Canceled Sale Of California Buildings Prompts Lawsuit

SACRAMENTO (CBS / AP) — The investors who won the contract to buy 24 state office buildings have sued the state.

Gov. Jerry Brown canceled the deal last month. The attempt to sell state assets was championed by former Gov. Arnold Schwarzenegger, but Brown said the high cost of renting the properties back from the buyers did not make financial sense for taxpayers.

A group of investors who formed California First announced Friday they had filed a lawsuit in Los Angeles County. They had offered to buy the properties for $2.3 billion.

The investors say “a deal is a deal.” The suit says the state failed to meet its obligations when Brown cancelled the agreement.

Eric Lamoureux, a spokesman for the state Department of General Services, calls the lawsuit “frivolous and wholly without merit.”

(Copyright 2011 by CBS San Francisco. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. Wire services may have contributed to this report.)

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