A real estate developer entered into a development agreement with a local agency to develop a parcel of land. The development agreement contained a clause requiring the developer to adhere to basic rules and regulations of a federal agency that would fund the development, but did not require the developer to comply with any conditions of the funding agreement between the local agency and the federal agency. Prior to funding, the federal agency objected to an aspect of the development and pulled funding of the project until the developer satisfied the federal agency’s demands. The local agency made a demand on the developer to modify the development agreement plans to satisfy the federal agency and the developer refused. The developer made a demand on the local agency to perform based upon the terms of the development agreement. The local agency refused, causing the developer to suffer money losses. The developer sought to recover his losses, claiming the local agency breached the development agreement by refusing to perform since the local agency’s performance of the development agreement was not contingent on the federal agency’s performance under their funding agreement. The local agency claimed it was not liable for the developer’s money losses since the conditions of the funding agreement between the local and federal agencies were part of the federal agency’s rules and regulations the developer agreed to in the development agreement. A California court of appeals held a local agency is liable for a developer’s money losses for breaching a development agreement since conformance to a federal agency’s rules and regulations called for in a development agreement do not include funding conditions covered under a separate agreement between the local agency and the federal agency. [
Mammoth Lakes Land Acquisition, LLC v.
Town of Mammoth Lakes (2010) 191 CA4th 435]
