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Agenda 10/25/2016 Item #12A 12.A 10/25/2016 --- EXECUTIVE SUMMARY Recommendation to authorize the County Attorney to file a lawsuit seeking to recoup in excess of $6.5 million paid to Holiday CVS, LLC, a corporate subsidiary of CVS Health Corp., and Realty Trust Group, LLC pursuant to a jury award in January 2014. The claims in the lawsuit are for unjust enrichment and civil conspiracy to commit extrinsic fraud on the court. OBJECTIVE: To seek repayment of a jury award, attorneys' fees, expert witness fees and costs in excess of$6.5 million from Holiday CVS,LLC a corporate subsidiary of CVS Health Corp. ("CVS")and Realty Trust Group,LLC ("RIG"). CONSIDERATIONS: Collier County began intersection improvements at US 41 and Collier Blvd. (CR 951) in January 2013. As part of the project, the County commenced an eminent domain proceeding against CVS and RTG to condemn certain property owned by RTG and leased by CVS. In response, CVS requested full and just compensation and business damages and/or relocation damages. CVS terminated its lease with the landlord, RTG, based on the loss of 11 parking spaces, despite the County's offer to provide 6 additional parking spaces,but continued operating on the property as a month-to-month tenant. RTG also claimed business and severance damages. The Court granted the taking, and the County paid what it believed to be full compensation. Following the taking, a jury trial was held in January 2014 to determine the amount of the business and severance damages for CVS and RTG. The lawsuit asserts that CVS and RTG conspired to engage in extrinsic fraud that precluded the County from being able to properly defend against their claims, and precluded the jury from fairly adjudicating the claims. On January 10, 2014 the jury awarded CVS $1,933,000 in lost future business income, and RTG was awarded $3,100,000 for loss of future rental income from CVS. As a direct result of the verdict, pursuant to Florida statute,the Court later ultimately awarded in excess of$1.5 million for CVS's and RTG's attorneys' fees,expert witness fees and costs. On January 28, 2014, I brought an Executive Summary to the Board recommending that the County accept the jury verdict and not appeal.During my presentation I stated to the Board as follows: "It is my recommendation that the County not appeal...If indeed they stay in business, I'll be coming back here with some different proposals...." Despite "terminating" the Lease and claiming that CVS would be closing on January 1, 2015, CVS remains in business as a tenant of RTG as of the date of this meeting(October 25, 2016). As promised, I have come back with a different proposal. FISCAL IMPACT: Unknown at this time. GROWTH MANAGEMENT IMPACT: None. LEGAL CONSIDERATIONS: The Fifth Amendment to the United States Constitution provides that private property cannot be taken for public use without the payment of"just compensation,"with Article X, Section 6 of the Florida Constitution requiring that "No private property shall be taken except for a public purpose and with full compensation therefor paid to each owner..." The overriding principle is that property owners are to be fully and fairly compensated for their loss as a result of a public taking of their property. CVS and RTG received combined payments in excess of $5 million pursuant to a jury award, and an additional $1.5 million for their attorneys' fees, expert witness fees and costs,based on the termination of the Lease and the proposition that the CVS store was going to close as a result of the Packet Pg.405 12.A 10/25/2016 taking. CVS did not close on January 1, 2015, and as of today remains open for business. "Just compensation"was never intended to give a property owner a windfall. CVS and RTG either engaged in a scheme that was calculated to interfere with the judicial system's ability to fairly adjudicate that lawsuit, and should return the money, or at best made an error that resulted in a windfall, and should return the money. The County Attorney drafted this item. It is approved as to form and legality and requires majority vote for approval. -JAK RECOMMENDATION: That the Board of County Commissioners authorizes the County Attorney to file a lawsuit seeking to recoup in excess of $6.5 million paid to Holiday CVS, LLC a corporate subsidiary of CVS Health Corp. ("CVS") and Realty Trust Group,LLC ("RTG")pursuant to a jury award in January 2014. The claims in the lawsuit are unjust enrichment and civil conspiracy to commit extrinsic fraud on the court. Prepared by: Jeffrey A. Klatzkow,County Attorney ATTACHMENT(S) 1.Complaint-Collier County v Holiday CVS LLC and Realty Trust Group LLC (PDF) 2.Exhibit A(excerpt)to Complaint-Lease Agreement (PDF) 3.Exhibit B to Complaint-Verdict Form CVS (PDF) 4.Exhibit C to Complaint-Verdict Form RTG (PDF) 5.Trial Testimony of CVS Representative(excerpt) (PDF) 6.Executive Summary and Minutes-January 28 2014 Item 12A (PDF) Packet Pg.406 12.A 10/25/2016 COLLIER COUNTY Board of County Commissioners Item Number: 12.A Item Summary: Recommendation to authorize the County Attorney to file a lawsuit seeking to recoup in excess of$6.5 million paid to Holiday CVS,LLC, a corporate subsidiary of CVS Health Corp., and Realty Trust Group, LLC pursuant to a jury award in January 2014. The claims in the lawsuit are for unjust enrichment and civil conspiracy to commit extrinsic fraud on the court. Meeting Date: 10/25/2016 Prepared by: Title: Legal Assistant/Paralegal—County Attorney's Office Name: Virginia Neet 10/19/2016 12:33 PM Submitted by: Title: County Attorney—County Attorney's Office Name: Jeffrey A. Klatzkow 10/19/2016 12:33 PM Approved By: Review: Office of Management and Budget Valerie Fleming Level 3 OMB Gatekeeper Review Completed 10/19/2016 1:15 PM County Attorney's Office Jeffrey A.Klatzkow Level 3 County Attorney's Office Review Completed 10/19/2016 1:49 PM Budget and Management Office Mark Isackson Additional Reviewer Completed 10/19/2016 2:06 PM County Manager's Office Leo E.Ochs Level 4 County Manager Review Completed 10/19/2016 3:41 PM Board of County Commissioners MaryJo Brock Meeting Pending 10/25/2016 9:00 AM Packet Pg.407 12.A.a IN THE CIRCUIT COURT OF THE TWENTIETH JUDICIAL CIRCUIT IN AND FOR COLLIER COUNTY, FLORIDA CIVIL ACTION cc COLLIER COUNTY, a political subdivision of -0 the State of Florida, Plaintiff, > v. Case No. 16-CA- 0 HOLIDAY CVS, LLC, a corporate subsidiary of CVS HEALTH Corp., and REALTY TRUST °' GROUP, LLC, Defendants. N N U COMPLAINT Plaintiff, COLLIER COUNTY, by and through its undersigned counsel, and in accordance 0 with the Florida Rules of Civil Procedure, files this Complaint against Defendants, HOLIDAY E CVS, LLC, and REALTY TRUST GROUP, LLC, and alleges the following: a) CY JURISDICTION AND VENUE 1. This is an action for damages in excess of $15,000.00, exclusive of interest and costs. > 2. Venue is proper in Collier County, Florida, because Defendants, HOLIDAY CVS, -0 LLC and REALTY TRUST GROUP, LLC, conduct business in Collier County, and because the causes of action alleged herein accrued in Collier County. 0 PARTIES 0 3. Plaintiff, COLLIER COUNTY (hereinafter the "County"), is a political subdivision of the State of Florida. E 4. Defendant, HOLIDAY, CVS, LLC (hereinafter "CVS"), is a Florida limited liability 0 company that conducts business in Collier County, Florida. E 5. Defendant, REALTY TRUST GROUP, LLC (hereinafter "RTG"), is a Tennessee limited liability company that conducts business in Collier County, Florida. Packet Pg. 408 12.A.a GENERAL ALLEGATIONS 6. Beginning in 2004, CVS leased property located at 6800 Collier Blvd., Naples, ca ce Florida, 34114 (hereinafter the "Collier Blvd. CVS"), from RTG, pursuant to a lease agreement (hereinafter the "Lease"). 7. The Lease was a twenty-year lease set to expire in November 2024, with four or five-year options to extend. See Lease, at p. 1, a true and correct copy of which is attached ° a) hereto as Exhibit "A". U 8. Beginning in 2013, the County began an expansion of the intersection located at N CNI US 41 and Collier Blvd. (CR 951) in Collier County, Florida, as part of its Five Year Transportation Work Program. The purpose of the project was to improve intersection capacity Q and safety. To accomplish these goals, the construction project required the acquisition of an additional right-of-way. 9. On January 25, 2013, as part of the expansion project, and pursuant to Chapters cc 73, 74, and 127 of the Florida Statutes, the County filed a Petition to commence an eminent c domain proceeding against CVS and RTG to condemn certain property, owned by RTG and leased by CVS, including in relevant part, Parcels 116FEE, 116TCE1, 116TCE2, and 116TCE3 C6 (collectively "Parcel 116"). 10. The Collier Blvd. CVS was located in the northeast quadrant of the subject intersection for construction. Included within the property sought to be condemned by the County o were eleven (11) parking spaces from CVS, which were located within Parcel 116. a 11. In addition, the County sought a temporary construction easement for the purpose of entering the above listed parcels to begin construction of the right of way and various E improvements connected therewith. The construction easement was to last no longer than three U (3) years. a-r 2 Packet Pg.409 12.A.a 12. Prior to beginning its construction, the County sent CVS a notice with a plan showing the work to be completed, including the eleven (11) parking spaces that would need to ED- rr be acquired. 13. On February 19, 2013, CVS filed an Answer to the County's Petition, in which CVS claimed that it would be severely damaged by lost profits, destruction of good will, loss of ;, customers, and loss of income as a result of the County's proposed plans. CVS requested its full U and just compensation, while also seeking business damages and/or relocation damages. 14. On May 20, 2013, CVS made an "in-house decision" to terminate the Lease with v RTG, based only on the fact that eleven (11) parking spaces would be lost and despite the fact U that several other CVS stores operate with less parking than is available at the Collier Blvd. CVS. 0. CVS made this decision to terminate without first consulting any experts, and without hiring any w engineers or outside personnel to assist in the decision-making. 15. In an eminent domain proceeding, the condemnor must accept a condemnee's w choice to close the business, rather than attempt to relocate or otherwise continue operating after the taking. J cn 16. CVS claimed to have terminated the Lease pursuant to an Eminent Domain Clause. The Eminent Domain Clause, however, provided that "tenant shall not have the right to 0 terminate this lease if landlordprovides alternative = parking areas which are reasonably , acceptable to tenant." See Exhibit "A", at Section 23.2. 0 U 17. Upon information and belief, the Lease "termination" was not necessary and was 16 a "sweet heart deal" between CVS and RTG to improperly maximize their claimed damages in c. the eminent domain proceeding. ss E 18. The County, recognizing that there may be a need for alternative parking, offered 0 to put six (6) additional parking spaces on the side of the CVS building. However, CVS did not accept this proposal, and instead continued to reiterate the importance of those eleven (11) asas parking spaces that were the subject of the eminent domain proceeding. 3 Packet Pg.410 12.A.a 19. Despite termination of the Lease, CVS remained on the property as a month-to- month tenant of RTG and continued operating the Collier Blvd. CVS. 20. The Court found that the County had complied with all requirements for the taking, c and, on March 26, 2013, the Court entered an Order of taking as to Parcel 116. 21. However, CVS and RTG each claimed that, in addition to "full compensation" for the taking, they were entitled to additional business and severance damages for anticipated lost v CD business as a result of the "taking". Q U 22. In January 2014, CVS and RTG's damages claims proceeded to a jury trial. N 23. At the trial, CVS and RTG represented that CVS would be leaving the Collier Blvd. U J CVS because of the "taking", thereby leaving RTG without a tenant. 2 24. CVS gave sworn testimony that "enough business would be lost permanently that would not allow[CVS] to remain profitable after those [parking] spaces were taken." 25. CVS affirmatively declared that it was closing the Collier Blvd. CVS on January 1, eD ce 2015. 26. In addition, RTG affirmatively represented that it would no longer be able to rent its Collier Blvd. property out as a pharmacy/convenience store due to the taking of parking (13 spaces. 0 27. Based on the evidence and testimony presented, the jury awarded a significant > amount of damages to CVS and RTG to compensate for their alleged future loss of business o from the closed store. °i C—)6 28. Specifically, CVS was awarded $1,933,000.00 in business damages. See Verdict, dated January 10, 2014, a true and correct copy of which is attached hereto as Exhibit "B". RTG was awarded $3,100,000.00 in severance damages. See Verdict, dated January 10, 2014, a true 0 and correct copy of which is attached hereto as Exhibit "C". These damages were in addition to the compensation that the County was ordered to pay to CVS for the taking, itself. See Exhibits "B" and "C". Additionally, the County was ordered to pay over $1,000,000.00 to CVS and RTG 4 Packet Pg.411 12.A.a' for attorneys' fees. These fees were based on percentages of the results attained as referenced above pursuant to F.S. Section 73.092. Finally, the County also paid almost $500,000 towards CVS' and RTG's expert fees, much of which dealt with the business damages issue. In this action, the County should be able to recoup most of these approximately $6,500,000.00 in purported business damages, attorneys' fees and costs as damages. ;, 29. The County has paid CVS and RTG the damages awarded in full. 30. Despite the purported termination of the Lease, and express representations that "6— the the Collier Blvd. CVS would be closing on January 1, 2015, and that the store could no longer be 707 used as a pharmacy, the Collier Blvd. CVS remains open and in business. As a part of their conspiracy to defraud, the Defendants agreed upon a date around one year into the future for the 0_ alleged cessation of business, which was the false premise of their purported damages. 31. The Collier Blvd. CVS has now been open for nearly twenty (20) months from the "guaranteed" closing date. Contrary to their representations, CVS has at all times continued to a operate its business as usual, and RTG has continued to collect monthly rent payments from CVS. 32. CVS and RTG's damages claims were based on an invalid and pretextual termination of the Lease. 33. As a result, CVS and RTG have reaped the benefits of the multi-million dollar ; damages award that was based solely on Defendants' false position that CVS was closing the business, while simultaneously continuing to operate and collect the very profits that were 0 supposedly lost, and for which the County compensated both CVS and RTG. 34. The expansion project was completed in November of 2015. E 35. Significantly, CVS and RTG have been unjustly enriched by millions of dollars to the detriment of the Collier County taxpayers. 0 Ct 5 Packet Pg.412 12.A.a COUNT I UNJUST ENRICHMENT 36. The County hereby incorporates paragraphs 1 through 35 for all purposes as if set cc ca forth in full herein. U 37. The County was ordered to pay damages, attorneys' fees, expert fees and costs to CVS and RTG to compensate CVS and RTG for their supposed loss of business suffered as a 0 result of the taking. a) 38. The County paid an excessive amount of unwarranted damages, fees and costs ci to CVS and RTG, and CVS and RTG accepted same. N 39. However, CVS and RTG have not suffered the stated loss of business. J 40. The County's payment of business damages, attorneys' fees, expert fees and o L costs to CVS and RTG constituted the conferral of an excessive benefit upon CVS and RTG. 41. CVS and RTG are now being permitted to retain a windfall recovery by keeping an award of damages for lost profits and lost business in addition to maintaining operation of that cc business, which has been continuously generating profits. In addition, RTG's award of damages was based largely in part on the loss of CVS as a tenant; yet, CVS continues to operate in the Collier Blvd. store, and upon information and belief, pay rent to RTG. 7 42. CVS and RTG's continuous operation of the Collier Blvd. CVS, even after being awarded damages to compensate for the closing of same, is the direct cause of the County's damages in an amount equal to CVS and RTG's awarded business damages, attorneys' fees, expert fees and costs. "5 43. The County does not have an adequate remedy at law. 44. All conditions precedent have occurred or been waived. 0 WHEREFORE, Plaintiff, COLLIER COUNTY, respectfully requests that this Court enter w judgment in its favor and against Defendants, HOLIDAY CVS, LLC and REALTY TRUST F GROUP, LLC, for damages, including but not limited to the special damages of attorneys' fees, 6 Packet Pg.413 12.A.a expert fees and costs paid pursuant to the prior award, costs and all such other and further relief as the Court deems just and proper. a w COUNT II 0 CIVIL CONSPIRACY TO COMMIT EXTRINSIC FRAUD ON THE COURT 03 45. The County hereby incorporates paragraphs 1 through 35 for all purposes as if set to forth in full herein. c 0 46. CVS and RTG conspired to do an unlawful act, to-wit: agreeing to terminate the L, Lease without basis and knowing CVS would remain as Tenant; leading the County and the co.) Court to believe that the Collier Blvd. CVS would be closing its business because of the taking; N N knowingly making false claims for damages and offering false evidence in support thereof; then c) J J a. receiving an award of damages, attorneys' fees, expert fees and costs from the County in excess 2 of $6.5 million; and continuing to reap the benefit of this award despite continuing to operate N business as usual. it Zs cu 47. Once CVS and RTG received the notice from the County that construction would Et 10 occur and that the County would be taking eleven (11) parking spaces, CVS and RTG began rts U J taking overt acts in pursuit of their conspiracy as follows: cn > a) RTG allowed CVS to terminate its Lease contrary to the Lease's terms providing ; 12.A.a 48. CVS and RTG defrauded the Court and the County by setting in motion an unconscionable scheme that was calculated to interfere with the judicial system's ability to fairly ec adjudicate the lawsuit and appropriately determine damages. co 49. CVS and RTG knew that they were deceiving the Court and the County, and they wintentionally undermined the judicial system by making a claim for damages that was based on fraudulent positions and evidence. CVS and RTG's collective actions prevented the County from v a) presenting fair and viable defenses as to CVS and RTG's claims to same—including, but not limited to, the doctrine of avoidable consequences. v N 50. CVS and RTG entered into a pretextual, purported Lease termination and U submitted false claims as to their intentions to discontinue the business and the amounts they J O. 0 were owed from the County in damages, of which amount was the very subject matter of the 2 N lawsuit. Thus, the trial court was prevented from being able to fully address, on its own, the issue 2. of the amounts owed by the County for the "taking". cc 51. CVS and RTG's scheme was successful, because in an eminent domain c as proceeding such as this one, a condemnor, like the County, must accept a condemnee's choice J cn as to whether to continue or discontinue the business. By fraudulently claiming the intent to close the business and pretextually terminating the Lease, CVS and RTG prevented the County from a �o presenting a "cost-to-cure" analysis that would have drastically reduced the damages awarded. , 52. As a result of the acts performed pursuant to the conspiracy, the County has 0 U suffered damages in excess of$6.5 million. (i) 0 53. All conditions precedent to the bringing of this action have occurred or been 0 waived. WHEREFORE, Plaintiff, COLLIER COUNTY, respectfully requests that this Court enter U judgment in its favor and against Defendants, HOLIDAY CVS, LLC and REALTY TRUST GROUP, LLC, for damages, including but not limited to the special damages of attorneys' fees, 8 Packet Pg.415 12.A.a expert fees and costs paid pursuant to the prior award, costs and all such other and further relief as the Court deems just and proper. DEMAND FOR JURY TRIAL U) Plaintiff demands that all matters relative to this Complaint and all subsequent pleadings U cn be heard by a jury in accordance with applicable Florida law. Dated this day of October, 2016. 0 WOODS, WEIDENMILLER, MICHETTI, RUDNICK & GALBRAITH, PLLC •By: /s!Gregory N. Woods Gregory N. Woods Florida Bar No. 175500 J 9045 Strada Stell Court, Suite 400 Naples, FL 34109 (239) 325-4070—Telephone (239) 325-4080— Facsimile Primary Email: gwoods@wwmrglaw.com Secondary Email: bwisher@wwmrglaw.com Attorneys for Plaintiff COUNTY ATTORNEY'S OFFICE J > U Jeffrey A. Klatzkow Florida Bar No. 0644625 3299 East Tamiami Trail, Suite 800 Naples, Florida 34112-5746 Telephone: (239) 252-8400 Facsimile: (239) 774-0225 Primary Email:jeffklatzkow@colliergov.net Secondary Email: nancybradley@colliergov.net �, Co-counsel for Plaintiff U Q E 0 U e E 0 9 Packet Pg. 416 , 12.A.b - • ‘� ,,„,,i1 Eckerd Corporation Store No.:3943 1 LEASE AGREEMENT This Lease Agreement rLeaes�is made this .day at Apra, 2003, by and bedrreen:SOUTHERN • 1- CENTERS IN NAPLES, LC., a Florida limited Iablity company ri.arrdlord') and ECK ERD CORPORATION, a Delaware corporation('Teriarrt'). In consideration of lire mutual covenants and agreements contained in this Lease, 0 and for other good and valuable oart.dderaiiart,the recent of which b laaadiornd and Tilos*agora as j follows: Leased Prre�bes = �• o 1.1. Landlord teens to Tenant,and Tenant accepts from Landlord,.those cerrtainn promises consisting of land 0 and a budding OM area keide wale of 13,824 square fest,as shown on the elks plan on the attached c Brddbil"A",upon real properly located at the northeastern corner of U.S.41 (a kle Tunhtnt TM)and a C.R. 951 (ands Caller Boulevard),and situated in an unincorporated portion of Collar County, In the c.o State of Florida.end as legally described in the attached ilbdattslt"B"('Leased Promises". 1.2. Tenant shalt be permitted to use the leased Promises for the operation of a drug store and/or for any N other lawful purpose or purposes including,but not erdksd to,an Engares,Photo and/or photo processing center,a postei substation or pesokage nailing anter,and an optical center for the practice of*Merry •d and optometry. Tenant may awl, aper obtaining al mutat losaesa and penntlt, sat a b tuL beverages for off-prones consumption. Subject to the foregoing enrage in tide Section. Landlord 0 warrants that the teased Premises are properly zoned(or the relevant valances or elle approvals have been obtained)which alba each of the spsdna eves dwalbeq above and that issue are no recorded re btailorts stitch wed prvlrb�it or restrict Tenant Dom wiry Cts Wand Promisee iter any of those N specific uses. The polies endunawledgs that Landlord Is vrorkknp +and in good faith to own the 0 proper zoning to Mors for each Ole with written notice upon Its receipt of such proper zoning. fn the event Landlord in unableuses described above. Landlord agrees to Tenantp rovide s �' zoning prior to the construction start date set forth in the Lease,Tenant mei tenrntnata this Leese by r c written notice of such bntdtsrtiori to Landlord prior such stet data. Tenant has the right to 0 deoonitrue all or any part of Its business operations (biduding, but not limited to Is pharmacy a operations) at the Leased Premises at any time, et Tenants sole discretion and without Landlord's E approval or consent 0 0 2. Initial Term and Option Periods a. 2.1. The reit team of the Lease sign ©onaneacs concurrently with Rent Commencement Date ("Lease 0 Commencement and afros end at midnight twenty(20)years later(*Lease Tenni We,. x 0 2.2. Because of the admittedly seasonal aspect of Tenant's badness ciparallocat,!t is agreed!bat Tesar t s mle 4 not be obligated to brushy open for buebeee between November 1 and January 31. Rent slap not begin • to accrue until February 1 If possession of the Leased Premises Is nada avdebte to Tenant t for initial :0 store opening at any time between November 1 and January 1.These provisions shall have no effect w span contivaed,00ymantants*following Tea ntsbalsam,awniyng. w 2.3. Landlord and Tenant agree, upon written request by either party, to execute, adanowledge and delver instruments to each other in recordable farts certifying the Lease Commenoament Dab and Lease _ Termination Date. 0 d+. I 64121103:14341 1 Packet Pg.417 12.A.b I .8 , 23. Emhnnent._pomaia 23.1. If the.entire building on the Leased Premises ebd be taken by reaeon of oondemnat'bn or under eminent domain proceedings,Landlord or may terminate this Lease as of the date when possession of the building Is taken. if a portion of the building shall be taken under eminent domain or by reason of condemnation and if in the opinion of Tenant,reasonably exercised,the rem ander of the building is no longer suitabie for Tenses business, this Lease. at tenants opdorr, to be a asacised by notice to I- Landlord within sbcty(60)days of such taking,shellterminate. in such event,any unearned Rent paid or duediesd in advance shell be refunded to Tenant. If tide Leese in not so terminated, Landlord atop c proceed promptly and v11iti due Apnea,b restore the building. Unit so restored,Rent sited abate to the ca extent that Tenant stroll not be able to conduct business in a reasonable manner, and Rend for the > remakitng portion of the team of this Lease shop be reduced (based on the reduced o square foot floor area of the building). > 23.2. in the event any pert of the parkNp areas of the Leased Premises shall be taker by reason of c condemnation or under eminent domain proceedings, or If as a roue of any feting of the Laked o Premises or other property subject b an easement benseling the Leased Promiess any driveway or curb c.) cut acerae to the Leased Premises will be dosed,and If in the opinion of Terme,raasor exercised. iii Leased Prerdeess are no longer suitable for Tenant's business, this Lease, at T s option by = notice to Landlord within stony(SO)days of such taking,shall terminate. Chia Lease is not so laminated, Landed,at Landlord's..expetse,shad proceed promptly and with due digest=a to mature the retraining Leased Pmmises and a proper and usable oondllon. Howiwer,Tenant shall not hove . the rightterminate this arki~Lease if antestol�oed pevwdes aMremats paldag wee. which are aeon bN acoepbable to Tenant unit restored, Rant aha!abate to the extent that Tenet ahs! not be able to conduct business at the Leased Premises In a reasonable manner,and Rent for the refraining porton of the farm of thils Lease chef be panporhiare ily asdaasd geed as be aka arab heft has on Tanen business ness et the Leased Premises). • 1 0 23.3. For purposes of this Section, the berm `dvridemnriabori or under unbent domain proceedings'alai a include conveyances aid grants made In arrdoipalbrr oforin leu of such proceedigs. a to i 24. Tenant's Default co 24.1. Each of the following shah oonspbsts•a defier*by Tenant and a breach dais Lease *E' 24.1.1. Any of the following which shall rode in final adjudication agakat Tenant a 24.1.1.1., The fling of a bardcnrptoy petition by or againist Tenant for adjudication, t reorganization or arrangement or c°� 24.1.1.2. My proceedings ngs for dissolution or lquidedion of Tenant;or 24.1.1.3. Any assignmient for the benefit of Tenant's°retinas. a • 24.1.2. Failure to: 0 x 24.121_ Pity Rent for a period of fifteen(15)days after receipt of written notice;or • °= 24.12.2. Perform any other covenant or cardigan of this Lease for a period of `t thirty(30)days after receipt of wrtien notice. Q 24.2. M tine event of aw dauudt of Tenant>n adduce to arty other remedies available to Landlord by law, w Landlord may serve written notice upon Tenant that Landlord elects to temdnats this Lease upon a specified date not tams then thirty(30) days after the date of receipt of such notice.This Lease shall d expire on the date so specified as If that date had been originally Arend as the expiration date of the term granted in this Lease unless steps have,in good fakh,been commenced promptly by Tenant to cure the default, and are prosecuted to completion with diligence and continuity.If the matter In question shall 0 involve building eonstnratlon, and if Tenant shad be subject to unavoidable delay by condilbns beyond Q • 1$ 04/251113:14341 Packet Pg.418 1 12.A.c M IN THE CIRCUIT COURT OF THE TWENTIETH JUDICIAL CIRCUIT IN AND FOR COLLIER COUNTY,FLORIDA CIVIL ACTION COLLIER COUNTY,FLORIDA,a political subdivision of the State of Florida, & 1— Case No.: 13-CA-259 0: Petitioner, w c css vs. Parcels: 116FEE, 116TCE1, 0 116TCE2, 116TCE3 o N RTG,LLC,a Nebraska limited liability ;, w company; et al., 0 Respondents. o / _ 0 U FINAL JUDGMENT 4- C•1 [Business Damages] `=' Cn> THIS CAUSE came on for trial and the jury, having been empaneled and sworn to try U E 'c3 what compensation shall be made to the Respondent, HOLIDAY CVS, LLC, for business w U_ i damages, and having heard the evidence and charges of the Court, and having retired to > consider its verdict, returned its verdict returned the following verdict: 'i 71. E 0 U 0 0o a x W ezi a cn CIS Q r, - Q " Cil r..,r _ 1.1:- ':, T .. t. om.) =r" C Packet Pg.419 12.A.c r IN THE CIRCUIT COURT OF THE TWENTIETH JUDICIAL DISTRICT IN AND FOR COLLIER COUNTY,FLORIDA CIVIL ACTION COLLIER COUNTY, FLORIDA, F— Petitioner, cc Case No.: 13-CA-000259 vs. _ rli Parcels: 116FEE, 116TCE1, > RTG,LLC,et al., 116TCE2, 116TCE3 U Respondents. r / c V I L VERDICT -au WE,THE JURY,duly impaneled and sworn to try the issues in the above-entitled action, N Csi find that the Respondent,HOLIDAY CVS,L.L.C.,suffered business damages in the amount of cn $ ( '133�6e o E ! Jy o LL SO SAY WE ALL. L a) DATED this f 0 41". day of January,2014. "E c Q. 1 0 (--Th L.1.,4 , - —L 0 FO PEONco x u.1 a.: m E U Rs Zi a-. FILED IN OPEN COURT JAN 1 0 2014 Packet Pg. 420 12.A.d \\\- IN THE CIRCUIT COURT OF THE TWENTIETH JUDICIAL CIRCUIT IN AND FOR COLLIER COUNTY, FLORIDA CIVIL ACTION COLLIER COUNTY, FLORIDA, a political subdivision of the State of Florida, cc Petitioner, Case No.: 13-CA-00259 a co a) vs. Parcels: 116FEE, 116TCEI, > 116TCE2, 116TCE3 c.) N RTG, LLC, a Nebraska Limited Liability ; 12.A.d IN THE CIRCUIT COURT OF THE TWENTIETH JUDICIAL DISTRICT IN AND FOR COLLIER COUNTY,FLORIDA CIVIL ACTION COLLIER COUNTY,FLORIDA, Petitioner, Case No.: 13-CA-000259 vs. U) Parcels: 116FEE, 116TCE 1, RTG,LLC,et al., 116TCE2, 116TCE3 Respondents. l / L i i VERDICT 0 T WE,the Jury,find for the Respondent,RTG,LLC,as follows: N o cc (a) Land Taken(116FEE) $ 2 :s,c c'o c (b) Improvements Taken $ ( o CI C; cs C (c) Severance Damages $ 3 j c c' c c^ �, > J (d) Temporary Construction Easements 2 , (116TCE1, 116TCE2 and 116TCE3) $ 3 C G C 0 U TOTAL COMPENSATION $ ) �r G C` G 0 :d SO SAY WE ALL,this I c' day of January,2014. W J � � FOREPERSON 1 �" FILED IN OPEN COURT JAN 1 0 2014 Packet Pg.422 12.A.e IN THE 20TH JUDICIAL CIRCUIT COURT IN AND FOR COLLIER COUNTY CASE NO. 13-CA-359 I- COLLIER COUNTY, FLORIDA, a political subdivision of the State of Florida, cn U N Petitioner (s) , > U N a v. RTG, LLC, a Nebraska limited liability company, et al. , Respondent (s) . a EXCERPT OF PROCEEDINGS 0 TESTIMONY OF BRIAN COOK 0 U) U DATE TAKEN: January 7, 2014 0 TIME: 8 :30 A.M. >' PLACE: Collier County Courthouse Naples, Florida BEFORE: Honorable Lauren L. Brodie 0 LL C) E Elizabeth M. Brooks, RPR, FPR Gregory Court Reporting Services, Inc. 2650 Airport Road South Naples, FL 34112 Packet Pg.423 12.A.e 21 1 A That's a termination letter for the lease of 2 the subject site. 3 Q And can you read it beginning with, Dear 4 Mr. Weigel? 5 A Reference is made to the eminent domain action u� c3 6 filed by Collier County in the Circuit Court of the 20th Zs 7 Judicial Circuit, Case Number 13-00259-CA, Parcel 8 Numbers 116 FEE, 116 V1, 116 TCE 2, 116 TCE 3, 1189 GFE 0 9 and 1189 TCE. 0 10 "As you know, the Circuit Court entered an 11 order of taking on March 26th, 2013, and a good faith d 12 deposit was made April 3, 2013, by Collier County. 13 Accordingly the taking has occurred. Please be advised "Ti 14 that Holiday CVS, LLC elects to terminate the lease. d N 15 Pursuant to the terms of the lease, Holiday CVS, LLC is 16 willing to remain in the premises at the present monthly 0 17 rate on a month-to-month lease until construction 18 begins. It will continue to operate as a month-to-month N 19 tenant in the interim period. Please let us know if 7-0 si H 20 there are questions . Sincerely, Holiday CVS, LLC. " 21 Q And who is Holiday CVS, LLC? 22 A It is the Florida entity for CVS Pharmacy. 23 Q Does it own CVS 789? 24 A It does . 25 Q And it's the tenant? GREGORY COURT REPORTING SERVICE Packet Pg. 424 12.A.e 22 1 A Correct. 2 Q Were you involved in the decision to terminate 3 the lease on this store? 4 A I was. 5 Q And how high up into CVS did it go or did you cn o 6 make the decision by yourself? 7 A I did not make the decision by myself. It was U 8 a collective group of us who made this decision and the 0 0 9 decision-making fell right below the president level . 0 10 Q Was it a close call, whether or not to keep N 11 the store open or to close it? d 0 12 A No. 13 Q And why wasn't it a close call? 14 A Given the 11 spaces taken and where those 0 15 spaces are located in relation to the front door and how 0 16 convenient they are for folks, to that front door, we U 17 determined that enough business would be lost 18 permanently that would not allow this store to remain d 19 profitable after those spaces were taken. 20 Q Now, did you consider -- did you and others c a� 21 who made this decision or participated in making the 0 U fSS 22 decision consider the competitive environment for this 23 store? 24 A Absolutely. That comes into play quite a bit 25 here. GREGORY COURT REPORTING SERVICE Packet Pg. 425 12.A.e 23 1 Q Does CVS normally terminate leases of stores 2 making $500, 000 per year? 3 A No. 4 Q With regard to the 11 spaces, are they high 5 quality spaces or low quality space? 6 A Very high quality spaces. y 7 Q And are some parking spaces better than 0 8 others? o 0 9 A Absolutely. 0 10 Q And which ones are the most valuable? 11 A The ones approximate to the front door of the 0 12 store, the ones closest to the front door of the store. v 0 13a Q Now, why did CVS, before the taking, consider 14 this to be a good intersection? 0 2 L a 15 A Great traffic, significant income in the area. 0 U) 16 It really meets our lifestyle segment for the pharmacy 0 O 17 and pharmacy needs. It's a strong median age in this 0 18 community and, really, we were the first -- if you've 0 0 19 heard of the first mover advantage in retail, we were 20 the first pharmacy there. We beat Walgreens in there, ? 21 and that was a really, really positive thing for us. ca 22 So, when we acquired the store from Eckard's, it was a 23 no-brainer to keep moving the train. 24 Q Now, when this store was acquired from Eckerd, 25 it had not opened yet, had it? GREGORY COURT REPORTING SERVICE Packet Pg. 426 12.A.e 24 1 A Correct. 2 Q When it opened did it open as a CVS or as an 3 Eckerd? I- h 4 A It opened as a CVS. 5 Q So it's always been a CVS? U 6 A Correct. > a 7 Q But the building looked like an old Eckard's o U 8 building? 0 9 A Yes . It was already acquired at the point of 10 acquisition. 11 Q When do you anticipate that CVS is going to ?C 12 leave this site that is Store 7899? 13 A January 1st, 2015. o 0 14 Q And is CVS really going to leave the site or cz. N 15 is this just some kind of game that's being played? 16 A We are really going to leave this site. 48 17 Q What happens to the employees of this store if 18 it's closed? 4) 19 A They will hopefully -- L I- 20 MR. VICKERS: I object to this line of E 21 questioning. It's not relevant to the -- 22 THE COURT: Sustained. 23 BY MR. BUELL: 24 Q Does CVS close doors every year from time to 25 time? GREGORY COURT REPORTING SERVICE Packet Pg.427 12.A.e 25 1 A Yes. 2 Q And have you been involved in other store 3 closings -- t� 4 A Yes. _ 5 Q I didn't finish asking you. U 6 With respect to the decision to close this 7 store, how many people were involved in that decision? = 0 U 8 A About ten, including myself. 0 0 9 Q And what other real estate executives were U 10 involved? 11 A My boss, the vice president of real estate for a 0 0 12 one-third of the country, also, on the real estate side, 13 his boss and his boss' boss. 14 Q And the boss ' boss is responsible for what? N 0 15 A He is our executive vice president of store 16 operations, real estate, construction, and facilities. 0 U 17 Q And so for how many states is he responsible? o 18 A All of them. 0 F- 19 Q Have you done any analysis or have you looked 20 at this idea about moving the door that's been talked 21 about? = 0 22 A We did consider it during that period of time 23 before we terminated the lease. 24 Q When CVS was considering that and before the 25 termination letter went out, is that something that GREGORY COURT REPORTING SERVICE Packet Pg.428 12.A.e 26 1 occurred to CVS, that the door could be moved? 2 A Yes. 3 Q And why didn't CVS just move the door? 4 A It's a cost prohibitive exercise for us. It 5 didn't make financial sense. U U 6 Q Have other stores that are under your ; 7 supervision undergone interior renovations in the past? o 8 A Yes. 0 9 Q And do you have any ongoing now? 0 10 A I do. 11 Q And, generally speaking, ballpark, what does Q- a) U 12 it cost to redo the interior of a store? a a) 13 A Obviously the scope of work determines that, 14 but a lot of them are in the million dollar range, plus, 15 minus, depending on the scope of work. 16 Q Now, is it important when the interior of a 0 17 store is set up how the customers are routed through the 18 store to the pharmacy? N a) 19 A Absolutely. ALL r 20 Q And can you explain why that is important to a) 21 the jury? = U 22 A Well, we have what's called the drive aisle, 23 that takes the customer from the entrance to the store, 24 all the way back to the pharmacy. And in that drive 25 aisle a customer is exposed to the most popular GREGORY COURT REPORTING SERVICE Packet Pg.429 12.A.e 27 1 categories in our store in which to shop. They are also 2 high margin categories that earn us, you know, money, 3 you know, for lack of a better word. So that's very 4 important to us, to get people exposed to the things 5 that they most commonly come into our store to shop for. u 6 Q And when you say margins are higher, what are 7 you talking about exactly? 0 8 A Profit margins. 0 9 Q Do medications pretty much cost the same u T 10 everywhere? N 11 A Yes. 0 12 Q So there is no real price advantage to a CVS u 13 customer in general, going to CVS as opposed to .76 14 Walgreens or somewhere else? 2 L 15 A Taking the insurance piece out of the 16 equation, that's correct. U 17 Q So how does CVS get customers to come to it 0 18 rather than to one of these competitors? 0 19 A We have to beat out our closest competitors on F- 20 attractiveness of the store and the service within the c 0 21 store, the convenience of the whole experience of 0 22 shopping. 23 Q Do some stores need more parking than others? 24 A Yes. 25 Q And how is it that some stores can do well GREGORY COURT REPORTING SERVICE Packet Pg.430 12.A.e 28 1 with less parking than others? 2 A Well, as we've discussed, there are a number 3 of variables that go into this entire equation. You 4 could need more parking based on the fact that you do 5 more sales in the store, but the other side of that is, U 6 if you don't have any competitors in your trade area, a 7 well, even if your store does a high volume of sales, if o 8 you don't have any competitors to worry about, you 0 0 9 really wouldn't need to have as much parking. So this o 10 is kind of a sliding equation, if you will, with the N 11 competitive environment being a piece, the site d 12 characteristics of the location being a piece and then a 13 the demographic profile being a third piece. 7 14 Q And if there is more competition, then the a 15 demographic profile has got to include more people; is U) 16 that -- v 0 17 A Logically, yes. E 18 Q Do you know exactly when construction is going 19 to begin to affect the site? 20 A I heard earlier today it's the end of this 21 month. 22 Q And do you have any understanding as who how 23 long this construction project will last? 24 A Well, typically, you know, two years, but I 25 heard a year and eight months today specifically. GREGORY COURT REPORTING SERVICE Packet Pg. 431 12.A.e 29 1 Q Now, with regard to whether or not CVS is 2 terminating or has terminated this lease, do any of 3 those cures that have been talked about have any impact 4 or influence on that? a 5 A No. 6 Q Would this lease have been terminated if 7 Collier County had not sued and taken land from this = O U 8 site? 0 9 MR. VICKERS: Objection. Calls for 0 U 10 speculation. 11 THE COURT: Overruled. 0 12 BY MR. BUELL: X 13 Q Daou understand myquestion? Y 14 If this loss had not happened, if there had a 15 been no taking from this site, did CVS intend to 16 terminate the lease? 0 17 A No. We would not be closing this store if not 0 18 for this taking. 19 Q Does CVS have other stores in Collier County? 20 A We do. m 21 Q And how many others are there, if you know? 0 22 A Fourteen other stores in addition to 7899. 23 Q And how many employees does CVS have in 24 Collier County? 25 A 260. GREGORY COURT REPORTING SERVICE Packet Pg.432 12.A.f I 1/28/2014 12.A. n EXECUTIVE SUMMARY • Recommendation to accept the jury award and Final Judgments in the eminent domain case styled Collier County v. RTG, LLC, et ab, Case No. 10-CA-00259, for the taking of cc Parcels 116FEE, 116TCE1, 116TCE2, and 116TCE3 for the intersection improvements at c US 951(Collier Blvd.)and US 41(Project No.60116).Fiscal Impact:$5,524,050.00. > U OBJECTIVE: To forego any appeal and accept the jury award to the property owner and the ; business owner as just compensation and business damages for the taking of Parcels 116FEE, Zs 116TCE1, 116TCE2,and 116TCE3. o U CONSIDERATIONS: Utilizing an experienced eminent domain firm, Collier County a) condemned Parcels 116Ehh., 116TCE1, 116TCE2,and 116TCE3 from RTG,LLC at an Order of Taking bearing held March 26, 2013. The parcels were necessary for the construction of the o intersection improvements at Collier Blvd. and US 41. The County previously deposited $878,600.00 into the Court Registry. V At mediation held on November 13, 2013,the parties were unsuccessful in coming to a mutual Q agreement as to the value of compensation and business damages.As a result,the parties went to E trial from January 6a'to January 10th. °' The property owner, RTG, LLC, originally claimed $4,178,200.00for the value of land and N damages,and the business owner,Holiday CVS,LLC,alleged a complete business wipeout with N damages of another $3,151,534.00. The owners' claims were based on the loss of 11 parking spaces closest to the front door of the store along Collier Boulevard. The County's experts ,c believed that the business and severance damages could be mitigated to a large degree by c relocating the front door of the store to the south side of the building. CVS disagreed and terminated their lease. u) w At the completion of trial, the jury returned a verdict within the range of expert testimony awarding $3,483,000.00 for RTG, LLC, the landowner, and $1,933,000.00 for Holiday CVS, LLC, the business owner. Statutory attorney's fees result in an additional $599,880.00 for the c landowner's attorney and $386,600.00 for CVS's attorney. The court retains jurisdiction to award supplemental attorney's fees and expert fees and costs, as well as any interest which accrues. E u) According to the analysis of an appeal by outside counsel,as attached hereto,there are numerous > grounds for appeal which could result in a reversal of the judgment and a new trial. However, S because the County is required to pay all fees and costs incurred and there is little incentive for settlement if the County threatens an appeal, outside counsel concludes that they do not w recommend an appeal of this judgment.See attached email for more details, r c m FISCAL IMPACT: Entry of the attached final judgments,deposits into the Court Registry and payments to the trust accounts of the two law firms pursuant to the provisions of the final as judgments amounts in a fiscal impact of$5,523,050.00. Source of funds is Road Impact Fee Fund(336). Packet Page-377- Packet Pg.433 12.A.f 1/28/2014 12.A. n COUNTY ATTORNEY DISCUSSION: The County's position was that CVS could have substantially reduced the impact of the taking by relocating the front door. CVS disagreed and terminated their lease, taking the position that the taking rendered their continued operations untenable. They are currently on a month to month lease with the landlord,pending the start of construction (which is scheduled to commence in the very near future). The best the County could hope for on appeal is a new trial. If CVS does indeed close their store,a retrial would not Cn unlikely reach a similar result. If CVS does not close their store,the matter could be revisited in • a non-eminent domain proceeding,wherein the County will not have to statutorily pay all of their legal fees and expert costs. -JAK RECOMMY0NDATION: That the Board accepts the jury award and Final Judgments. v Q1 Prepared by: Jeffrey A. Klatzkow, County Attorney; Emily R. Pepin, Assistant County c°� Attorney;and Kevin Hendricks,Right-of-way Acquisition Manager � N Attachments: N 1. January 13,2014 email from outside counsel 2. Final Judgment for compensation to RTG,LLC a; 3. Final Judgment for compensation to Holiday CVS,LLC el".6N 03 t6 1 � fC E a) d t4 Packet Page-378- • Packet Pg. 434 N. 12.A.f January 28, 2014 CHAIRMAN HENNING: I keep my word. a i- 73 Item #12A CZ DIRECTING THE COUNTY ATTORNEY TO ACCEPT THE JURY AWARD AND FINAL JUDGMENTS IN THE EMINENT DOMAIN CASE STYLED COLLIER COUNTY V. RTG, LLC, ET c AL., CASE NO. 10-CA-00259, FOR THE TAKING OF PARCELS 116FEE, 116TCE1, 116TCE2, AND 116TCE3 FOR THE .o INTERSECTION IMPROVEMENTS AT US 951 (COLLIER U BLVD) AND US 41 — APPROVEDcv Q MR. OCHS: Yes, sir. We have one more item on your regular agenda before communications this afternoon, sir. That's Item 12.A. That's a recommendation to direct County Attorney to accept the jury N award and final judgment in the eminent domain case styled Collier N County versus RTG Limited Liability Company. MR. KLATZKOW: I'm just trying to get my north and south. c CHAIRMAN HENNING: I'm getting dizzy. COMMISSIONER HILLER: Stop already. MR. KLATZKOW: This is the corner of-- CHAIRMAN HENNING: Your name for the record. 73 MR. KLATZKOW: Jeff Klatzkow, County Attorney for the record. g This is the corner of Tamiami Trail and 951. The taking w N occurred at what is presently the CVS Store. There were two primary takings: One was a fee taking which is W out there. And you can see the major impact it has on their parking t spaces. There was also a temporary construction easement which went 0 beyond that. Page 145 Packet Pg.435 12.A.f January 28, 2014 There was some dispute as to how many parking spots were lost, but approximately 11 or 12 would be lost. a CVS took the position that with the reduction in the parking ce spaces they could no longer operate at the site. They had a $392,000to per year rent for the building. It was a 20-year lease with four U five-year options. They testified at trial that they're gone, that they've given their notice and as soon as construction starts or shortly thereafter they'll be leaving. The property owner at CVS was seeking well in excess of$7 0 million. During the proceedings, the jury came back with N approximately $5.5 million award split between the landowner and a CVS. Above what we had offered, well below what they had been r asking for. Which is typical in these proceedings. It's my recommendation that the county not appeal. And that our o theory of the case was that they could relocate the door and stay in N business. If indeed that they stay in business, I'll be coming back here with some different proposals. If they do go out there, then they negatively impacted by our taking. -, And I'm open to any questions. CHAIRMAN HENNING: Questions by the Board? 0 (No response.) 0 CHAIRMAN HENNING: I have one question. Did the landowner represent that the building is no longer useful? ? MR. KLATZKOW: I do not believe that they represented that it was no longer usable, but it was certainly no longer usable for that purpose and there's no replacement tenant in site. x CHAIRMAN HENNING: Entertain a motion. w COMMISSIONER FIALA: Motion to approve. c CHAIRMAN HENNING: Motion to approve staffs 0 recommendation? a Page 146 LPacket Pg. 436 [ 12.A.f I January 28, 2014 COMMISSIONER FIALA: Yes, sir. CHAIRMAN HENNING: Is there a second to the motion? COMMISSIONER NANCE: Second. CHAIRMAN HENNING: Discussion on the motion? 0 U (No response.) ;