The England keeper today made a transfer request, although Pearce insists it has nothing to do with the fact City turned down a bid for James from Portsmouth earlier this week.
"We have a situation where a player has asked to leave the club in respect to his personal reasons," Pearce told the City website. "His reasons are between David and myself but they are common-sense ones that I understand.
"None of them were football-related or anti-Manchester City or anti-Stuart Pearce in any way, shape or form. I understand them thoroughly and we had a decent conversation between us."
However, despite James wanting to leave, Pearce has said the 35-year-old will only go if City receive a decent offer.
"With those things considered, it's very difficult for a manager to say, 'you are not going anywhere'. Everything has to be right for me to consider losing a player of his quality," he added.
"I have to make sure we have a replacement and that the financial aspects are right for the football club, otherwise no player leaves us."