Guntert

Plaintiff Ronald M. Guntert and two wholly owned corporations brought this suit against the City of Stockton, seeking declaratory relief, an injunction and damages. After trial the superior court entered findings in favor of plaintiffs, ordered issuance of a permanent injunction and directed a future trial for the purpose of fixing damages. The City of Stockton appeals from the order granting an injunction.

Guntert and his companies operate a steel construction and machinery manufacturing business on waterfront land, known as Banner Island, which Guntert leases from the City of Stockton. Guntert occupies the property under a 1966 lease as amended and extended in August 1970. The amended lease includes a clause permitting termination by the lessor on 18 months’ written notice when and if the city decides to accept a development offer conforming to described conditions. The text of the termination clause appears in the margin.

Both before and after the 1970 lease amendment, Stockton city officials had been negotiating with a group of developers called Channel Land Company. In these negotiations the city was represented by the city manager, assistant city manager and by…