Agenda 04/12/2016 Item #16K 2 4/12/2016 16.K.2.
EXECUTIVE SUMMARY
Recommendation to reject a mediated settlement agreement for an all inclusive amount of
$2,100,000; authorize an Offer of Judgment to Respondents, S.D. Corporation of Naples,
Inc and Cypress Landings II of Naples, LLC, for Parcels 251DAME, 255DAME,
257DAME, 258DAME, 258TCE1 and 258TCE2 in the amount of$1,200,001 (estimated to
be $1,680,351.25 when attorney's fees and expert costs are later included) in the lawsuit
styled Collier County v. S.D. Corporation of Naples, Inc., et al., Case No. 15-CA-1580,
required for the Wing South / Sandy Lane Interconnect portion of the Lely Area
Stormwater Improvement Project, Project No. 51101; and authorize any necessary budget
amendments. (Fiscal Impact: $669,851.25)
OBJECTIVE: To reject a mediated settlement agreement and authorize an Offer of Judgment
pursuant to Section 73.032, Fla. Stat. in the amount of $1,200,001.00, as full compensation,
excepting attorney's fees and costs, for condemnation of Parcels 251DAME, 255DAME,
257DAME, 258DAME, 258TCE1 and 258TCE2 which were required as part of the Wing South
/ Sandy Lane Interconnect portion of the Lely Area Stormwater Improvement Project, Project
No. 51101,hereinafter referred to as "LASIP."
CONSIDERATIONS: On June 11, 2013 and June 9, 2015, the Board authorized the
condemnation of Parcels 251DAME, 255DAME, 257DAME, 258DAME, 258TCE1 and
258TCE2 in order to construct stormwater improvements to the Wing South / Sandy Lane
Interconnect segment of LASIP. On October 29, 2015, the Court entered an Order of Taking for
the required property and the County subsequently deposited a good faith estimate of value in the
amount of $738,500.00 into the Court Registry. The four perpetual, non-exclusive drainage,
access and maintenance easements and two temporary construction easements, totaling around
10.09 acres, were taken from property owned by S.D. Corporation of Naples, Inc., and Cypress
Landings II of Naples, LLC. Attached are aerials of the subject property and a location map for
your reference.
At mediation, the owners, through their representatives and counsel, presented a claim for full
compensation in the amount of $5,794,420.00, which includes both the compensation for the
value of the land taken, a cost to cure for lost access, and severance damages based on the claim
that LASIP will negatively impact the drainage of the remainder property, causing increased
developmental costs and loss of development potential.
Collier County staff and the engineer of record strongly dispute the claim that the parent tract
will be damaged at all by LASIP and the County's appraiser found that no severance damages
are to be awarded. In fact, the County's experts contend that the parent tract will drain better
after the construction of LASIP than it did before. The best final offer that the County received
at mediation is an all-inclusive amount of$2,100,000.00 for value of the land taken, any cost to
cure, all severance damages, all experts' fees and attorney's fees. Staff is recommending
rejection of the attached settlement since it is believed that the County will prevail in convincing
the jury that the property owners will not be damaged as claimed.
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Upon rejection, the County Attorney's Office and staff would like to make an Offer of Judgment
in the amount of $1,200,001.00 as full compensation for Parcels 251DAME, 255DAME,
257DAME, 258DAME, 258TCE1 and 258TCE2, including all costs for damages and a cost to
cure but excluding attorney's fees, expert fees and costs. Statute 73.032 requires that Offers of
Judgment pursuant to that chapter not include fees. The offer of judgment will expire in 30 days
unless extended by the County or accepted. If the property owner accepts the offer, the County
will be required to pay an additional $461,501.00 over the amount on deposit. Although the
offer does not include attorney's fees, if the property owner accepts the offer, the attorney is
entitled to a fee based on benefit achieved pursuant to Section 73.092, Florida Statutes, is
$208,350.25. Expert fees at this time are estimated to be about$272,000.00, but may increase by
the time the property owner accepts the offer. The total cost to the County at the end of the day
is estimated to be $1,680,351.25 if accepted.
If the property owner rejects the offer and fails to recover more than $1,200,001.00, either
through settlement or jury verdict, the County will not be required to pay any experts' costs
incurred by the property owner after the date of the offer's rejection.
GROWTH MANAGEMENT IMPACT: None.
FISCAL IMPACT: If the Offer of Judgment is accepted by the property owners, the County
will be required to pay an additional $669,851.25 for additional compensation over the amount
on deposit and statutory attorney's fees. The expert fees are estimated to be $272,000 to date,
but could increase in the time from delivering the offer to acceptance, therefore authorization to
pay those fees will be brought back to the Board. A budget amendment in the amount of
$669,851.25 is needed. Source of funds is transfers from the General Fund (001) and
Unincorporated Area General Fund(111).
LEGAL CONSIDERATIONS: This item has been reviewed by the County Attorney. Staff's
recommendation of rejection is based on the County's strong belief(which I concur in) that this
project enhances the claimant's property, and that claimant's expert reports are fundamentally
flawed. With that said, there are risks associated with this approach. Accompanying this
Executive Summary is an analysis by outside trial counsel that I requested be prepared. There is
approximately a $5,000,000.00 difference between the County's valuation and that of the
claimant's. The break-even point between the negotiated settlement of$2,100,000.00 and a jury
verdict is approximately 12% of this difference. Accordingly, the County runs a risk of a jury
verdict higher than the negotiated settlement. With that said, if there was ever a condemnation
case where the County should completely prevail,then this is it.
This item has been approved as to form and legality and requires a majority vote for Board
approval. -JAK
RECOMMENDATION: Recommendation to reject a mediated settlement agreement for an
all inclusive amount of $2,100,000.00; authorize an Offer of Judgment to Respondents, S.D.
Corporation of Naples, Inc. and Cypress Landings II of Naples, LLC, for Parcels 251DAME,
255DAME, 257DAME, 258DAME, 258TCE1 and 258TCE2 in the amount of$1,200,001.00 in
the lawsuit styled Collier County v. S.D. Corporation of Naples, Inc., et al., Case No. 15-CA-
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1580, required for the Wing South / Sandy Lane Interconnect portion of the Lely Area
Stormwater Improvement Project, Project No. 51101; and authorize any necessary budget
amendments, as stated herein.
Prepared by: David Wilkison, Growth Management Department Head, and
Jeffrey A. Klatzkow, County Attorney
Attachments: (1)Mediated Settlement Agreement and(2)Aerials of Subject Property
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COLLIER COUNTY
Board of County Commissioners
Item Number: 16.16.K.16.K.2.
Item Summary: Recommendation to reject a mediated settlement agreement for an all
inclusive amount of$2,100,000; authorize an Offer of Judgment to Respondents, S.D.
Corporation of Naples, Inc. and Cypress Landings II of Naples, LLC, for Parcels 251DAME,
255DAME, 257DAME, 258DAME, 258TCE1 and 258TCE2 in the amount of$1,200,001
(estimated to be $1,680,351.25 when attorney's fees and expert costs are later included) in the
lawsuit styled Collier County v. S.D. Corporation of Naples, Inc., et al., Case No. 15-CA-1580,
required for the Wing South/Sandy Lane Interconnect portion of the Lely Area Stormwater
Improvement Project, Project No. 51101; and authorize any necessary budget amendments.
(Fiscal Impact: $669,851.25)
Meeting Date: 4/12/2016
Prepared By
Name:NeetVirginia
Title: Legal Assistant/Paralegal, CAO Office Administration
4/5/2016 8:38:29 AM
Submitted by
Title: Assistant County Attorney, CAO Litigation
Name: PepinEmily
4/5/2016 8:38:31 AM
Approved By
Name: PattersonAmy
Title: Division Director-IF, CPP &PM,Capital Project Planning,Impact Fees and Program
Management
Date: 4/5/2016 1:27:07 PM
Name: AhmadJay
Title: Division Director-Transportation Eng,Transportation Engineering&Construction Management
Date: 4/5/2016 1:39:03 PM
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4/12/2016 16.K.2.
Name: WilkisonDavid
Title: Department Head-Growth Management Dept, Growth Management Department
Date:4/5/2016 3:46:31 PM
Name: PepinEmily
Title:Assistant County Attorney, CAO Litigation
Date: 4/5/2016 4:35:40 PM
Name: IsacksonMark
Title: Division Director-Corp Fin&Mgmt Svc, Office of Management&Budget
Date:4/5/2016 5:26:14 PM
Name: KlatzkowJeff
Title: County Attorney,
Date: 4/6/2016 8:10:16 AM
Name: OchsLeo
Title: County Manager, County Managers Office
Date: 4/6/2016 10:59:32 AM
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IN THE TWENTIETH CIRCUIT COURT
OF FLORIDA IN AND FOR THE
COUNTY OF COLLIER
COLLIER COUNTY, FLORIDA, a
Political subdivision of the State of Florida,
Petitioner, CIVIL ACTION NO.:2015-CA-1580
-vs- PARCEL NO.: 251 DAME, 255 DAME,
257 DAME, 258 DAME, 258TCE1,
258 TCE2
S.D. CORPORATION OF NAPLES, INC.;
CYPRESS LANDINGS II OF NAPLES, LLC,
A Florida Limited Liability Company;
WING SOUTH, INC.. formerly known as Wing
South Airpark Private Villas, Inc. and FLORIDA
DEPARTMENT OF EDUCATION.
Respondents.
MEDIATED SETTLEMENT AGREEMENT
As a result of a Mediation Conference held on February 24, 2016 the parties reached the
following Settlement Agreement contingent upon the approval of the Collier County Board of
Commissioners:et t\ei ( (4, /ikt„, )e - e
1. Petitioner will pay to Respondent, S.D. Corporation of Naples, Inc., the sum of
$ 2,/ 2 frit r in full settlement of all claims for compensation from
Petitioner Aatsoever, including business damages,4RitoracilfttIng attorney's fees, experts'
fees, and costs.
s--Prttrtjne „ ” ent Cypress Landings II of Naples, LLC., thessuswof
in In . • • ". e from
P, - , „,- I•' • •I,i- excusing attorney s ees, ex.- s'
csts,
.er-will-pay-to-Resporident7Wing-S-otttivine:Ae-sum-of---
$ -__in-full-settlemont-ocall-clai-m-s-for-compensation--from
Pet-Mier Wtsoë r,ThcUdir1insrJar ages, but exctuding-attorneyls-fees,-e-xper4s=
feesrand-tes.ts_
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e,. ; - — .. 1 of this Agreement,.
•- • '; p •• 11 . • p- .• -costs in
, - .:' - .*e •e• Nees' s and.supplemental
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5. • -•• - nt,
Peti . a in-total-expeancl-eestsdnildcase.
6. Counsel for Petitioner and Respondent will jointly submit to the Court for
signature a mutually approved Stipulated Final Judgment in this matter as soon as practical
hereafter, but not prior to the satisfaction of all conditions contained herein.
7. Petitioner shall be entitled to a credit for its deposit in to the Court Registry in the
amount of $ n
8. Petitioner will pay Respondent the balance due of$ <3 6-
within thirty(30) days of the actual date of receipt by the Petitioner's counsel of a conformed
copy of the aforesaid Stipulated Final Judgment from the Court.
9. Attached hereto is an addendum to this Agreement.
Yes .(-7 No
9 This Agreement, dated February 24,2016, contains all of the agreements of the parties.
Vitio ;r, CoIi o. KevinMrdricks Respondent, S.D. Corpo ion of aples, Inc,
v.1,) BY Ro UR-17 k.)c E
AIL 1N
'esp., press La • • 7s Of Nap -s, Inc -
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iyAg I
ttorney I mily R. Pepin Attorney o(- esparto ent, Bella Patel
acze_
ediator, Lawrence,:. -nd.zier
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LAW OFFICES
FIXEL &WILLIS
211 SOUTH GADSDEN STREET
TALLAHASSEE,FLORIDA 32301
www.floridaeminentdomainattorneys.com
TOLL FREE TELEPHONE FACSIMILE EMINENT DOMAIN
(800)848-7535 (850)681-1800 (850)681-9017 INVERSE CONDEMNATION
March 29,2016
Mr. Jeffrey A. Klatzkow,Esquire
County Attorney
Collier County
3299 Tamiami Trail East
Naples,FL 34112
Re. Collier County v. S.D. Corporation of Naples,Inc.,et al., Case No. 2015-CA-1580
Parcel Nos.: 251DAME,255DAME,257DAME,258 DAME,&258TCE1 &2
Dear Mr. Klatzkow:
As special litigation counsel for Collier County in the above-referenced eminent domain
matter I am providing you with the following information. On February 24, 2016, mediation was
conducted between representatives of S.D. Corporation of Naples, Inc. and Cypress Landings II
of Naples, LLC (property owners) and their counsel, and representatives of Collier County,
Florida and its counsel. Mediation was held to settle the issue of full compensation due the
property owners for the eminent domain taking of approximately 10.09 acres in drainage, access
and maintenance easements for the construction of the Wingsouth segment of the Lely Area
Stormwater Improvement Project. Pursuant to the Stipulated Order of Taking dated October 29,
2015, the County originally deposited a good faith estimate of value in the amount of
$738,500.00. At mediation, the property owners were claiming a total of$5,794,420.00 as full
compensation for the value of all parcels, including severance damages, which is an element of
full compensation under Florida's Constitution. The large disparity between starting positions
stemmed primarily from a large severance damage claim made by the property owners that the
LASIP project will negatively impact the drainage on the parent tract causing increased
developmental costs and loss of development potential. Through mediation, the parties arrived
at a tentative settlement in the amount of$2,100,000.00 in full compensation, which includes all
expert fees and attorney's fees. The expert fees as presented to the County at the mediation
totaled approximately$275,000.00.
While the County continues to firmly discredit the claims by the property owner that the
parent tract will be damaged by LASIP, there are several factors which make acceptance of this
offer more prudent than proceeding onto a jury trial. First, the estimated experts' fees as stated
above were just the accumulation of fees to the date of mediation and do not include the
additional fees for those experts to prepare for and testify at trial, any additional experts that the
property owners may feel are necessary to bolster their position, and the cost of the County's
own experts. It is estimated that expert fees alone may cost the County $500,000.00, if the case
were to proceed to trial.
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Page Two
In performing a risk/benefit analysis of settling the case at the proposed mediated amount
versus taking the case to a jury trial, the first legal premise must be stated that under Florida law
the jury will be instructed to return a verdict no lower than the amount presented by the County
as full compensation, nor no higher than the amount presented by the property owner. For
purposes of this analysis, I provide the following calculations:
A. Jury Returns a Verdict in favor of the County
Verdict: $738,500.00
Attorney's Fees: 92,975.00
Experts' Fees: 500,000.00
Statutory Interest: 0.00
Total:) $1,331,475.00
B. Jury Returns a Verdict in Favor of Property Owners
Verdict: $5,794,420.00
Attorney's Fees: 1,139,564.00
Experts' Fees: 500,000.00
Statutory Interest: 254,021.45
Total: $7,688,005.45
C. Jury Returns a 50/50 split verdict
Verdict: $3,266,460.00
Attorney's Fees: 633,972.00
Experts' Fees: 500,000.00
Statutory Interest: 120,078.10
Total: $4,520,510.10
Every $100,000 above the County's best verdict would cost the County an additional
$4750 a year in statutory interest based on historical interest rates.
Attorney's fees are a statutory percentage of the benefit calculated by subtracting the
written offer from the amount of the judgment. The written offer to the property owners was
$446,600 and was based on a combination of in-house appraisals and outside appraisals. As the
case proceeded and it was clear that it was going to be contested, all appraisals were conducted
by outside appraisers who determined a good faith estimate of value of $738,500, which was
deposited pursuant to the Order of Taking in October, 2015. Because the County increased its
estimated value by $291,900, it is automatically responsible to pay $92,972 in attorney's fees,
even if the verdict is returned in the County's favor. For the first $708,100 over the County's
best verdict, the County will be obligated to pay an additional $25,000 in attorney's fees for
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every $100,000 over the verdict. For all verdicts more than $708,100 over the County's best
verdict, the County will be obligated to pay $20,000 in attorney's fees for every $100,000 over
$708,100.
A verdict on or under 20% of the spread is usually considered a major victory for the
government. A more customary result is 40% of the spread. A verdict of 10% of the spread is
estimated to cost the County $1,987,480.00. A 10% verdict is the highest verdict the County
could receive and still be under the mediated settlement amount.
If the mediated settlement agreement is determined not to be in the County's best interest
at this time by the Board of County Commissioners, I would recommend that an Offer of
Judgment in the amount of$1,400,000 be made in order to put the maximum amount of pressure
on the property owners to settle. This would mean that the attorney fee would be $258,350, and
assuming that the expert fees currently are, in fact, $275,000, then the total settlement cost to the
County would be $1,933,350, which is better than the current, proposed $2,100,000. Even an
Offer of Judgment in the amount of$1,500,000 would save the County a few dollars in excess of
the proposed settlement agreement. And, if accepted, eliminate the risk of a bad verdict.
Even though representatives for the County believe the County's position in this case is
strong, the uncertainty of a jury trial, especially where the case revolves around highly technical
drainage concepts, makes it necessary to consider the various case scenarios when agreeing to a
settlement figure. In conclusion, I recommend that the settlement in the amount of$2,100,000, as
proposed, which would resolve all claims for compensation, including all fees and costs in the
case, Collier County v. S.D. Corporation of Naples, Inc., et al., is in the County's best financial
interest.
Sincerely yours,
"At
rai g B. Willis
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AERIAL PHOTO SHOWING "THE BUCKEL PARCELS"
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