Glen H. Waldman (Melanie Bell)
Details: In April 2010, Pittsburgh-based American Bridge Co., through its Tampa division, submitted a bid package to Miami-based Gencom Group, which was seeking proposals for construction of a marina at a Ritz-Carlton resort hotel planned on Rose Island in the Bahamas.
Three months later, Gencom and RC Rose Island Hotel Co. Ltd., the Bahamian company created by the developers, sent a letter of intent to American Bridge, identifying various joint venture partners. Among them were Gencom, Ritz-Carlton and Lehman Brothers.
Case: American Bridge Bahamas v. Ritz-Carlton Hotel, Marriott International, Gencom Group, Gencom Asset Management
Case no: 11-34830-CA
Description: Enforceability of judgment, fraudulent misrepresentation
Filing Date: Oct. 21, 2011
Judge: Miami-Dade Circuit Judge Marc Schumacher
Plaintiff attorney: Glen H. Waldman and Eleanor Barnett, Heller Waldman, Miami
Defense attorney: Loren Fender and Jeffrey B. Shapiro, Arnstein & Lehr, Miami; E. Colin Thompson, DLA Piper, Miami
Verdict amount: $20.6 million
A Marriott representative was copied on the letter, and a Marriott vice president later contacted American Bridge and indicated interest in supplementing the project.
American Bridge proceeded with discussions in the belief that the hotel venture included Marriott, Lehman Brothers and Gencom, among others.
American Bridge signed a $32.5 million contract in September 2007 to build a 300-slip marina. Construction began that fall, but payments were suspended in July 2008 even though American Bridge understood the project would not be completed until summer 2009.
In June 2011, American Bridge received a judgment in the Supreme Court Common Law and Equity Division in the Bahamas for more almost $7.6 million against the Bahamian entity.
American Bridge then filed suit in Miami to enforce the judgment and seek other damages.
Plaintiffs case: American Bridge built its case on the email traffic, correspondence and witnesses who were party to the negotiations during and after the contract.
The company alleged fraudulent misrepresentation in two areas. First, the company claimed it was induced to perform when the defendants knew they did not have enough financing in place to complete the project. Second, the defendants lied to the plaintiff about the availability of future financing when it became clear funding was depleted to induce American Bridge to complete the job, said plaintiffs attorney Glen Waldman.
“There was a tremendous amount of email traffic back and forth between the parties, between Gencom and Marriott about the fact they didn’t have money, about the fact they were acting as joint venture partners,” Waldman said.
Waldman acknowledged the parties never formalized the joint venture. That’s why it was essential to bring in evidence about the contract and correspondence from the negotiations to establish the elements of a joint venture as defined by law, he said.
The key witnesses for American Bridge were Richard Kermode, then a senior vice president, and Wubbo “Bob” Wind, the manager of estimating and pre-construction.
An essential component of the case was to establish that actions of the defendants met the five elements to prove the existence of a joint venture. These included a community of interest in the performance of a common purpose, joint control, joint ownership interests, profit sharing and a duty to share in the losses.
In addition, the plaintiff needed to prove employees of the defendants were involved in day-to-day operations of the project. Evidence was offered about participation in weekly design conference calls and input on design decisions.
The minutes of RC Rose Island Hotel quarterly partnership meetings were submitted showing defendants made decisions affecting concept, design and construction.
Defense case: The defense attorneys did not respond to requests for comment by deadline.
The defendants relied on two arguments. First, they claimed the only potentially liable party was the Bahamian company they created, RC Rose Island Hotel. Second, they asserted there was no joint venture agreement between them.
Outcome: The jury worked through a 19-page verdict form and found Marriott and Gencom participated in a joint venture and Ritz-Carlton was an agent. The Bahamian judgment was within the scope of the joint venture, but the corporate veil was not pierced, leaving only the Bahamian company liable.
Gencom fraudulently misrepresented the project, and again fraudulently misrepresented the available financing a year later. The jury said Gencom was 100 percent at fault for negligent misrepresentation, and Gencom and Marriott conspired to misrepresent the facts.
The Gencom companies were liable for more than $4 million in economic damages. Marriott was liable for almost $1.4 million for fraudulent inducement on the contract. Marriott and Gencom were liable for another $7.5 million in punitive damages for fraudulent misrepresentation.
Comments: “The $32 million was supposed to run through June or so of 2009. They knew in October 2008 they only had enough money to get through June of 2008. Then they told us they had gotten additional money to fund through the end,” Waldman said.
Post-verdict: A hearing is set July 8 to consider motions for a new trial and final judgment.