Cmty. Mar. Park Assocs., Inc. v. Mar. Park Dev. Partners, LLC

• Decision Date: 04 February 2014
• Docket Number: Case No. 3:11cv60/MCR/CJK
• Parties: COMMUNITY MARITIME PARK ASSOCIATES, INC., Plaintiff, v. MARITIME PARK DEVELOPMENT PARTNERS, LLC, Defendant.
• Court: U.S. District Court — Northern District of Florida

COMMUNITY MARITIME PARK ASSOCIATES, INC., Plaintiff,
v.
MARITIME PARK DEVELOPMENT PARTNERS, LLC, Defendant.

Case No. 3:11cv60/MCR/CJK

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF FLORIDA PENSACOLA DIVISION

DONE and ORDERED: February 4, 2014

ORDER

The Court has previously determined that the public works contract at issue in this case, which Plaintiff awarded Defendant in August 2009, is void for material noncompliance with Florida's competitive negotiations statute, known as the Competitive Consultants Negotiations Act ("CCNA"), Fla. Stat. § 287.055 and that disgorgement is the proper remedy.¹ In light of Defendant's affirmative defense of equitable setoff and to resolve issues of fact regarding whether fraud occurred in the CCNA process, the Court held a final evidentiary hearing on January 30, 2013, through February 5, 2013. This order sets forth the Court's findings of fact and conclusions of law on these remaining issues.

Procedural Background

In 2011, Plaintiff Community Maritime Park Associates, Inc. ("CMPA") brought suit in state court seeking rescission and cancellation of a public works development contract ("Development Agreement") it entered into with Defendant Maritime Park Development Partners, LLC. ("MPDP"), alleging fraud, misrepresentation, and rescission on public policy grounds for the violation of Florida's competitive award statutes. MPDP removed the case

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to federal court. CMPA later moved for summary judgment on Count III of its complaint for violation of the CCNA, which the Court granted partially, declaring the professional services portion of the Development Agreement void. (Doc. 207). On reconsideration, the Court determined that the entire Development Agreement was void for violation of the CCNA and because no other Florida competitive award or bidding statute was engaged in, which in turn required disgorgement of all public monies paid on the void contract in an amount yet to be determined. (Doc. 252). The parties have stipulated to the undisputed facts set forth in the prior orders,² and the Court incorporates those facts herein by reference, without reciting them again in full (doc. 306, at 28, ¶1). The following summary of the operative undisputed background facts from those orders, however, will be helpful to an understanding of the remaining issues.

CMPA is a publicly funded non-profit corporation governed by a Board appointed by the City of Pensacola, Florida, tasked with developing and managing city-owned property known as the Vince Whibbs, Sr. Community Maritime Park, a project originally estimated to exceed $38 million in construction costs. In seeking a Master Developer for the project, CMPA was required by the CCNA to competitively award the contract to the most highly qualified firm.³ Accordingly, in early 2007, CMPA proceeded to engage in a two-stage competitive negotiations process under the CCNA, first selecting the most qualified firm and then engaging with that firm in contract negotiations. To solicit qualified professional services firms to compete for the project, CMPA issued a formal Request for Qualifications (RFQ). Among the requirements listed in the RFQ, candidates for Master Developer had to demonstrate the following regarding their businesses: (1) previously completed projects of at least $50 million; (2) successful development of at least one major

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mixed-use project; (3) ability to obtain or attract financing for all aspects of the proposed project; (4) a team including qualified professionals registered in the State of Florida, and (5) a team record of long-term management of completed projects, (6) a team record of small and minority business inclusion, and also (7) a record of satisfying clients and end users. All personnel assigned to the project were required to be employees of the Master Developer or a collaborative partner and had to be approved by CMPA. Master Developer candidates were required to identify each organization that would provide services, including company principals. Another crucial requirement of the qualifications process was that the chosen Master Developer be able to demonstrate sufficient financial capacity in order to obtain and attract adequate financing for all aspects of the project. This requirement-to demonstrate financial capacity-garnered the highest point total on CMPA's Master Developer evaluation sheet included in the RFQ. Based on the applicants' RFQ submissions, CMPA selected four qualified firms, with an organization known as Land Capital Group, Inc. ("Land Capital") ranked as the top firm.⁴

CMPA then issued a Request for Proposals (RFP), soliciting proposals only from the four finalists and requesting more details regarding each candidate's vision, concept and implementation plans for development of the park. The RFP did not require the four finalists to restate their RFQ responses and qualifications but did permit supplementation of the prior submissions and emphasized the importance of the applicant's experience and financial capacity. The finalists were also required to submit a transmittal letter identifying the lead proposers and any persons with an equity interest in the project, describing their legal and financial relationships and confirming that any legal entity created for the project was in existence and that the person signing the letter was authorized to act on its behalf. The finalists also participated in oral presentations before CMPA.

Land Capital submitted an RFP response to CMPA on May 30, 2008, and presented an oral presentation on June 13, 2008. Both included representations by Land Capital's

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CEO Scott Davison that Land Capital had partnered in a joint venture with entities known as Brass Real Estate Fund and Magi Real Estate ("Brass/Magi"), owned by an individual named Richard Rodriguez. Davison stated in the RFP transmittal letter that Land Capital and Brass/Magi had created a project specific development entity-Defendant MPDP-to enter into the Development Agreement with CMPA, and that Jeffrey Galt, Chief Financial Officer of Brass/Magi, would serve as president of MPDP and Davison as vice-president. Galt and Bruce Cutright, the individual named in Land Capital's RFP as the project manager, both participated in the June 2009 oral presentation with Davison. Land Capital's RFP response outlined in detail Cutright's impressive project history. CMPA was impressed by Land Capital's written response and "assembled team" of professionals, as well as its oral presentation, and as a result, Land Capital maintained its top ranking following the RFP process.

As the top-ranked firm, Land Capital earned the right to engage in contract negotiations with CMPA.⁵ The contract negotiations commenced in August or September of 2008 between Galt and Davison for MPDP, and CMPA's representative, Owen Beitsch. Later in the process, Barry Abramson participated as the City's representative, as well as City Attorney Rusty Wells, among others, while Trinity Capital Advisors, the second most qualified firm, waited on standby, in case negotiations with MPDP did not produce an acceptable agreement.

During the course of the negotiations and prior to the execution of the Development Agreement, Land Capital financially collapsed and was unable to play any role in the project. Although CMPA was not aware of Land Capital's demise, it did become aware in December 2008 that Land Capital was suffering financial difficulties; however, Davison and Galt assured CMPA and the public that its financial partner, Brass/Magi, was sound and therefore Land Capital's financial troubles would not threaten the project. In late April

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2009, after an audit confirmed that Brass/Magi was financially sound,⁶ CMPA and the City Council approved a final Development Agreement which identified MPDP as Master Developer. The record unquestionably reflects that at that time, CMPA understood, based on the representations of Davison and Galt, that MPDP was a joint venture between Land Capital and Brass/Magi.

The final Development Agreement, which was executed by all parties on August 14, 2009, set forth four separate roles for the Master Developer: (1) to act as Project Coordinator, for which it would be paid a 4% Development Fee; (2) to act as CMPA's agent in managing the facilities, for which it would be paid a management fee; (3) the potential to act as design-build contractor, in CMPA's sole discretion, for an additional 3% fee; and (4) to act as developer of private improvements under a separate sub-lease. The Development Agreement required the Master Developer to be a qualified design-build contractor as of the date of the Agreement was executed, although the design-build contract would be awarded separately, at CMPA's discretion.⁷ CMPA ultimately voted in January 2010 to award the design-build contract to MPDP. MPDP, however, proved to be unable to acquire the necessary bonding without the aid of another company, Hoar Construction, with whom MPDP formed a new company, Magi Construction, LLC (not to be confused with Brass/Magi), to be named as the general contractor. As a result of this arrangement, MPDP and Hoar Construction agreed to share the Master Developer's 3% fee for the design-build contract.

After entering into the Development Agreement with MPDP, CMPA became aware of the following: (1) Land Capital had not merely suffered financial difficulties but had actually collapsed during the contract...