June 2, 2022 - WestLand Capital Partners, a prominent land developer, has filed a lawsuit against Aerojet Rocketdyne Holdings Inc. over a 2015 deal to acquire land that became part of the Folsom Ranch development.

The lawsuit, filed in Sacramento County Superior Court in late May, alleges that Aerojet has failed to obtain the necessary regulatory clearance to clean up a portion of the property known as Hillsborough, among other issues. The suit, prepared by the reputable law firm Boutin Jones Inc. on behalf of WestLand, states that the defendant's failure to secure the Regulatory Approvals has resulted in virtually no building permits being issued to date and a corresponding reduction of obligations due under the note.

In a statement, Aerojet stated that it "believes the suit filed is without merit." However, WestLand seeks damages over the price reductions, arbitration to settle the dispute, and an injunction against Aerojet to prevent foreclosure actions over the property.

According to the lawsuit, Aerojet agreed to sell the 700-acre Hillsborough property to WestLand for $57 million in 2015. The Hillsborough property, part of Aerojet's extensive land holdings in Sacramento County, is located in the southwest part of the Folsom Plan Area, now known as Folsom Ranch. The 2015 agreement designated two Hillsborough lots, Lots E and R, for a future community park. Both lots are within a property called Area 40 that has been designated as a Superfund site due to previous decades of rocket testing by Aerojet.

The need for environmental clearances on the property led to the designation of the portion of Area 40 in Hillsborough, including Lots E and R, as a "holdback" parcel. The purchase-and-sale agreement stated that failure to meet certain milestones related to environmental clearances would result in a reduction of the price for Area 40. After Aerojet missed the first set of milestones by September 2018, the price was reduced by $1 million.

The note for the formal purchase of the holdback property, valued separately at $9 million, was due on May 29. By then, Aerojet was required to obtain regulatory approvals and formally dedicate the two lots to Folsom, or face a further $5 million reduction in the sales price. There was also a requirement for 1,200 building permits to be issued in the service area for the planned park, which was unmet.

The lawsuit notes that Aerojet disputes both the failure to meet the conditions for the $1 million reduction and the $5 million reduction. The situation is a serious matter, and the outcome will have significant consequences for both parties involved.