Daily Business Review, HREC v. Broward County

Judge rules in favor of plaintiff suing Broward County
By Adolfo Pesquera

Daily Business Review
October 20, 2011

Glenn Waldman
Photo by Melanie Bell

Case: HREC Development Resources v. Broward County

Case no: CACE10-031391

Description: Contract and indebtedness

Filing date: Aug, 2, 2010

Outcome: Summary judgment for plaintiff

Judge: Broward Circuit Judge Jack Tuter

Plaintiff attorney: Glenn J. Waldman, Waldman Trigoboff Hildebrandt Marx & Calnan in Fort Lauderdale

Defense attorneys: Tony J. Rodriguez, Broward County Attorney’s office

Details: Broward County hired real estate adviser and broker HREC Development Resources as a consultant to help find a developer and obtain financing for expansion of the Broward County Convention Center and construction of a 1,000-room Hilton hotel project in 2007. The county selected Austin, Texas-based FaulknerUSA for construction, but the deal fell through two years later.

HREC demanded its advisory fee Oct. 29, 2009, but the county refused to pay. Further negotiations came to nothing, and HREC sued for payment.

Plaintiff case: The Broward County Commission approved an agreement entitling HREC to a percentage advisory fee if the county reached a deal as defined by the agreement. The fee would be based on a percentage of the hard and soft costs incurred by the selected developer.

Defense case: HREC was not entitled to a fee because the fee was never approved by the commission. And if the court found the fee was approved, the transaction did not occur because the project was never presented to the commission and no agreement was entered.

Outcome: In reviewing minutes of a June 2007 commission meeting, the judge found the commission approved an advisory fee for HREC. He also cited the affidavit of Broward County Chief Financial Officer Mark Geoghegan describing the commission’s establishment of an agreement and compensation schedule.

As to whether there was an actual transaction, Tuter cited the affidavit of Mark F. Schultz, president of FaulknerUSA. The commission notified FaulknerUSA on Nov. 5, 2007, that its proposal had been selected. Schultz said FaulknerUSA entered negotiations and partially funded the project pre-development costs through a $3 million deposit under financially binding portions of a letter of intent.

Broward County tried to make a distinction between “pre-development costs” and “development costs,” but Tuter was not swayed.

The contract language doesn’t require the agreement to be a final agreement on development or construction, he said in the summary judgment order.

The county agreed to pay about $2 million to cover FaulknerUSA’s deposit plus interest after the company demanded $3 million.

Examining HREC’s claim, Tuter concluded, “The letter of intent and site access agreement are ‘any form of agreement’ as defined by the contract and would trigger the plaintiff’s contractual right to an ‘advisory free.’ “

Quote: “When HREC made a claim for its fees, at that time the county refused because the county for other reasons elected not to go forward with the project at that time,” Waldman said. “The county defended primarily on the basis that the contract was never formally authorized and approved by the county commissioners, even though it was signed by the mayor, the county attorney and signed by the clerk.”

Post-judgment: The order requires the parties to meet in mediation to determine an amount “subject to a final judgment.” HREC is seeking fees plus interest totaling about $2.15 million.

Tony Rodriguez, counsel for the county, acknowledged the order entitles HREC to a fee. He would not comment on what amount the county would be willing to pay