Developer files lawsuit against city

City refuses to release deed until subdivision issues resolved

A local developer has filed a lawsuit against the City of Yuma, alleging that the city refuses to release a deed of trust used for financial assurance that public improvements at the Park West housing development were constructed as required by law and contract.

However, the city alleges that it’s looking out for the homeowners by refusing to release the deed due to outstanding issues that remain unsolved by the developer.

In the documents filed Oct. 1 in Yuma County Superior Court, Brian L. Hall, manager of Park West Yuma Development, Territorial Real Estate and Yuma Valley Land Company, collectively called Hall Companies, asks the court to order the city to release the deed of trust.

The lawsuit names the City Administrator Philip Rodriguez, Assistant City Engineer Andrew McGarvie, City Attorney Richard Files and the City of Yuma as defendants.

Park West Unit No. 1 through Unit 5 is a 130-acre residential subdivision at the southwest corner of Avenue C and 24th Street.

In 2013, the city and the developer entered into a preannexation agreement that called for the developer to provide certain assurances related to public improvements at Park West. The agreement stated that the developer’s obligations would be secured by real property held by a deed of trust. The trust property was identified as “Office/ Yard Hall’s General Contractor and Yuma Lumber Company Office/Yard.”

According to the Hall lawsuit, the developer’s obligations were limited to completing the installation of the public improvements for Park West Unit No. 1 and completion of 28th Street improvements. The public improvements included the street; sewer, electric and water utilities; drainage, flood control, lift station and other improvements of the subdivision.

In 2015, the city and the developer modified the agreement to include Part West Unit 2.

The Hall lawsuit claims that the only condition outlined in the agreement is to “complete the installation” of the public improvements. The lawsuit states that there is no mention in any agreement of an enforceable warranty or warranty period or a required final acceptance by the defendants.

However, in its response, the city points out that the

agreement specifically states that the “owner is responsible for assuring all Public Improvements are constructed in accordance with the designs, plans and specifications approved by the City ... The City shall have the right to inspect the construction work for compliance with specifications, plans, codes, ordinances and other regulations or laws that may apply.”

The Hall lawsuit alleges that the developer completed the public improvements in February 2020, and believes that the city should have released the deed of trust a month later, in March 2020. The city “refused” to release the trust property after the improvements were completed, according to the court document.

“Plaintiffs have made numerous verbal and written demands to Defendants since February 28, 2020 for full release and reconveyance of all Trust Property,” the lawsuit states. “Plaintiffs will continue to suffer significant and irreparable harm if Defendants are permitted to wrongfully and willfully cloud title as to the Trust Property as the marketability and value of the Trust Property is significantly impacted by the Defendants’ illegitimate and illegal Deed of Trust.”

In addition, the Hall Companies asked that the court award them all attorneys’ fees, costs and other expenses.

In its response, the city said that the deed of trust was not its idea. “Contrary to the unsupported allegations of the Complaint, it was not the City’s desire to use a deed of trust to secure such assurances as normally the City requires a performance bond or letter of credit,” the city stated.

The city explained that that it defines the improvements and the standards to which they are to be constructed while the financial assurances protect the city and the public by providing the city with the money to finish the improvements, if for some reason the developer does not do so or if the work is defective and needs to be replaced or corrected.

“The Hall Companies requested the Deed of Trust for the assurances to save the Hall Companies the cost and expense in procuring a performance bond or letter of credit,” the city response states.

The city, in its response, claimed that it has not released the deed because of two outstanding issues with the required Park West public infrastructure. The first issue, the city stated, is that the developer constructed a subdivision wall over an underground 12 kV Arizona Public Service electric transmission line in the backyards of some of the homes which have already been sold.

“The developer’s attorney has not confirmed if the developer has provided any notice to affected homeowners that an APS electrical line is located in their backyards,” the city stated. Consequently, the city sent letters on Nov. 19 notifying the impacted property owners of the situation.

The city also alleged that the Hall Companies failed to comply with public competitive bidding requirements for the construction of 28th Street. The city states that the preannexation development agreement required the Hall Companies to provide copies of the written bids to the city prior to start of construction and as a precondition to obtaining development fee credits.

“A mandatory obligation under the PDA and Credit Agreement the Hall Companies refused to follow,” the city states.

Therefore, the city contends that an agreement that provides $672,560 in development fee credits is void and the city is entitled to recover the fees from the assurances posted under the deed of trust.

The city does not normally comment on pending lawsuits, but in an usual move, the city responded to the lawsuit with a press release on Nov. 17.

“These issues remain unresolved by the developer and the City has filed a motion to dismiss the lawsuit,” the city said in the press release.

The city contends that the Hall Companies breached their contract and called for dismissal of the lawsuit. “The Hall Companies attempt to contort fraudulent recorded lien statutes and release of mortgage statutes but gloss over the ongoing contractual disputes between the parties, possibly to avoid Arizona’s Notice of Claim statute since the Hall Companies did not serve a notice of claim on the City as required under Arizona law,” the city’s response states. “Because the Complaint fails to state a claim for special action, the complaint must be dismissed.”

The Yuma Sun reached out to Hall’s attorney William Katz for comment. “My clients will not be commenting on the pending litigation at this time. In documents filed with the court, my clients have disputed and denied all allegations made by the City of Yuma,” Katz said in an email.