Until final order entered in case awarding a plaintiff almost $50 million from City of Sarasota, no appeal decision needed, city attorney says

Presiding judge has asked for transcript of May trial before ruling on a city motion that plaintiff’s evidence was insufficient for the case to go to the jury

The development of the Palm Avenue parking garage has been a key element in a years-long legal case involving the City of Sarasota. File photo

It likely could be August before the Sarasota City Commission has to decide its next course of action in a legal case in which a jury recommended the city pay a company approximately $49.8 million for breach of contract. That was the news City Attorney Robert Fournier delivered to the commissioners during their regular meeting on June 4.

“The final judgment in this case … has not been entered yet,” he told the board. Before County Judge Erika Quartermaine issues that order, he said, she has asked to review a copy of the transcript of the four-day civil trial. The city has directed — and he has verified — that the transcript will be prepared, Fournier added. He anticipated the earliest the document would be completed would be the final week of June, though the first week of July is the more likely timeline, he said.

The city would have 30 days after entry into court records of the final judgment before it would have to file an appeal, if that were the path the commission chose to pursue, Fournier explained. “It’s difficult to project when that will be,” he added of the date of the final order. “It could even go into … August.”

The verdict was handed down as the City Commission was meeting on the night of May 21, Fournier noted. “While I certainly have some very definite thoughts about the propriety of that amount and the finding of liability,” Fournier continued, for the time being, he would resist the temptation “to characterize that sum.”

This is the May 29 order signed by County Judge Erika Quartermaine. Image courtesy City of Sarasota

The aspect of the jury’s decision that he found most troubling, he told the commissioners, “is that the way this process is supposed to work” is that the jury makes findings of fact, and bases its verdict on those. “Here, I don’t believe that the jury made any factual findings.”

On May 23, two days after the jury issued its decision, attorney Thomas E. Leiter of Peoria, Ill. — the attorney for Buck-Leiter Palm Avenue Development LLC, the plaintiff in the case — emailed a representative of the 12thJudicial Circuit Court, asking when Quartermaine planned to enter a judgment on the verdict.

On May 29, Quartermaine issued an order saying, “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 Morgan Bentley of Bentley & Bruning in Sarasota, the city’s attorney in the case, made in open court — with the jury absent — at the conclusion of Buck-Leiter’s case, Fournier wrote in a June 2 email to the City Commission. That motion was for a directed verdict. Fournier explained on June 4 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].”

Subsequently, Fournier noted, on June 1, the city filed a motion seeking a directed verdict. The Florida Rules of Civil Procedure, he said, allow for such action within 15 days of the return of a verdict.

Additionally, on June 1, he continued, the city filed a motion asking Quartermaine to reduce the jury award — legally, a motion for remittitur— or, alternatively, to set a new trial on the breach-of-contract complaint.

To date, Fournier told the commissioners, no hearing had been set on those motions. (As of the publication deadline for The Sarasota News Leaderthis week — June 7 — that remained true.) Yet, a hearing is not necessary, he continued. Quartermaine could rule without one.

He further referenced a May 30 letter from Thomas E. Leiter, the attorney for Buck-Leiter, following up on a telephone conversation Leiter had the previous day with Morgan Bentley. Leiter had suggested that the city consider a settlement, Fournier said.

“The case has now culminated in the verdict of the jury in the amount of $49,782,431.00,” the letter pointed out. “My clients are willing to consider settling all issues at this stage of the proceedings and before the accrual of additional attorneys’ fees, costs and interest.”

A segment of the letter from attorney Thomas Leiter provides details about the case. Image courtesy City of Sarasota

Buck-Leiter “is willing to seriously consider settling the dispute at this time,” Fournier told the commissioners on June 4. However, Fournier added, “what’s actually most important here” is what the letter does not say: “It doesn’t make a specific settlement proposal.”

He said he saw no reason why they should consider a settlement at that time, given the pending motions and the lack of a final order.

Commissioner Shelli Freeland Eddie asked that Fournier let the board members know if Quartermaine does set a hearing date for the motions. She added that it appeared they had no reason to schedule a “shade” meeting in the near term to discuss their next steps. (Freeland Eddie was referring to the state’s open meetings laws, which allow local government bodies to discuss legal issues in private with their attorneys.)

“I don’t think there’s a proposal there for the commission to react to. No,” Fournier replied, referring to the Leiter letter.

A years-long legal process

City Attorney Robert Fournier. File photo

Buck-Leiter Palm Avenue Development filed its original complaint against the city in June 2010, court records show.

As Fournier explained on June 4, the issues in the case go back to 2006, when the city issued a Request for Proposals (RFP) for a project on the site of the Palm Avenue parking garage and the Art Ovation Hotel in downtown Sarasota.

The original Buck-Leiter complaint said that the RFP was for the development of a municipal parking garage at the intersection of Palm Avenue and Cocoanut Avenue. Of the responses the city received, the Buck-Leiter proposal “was the highest ranked,” the complaint added.

(Fournier said on June 4 that the company’s response was on the “short list” of those the city had received. Ultimately, he noted, Buck-Leiter was selected to negotiate a contract with the city.)

The complaint said Buck-Leiter “entered into a ‘Preliminary Redevelopment Agreement’ as prelude to a ‘Final Development Agreement.’”

On March 21, 2008, the complaint noted, “[T]he City approved the conceptual architectural design and appearance of the project.”

Part of the initial agreement, the complaint pointed out, included steps to enable Buck-Leiter to obtain financing for the construction. However, the complaint said, after that initial agreement was executed, the city breached it by not following through on the financing part of the deal. That led to increased costs for Buck-Leiter “and corresponding changes in financial projections for the project,” the complaint said.

(The complaint had three claims, Fournier told the city commissioners on June 4. Two of those were “disposed of,” he added, leaving just the breach of contract issue for trial.)

On April 8, 2008, the complaint continued, Buck-Leiter and the city executed a document “that dealt with most of the remaining issues that had not been specifically included in the ‘Initial Redevelopment Agreement.’”

A rendering shows the Art Ovation Hotel, which is adjacent to the Palm Avenue parking garage. It was built after the City of Sarasota entered into an agreement with the Floridays Development Co. Image courtesy of the hotel website

On July 17, 2008, the complaint said, the City Commission, meeting in regular session, had on its agenda consideration of the proposed Final Redevelopment Agreement. “Under the terms of the RFP, there was a deadline of July 21, 2008 in which to enter into the final agreement,” the complaint pointed out. The city could have extended that deadline so a new economic analysis of the agreement could be completed, the complaint said. Instead, the complaint continued, city administrative staff said it had found the current redevelopment proposal outline unacceptable, and the city ended up backing out of the deal.

As the complaint put it, the City Commission voted “to terminate discussions and [failed] to obtain an economic analysis of [Buck-Leiter’s] proposal.”

In a Sept. 15, 2008 memo, the complaint said, Fournier responded to a letter from Buck-Leiter, reiterating “that the reason for the City not approving the final agreement was solely because of the relative change in the relative contributions of the Developer and the City and despite the fact that the project would have a long-term economic benefit to the City.”

After the city failed to have the case dismissed, it finally filed an answer on Dec. 6, 2010. In that document, the city argued that it had characterized the Initial Redevelopment Agreement “as a ‘tentative’ initial agreement.”

The John Buck Co., based in Chicago, features this among the banners on its website. Image from http://www.tjbc.com

The answer explained that the project was to consist of 150 condominium units in an 11-story structure; an eight-story business class hotel with 140 rooms; approximately 25,400 square feet of retail space; and a parking garage with 400 public spaces and “a total of approximately 700 parking spaces.” (The Art Ovation Hotel on Palm Avenue, next to the city parking garage, has an agreement with the city to use about 40% of the spaces.)

The answer also pointed out that the proposal John Buck Co. (which partnered with the Leiter Group) submitted in response to the RFP included a line saying, “Developer and City will enter into a 50 year participating Ground Lease under which the Developer will make fixed annual payments to the City. The ground lease shall be subordinate to mortgage financing on the project.”

However, the city’s answer explained, “Publicly owned municipal property cannot be pledged as security for the repayment of a private debt or mortgage in Florida.” The answer added that the Buck Co. wanted the city “to unlawfully subordinate its fee simple ownership interest in the property to the lien of the developer’s mortgage, which could have resulted in the loss of publicly owned property at foreclosure upon the default of the private party mortgage.”

The answer noted, “The Initial Redevelopment Agreement contemplated a transfer of title to the property upon the expiration of the Ground Lease term, with the consideration being the payments made to the City under the Ground Lease.”