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HomeMy WebLinkAbout1991 - Settlement Agreement - Atty Opinion• E FxEsE, FAhEACE, NASH & TORPY, P. A. ATTORNEYS AT LAW GARY B. FRESEt .TAMES H. FALLACE C HAR7,ES TAN NASH* VINCENT G. TORPY, JR- RICHARD RRICHARD E. ToRPY GREGORY S. HANSEN J. PATRICK ANDERSON LAURA L. ANDERSON WILLIAM Ai GRIMM OF COUNSEL October 28, 1991 Via Hand Delivery Robert S. McClary City Manager City of Sebastian P.O. Box 780127 Sebastian, FL 32978-0127 930 S. HARBOR CITY BLVD. SUITE 505 MELBOURNE. FLORIDA 32901 (407) 984-3300 FAX (407) 951-3741 t BOARD CERTIFIED IN TAXATION BOARD CERTIFIED IN ESTATE PLANNING AND PRODATE Re: General Development Corporation Settlement Agreement Our File No. 90-5496 Dear Robb: At your request, I have reviewed the proposed settlement agreement offered by General Development Corporation. The following are areas I believe need to be addressed. 1. Most importantly, none of the exhibits that are referenced in the agreement are attached to the settlement agreement. As a result, much of the substance of this agreement is absent. The settlement agreement should have all exhibits attached. Further, the entire settlement agreement should be under one staple and should be paginated so as to include all exhibits. 2. There are three primary requirements that GDC is imposing in connecticn With the convevance of certain parcels of property to the City. a. The City must irrevocably and unconditionally release GDC from all obligations that they currently have to the City. This includes release of bonds and, arguably would include release of obligations that GDC may have for parcels that have not been conveyed to the City. Although I believe this is the City's intention, it must be made quite clear that any parcels not conveyed, will be subject to regulations of the City as to development for any future intentions of GDC. b. The agreement also requires Sebastian to withdraw, or file notice of satisfaction, for all proofs of claim filed. 9 Robert S. McClary City of Sebastian October 28, 1991 Page -2- c. The agreement requires the City of Sebastian to assume maintenance and construction responsibilities included within the GDC obligations. This provision is troublesome due to the fact that the "GDC obligations" are not attached as an exhibit and I am not sure what these are. 3. Subsection 3, pertaining to "title", requires the City of Sebastian to take these parcels subject to several conditions. Each of these conditions must be considered due to the fact that a couple of them are inconsistent with the Citv's intention. Specifically, paragraphs 3 (a) , 3 (c) , 3 (d) and 3 (e) all could result in the City of Sebastian taking this property subject to prior conditions which may have been imposed or caused by General Development Corporation. Title searches should be done at the expense of General Development Corporation, to insure what is being conveyed. 4. Subsection 4 of the agreement is of great concern, it imposes a duty on the City of Sebastian to procure a title commitment policy within ten days from the date this agreement is executed. Further, it imposes a further duty on the City of Sebastian to object to any encumbrances or defects in title, which appear on such title policy, within ten days from the receipt of such commitment. The remaining text of subsection 4 allows General Development Corporation to completely absolve itself of all responsibility for any title defects if the City of Sebastian fails to act within the time period specified in this section. Further, this section also permits General Development Corporation, with the approval of Sebastian, to substitute property located in Port Charlotte County in the event there are title defects in property within Sebastian. I believe the drafting of subsection 4 is prime for litigation. It imposes several duties upon the City of Sebastian, and provides several exculpatory phrases which would benefit General Development Corporation. I believe it was the clear intent of Council that all transfers of property will be done at GDC's expense. Further, I believe it was the intent of Council that GDC would guarantee that all property would be conveyed in fee simple, free from defects in title and encumbrances. Therefore, subsection 4 should be completely rewritten so as to evidence the intents of Council. 5. Subsection 5 is totally inconsistent with the terms of the City's July 24th letter. This section specifically gives GDC the right to develop units 16 and 17 at any time in the future, under the development of restrictions that existed when these units were originally platted, or which were in i Robert S. McClary City of Sebastian October 28, 1991 Page -3- effect at the time of the 1979 agreement. Further, this section states that even if GDC has to replat these units, they will still only be subject to the development requirements in existence when they were originally platted. This provision is 100% inconsistent with the City's letter which specifically requires that GDC meet all new land development restrictions with regard to future development. Furthermore, the City's July 24th letter requires unit 16 to be replatted so as to include a realigned public street. There is no reference to this replatting within paragraph 5. Also, there is no reference to a specific replatting of unit 17, as required by the City's July 24th letter. 6. GDC has agreed to quit -claim an assignment of their easement on Shiloh Ranch property and the Boy Scouts of America property. This provision is simply a quit -claim assignment which only conveys to the City the interest which GDC holds. If this is consistent with the City's intentions, this provision is provided in the contract. 7. Paragraph 7 of the agreement provides that GDC will pay all outstanding ad valorem real property taxes, interest payments and penalties with respect to the GDC conveyance parcels. This provision is slightly inconsistent with paragraphs 3 of the agreement which seems to state that the City will be responsible for certain ad valorem taxes, (specifically 1991) and other potential defects in title. 8. Paragraph 8 specifically sets the groundwork so that the City is acknowledging that they are sophisticated in the purchase of real estate and that GDC has no obligations to the City other than those which are specifically stated within the four corners of the agreement. The City must be careful in acquiring these properties, especially when considering problems with abatement of potentially environmentally hazardous materials. Under the terms of this agreement, if, after acquisition of the property, the City learns that there has been contamination to the property which GDC has conveyed, the City's ability to seek recovery from GDC for any expense incurred eliminated. Therefore, I highly recommend that GDC be required to make some type of warranty with regard to these issues due to the fact that it is impractical to do studies of this land to determine any hidden defects which may be present. It must be understood that this agreement is specifically attempting to allow GDC to walk away from these lands without 0 0 Robert S. McClary City of Sebastian October 28, 1991 Page -4- any further obligations, irrespective of title problems or any other defects which may exist. 9. Paragraph 11 is completely inconsistent with the July 24th letter. It specifically requires that the City shall be responsible for payment of all closing costs in connection with the transfer of the property. The July 24th agreement requires that these expenses be borne by General Development Corporation. 10. The closing of this agreement is to occur in Miami at GDC's law office. I'm not sure if this is acceptable, you just need to be aware of it. 11. Paragraph 17(d) should be amended so as to eliminate the following sentence. "All of the parties to this agreement have participated fully in the negotiation and preparation hereof, and, accordingly, this agreement shall not be more strictly construed against any one of the parties hereto. 12. Paragraph 17(f) should be amended to add in the last line, "attorneys fees and court costs at all pre-trial, trial and appellate levels". 13. Paragraph 17(i) should be eliminated. Until I have all of the attachments which are referenced within the agreement, I am unsure as to whether this agreement conveys the parcels that are required by the July 24th letter. Further, these attachments may include other provisions which I find inconsistent with the July 24th agreement. Therefore, before the City commits to any tentative acceptance of this agreement, all attachments must be attached and the entire agreement must be in tact for review. If you have any questions regarding this matter, please let me know. Sincerely, FRESE, FALLACE, NASH & TORPY, P.A. Richard E. Torpy RET/lbg cc: Charles Ian Nash