CLOSED DOOR ATTORNEY-CLIENT SESSION RE: GREATER BAY GROUP, LLC. vs. CITY OF LAKE WORTH October 11, 2011

CITY OF LAKE WORTH

CLOSED DOOR ATTORNEY-CLIENT SESSION

IN RE: GREATER BAY GROUP, LLC.

vs.

CITY OF LAKE WORTH

Tuesday, October 11, 2011

2:33 - 4:08 p.m.

7 North Dixie Highway

Lake Worth, Florida 33460

Reported by:

Kathleen Lusz, RPR

Job#341670

IN ATTENDANCE:

Rachel Waterman, Mayor

Suzanne Mulvehill, Vice Mayor

Jo-Ann Golden, Commissioner

Scott Maxwell, Commissioner

Christopher McVoy, Commissioner

Susan Stanton, City Manager

Elaine Humphreys, City Attorney

Brian Joslyn, Esquire

(The following proceeding was had:)

MS. LOPEZ: Mayor Waterman?

MAYOR WATERMAN: Here.

MS. LOPEZ: Vice Mayor Suzanne Mulvehill?

VICE MAYOR MULVEHILL: Here.

MS. LOPEZ: Commissioner Scott Maxwell?

COMMISSIONER MAXWELL: Here.

MS. LOPEZ: Commissioner Christopher McVoy?

COMMISSIONER MCVOY: Here.

MS. LOPEZ: Commissioner Jo-Ann Golden?

COMMISSIONER GOLDEN: Here.

MAYOR WATERMAN: Okay. We have a city attorney announcement?

MS. HUMPHREYS: Yes. Pursuant to Section 286-011(8) of the Florida Statutes I desire advice concerning pending litigation in the case of Greater Bay Group, LLC, versus The City of Lake Worth.

MAYOR WATERMAN: Okay. So pursuant to that same Florida Statute cite, we are going to commence a closed door attorney-client session for the purpose of discussing pending litigation regarding the case of Greater Bay Group, LLC, versus The City of Lake Worth. Shut the door at this point?

MS. LOPEZ: No.

MAYOR WATERMAN: No?

MS. LOPEZ: Then you have to state the estimated length.

MAYOR WATERMAN: Oh. The estimated length of this session is one-and-a-half hours. And the following individuals will be in attendance: Myself; the vice mayor; all city commissioners; city manager in her part, the designee; the city attorney, Brian Joslyn, Esquire, and our court reporter. And your name is?

COURT REPORTER: Kathy Lusz.

MAYOR WATERMAN: Thank you. Okay. So we have to recess now?

MS. LOPEZ: If you recess the special --

MAYOR WATERMAN: Recess the special meeting.

MS. LOPEZ: Yes. To go into the closed door.

MAYOR WATERMAN: Okay. So at this time I'll recess the special meeting. And I would like to reconvene a closed door attorney-client session.

MS. LOPEZ: When you reconvene, come get me. I'll come back.

MAYOR WATERMAN: Okay. 2:35. Thank you.

(Ms. Lopez exited the room.)

[FORWARD TO PAGE 63, LINE 12]

MAYOR WATERMAN: No, I don't want to put it on the board for them. But I would want to have it in my own back pocket. I mean if I was negotiating the contract, I would want to know what I felt the value of the contract was. If I'm going into mediation, I would want to know what I thought a realistic number was if I got the sense that things weren't looking in my favor. So what would have been realistic square footage lease.

I mean I think we are only getting 24 now. You know five years ago what was realistic? What do other similar sized facilities -- how often -- what are their booking schedules like; how much money are they generating? Why don't – Why haven't we done some projections or analysis of that?

MR. JOSLYN: I don't want to put a number on the board for them, A. But, B, we need to hear how they get to their number, their official under oath version of how they get to their number for our economist to tear it apart.

MAYOR WATERMAN: I just don't see how he could be prepared to tear it apart unless he's already done the homework. I'm not talking about putting it on the board for them. I'm talking about us being prepared and knowing what is reasonable.

MR. JOSLYN: We asked them to provide us the exhibits that they have for damages. They gave us a list of documents. It's the pro formas and all of that stuff that they provided. There is no way to analyze that at this point without them telling us how the dots are connected.

What's the real number: Three, four million bucks over 20 years given the amount of financing they were going to have versus the amount of rent they could realistically charge out there maybe. At the very beginning they were talking about it might even be -- they might even have a loss when they're doing projections out there. It would be very, very tight. Okay.

MS. HUMPHREYS: And also just for if we wanted to put something on the table for a nuisance value, you know, under Brian's suggestion, you know, we have budgeted for this current fiscal year $300,000 to defend and have this case tried.

MR. JOSLYN: But let me just say one more thing. Our number comes up after theirs. So the reason -- The reason this is a little out of order is because the other side wanted to mediate sooner rather than later. I normally in the course of things would mediate after we took everybody's deposition, had all the expert reports and all of that stuff. But given the fact that he's saying that -- he's at 20 million or 10 million or 5 million dollars at mediation and knowing what the city is in a position to do, it doesn't appear to either of us that mediation is going to be successful. But we have to do it to get it out of the way. So I mean in my mind at this point, I don't see that you give them any more than a nuisance value or a cost of defense offer. There is certainly no basis that I see at this point to put anything like a million dollars on the table even if you could afford to put a million dollars on the table.

MS. HUMPHREYS: And we can't, quite frankly.

MR. JOSLYN: Right.

COMMISSIONER MCVOY: So you're saying that, that's kind of back to my question, the reasonable value is zero. But then you're saying, okay, for the cost of defense and nuisance --

MR. JOSLYN: Uh-huh.

COMMISSIONER MCVOY: -- there is some -- they have some costs, and maybe they're entitled to that. And what would that number look like ballpark?

MR. JOSLYN: Well, their actual out-of-pocket expenses?

COMMISSIONER MCVOY: Well, no. This would be the number that we --

MR. JOSLYN: That you're authorizing?

COMMISSIONER MCVOY: For a mediation.

MR. JOSLYN: You could say the cost of defense or maybe a hundred thousand more than that. I don't see at this point any basis for an award to give them any kind of money like a million dollars. I really don't see it.

COMMISSIONER MCVOY: So it's going to be we're going into mediation. They're coming with anywhere from 25 to 40 million, and we are going to say, yeah, we're looking at a few hundred thousand at best?

MR. JOSLYN: Absolutely. And here is why, blah, blah, blah, blah.

COMMISSIONER MCVOY: Yeah. Right. I would like to follow up a little bit with what Commissioner Golden said that I would definitely go into that mediation or at least into whatever the next phase with whatever information we can find in the track record of either Willard as an individual or Greater Bay construction. Because I remember one time running into Willard at Pollo Tropical. I don't think I recognized him. I don't think I had ever seen him before. But he recognized my wife and I. And we wound up sitting and talking to him. He's a fascinating guy. He can talk --

MR. JOSLYN: Oh, yeah.

COMMISSIONER MCVOY: -- very persuasively. And I think that would not work in our favor, because he can -- and he claims to have done all sorts of wonderful philanthropic things. It was really hard to tell. And he's interesting. We had an enjoyable evening.

But I would do -- You know, I asked him to e-mail me stuff about some of these interesting projects. It had nothing to do with the beach, but he seemed to be proud of. I never got anything.

MR. JOSLYN: Sure.

COMMISSIONER MCVOY: And I would say it wouldn't hurt for us to say his track record with us has this, this, this, this, consistent shortfalls, late. But you know what, when you look at what he's done on some other things, he also has that track record.

MR. JOSLYN: You know I have just -- We have Googled him. We have called people that we know on the west coast specifically about Greater Bay Construction, Googled Willard, Internet searched Willard, and you don't find anything.

COMMISSIONER MCVOY: My sense -- I didn't do anything on Greater Bay Construction, but I think I did Google Willard at the time. And this is four, five years ago. And I didn't -- You know, the stories seemed to be a bit bigger than what Google could come up with.

MR. JOSLYN: Well, clearly. The guy is a developer.

COMMISSIONER MCVOY: Yeah. But he must have done something, you think?

MR. JOSLYN: I have no doubt he did. We've got some anonymous stuff sent to Larry Karns in the middle of this about a deal that had gone bust. But his response was, well, I paid my obligations out of that. Until we know the names of the entities --

COMMISSIONER MCVOY: It's hard to track down.

MR. JOSLYN: Yeah.

COMMISSIONER MCVOY: He didn't leave much record.

MR. JOSLYN: You know I think what I'm hearing here is that maybe, like you say, the nuisance value. But what scares me personally is this is a very grey area. And depending on what mood that jury is in, if you throw $300,000 out there he has no reason to even reasonably consider that offer.

MS. HUMPHREYS: Just as we don't even consider offering him and saying you're right, here is $40,000,000.

MS. STANTON: No, no. But that doesn't mean we can't settle this thing the day before the jury award.

MS. HUMPHREYS: That's true.

COMMISSIONER MAXWELL: The other question is, and you've said it already, we don't have money to pay out.

MR. JOSLYN: Right.

COMMISSIONER MAXWELL: What do we do? We'll run this thing out, and then let's say he prevails. Then what? We still don't have the money to pay out.

MAYOR WATERMAN: If we end up with some Lake Worth haters on the jury, we're in trouble. It wouldn't matter how strong our case is.

MS. HUMPHREYS: Well, there is four here, and Brian can weed those people out.

MR. JOSLYN: The other thing is if we do get the case bumped off the docket, I talked to the city manager about one thing I would like to do is get a company that does essentially jury studies or mock juries in to actually try our case in front of a group of people that are called at random, not try the full case.

COMMISSIONER MCVOY: Right. Right.

MR. JOSLYN: What you do is each side makes a presentation. I would take the Greater Bay side to make their presentation, let my associate make the presentation for our side. So you have got everything stacked as far possible as you can in favor or Greater Bay. And then we film them and see what they have to say during the deliberations, because that gives you a really good idea about things that bother people so that you can try to deal with them at the trial.

COMMISSIONER MAXWELL: What is the price of something like that?

MR. JOSLYN: About 40 grand.

COMMISSIONER MAXWELL: We've got a quarter million in it already.

MR. JOSLYN: Yeah.

MS. HUMPHREYS: Over a two-year period just a little under that, but yes.

VICE MAYOR MULVEHILL: So is there any advantage for us to go in with a number for your mediation purposes?

MR. JOSLYN: Well, we have to make a good faith effort to settle the case.

VICE MAYOR MULVEHILL: Just to settle.

MR. JOSLYN: Now, that doesn't mean that you in good faith just bend over for these guys. That isn't what that means. It means that we have to go in there with the idea that we can settle on – That we could try to settle the case for a number that we believe is reasonable under the circumstance.

VICE MAYOR MULVEHILL: Do we have insurance? Did we find out if this is covered through our insurance?

MR. JOSLYN: It's an intentional breach of contract here.

VICE MAYOR MULVEHILL: Okay. And by us trying to settle, does that mean that we're --

MS. HUMPHREYS: Admitting liability?

VICE MAYOR MULVEHILL: Yeah.

MS. HUMPHREYS: No.

MR. JOSLYN: No.

MAYOR WATERMAN: No.

MS. HUMPHREYS: Not at this stage.

MR. JOSLYN: Not at any stage in the settlement discussion. It won't come into evidence either.

MS. HUMPHREYS: Exactly.

VICE MAYOR MULVEHILL: Well, I guess I would really like to hear your expertise or your recommendations, what you recommend that we do at this point.

MR. JOSLYN: I think you give the city -- My recommendation is you give the city manager authority up to about $400,000 for purposes of mediation.

VICE MAYOR MULVEHILL: And do we have that to pay out?

MR. JOSLYN: I don't know.

MS. HUMPHREYS: We have $300,000 right now budgeted for the case for this fiscal year. But part of that is Brian being here now talking to us and doing the mediation and doing more depositions.

VICE MAYOR MULVEHILL: So part of the 300 is the amount of money that we budgeted for his spending on this case?

MS. HUMPHREYS: Correct.

MR. JOSLYN: Yeah.

MS. HUMPHREYS: So in fairness, probably 150,000, 200,000 we would have at this point for Monday that we know that is in budget. And if there is something in the self-insurance fund or something like that.

MS. STANTON: We try not to use it for this type of a purpose, but if we had to...

COMMISSIONER GOLDEN: So if we did -- The point is that if you did make a settlement and they did take 400,000, then Brian wouldn't have to continue to depose anybody?

MS. HUMPHREYS: That's correct.

MR. JOSLYN: Right.

MS. HUMPHREYS: Our litigation costs would just about stop except for putting together the settlement agreement.

MR. JOSLYN: Which would cost you about $150,000. No.

COMMISSIONER MCVOY: I fell right into that.

MS. STANTON: Is there an issue of time, because I wouldn't want this type of a settlement offer to then jump into the November process: This is just another example of how bad the city is.

MS. HUMPHREYS: Well, all settlement negotiations and the mediation is confidential. So everything we've discussed today we've done it openly. So we don't go outside this room and talk about it. Otherwise, you will break our confidentiality.

MR. JOSLYN: You can't.

VICE MAYOR MULVEHILL: Right.

MR. JOSLYN: And you're subject to having your pleadings stricken if any discussion occurs about the mediation either before or after it occurs. So, yeah, we can't say a word about this to anybody. And we can't make it confidential obviously.

COMMISSIONER MCVOY: Can't make what confidential?

MR. JOSLYN: Settlement.

COMMISSIONER MCVOY: Once it's happened.

MR. JOSLYN: Right.

COMMISSIONER MCVOY: But anything that we've heard or discussed here today --

MR. JOSLYN: Correct.

COMMISSIONER MCVOY: -- is strictly verboten?

MS. HUMPHREYS: Yes. It is within the walls of this room at this time.

MAYOR WATERMAN: Verboten.

MS. HUMPHREYS: And you can talk to Susan or me about it no problem, but not each other or --

COMMISSIONER MCVOY: Or anybody else.

MS. HUMPHREYS: -- or anybody else. You know if somebody asks, one of your constituents asks a question, just say it's in pending litigation and you cannot discuss it under advice of counsel.

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