David Duval Losing $12m Mansion, More than a year after the case was arbitrated, the general contractor of the Berkman Plaza II Downtown riverfront condo project has been awarded $12.4 million against the developer for nonpayment and breach of contract, giving the company several options to collect, including to foreclose on the property.
Choate Construction Co. General Counsel Shawn Allen said he could not comment on what options the Georgia-based contractor was pursuing to obtain the judgment amount, but the judgment does include a construction lien against the developer.
“We will take whatever legal means to effect on the judgment,” he said.
The Choate case, resolved April 4, is one of many involving the riverfront condominium project at 500 E. Bay St. Construction abruptly stopped on the project in December 2007 when the parking garage collapsed while concrete was being poured on the sixth floor, killing one worker and injuring 23 others. Work on the 23-story high-rise has never restarted and the building remains a shell.
Boyd & Jenerette PA Partner Elizabeth Howard said the Berkman Plaza II cases are extremely complex because of their numbers and because they involve different attorneys, different judges and were litigated in different courts.
“In Jacksonville, as far as a construction project goes, this is about as complicated as it gets,” said Howard, who was not involved with any of the lawsuits.
The cases also involve a number of different companies, including not only Choate and the developer, Berkman Plaza 2 LLC, but also six subcontractors – Southern Pan Services Co., Universal Engineering Sciences Inc., Infinity Reinforcing Inc., PTE Strand Company Inc., A.A. Pittman and Sons Concrete Company Inc. and Harsco Corp. dba Patent Construction Systems.
Nearly five years after the collapse, most of the other cases have finally reached some sort of resolution as well.
The family of Willie Edwards III, the Southern Pan employee who was killed in the parking garage collapse, reached a settlement agreement with the developer, general contractor and six subcontractors in March. The gross negligence lawsuit, which also included as plaintiffs 11 employees injured in the accident, stated that the agents and employees of the defendant companies deliberately poured concrete onto a structure that had inadequate support, which caused the garage to collapse. Details of the settlement were not released, but the counts against Universal Engineering Sciences and PTE Strand were dismissed with prejudice. The suit was filed in Fulton County, Ga., in March 2010.
Four out of the six subcontractors named as defendants in the 2009 suit that Berkman Plaza 2 LLC filed – Universal Engineering Sciences, Harsco Corp. dba Patent Construction Systems, Infinity Reinforcing and PTE Strand – have been dismissed with prejudice. In March, the judge ruled in favor of the other two – Southern Pan and A.A. Pittman and Sons – in granting a summary judgment. The suit, which was filed in Duval County, stated that the defendants’ negligence was worth well in excess of $36 million.
David Berkman, an equity holder in Berkman Plaza 2 and the namesake of the project, settled in January with Wells Fargo NA and BBVA Compass Bank relating to several lawsuits. The settlement agreement notice, filed in the U.S. District Court Northern District of Georgia, states that the settlement is complex and involves multiple lenders, borrowers and real estate properties throughout the Southeast. Among the suits that Berkman was involved in was one in 2010 in which Wells Fargo sued for breach of contract and fraudulent transfer. The suit states that Berkman transferred $23 million from his personal account into a related limited liability company that the suit said was created to shield his personal assets from the legal claims of lenders. The suit also said that Berkman borrowed $53.8 million in 2007, of which he still owed $14 million and was in default.
Southern Pan Services has appealed a judge’s ruling relating to a citation that the Occupational Safety and Health Review Commission upheld. The Occupational Safety and Health Administration issued citations in 2007 against Choate and several of the subcontractors involved in the project, but eventually reached a settlement with all the parties in which the agency noted that none of their actions caused the parking garage collapse. Southern Pan Services appealed the OSHA citations to the OSHRC, which is an independent organization. The OSHRC judge ruled in the company’s favor for three of the four citations. The appeal to the full commission on the fourth citation is still pending.
Unlike many other construction cases involving deaths, the Berkman Plaza II project was never completed. Howard said OSHA initially stopped the project during its investigation, and by the time that cleared, the economy had plunged into a deep recession, a number of the lawsuits had been filed and many of the companies involved said they had not been paid for their work.
Even with the resolution of many of the legal issues surrounding the project, it is not yet clear who will ultimately own the property and what, if anything, will be developed there.
Charles Jimerson, a partner at the Jacksonville law firm Jimerson & Cobb PA, said there are still a lot of variables relating to the property, but the credit market’s loosening and the real estate market’s slow improvement could help speed up any type of resolution with the property itself.
“Whoever takes this property has a mess on their hands,” said Jimerson, who was not involved with any of the litigation involving the Berkman Plaza II project. “That building is a blight on Downtown Jacksonville.”