Investors sue over lack of progress on proposed office building for 40 Main St.

Two of Ted and Jerry Sorensen’s investors have run out of patience with the brothers’ protracted efforts to build a three-story office building at 40 Main St. in downtown Los Altos.

Sean and Erik Corrigan of the Los Altos-based Old Trace Partners LP filed a lawsuit June 19 seeking the return of their $284,000 investment in the Sorensens’ project.

The suit accuses the Sorensens of fraud for “intentional or negligent misrepresentation.” The Corrigan brothers also claim that the Sorensens withheld information from investors. The plaintiffs are calling for a lien on the Sorensens’ property to recoup their investment, plus interest, in addition to inspection of financial information.

Ted Sorensen last week declined to comment on the specifics of the suit but said it was “without merit.” He added that he and his brother would “vigorously defend” themselves.

In addition to “mismanagement of the development process,” the suit charges the Sorensens with “misusing and depleting (investor) funds, taking approximately $540,000 in fees based on the false premise that Los Altos rents are largely comparable with those of Sand Hill Road and downtown Palo Alto.”

The Corrigans reportedly made several attempts to contact the Sorensens and work with them to resolve the “deficiencies,” according to the suit, but the Sorensens either refused or ignored requests to allow inspection of financial records.

The Sorensens have been trying since 2007 to construct an office building at the 7,841-square-foot site currently occupied by a one-story structure that serves as their offices.

The Los Altos City Council rejected their latest application in June 2012, despite a recommendation for approval from the city Planning Commission. The council rejected the proposed 15,249-square-foot, three-story building in part because the building was nearly 5 feet higher than the city’s 30-foot height limit and fell 17 spots short of the required parking stalls.

The Sorensens filed a new plan with the city last October, but city staff deemed it incomplete. The Sorensens said they are waiting for a change in city policy that would allow them to reconfigure space for parking around their building to add more stalls. The city council is scheduled to discuss the matter Aug. 26.

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