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Published on 11/23/1998 All articles from this issue

Lawsuit among Tree Farm partners stalls project

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By Joanne Griffith Domingue / Town Crier Staff Writer

One Tree Farm partner has filed suit against the other two, alleging mismanagement, abuse of authority, diverting income for personal use and engaging in negligent, reckless and intentional misconduct, according to court documents.

Beverly Brockway, who with John Challas and Oliver Lin make up the Tree Farm Associates, is suing her partners, Challas and Lin, over development of the Los Altos land at 4434-4444 El Camino Real known as the Tree Farm.

After two years of hearings, study sessions, neighborhood gatherings and council meetings, work on the project has stopped.

In August and again in September the developers pulled the item, at the last minute, from the city council agenda.

In October, Brockway filed suit.

"I'm looking for some way to get the project off dead center," she said, "to get it going again. I still think it's a good project in a great location."

The developers plan a mixed-use project that includes a three-story office building on El Camino Real, eight below-market-rate rental condos and a 131-room residential inn on the 4.5-acre site.

For Los Altos senior planner Jim Mackenzie, the suit "doesn't come as a big surprise. We'd been aware of internal conflicts among the three partners. But we weren't aware they were escalating to legal action."

Lawsuits are not unheard of in "these kinds of projects," said Los Altos City Manager Phil Rose, when he heard of the suit. "These kinds of projects are difficult to put together and keep going."

According to court documents, Brockway owns 18.9 percent of the Tree Farm land and Sissu, a California limited partnership, owns 6.1 percent.

The remaining 75 percent is owned by the Tree Farm Associates.

The associates include Brockway and two limited liability companies: C.C. and W. Associates, which is Challas, his wife Jane and other relatives; and C.G. and G. Associates, which is Lin, his wife and other relatives, according to court documents.

On Nov. 25, 1997, Tree Farm Associates, along with Brockway and Sissu as tenants in common, jointly purchased the Tree Farm site, according to court documents.

Cathay Bank, also named in the suit, holds a deed of trust securing a loan of $4.23 million.

In the suit, Brockway asks that the land be sold.

The suit alleges that the defendants interfered with the development of the project by "canceling scheduled meetings with the city of Los Altos."

Other allegations state that the defendants have tried to destroy the value of Tree Farm Associates "with a goal of forcing Brockway to sell her interest ... for less than fair compensation," according to court documents.

The suit also alleges that income from the limited liability company of C.C. and W. Associates was diverted for personal use through family members, that the limited liability company was "inadequately capitalized and that proper formalities were not observed in order to serve other interests" than those of the Tree Farm, according to court documents.

Challas and Lin did not return phone calls. Challas, according to those close to the project, is out of the country.

Some work did begin on the site last spring. Trees were cleared, leaving stumps and slash; and a 10-foot white stucco wall, costing $90,000, was built to separate the site from the neighboring homes.

The wall has not been paid for, a mechanics lien is on record, and since October it has been covered with black graffiti.

At this point, the project has "all the planning approvals in place to apply for an excavation permit," Mackenzie said. "They did apply last summer, but were rejected because the supporting information was not complete. So the plans weren't even reviewed by the city."

News of the lawsuit is "certainly disappointing," Mackenzie said.