settlement agreement was never signed and the case was subsequently dismissed by Licking Enterprises' former counsel without Licking Enterprises' knowledge.

Result

Licking Enterprises retained current counsel in 2010. The city agreed to pay $1 million in economic damages for Licking Enterprises' lost income caused by the denial of the rezoning application and proposed taking. The city also agreed to purchase the property for $2.023 million and lease the property for $1 per month as previously agreed.