Judge grants Edgewood Plaza developer a break from fines | News | Palo Alto Online |


Judge grants Edgewood Plaza developer a break from fines

Sand Hill Property Company granted relief from $5,000-per-day fines until court battle is settled

The city cannot enforce its three most recent citations on the developer of Edgewood Plaza shopping center under a court order from Santa Clara County Superior Court pending an October hearing. Weekly file photo.

Sand Hill Property Company won a temporary reprieve in its court battle against the city of Palo Alto in late June when a Santa Clara County Superior Court judge allowed it to stop paying fines to the city, pending an October hearing.

The ruling by Judge James L. Stoelker represents a victory after a string of defeats for Sand Hill, which is facing fines of $5,000 per day for failing to operate a market at Edgewood Plaza, a key "public benefit" in its agreement with the city for the plaza's redevelopment.

The developer has racked up more than $1 million in fines to date and had paid $630,500 as of April 2, when an administrative judge ruled in the city's favor and reaffirmed the fines. To date, Sand Hill has paid $700,500.

The payments have stopped in recent months, however, as Sand Hill pursued an injunctive relief from the court system. After declining an earlier request in mid-June, Stoelker agreed to do so on June 27. Requiring the developer to pay "all of the accrued and growing penalty amounts assessed by the City as a precondition to pursuing administrative and court remedies for administrative citation would impose an extreme financial hardship and prevent Petitioner from effectively exercising its due process rights."

The order bars the city from enforcing its three most recent citations against Sand Hill and from requiring the developer to prepay penalties under any new citation "arising from the vacancy of the grocery store building as a condition to obtain administrative or court relief."

In his order, Stoelker does not speculate about the merits of the broader dispute between the city and Sand Hill about the legality of the city's escalating fines. As part of its agreement with the city, Sand Hill was allowed to build 10 homes at Edgewood Plaza, along with two commercial buildings and a grocery store.

The developer fulfilled the requirement for the market in June 2013, when Fresh Market opened its doors. The market, however, closed in March 2015 as part of a nation-wide corporate strategy. The space hadn't been filled to date, though Sand Hill announced on June 27 that a new grocer will occupy the space in the fall (the market will be run by Mustafa and Kyazi Mutlu, who operate Crystal Springs Produce in San Mateo).

Meanwhile, the city has been steadily ratcheting up its fines. In November, the council agreed to raise the daily penalty from $1,000 (which Sand Hill has been paying since October 2015) to $2,500 and, ultimately, $5,000 -- the amount the developer had been paying between Nov. 30 and Jan. 8.

Though Sand Hill had initially paid the fines, it maintained that the penalty is illegal. In a November letter to neighbors, developer John Tze of Sand Hill wrote: "While we are being fined, we believe that fine is not legally enforceable, but we choose not to contest to avoid a messy situation."

While Stoelker's order offers Sand Hill temporary relief, it also makes clear that it is not disputing the city's rights "to claim new or on-going violations of the zoning code while this action remains pending, or for penalties (enforcement or collection of which is enjoyed and suspended by this Order) to continue to be accrued during the pendency of this action."

It also does not dispute the court's right to order "that all or any portion of such accrued penalties may become payable to the Respondents (the city) following trial and depending on the adjudication of the merits of this action."

The two sides are set for a court hearing on Oct. 10.


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9 people like this
Posted by Resident
a resident of Another Palo Alto neighborhood
on Jul 12, 2017 at 11:33 am

And so the saga continues.

What I have asked and never seen published is what the City is doing with the money from the fines?

The City is getting a windfall from the fine and really it is the nearby residents who should be getting any benefit from this.

So is it just going into City general fund coffers? If so, is there really any reason why the City would want to lose this income stream?

Curiouser and Curiouser.

27 people like this
Posted by Friend
a resident of another community
on Jul 12, 2017 at 2:13 pm

Sand Hill has managed to do everything they possibly can to get "developer" privileges.... without giving back. If there has been no grocery story for over 2 years and they cry about how much they tried to locate a replacement - why did they refuse to communicate or show a lease from FM and always claim corporate privacy.......when the frustration would overflow - there would be a new potential grocer in the wind that somehow blew away a week later. Sand Hill's reputation up and down the peninsula is less than stellar. Claiming hardship is a joke as they are using every legal business loophole to get out of paying, not really communicating with the neighbors. How many possible opportunities did they miss out on by not being transparent. What is in the lease with FM - it is obviously to their advantage to keep the status as is. If it wouldn’t be they would have altered the situation long ago. They only do what is in their best interest, not the community. Financial hardship, seriously!. If we have learned anything about Sand Hlll is that they stop at nothing and don't hesitate to throw legal money where and when they want to get something for SandHill. And the little LLC of the shopping center is a legal loophole for the larger corporation to cry hardship.

I wish I could find some redeeming ways in which SandHill has cooperated with the neighbors and city. They tore down an historic building and got a slap on the wrist by the city (unfortunately). They built 10 houses and made some serious serious millions before the ink was dry and took up valuable parking giving nothing in return and not keeping their commitment to the community. The fact that they cry about how hard they tried…..is hogwash.

It is certainly time for the city not to issue any more permits and hold up whatever is in the pipeline. In the meantime, the city could use some of the money to fix up the “park” at Edgewood. It should be SH’s responsibility but I won’t hold my breath. The tables and benches they installed in the area are the cheapest possible. Everything installed is warped, splintered and questionable to use.

21 people like this
Posted by 38 year resident
a resident of Old Palo Alto
on Jul 12, 2017 at 2:57 pm

38 year resident is a registered user.

@ Resident....I can say with reasonable certainty, the money will go toward another city hire or wasted in another way. So glad Keene is on his way out.

2 people like this
Posted by For what
a resident of Another Palo Alto neighborhood
on Jul 12, 2017 at 5:31 pm

[Portion removed.] Sandhill had nothing to do with Fresh Market leaving which caused what we see here today. They are responsible for it but not the one who caused it. I'm not sure why "Friend" is advocating to get Sanshill in so much trouble so that they can no longer do business. That is simply over the top cruel and unjust. As a resident, I feel empowered to sharing my view on issues and express how I want to be treated. I know my opinion offers an option, not an utimatum. I'd never expect a business to "do as I say or else..." therefore, I don't understand when an individual is telling Sandhill how they should run their business, or how their business privacy is any of my business to stick my nose in. All I know is a great grocer is En route. Yay. So, are we putting our priority on solving a problem making the grocer a success, or does it serve us residents any favor by smearing a community business so they get run out of town? For what?

30 people like this
Posted by Curmudgeon
a resident of Downtown North
on Jul 12, 2017 at 5:52 pm

"...does it serve us residents any favor by smearing a community business so they get run out of town?"

Sand Hill Properties is hardly a community business. Get familiar with their record and you'll realize that what you call smearing is just objective reporting, toned down for this forum. It is impossible to discern if they are majorly evil, or just monumentally inept.

32 people like this
Posted by Grrrrr
a resident of Leland Manor/Garland Drive
on Jul 12, 2017 at 6:37 pm

Now THT is criminal!

Sand Hill deserves NO special treatment!

25 people like this
Posted by john_alderman
a resident of Crescent Park
on Jul 12, 2017 at 10:53 pm

john_alderman is a registered user.

Calling Sand Hill a community business reeks of astroturf.

8 people like this
Posted by CrescentParkAnon.
a resident of Crescent Park
on Jul 13, 2017 at 12:16 am

It really does not matter why Fresh Market left, and presumably they are still paying rent. The obvious intent of the city and reason for the agreement is to serve the local people with a market, and Sand Hill agreed. Why would a judge go out of his way to interfere for a big corporate developer when it screws over the people in his jurisdiction?

Sand Hill signed the contract, there would appear to be something fishy about Judge James L. Stoelker ... wonder what bag of money or great favor got him elected to a judgeship, to serve the developers. Apparently Stoelker was a Schwarzenegger appointee which says a lot.

In 2012 he "ran" for re-election unopposed and was automatically re-appointed.

There is an interesting but complicated and wordy article here in the Occupy Wikileaks Site: Web Link

Since I do not know the complete context of this and as a Wiki Site for Occupy this would be in the public domain, so I will copy the text here:

Judge James L. Stoelker is currently the presiding judge in Department 18 of the Superior Court of Santa Clara County, CA. Between March 2010 and November 2012, he was ruling on discovery in Merritt v. Mozillo et al. On Nov. 26, the California Court of Appeals for the sixth district ruled that the Santa Clara County Superior Court should either remove Stoelker from this case or show cause why they shouldn't.

This ruling came in response to the refusal of the Santa Clara Superior Court to remove Stoelker in response to a petition from the Merritts. This petition cited Stoelker's extensive previous relationships with the defendants, his failure to disclose this to the plaintiffs and his consistent rulings against the Merritts and in favor of the defendants. A key standard for recusal is the California Code of Civil Procedure (CCP) 170.1(a)(6)(A)(iii): "A person aware of the facts might reasonably entertain a doubt that the judge would be able to be impartial."

Beyond CCP 170.1, CCP 170.3(c)(3) says that a judge must reply within 10 days to a request for recusal. Failure to reply "within the time allowed shall be deemed to have consented to his or her disqualification" [CCP 170.3(c)(4)]. A previous ruling in another case supported this 10-day limit: “Although a challenged judge has the power to order a statement of disqualification stricken as legally insufficient, that power must be exercised within the ten-day time limit for filing an answer to the statement of disqualification; thus judge who failed to timely strike statement of disqualification as legally insufficient was disqualified”. Lewis v. Superior Court (App. 2 Dist. 1988) 244 Cal. Rptr. 328, 198 Cal. App. 3d 1101.

Stoelker replied on the 11th day, denying the motion for recusal. Stoelker's denial was referred to Santa Cruz county Superior Court judge Timothy R. Volkmann, who confirmed Stoelker's denial of recusal. Volkmann noted that, "Making decisions against a party is not grounds for disqualification (Code of Civil Procedure Section 170.2(b)). 'A trial court's numerous rulings against a party -- even if erroneous do not establish a charge of judicial bias ...' (People vs. Guerra (2006) 37 Cal. 4th 1067, 1112)." In this ruling Volkmann failed to mention the 10-day limit and the ruling of the appellate court in Lewis v. Superior Court(App. 2 Dist. 1988) 244 Cal. Rptr. 328, 198 Cal. App. 3d 1101. The appellate court decision against Stoelker was based on this 10-day rule.

The defense responded by claiming that the 10-day clock never began, because CCP 170.3(c)(3) says the judge must reply "Within 10 days after filing or service, whichever is later," and the Merritts failed to file the Verified Statement of Disqualification," as witnessed by the fact that said Statement does not appear on the docket of the case. However, in Judge Stoelker's response, he acknowledges that, "On August 17, 2012, plaintiff Salma Merritt filed and served a statement of disqualification against me." A hearing on Dec. 24 will consider the discrepancy between (a) the affirmations of both David Merritt and Judget Stoelker that the statement was both filed and served and (b) the absence of the statement from the docket.

One of Stoekler's most questionably rulings was his insistence that defense attorney James Goldberg be allowed to continue to depose Salma Merritt without witnesses. In mandating the exclusion of witnesses, Stoelker failed to cite "good cause shown" for the exclusions, in apparent violation of California Code of Civil Procedure section 2025.420(b), which says, "The court, for good cause shown, may make any order that justice requires to protect any party, deponent, or other natural person or organization from unwarranted annoyance, embarrassment, or oppression, or undue burden and expense." The requirement for citing good cause has been recognized in other court procedures, noting that, 'a court has no power to grant a protective order barring a party from attending another's deposition even on a showing that the deponent will feel "intimidated" by the party's presence at the deposition (Willoughby v. Supp. Ct. (Lui) (1985) 172 Cal. App. 890, 892.' This is important in this case, because a witness to a previous deposition by Goldberg of Salma Merritt reported that Goldberg was shouting obscenities and physically "manhandling [David Merritt's] father"; this witness, Porter Eugene Johnson, said he had not met the Merritts prior to attending that deposition on the request of a report for several Blogs. In particular, in spite of "good cause shown" that others should be present and allowed to record the deposition, Stoelker ordered a continuation of the deposition, excluding any audience and any recordings other than a court reporter working for defense attorney Goldberg and without citing "good cause shown". This is particularly important in this case for several reasons. First, the defense attorney has already demonstrated unprofessional behavior attempting to entrap the Merritts into saying something he can subsequently quote out of context to support his clients' case. Judge Stoelker's rulings in this case to require the Merritts to subject themselves to a continuation of this mistreatment without independent checks on Goldberg's behaviors would seem to provide strong evidence of bias.

Like this comment
Posted by CrescentParkAnon.
a resident of Crescent Park
on Jul 13, 2017 at 12:23 am

Much as I admittedly do not like Sand Hill Properties and think they have
treated our City has a gullible, stupid mark for purposes of profit ...

> They tore down an historic building

I think this criticism of Sand Hill is both unwarranted; and it was a bad decision
to force the preservation of that building. That is the reason the market is the
peculiar and small size it is and probably an aggravating reason why it might
not be easily rentable as a supermarket.

My question would be, was the dangling of a new lessee in this building just
a flash of hope so before dumping this judicial bomb on us so that people
would have a slightly more positive image of SHP?

Is this new market really going to open here, and if so when?

Like this comment
Posted by Logic
a resident of Professorville
on Jul 13, 2017 at 1:05 am

It's the residents fault we wouldn't shop there we didn't support the market there's no way they could afford to remain Sandhill is not operating a nonprofit organization get your heads out of the sand and see it for what it is a for profit business! PaloAltans shop at Costco and drink Silicon from paper cups....

10 people like this
Posted by Logic Needs Facts
a resident of Crescent Park
on Jul 14, 2017 at 12:00 pm

> It's the residents fault we wouldn't shop there we didn't support the
> market there's no way they could afford to remain Sandhill is not
> operating a nonprofit organization get your heads out of the sand
> and see it for what it is a for profit business!

No ones head is in the sand, but you might try wrapping your head about the facts of this situation.

GIGO ---- all the logic in the world is useless if you have incorrect premises. Fresh Market in Palo Alto was profitable and closed along with a small number of other stores in California because the parent company overall decided to pull out of the state. This was written about and commented on many times in PAO.

5 people like this
Posted by Anonymous
a resident of Duveneck/St. Francis
on Jul 14, 2017 at 2:22 pm

Disgusted and disappointed -- this long running saga continues to screw neighborhood residents. Apparently no likelihood of new store until NOVEMBER (!) -- see other thread. Beware of "community benefits" (ha!) ever again in this ciry (IF you are a local resident, that is).

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