Court of Appeal rules city should pay only $1.4 million instead of close to $50 million to company that originally had contract to build Palm Avenue parking garage, plus adjacent hotel and condominiums

Judges uphold 2018 ruling of county judge

The Second District Court of Appeal building in Tampa stands at 1700 N. Tampa St. Image from Google Maps

On March 17, Florida’s Second District Court of Appeal agreed with a Sarasota County judge that the City of Sarasota should pay only $1.4 million instead of approximately $49.8 million in a case dating to 2013.

The litigation involved the development of the city-owned property that became the site of the Palm Avenue parking garage and the Art Ovation Hotel.

City Attorney Robert Fournier reported the decision to the City Commission in a March 17 email.

“That is great news,” Mayor Hagen Brody responded in an email the same day.

Not quite two years ago, Brody told his colleagues on the commission that he felt the city should make a settlement offer in the case, before the county judge issued her opinion about the award to the developer. However, the majority of the commissioners disagreed with him.

Additionally, Fournier pointed out, the Appeal Court denied both parties’ petitions for attorneys’ fees.

The Appeal Court issued what is called a per curiam affirmation (PCA). As Cornell University’s Legal Information Institute explains it, “A per curiam decision is a court opinion issued in the name of the Court rather than specific judges. Most decisions on the merits by the courts take the form of one or more opinions written and signed by individual justices.”

Such opinions also cannot be appealed to a higher court, because they do not offer any written discussion about the judges’ decision, attorneys have told The Sarasota News Leader.

City Attorney Robert Fournier. File photo

A 2019 Florida Bar Journal article written by H. Michael Muniz explains that, more than 35 years ago, the First District Court of Appeal responded with the following to a motion for rehearing following its issuance of a per curiam decision: “We recognize that if we decide a case without writing an opinion, the losing party will be unable to obtain further review in the supreme court. Therefore, we endeavor to write opinions in all cases in which we believe that our decision can arguably be in conflict with a prior decision of the supreme court or a district court of appeal.”

Further, Muniz pointed out, in a 1983 case, the First District Court of Appeal further acknowledged that it “writes opinions in all reversals, remands, and in affirmances in which the appellate court believes a written opinion will make a substantial contribution to the law, or where necessary to disclose conflict or certify questions. If it were not permissible to issue a PCA, the processing of appeals would be materially delayed.”

As for the attorneys’ fees issue: The Appeal Court cited a June 2017 ruling by the Third District Court of Appeal in Bauer v. Ready Windows Sales Service Corp. In that opinion, the Appeal Court affirmed that Ready Windows had breached a contract, but the Appeal Court also affirmed the trial court’s award to the Bauers “of a set off amount for the installation [of doors and windows],” which was the subject of Ready Windows’ cross-appeal. “Because both parties prevailed on significant issues, this Court finds that appellate fees are not warranted for either party,” the Court of Appeal wrote.

Details of the Buck-Leiter case

County Judge Erika Quartermaine. Image from the 12th Judicial Circuit website

On May 21, 2018, a Sarasota County jury rendered a verdict that the city was liable for approximately $49.8 million for backing out of an agreement that Buck-Leiter Palm Avenue Development LLC said it had forged with the city almost a decade earlier. That agreement called for it to construct the Palm Avenue parking garage and a hotel/condominium complex/retail project adjacent to the garage.

However, before County Judge Erika Quartermaine issued her order in the case, she asked to review a copy of the transcript of the four-day civil trial that had been conducted.

On May 23, 2018, attorney Thomas E. Leiter of Peoria, Ill. — the attorney for Buck-Leiter Palm Avenue Development LLC — emailed a representative of the 12th Judicial Circuit Court, asking when Quartermaine planned to enter her judgment on the jury’s verdict.

On May 29, 2018, Quartermaine wrote in an order, “The Court will first enter a ruling on the pending motion and any other timely filed motions regarding the verdict. A copy of the trial transcript would assist the court in considering said motion(s).”

She was referring to a motion that Morgan Bentley of Bentley Law in Sarasota, the city’s lead attorney in the case, had made in open court — with the jury absent — at the conclusion of Buck-Leiter’s case, City Attorney Fournier wrote in a June 2, 2018 email to the City Commission. That motion was for a directed verdict.

Fournier explained to the commissioners during their regular meeting on June 4, 2018 that such a motion reflects the defendant’s belief that, even though the evidence and testimony the plaintiff has submitted is assumed to be true, “that evidence is still not sufficient to prove the plaintiff’s [allegations].”

On Aug. 16, 2018, Quartermaine finally issued her order, which reduced the jury award from $49,782,431 to $1,447,676.33 “with interest since the date of the Verdict” on the issue of lost profits to Buck-Leiter.

Morgan Bentley. Contributed photo

Quartermaine agreed with Buck-Leiter that the city was liable for breaching the city’s contract with the firm. Then-Mayor Lou Ann Palmer executed that agreement on the city’s behalf on Nov. 13, 2007, court records showed.

In his March 17 email to the city commissioners, Fournier noted that Buck-Leiter appealed Quartermaine’s ruling, and the city filed a cross appeal regarding her order that the city pay the $1.4 million to the firm.

In its 2008 agreement with the city, Buck-Leiter proposed 150 condominium units in an 11-story tower; an eight-story business class hotel with 140 rooms; approximately 24,500 feet of retail space; and the parking garage, with 400 public spaces and about 300 more for hotel patrons.

That plan came in response to a 2006 city-issued Request for Proposals (RFP), as city leaders wanted to develop the 2.25-acre parcel the city owned on Palm Avenue, Judge Quartermaine wrote in her Aug. 16, 2018 order. At the outset of the RFP process, she explained, the primary objective for the city was to provide 400 parking spaces and management of the parking area; “attainable housing units, ‘exemplary architecture’; and certain financial benefits to the City.”

Among the responses to the city’s RFP was a joint proposal from The Leiter Group and the John Buck Co., Quartermaine noted.

“In an effort to best understand the development proposals,” she continued, “the City hired an independent firm named Economic Research Associates” to prepare a report. Dated Nov. 10, 2006, that report estimated the Buck-Leiter project would cost $102,696,000, Quartermaine continued, with total revenue for a 10-year period estimated at $149,045,959. That meant the approximate amount of net revenue to Buck-Leiter would be $49,782,431, “(the same amount as the Verdict),” Quartermaine pointed out.

Citing Florida case law as the basis for her decision to reduce the May 2018 jury award, Quartermaine pointed out that the company’s calculations were what it hoped or wished to make from the project. It “failed to take into account the myriad of outstanding variables and changing circumstances which existed from the time the parties entered into the [Initial Redevelopment Contract] IRA with the City until the City terminated the Project on July 18, 2008,” she added.

“Most significantly,” she continued, as was addressed at City Commission meetings, “after the execution of the [agreement], the economy took a significant downturn and real estate values had changed.” Buck-Leiter’s calculation regarding lost profits “was actually slightly higher than the [profits] estimate of the [Economic Research Associates] Report ($49.8 million),” Quartermaine wrote.

The report was completed in 2006, she noted, when the Palm Avenue project “was a mere idea and the economy was better …”

The Palm Avenue garage is near the intersection of Palm and Cocoanut avenues. File photo

However, Quartermaine did point out that “what was ultimately built” on Palm Avenue — the garage and the Art Ovation Hotel next to it — “was very similar to what Buck-Leiter had proposed.”

Thus, she agreed with Buck-Leiter that the city was liable for breaching the agreement.