Tri-City Healthcare District announced Dec. 16 it will walk away from the disputed medical building at the center of a legal battle with a Carlsbad developer.

Rather than hand over the $12.1 million California’s Fourth District Court of Appeals recently agreed it must pay Medical Acquisition Co. Inc., Tri-City’s board voted unanimously to begin the process of abandoning the eminent domain proceedings it used to take ownership of the building.

Tri-City noted in a written statement it expects to recover its $4.7 million deposit on the 60,000-square-foot medical office building sitting vacant on its Oceanside hospital campus.

“A jury placed a value on a building that was double its actual value and Tri-City cannot in all good conscience agree to take out of circulation 12+ million dollars that can be used to provide healthcare to the community it serves by overpaying for a medical office building,” the public health care district stated.

Tri-City added it intends to honor terms of the building’s ground lease and collect $118,440 in annual rent.

A San Diego Superior Court jury in June rejected Tri-City’s contention the district’s development contract with MAC should be nullified because of an alleged conflict of interest that involved one of its former chief executives.

The jury found the district owed MAC $16.8 million for the building, plus $2.9 million for breach of contract. Tri-City’s appeal of the decision is pending.