Part I - CLOSED DOOR ATTORNEY-CLIENT SESSION IN RE: GREATER BAY GROUP, LLC. vs. CITY OF LAKE WORTH Tuesday, 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.)

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MR. JOSLYN: At the beginning of 2008 before the pool work was done and as a result of their dragging their heals, Larry Karns recommended to the city commission that the city go ahead and do the work itself. And we got a letter in from Greater Bay's attorney, the usual huff and puff about how they have been misled on everything in the deal and blah, blah, blah. But he didn't have

a problem with us hiring consultants as long as they weren't going to do any work. I mean I'm paraphrasing.

COMMISSIONER MAXWELL: Uh-huh.

MR. JOSLYN: So the minute that -- They had the right to do all the construction out there. And the city could hire anybody they wanted to study things. But --

COMMISSIONER MCVOY: If they do work.

MR. JOSLYN: -- if the city was going to try to undertake work itself, then that would be a breach of the agreement. So we have a letter in January saying you can hire people if you want. We got the mid-year structural analysis with no bitch, and then the end of the year they had a completely different position. But, of course, that was after their meeting where the agenda says how can we set up for litigation with the city.

MS. STANTON: Brian, can you -- We are dancing with a big pink elephant in this room. We had a commission meeting on the platform to save the building --

MR. JOSLYN: Uh-huh.

MS. STANTON: -- that's publicly discussed.

MR. JOSLYN: Sure.

MS. STANTON: And the concern potentially of someone perceiving the desire to save the building, what was potentially an indirect way of abrogating a contract. And how are we dealing with that in the process of --

MR. JOSLYN: Well, like I said, we're not talking about anything other than for the period of time that the city was going to control the building. Because at the point that Stratacon came on the scene, Greater Bay's contract was still in place. Everybody assumes Greater Bay is going to go ahead at some point. Clearly they were going to tear down the building. But until they started their work, and until the building was ready to be demolished, the city owned it. The city controlled.

COMMISSIONER MCVOY: Liability.

MR. JOSLYN: And the city collected the rent. So the city had liability if somebody got hurt out there. So the fact that somebody wanted to keep the building up doesn't necessarily mean in my mind that they're going to keep it up to the detriment of Greater Bay. It meant they were going to keep the building up while the city still owned it, not that they were going to keep the building up as a way of breaching the contract with Greater Bay.

MS. STANTON: Maybe we could have a discussion. Because certainly, Commissioner Mulvehill, you were at the time hoping the city would save the building, we would renovate it, we would make it historic.

COMMISSIONER GOLDEN: I don't remember that. I remember it being a point of can we keep the people who are in the building in the building; is it safe to keep the people in the building so we don't have to kick everybody out.

MS. STANTON: Yes. But, Jo-Ann, when I was hired I was hoping that we could save the building. Not save the building keep the people in, keep the building, save the building. We were going to historically keep it. The building is important. We're going to save the building. And that's always been a concern of mine in this whole thing that that be perceived by even a jury that we created the conditions to --

MR. JOSLYN: Well, clearly that's what they're traveling on.

MS. STANTON: Yes.

MR. JOSLYN: Of course that's what they're traveling on.

MS. STANTON: That's in play.

MR. JOSLYN: Of course it is. But what I'm saying is there is a completely separate reason why and a completely different way of looking at it than the way their looking at it.

And I think, quite frankly, our explanation of this makes a lot more sense than what they're talking about. Because the city really did have liability there if somebody -- You know, I mean think about what would happen if you had a concrete block fall on some baby stroller or something. I mean, my God, you'd have some serious problem.

VICE MAYOR MULVEHILL: And I want to add one thing. We did come to the determination that it was going to cost $400,000 to shore up that building, that the only way we could keep it open was to shore it up. And we got quotes. It was $440,000 to shore it up. So I don't know how that relates to -- I know what you're saying is that I ran on a platform of saving the building. But I'm one out of five people. But they're saying there was a conspiracy.

MS. STANTON: But you were one out of five to change the position in the city.

VICE MAYOR MULVEHILL: Right.

MS. STANTON: To be committed to this contract or find a way to get out of the contract.

MR. JOSLYN: No, no. I disagree. That wasn't what she said.

MS. STANTON: I understand that. But that's how they are portraying it.

MR. JOSLYN: Right.

VICE MAYOR MULVEHILL: Well, I think it's worthy to discuss it so that we know what our --

MAYOR WATERMAN: Be prepared for it.

VICE MAYOR MULVEHILL: Be prepared.

COMMISSIONER MAXWELL: I have to say something here. I'm a little confused because this talk about the building thing has been going on for years. When I sat on the commission ten years ago, we talked about a $10 million bond referendum.

MR. JOSLYN: Right.

COMMISSIONER MAXWELL: And Rodney Romano was out there on Labor Day with a jackhammer trying to bring that bad boy down, and it wouldn't come down. You talk about drama, okay. My point is this -- I'll never forget that day.

VICE MAYOR MULVEHILL: Oh, my gosh. But my point is this: If we had, you know, current present day engineering reports that said, look, this building isn't safe, and for whatever our motivational reason might be that we continue to get more studies and they continue to say this building isn't safe, if I'm sitting on that jury,

I'm saying why in the world are they keeping the damn thing open in the first place, shut it down right now because it's not safe. And then I would turn around and say, well, then we found a study that we liked that says it is safe or it is habitable and re-habitable. And I'm just playing the devil's advocate.

MR. JOSLYN: Well, look, if it was clear, they would never have filed suit. You know, it's not the cases that are clear, or if it was clear the other way, we would have settled instantly or not terminated them.

COMMISSIONER MAXWELL: Sure.

MR. JOSLYN: But, you know, this is a little grey. All I am suggesting to you is we have an explanation for this that makes a lot of sense. You can order -- I mean why you had a study in 1999 that said the building needed to come down; why do you have a study in 2000, 2003, 2005? You know, a different building official, different responsibility, different liability I guess.

COMMISSIONER MAXWELL: I thank you for using the term grey, because that's exactly what I was searching for.

MR. JOSLYN: Yeah.

COMMISSIONER MAXWELL: It's a very grey body. It's not clean.

MR. JOSLYN: No doubt. The cases that are clear settle or go to trial. And the cases that are grey are tricky. I mean just there is no doubt.

But I mean, you know, I think when you add up everything, all of it together, it seems to me that it's pretty clear that they fixed on Stratacon as a way to set themselves up for litigation with the city consistent with their agenda.

COMMISSIONER GOLDEN: And consistent with past performance on other projects.

MR. JOSLYN: I don't know that. We have not found another project where they have -- Actually, I mean Greater Bay Construction that's a different company entirely. Greater Bay Group, this is there one and only deal.

COMMISSIONER MAXWELL: Have we deposed everybody we are going to depose on our side?

MR. JOSLYN: Oh, no, no.

COMMISSIONER MAXWELL: Are we okay? Are we having any hostile witnesses on our side? Because we have a lot of turnover of staff. I mean is everybody pretty much on the same page?

MR. JOSLYN: Uh-huh.

COMMISSIONER MAXWELL: Or do we have anyone that's going to create a problem?

MR. JOSLYN: No, I don't think so. I think Larry is very helpful. We're meeting almost all day tomorrow to go through documents. He's going to be -- you know as a witness, preparation matters for trial. I met with John Farinelli, the building official, today. He doesn't have a problem with the city and is going to be very helpful, especially about all of the drama at the time they were trying to pull pool permits and all of the deficiencies in their performance at that point So, no, I think we're okay.

MS. STANTON: Let me interject. I mean Brian is our attorney and I'm deferring to him. As the city manager with a separate set of eyes do I feel comfortable that I know how important our case is with the city attorney who this group fired, with a building official that was fired by the city, with Corey O'Gorman who I got rid of, with a number of other characters? When Retha Lowe testified, she couldn't be more positive to the other side. She was yep, yep, yep, yep, yep. She was very positive for the other side. So I mean, yeah, so far the depositions that Brian has taken have been very positive.

It keeps me up at night knowing that this cast of characters, just the collection of people we have with a commission that ran against the project gets in and changes the dynamic. We have a city commissioner now that had a lawsuit against the city.

COMMISSIONER MCVOY: No, no, no. I had a lawsuit by the city against them. People mix that up a lot.

MS. STANTON: But the elements here are generally fascinating.

COMMISSIONER MAXWELL: Fascinating is not the word.

MS. STANTON: Fascinating is an understatement.

COMMISSIONER GOLDEN: I want to ask, Brian, when you first came to the first meetings that we had about this issue and you were laying out the reasons why you felt that we had a case.

MR. JOSLYN: Uh-huh.

COMMISSIONER GOLDEN: And it was more or less about a particular timeline of when they -- And I can't remember exactly what it was, but it was very clearly laid out at the time that it was a particular timeline when they brought up the zoning and when we objected to their being on this project. Is that still in play --

MR. JOSLYN: Sure.

COMMISSIONER GOLDEN: -- that initial? Can you just explain that? Because that was I thought --

COMMISSIONER MCVOY: Persuasive?

MR. JOSLYN: The contract is clear. You're talking about the contract language is clear.

COMMISSIONER GOLDEN: Yeah.

MR. JOSLYN: But the zoning approval date, they never got it. So all we have to do is show that you're not in breach of the contract on December 4, 2008. And you have a right to terminate the contract. You don't need to have a reason.

COMMISSIONER GOLDEN: Yeah.

MR. JOSLYN: You don't need to have cause to terminate these guys. What I'm suggesting to you is there was plenty of cause. But you don't need that to have cause.

COMMISSIONER MCVOY: Don't need to have it.

MR. JOSLYN: No. It's our option or their option. Either one of us can terminate the contract.

MAYOR WATERMAN: But I would imagine they're saying that we created conditions that would make it impossible for them to --

COMMISSIONER GOLDEN: Perform.

MAYOR WATERMAN: -- perform and meet those conditions of the contract.

MR. JOSLYN: Not really. What they're saying is that we agreed to extend their financing deadline and that that somehow extends the zoning approval date. But that isn't at all what the letters, exchange of letters say. They're really hanging their hat on Stratacon and some real estate title issues that are really not a problem either. We have testimony that they could have obtained title insurance. So really their -- They've changed their position. They're saying it's Stratacon, it's a cabal of commissioners, and it's title issues.

But, no, I think the timeline -- Look, they didn't perform on time throughout the process. There are a few responses inadequate. They were provided a list of inadequacies.

MAYOR WATERMAN: But we accepted it. If there are few was inadequate, it's irrelevant because the city accepted it.

MR. JOSLYN: No. What I'm saying or suggesting to you is that you can establish a pattern with these guys. They got to a point while they were negotiating the contract where the city manager and Corey O'Gorman recommended that they not continue because they were being untimely.

You had the same problem then with the pool. You had the same problem then with the punch list. You had the same problem with them on Stratacon. I mean it's all along these guys have been -- you know, my father would call it a little different, but half something or other. Okay.

VICE MAYOR MULVEHILL: I have a question. So were those conditions for termination: The punch list; the nonperformance? I mean where is that line that says we have the right to terminate that contract? Or did we terminate it because of the zoning approvals? I mean I thought it was --

MR. JOSLYN: You have the right to terminate the contract because the zoning approval was not obtained. And that is what was done.

VICE MAYOR MULVEHILL: But what I heard you just say is that they were not performing.

MR. JOSLYN: Right.

VICE MAYOR MULVEHILL: So, you know --

COMMISSIONER MCVOY: That's additional stuff to make the argument.

MR. JOSLYN: Additional. Additional argument especially to go to their damages. How are you guys entitled to this money when you were never performing all along the time? I mean there are number of tracks that are being followed here all the same time.

COMMISSIONER GOLDEN: But we're still going with the fact that they did not get the zoning approval?

MR. JOSLYN: Yes, absolutely.

COMMISSIONER GOLDEN: That's the main thrust.

VICE MAYOR MULVEHILL: And that's not what I talked about in my deposition. I talked about nonperformance so --

MR. JOSLYN: Right.

MS. HUMPHREYS: But that's your information.

VICE MAYOR MULVEHILL: That's the information that I had, yeah.

MS. HUMPHREYS: Let's not go too far into specific witnesses and what they testified.

VICE MAYOR MULVEHILL: Okay.

MS. HUMPHREYS: Brian is going to have to leave exactly at 4:00. I want you to have a chance to ask your questions about the case. But mediation is less than a week from now. Susan is going as the city representative. Brian and I will be there as attorneys. But we have to be there in good faith to negotiate. Susan needs some kind of direction on what she can put on the table for mediation. Obviously, it's going to be contingent to coming back and having city approval.

MR. JOSLYN: It always is, yes.

MS. HUMPHREYS: And, obviously, it doesn't sound realistic that we are going to find a number. But we have to go in there --

MR. JOSLYN: We have to have a range.

MAYOR WATERMAN: I would like to know what the economist says would be reasonable rents and reasonable --

MR. JOSLYN: We don't have his analysis yet because we haven't heard what they're saying and how they got to the numbers.

MAYOR WATERMAN: We didn't do our own analysis?

MR. JOSLYN: I just gave you our analysis that their numbers are ridiculous: 55 bucks a square foot; how you get to the 20 -- You're going to say you rent this space out full time; you don't have financing.

MAYOR WATERMAN: I would imagine I would do an analysis of what would be so that we -- I don't know.

COMMISSIONER MCVOY: Have that.

MR. JOSLYN: You want to put their number on the board for them?

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?

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