State judge sides with defendants in LIO case

A state judge handed down a significant ruling Thursday on a case involving the controversial lease for the state’s Legislative Information Office in downtown Anchorage.

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Read Judge Patrick J. McKay’s order denying the motion for summary judgement.

The case centers on claims made by attorney James Gottstein, who owns the building next to the LIO, and alleges the lease agreement between Legislators and developers is illegal. There are also allegations of threats and damages he suffered during construction. On top of that, Gottstein argues that as a whistleblower he should receive 10 percent of the monies saved if the lease agreement is invalidated.

On Thursday, Superior Court Judge Patrick McKay ruled that Gottstein waited an unreasonable amount of time–17 months–before raising the issue of illegality, during which time he accepted tens of thousands of dollars in professional fees and rent from the construction company. Additionally, McKay disagreed with many of the smaller points raised by Gottstein, not finding sufficient evidence for allegations of damages or threats.

The ruling stops short of issuing a judgment in the case. Instead, McKay wrote that too many factual issues remain unresolved to declaratively say whether or not the lease agreement signed by the Legislative Affairs Agency and developers in September of 2013 was illegal. However, the decision pokes many large holes in arguments brought forward by Gottstein, and bolsters the defenses claim that Gottstein’s delay caused harm.

In an emailed statement, Amy Slinker, a spokesperson for the company representing the building’s owners wrote, “The State is in a different fiscal environment now than when the lease was legally signed in 2013.  Mindful of this reality, 716 West Fourth Avenue, LLC has indicated its willingness to work with the Alaska Legislature to find a pathway to savings.”

The case is separate from the Legislature’s December 19th decision to put lease payments on hold until attorneys decide whether the office building meets “competitive costs.”

The case is scheduled to go to trial in March.