Alan Rose and Gregory Weiss with Mrachek Law in West Palm Beach (Melanie Bell)
Details: In 2005, Robert Abruzzo of Delray Beach purchased a restaurant-bar business from Phil Cacciatore, who owned the business since 1992 when he obtained a 30-year lease to operate it in the Palm Beach Gardens Embassy Suites hotel.
Abruzzo invested $1.7 million in renovation work.
The landlord, Palm Beach Florida Hotel and Office Building LP, and the property manager, Ashford TRS Lessee II LLC, resisted Abruzzo’s takeover of the business on grounds he was not experienced in the restaurant business and did not have sufficient financing.
Case: Palm Beach Florida Hotel and Office Building, Ashford TRS Lessee II v. Nantucket Enterprises
Case no: 502008CA039646
Description: Contract and debt
Filing date: Dec. 11, 2008
Trial dates: June 30-July 3, 2014
Judge: Palm Beach Circuit Judge Meenu Sasser
Plaintiffs attorney: Timothy Schulz, Timothy W. Schulz P.A., West Palm Beach
Defense attorneys: Alan Rose and Gregory Weiss, Mrachek Fitzgerald Rose Konopka Thomas & Weiss, West Palm Beach
Verdict amount: $10.8 million for the defense
Abruzzo took over in 2006, but over the next two years there were extensive interruptions in the food and beverage service to hotel customers. In November 2008, the landlord locked out Abruzzo, claiming a breach of the lease.
The landlord and property manager filed a lawsuit against Abruzzo’s company, Nantucket Enterprises Inc.
Then Nantucket filed a counterclaim against the landlord and a third-party lawsuit for wrongful eviction against the landlord’s holding company, Dallas-based Ashford Hospitality Trust. Nantucket also sued the hotel manager’s holding company, Dallas-based Remington Lodging & Hospitality LLC.
The judge entered a directed verdict before trial on Nantucket’s wrongful eviction claim because state law requires a court order, and no order was obtained.
Plaintiffs case: The jury was asked who was at fault for breach of the lease and to consider damages.
Schulz said Abruzzo conducted renovations without obtaining Palm Beach County permits. When the restaurant was functioning, it was open without a permanent certificate of occupancy. The county was so frustrated with Abruzzo that it shut down the restaurant, Schulz said.
“Embassy Suites had in its own building … a food and beverage operation that was operating against the law,” Schulz said during closing arguments.
He contested all of Abruzzo’s claims for damages, citing a lack of records to document them.
“What information was provided in evidence about the real damages? Basically I’ll characterize it as Mr. Abruzzo has said take my word for it, folks,” Schulz argued.
He said questions about the financial viability of the restaurant and circumstances that would put the lease in default created an issue about how long Abruzzo might remain in the hotel.
Schulz argued no damages were warranted against the landlord and hotel management based on the circumstances and the evidence.
He told jurors Abruzzo’s business accumulated federal and state tax liens during the short time he was in business. Had the hotel known of the liens, Nantucket would have been in default on the lease.
Defense case: Weiss explained the lease called for automatic renewal of two five-year terms at the tenant’s option. That set a minimum period for a lease that was written to keep Abruzzo’s business in place as far out as 2022.
He recalled the testimony of Doug Wise, the Palm Beach County building director, who said he was prepared to issue a certificate of occupancy the day Abruzzo was locked out by the landlord.
Weiss calculated damages according to how long jurors might believe Abruzzo would have remained a tenant, setting a range of $8.8 million to $13.7 million.
He asked jurors to consider the costs of the stock purchase, renovation, catering contracts, inventory and room service. This was testimony provided by Nantucket’s expert witness Richard Lackey, a Palm Beach Gardens restaurant broker.
Outcome: The jury found the landlord and third-party defendants breached the contract. It awarded Nantucket $8.8 million for wrongful eviction and $2 million for conversion. The conversion figure included the restaurant operator investment in the renovation.
Comments: “Remington’s general counsel drafted the lease, was one of the decision makers that decided to kick Nantucket out of the space. Ashford and Remington accepted the risk of the consequences of the actions they took. They didn’t do it unknowingly, and neither did they do it out of spite, out of hate or out of prejudice. They did it as a cold and calculated business decision,” Weiss said.
Post-verdict: No post-verdict motions have been filed. Weiss plans to request a final judgment.