Los Gatos Weekly-Times

Oregon company files suit over press release about Lexington

Greenbelt says the action is designed to kill debate

Arlie: Information false

By Jeff Kearns

Arlie Land and Cattle, the Oregon-based company that owns a large chunk of the Lexington Basin, filed a libel suit against Greenbelt Alliance June 12, claiming that a press release issued by Greenbelt contained false information about the company.

The suit, filed in Superior Court, seeks unspecified damages, alleging defamation, interference with a land deal and civil conspiracy, due to the defendant's acting intentionally "with malice, oppression and fraud" to injure Arlie. It alleges that the negative attention generated by the press release scared off potential buyers, although the suit names no specific potential buyers.

Greenbelt says the move is designed to shut them up. "The suit is an outrageous attempt to silence Greenbelt and other critics of their development schemes," said communications director Michael McCauley. "We've never faced this kind of legal challenge before, and we've been around for 40 years."

Greenbelt's attorney, Jim Wheaton of the First Amendment Project in Oakland, says the suit is a textbook form of legal harassment known as a SLAPP, or Strategic Lawsuit Against Public Participation. "It's being filed against [Greenbelt] especially to intimidate or stop them from talking about a public issue," he said. "It has no chance of winning."

Arlie refused repeated requests to comment publicly on the matter. The company's San Jose attorney, David Lively, did not return a phone call placed to his office.

Several environmental groups have decried the potential development of the property, calling the area one of the most environmentally sensitive areas in the county. The 1,130-acre property includes much of the hillside to the southwest of Lexington Reservoir, and extends almost to the Santa Cruz County line. Part of the property is a 210-acre parcel where developer Pete Denevi wants to build a country club. The land is the former site of Alma College, a Jesuit school that closed in the late '60s. The lots up for sale vary considerably in size and shape.

The sales literature, prepared by Acosta Commercial Real Estate Services of Mill Valley, advertises 54 "existing and potential" estate lots at $750,000 each. Arlie paid $17 million last year to buy the property from Wisconsin-based Hong Kong Metro Realty.

County officials say there are between 40 and 44 lots on the property, excluding 210 acres that Denevi is still trying to buy. Denevi received a 150-day extension June 15 on his option to buy, but sales literature for the property says that the owners may offer a total of nine lots on the golf course property if Denevi doesn't close the deal.

The sales literature says Arlie has five lots to the east of Highway 17, which runs through the property. According to sales literature, Arlie plans to create three more lots by filing certificates of compliance. The state is currently negotiating to buy one of the existing lots, a five-acre parcel now being leased by the California Department of Forestry and Fire Protection.

According to county planner Zack Carter, the property originally contained about 24 separate parcels, but in January, Arlie started submitting 19th-century land patents to the county for certification. Because the patents predate the county subdivision ordinance, which was adopted in 1969, officials have issued 16 certificates of compliance for the patents, giving legal recognition to the new lots. The patents were handed out by the federal government to soldiers, settlers and other early inhabitants of the area. Existing deeds overlap the property lines of the old patents, creating new lots in many cases.

But Carter says some of the lots can't be sold because the owners don't yet have recorded descriptions.

Arlie has made repeated demands for a retraction of Greenbelt's March 30 press release, "South Bay's Bear Creek Redwoods threatened by luxury housing and golf course development schemes." The suit names Vicki Moore, Greenbelt's associate policy director, and volunteer Celia Thompson-Taupin, the two contacts listed on the release.

The Los Gatos Weekly-Times, the San Jose Mercury News and the San Francisco Chronicle ran stories after the release went out.

The dispute arises from two passages in the release, which say that Arlie created four "paper shell" corporations that would "enable" the company to evade clustering and open-space requirements, and that it was "working to circumvent local zoning laws."

Greenbelt is sticking by the release. "We're still comfortable with those statements," McCauley said.

Associate policy director Vicki Moore defended the release in an April 9 letter to Arlie. "LLCs are freestanding independent corporate entities that can separately hold ownership of property," Moore said in the letter. "By transferring ownership to these entities, Arlie can avoid or minimize the impact of the county's residential clustering and open-space requirements for hillside property."

Additionally, Moore said that although the lots are legal, they do circumvent the county general plan and zoning codes.

Arlie says that filing for certificates of compliance is perfectly legal under county ordinance. Sixteen certificates were granted, creating lots that did not previously exist on the property.

Arlie says the notion that it created "shell corporations" is just plain false.

Arlie stated in an April 13 letter to Greenbelt: "Arlie owns the entire 1,100-acre parcel, and hasn't transferred title or possession to any other entity. ... On Feb. 11, 1998, Arlie granted an option to Los Gatos Hills LLC to buy a portion of the property. That option has since expired. However, Arlie did not create that corporation and did not transfer title or interest in it pursuant to the option. On Feb. 11, 1998, Arlie issued a deed of trust to Redwood Hills LLC in connection with its acquisition of the property. This is a debt and security instrument, and Arlie has no ownership interest in Redwood Hills LLC. The trust deeds to the Lex Company and LTC Exchange Co. are similar instruments. They were not created by Arlie, and Arlie has no ownership interest in them."

According to Santa Clara County senior planner Hugh Graham, the draft environmental impact report prepared for the property will most likely be recirculated. The county is also requiring Denevi to pay for an extensive geotechnical review of the area, which Denevi spokesperson Rich Robinson insists is unnecessary and too expensive. Previously, the price of the study was put at $450,000, but Robinson says that Denevi is negotiating for a better price.

The project hasn't gone to the county Planning Commission yet, but commissioners have accepted a draft EIR prepared for the golf course proposal.

According to Graham, "[Denevi] can either do the studies or abandon the project, and we're currently waiting on them to come forward with a response."

Meanwhile, a timber harvest plan submitted by Big Creek Lumber of Davenport in Santa Cruz County is circulating for part of the property. Camas Hubenthal, legislative advocate for the Committee for Green Foothills, says her organization is reviewing the plan and will make comments on it before the July 27 deadline.

Hubenthal also charges that several passages from an article she penned for the committee's newsletter were plagiarized, tweaked to favor development instead of preservation, and used in the sales literature for the property.

An Arlie employee, who did not wish to be identified by name, responded by saying that the material also appeared on the Web, which is a public domain, and that it was not copyrighted.

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