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Taylorsville • The city has agreed to pay $175,000 to settle a lawsuit filed by development companies that allegedly lost millions of dollars in a property deal that went sour.

Taylorsville has denied any wrongdoing in the dispute over the failed agreement to sell 5 acres near City Hall. It had filed a counterclaim against 5400 South Associates LLC and an affiliated company, PF 5400 South LLC.

City Attorney John Brems said it would have cost approximately $175,000 to take the case to trial, and given the uncertainty of what a jury might do, it made sense to settle. The Taylorsville City Council approved the payment earlier this month.

The city will pay $50,000 and the rest will be covered by insurance.

The dispute centered on an agreement reached in December 2010 between Taylorsville and Paul Zane Pilzer, the managing member and chairman of 5400 South.

The development company agreed to pay the city $1,038,000 for the plot at about 2700 W. 5410 South, where it planned to build a Planet Fitness center and retail stores. The deal with the fitness chain required that the center open during calendar year 2011, according to 5400 South.

The suit alleges that the city began demanding changes in the deal before the Feb. 11, 2011, closing date. Those changes allegedly included the right to repurchase parts of the property at the original price if construction did not begin within a specified time, even though 5400 South had already spent $10 million in site improvements.

Other demands, according to the suit, were the city's right of first refusal for any sale of the property and aesthetic matching of the project with the adjacent City Hall.

The deal fell apart, and the 5400 South development companies filed suit June 3, 2011, in 3rd District Court claiming breach of contract.

The suit asked for an order requiring Taylorsville to sell the property to 5400 South at the agreed-upon price. It also sought monetary damages, including the cost of the site improvements and improvements at an alternate location in Taylorsville.

In its counterclaim, Taylorsville denied any breach of contract and said Pilzer had been informed of the city's conditions.

The city accused Pilzer and 5400 South of inducing it to sign the sale agreement by falsely representing that they would agree to issues that had been worked out in negotiations.

The city had asked for a judgment that the sale agreement is void and for unspecified monetary damages.

Twitter: @PamelaMansonSLC

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