Oakland loses contract dispute with developer in latest battle over coal

OAKLAND — The developer fighting for years to transport coal through Oakland is on the way to another legal victory that could thwart efforts by the city’s leaders to prevent the pollutive substance from being stored at the harbor.

In a tentative ruling, an Alameda County court judge found that the city breached its contract with developer Phil Tagami by not granting him an extension amid delays in the planned construction of a large marine terminal at the city’s port.

The Oct. 27 decision, while not yet final, could pave the way for Tagami to store large amounts of coal at the planned 34-acre terminal before shipping it overseas, despite criticism from environmental advocates that the substance could further pollute West Oakland.

Attorneys for Tagami’s firm, Oakland Bulk and Oversized Terminal LLC (or OBOT), successfully argued that the delays were the result of unforeseen events — namely, the city’s own efforts to stall the project.

“OBOT proved the City’s lack of good faith efforts to address various obstacles (some of which were created by the City) in OBOT’s path, and its unjustified termination of the Lease prevented OBOT from receiving” the lease’s benefits, states the ruling by Judge Noël Wise.

The court will make a final decision after hearing comments from both sides. If he remains victorious, Tagami, who is seeking damages from the city, will have the choice of continuing on with the project or walking away.

“We are disappointed that the trial court did not recognize what we strongly believe the evidence demonstrated and contract language required,” city attorney Barbara J. Parker, who announced her retirement in August, said in a statement. “The City will carefully consider all of its options in light of this unfortunate decision.”

This is just the latest legal battle between Tagami and the city, which lost a separate lawsuit to him in 2020 after attempting to ban the passage and storage of coal.

In that case, the court determined there wasn’t substantial evidence of the proposed coal operations at the terminal posing a danger to Oaklanders’ health.

Judge Wise cited this point in her proposed ruling, agreeing with Tagami’s argument that the attempted ban constituted a sudden event that should preclude the developer being held liable for not meeting construction deadlines — a legal concept known as “force majeure.”

Environmental advocates have insisted for years that coal dust, when mixed into the air, would worsen air pollution in West Oakland, where the combined numbers for emergency room visits and hospitalizations for asthma are two times higher than in the rest of Alameda County.

After winning the right to ship coal through town, Tagami had briefly entered settlement discussions with the city over some kind of compromise. But the talks fell through last year, and the two sides resumed suing each other over the contract dispute.

This story will be updated.