Beruflich Dokumente
Kultur Dokumente
Plaintiffs,
v.
Defendant.
_________________________________________/
Corporation move pursuant to Florida Rule of Civil Procedure 1.610 on an emergency basis to
preliminarily enjoin Defendant City of Miami (City) and for a standstill order to preserve the
status quo until the Court has resolved the merits of Plaintiffs claims.
PRELIMINARY STATEMENT
The Citys recent public repudiation of its agreements with Flagstone for the
development of a mixed-use waterfront project will cripple Flagstones property rights and
unsupportable, so much so that the Citys own staff and lawyers tasked with coordinating the
development repeatedly confirmed that Flagstone remains in complete compliance with those
agreements. Flagstone will succeed on the merits of its claims in establishing that it never
Museum Tower 150 West Flagler Street, Suite 2200 Miami, FL 33130 (305) 789-3200
Case No.: 2017-013829-CA-01 (44)
defaulted, and furthermore, that the City breached and repudiated its obligations, to Flagstones
considerable detriment.
But in the interim, because of the Notice of Default, the State could withdraw land use
modifications without which Flagstone has no development or property rights; the City could
revoke Flagstones certification to use and develop its marina leasehold; the City threatens to
retake the entire property and all of its improvements; and Flagstones financing, investment and
development partners have and are backing out; all while development deadlines tick away with
Flagstone, through no fault of its own, unable to proceed with the project. Even after Flagstone
proves its compliance with every term of its agreements, and it will, Flagstone will have suffered
the diminishment or erasure of its property rightswithout the availability of any retroactive
recourse. Flagstone therefore seeks limited, preliminary injunctive relief to preserve the status
FACTUAL BACKGROUND
dispute. Flagstone verifies the following facts for purposes of this Motion, as provided in the
As more particularly described in the Deed, the Board of Trustees conveyed to the City
certain lands on which the Project is located. The Deed contained certain restrictions. In
December 2000, the City Commission authorized the RFP for development of the Project.
Solicited by the City, Flagstone submitted the Island Gardens Proposal in response to the RFP.
After conducting its technical review and evaluation process, by near-unanimous vote, the Citys
1
Capitalized terms not defined herein have the meanings ascribed to them in Flagstones
Complaint.
2
Museum Tower 150 West Flagler Street, Suite 2200 Miami, FL 33130 (305) 789-3200
Case No.: 2017-013829-CA-01 (44)
Selection Committee selected Flagstone as the developer for the Project. In November 2001, the
Island Gardens Proposal was soundly approved by voter Referendum. Flagstones Island
Gardens Proposal was approved by the City Commission by resolution. The Project consists of a
mixed-use development with a mega-yacht marina, luxury retail facilities, two hotels, fractional
Pursuant to a City Commission resolution, the City and Flagstone entered into the
Amended Agreement to Enter, dated as of February 1, 2010, which among other things, allows
for the phasing of the Project on a component-by-component basis: Phase 1 the Marina
Hotel 2 Component. Ex. A to Bayraktar Decl. The City also approved the form of Amended
On June 2, 2014, the Board of Trustees and the City amended and restated the Partial
Modification of Restrictions, which modifies certain restrictions in the Deed, on the terms set
forth in the Second Partial Modification. Ex. C to Bayraktar Decl. On May 30, 2014, the City
and Flagstone entered into the Marina Lease. Id. at Ex. D. On May 31, 2014, the City and
Flagstone entered into the Compliance Agreement. Id. at Ex. E. On March 20, 2015, the City,
Agreement (SNDA) with respect to the Marina Lease. Id. at Ex. F. On August 31, 2016, the
City and Flagstone entered into the Retail/Parking Lease. Id. at Ex. G.
The Agreements generally state the parties rights and obligations with respect to the
Project, and provide for interlocking development and construction deadlines. Further, certain
defaults under the Amended Agreement to Enter permit the termination of the other interrelated
Agreements.
Museum Tower 150 West Flagler Street, Suite 2200 Miami, FL 33130 (305) 789-3200
Case No.: 2017-013829-CA-01 (44)
Flagstone has met every contractual obligation required of it under the Agreements.
Flagstone has adhered to the required timeline with respect to the Project. This included
construction of the Marina Component at a cost of over $52 million. The Marina is operational,
Flagstone is not in default with respect to any of the Agreements. The City, through its
elected officials and professional staff, consistently and publically confirmed Flagstones full
compliance with all of the relevant Agreements throughout the course of the Projects
development and construction. Ex. H thru L to Bayraktar Decl. The City, including through the
City Managers office, City Attorneys office and various City departments, repeatedly reiterated
that position in standing weekly Project-coordination meetings with Flagstone during the past
three years. As recently as May 26, 2017, the City Manager publicly stated that he would
Nevertheless, on May 30, 2017, the City Commission issued the Default Resolution
directing the City Manager (despite his contrary conclusion) to issue a notice of default to
Flagstone for failure to timely begin construction of the Retail/Parking Component and for
failure to obtain financing under the Amended Agreement to Enter. Ex. M. to Bayraktar Decl.
On June 10, 2017, the City Manager delivered to Flagstone the defective Notice of Default, dated
June 7, 2017, referencing the Default Resolution, sections 6.1.2 and 12.1.12 of the Agreement to
Flagstone obtained the Phased Foundation Permit for the Retail/Parking Component on
Museum Tower 150 West Flagler Street, Suite 2200 Miami, FL 33130 (305) 789-3200
Case No.: 2017-013829-CA-01 (44)
with development and construction of the Retail/Parking Component, between June 2015 and
April 2017, Flagstone obtained a series of permits and approvals from various state and local
agencies:
On February 25, 2016, and on March 21, 2016, Flagstone obtained Miami-Dade
WASA water relocation permits.
On February 28, 2017, the private provider for the Project selected by the City
conducted an inspection whereby Flagstone received approval of all foundation
work completed to date under the Retail/Parking Component.
On April 26, 2017, Flagstone obtained preliminary approval of the City of Miami
Public Works Permit for a non-material public works permit, and the City of
Miami Public Works issued the final permit.
During that time and with those permits and approvals, construction continued apace. Also
during that time, the Phased Foundation Permit temporarily lapsed necessitating the issuance of a
new Phased Foundation Permit; Flagstone used good faith efforts to reinstate the Phased
Foundation Permit; and a new Phased Foundation Permit was issued by the City on May 4, 2017.
5
Museum Tower 150 West Flagler Street, Suite 2200 Miami, FL 33130 (305) 789-3200
Case No.: 2017-013829-CA-01 (44)
With respect to both the Marina Component and Retail/Parking Component, and with
respect to both the Marina Lease and Retail/Parking Lease, Flagstone had no need to obtain, and
therefore did not obtain, an Initial Construction Loan (as defined by the Agreements). Instead,
Flagstone initially self-financed with respect to both the Marina Component and Retail/Parking
Component and with respect to both the Marina Lease and Retail/Parking Lease. In connection
with both the Marina Lease and the Retail/Parking Lease, Flagstone provided the City an
affidavit attesting that: (1) there was no Construction Loan for the development of the relevant
Component; (2) Flagstone and its affiliates were funding the complete development and
construction of the relevant Component; and (3) Flagstone and its affiliates have sufficient funds
to finance the complete development and construction of the relevant Component. Ex. O & P to
Bayraktar Decl. The City accepted in writing those financing affidavits and Flagstones self-
financing of the development and construction of the Marina Component and the Retail/Parking
Component. Id. at Ex. Q. The City and Flagstone then entered into both the Marina Lease and
Under the various Agreements, Flagstone has development rights with respect to the
Project and has leasehold rights to occupy, use, and maintain the Land. In connection with the
supposed Default, the City has repeatedly indicated that it will be terminating the Agreements,
halting the Project, and retaking the Land. Ex. R & S to Bayraktar Decl. Regardless,
Flagstones relationships and contracts with third parties (which permit Flagstone to proceed
with the development and construction of the Project) have already been disrupted as a result of
the uncertainty surrounding the Citys repudiation of the Agreements. Id. at Ex. T.
Museum Tower 150 West Flagler Street, Suite 2200 Miami, FL 33130 (305) 789-3200
Case No.: 2017-013829-CA-01 (44)
occupancy with respect to the Marina Component. Ex. T to Bayraktar Decl. That temporary
certificate of occupancy is set to expire of its own accord on June 30, 2017. Id. With completion
and approval of a single construction itemextension of a sewer line and connection to a water
completed that construction item. Flagstone intended to complete that construction item within
the required timeframe. However, the City refused to process Flagstones permits required to
obtain the permanent certificate. In fact, the City has indicated that it will no longer process any
of Flagstones requests for permits and approvals, thereby preventing Flagstone from obtaining
Agreement to Enter, Marina Lease, and Retail/Parking Lease, during the six month period of
January 1, 2017 through June 1, 2017, Flagstone delivered to the City six monthly payments of
Rent totaling $570,000, and six monthly payments for remittance to the State totaling $85,500.
Ex. X & Y to Bayraktar Decl. Under the Compliance Agreement and Second Partial
Modification, the City is required, on or before July 1, 2017, to remit a semi-annual payment to
the State of that six-month $85,500 aggregate of Flagstones payments. However, Flagstone
understands that the City does not intend to remit that payment.
LEGAL STANDARD
Flagstone easily satisfies the test for issuance of a temporary injunction: [1] a substantial
likelihood of success on the merits; [2] lack of an adequate remedy at law; [3] irreparable harm
absent the entry of an injunction; and [4] that injunctive relief will serve the public interest.
Museum Tower 150 West Flagler Street, Suite 2200 Miami, FL 33130 (305) 789-3200
Case No.: 2017-013829-CA-01 (44)
Liberty Counsel v. Fla. Bar Bd. Of Governors, 12 So. 3d 183, 186 n.7 (Fla. 2009) (quoting
Reform Party of Fla. v. Black, 885 So. 2d 303, 305 (Fla. 2004)); Ryan v. Lobo De Gonzalez, 921
So. 2d 572, 579 (Fla. 2005); Charlotte Cty. v. Grant Med. Transp., Inc., 68 So. 3d 920, 922 (Fla.
2d DCA 2011); Dania Jai Alai Intl, Inc. v. Murua, 375 So. 2d 57, 58 (Fla. 4th DCA 1979). A
trial court may exercise broad discretion in granting injunctions and [an appellate court] will not
disturb the trial courts decision unless a clear abuse of discretion is demonstrated. U.S. 1 Office
Corp. v. Falls Home Furnishings, Inc., 655 So. 2d 209, 210 (Fla. 3d DCA 1995) (citing Wise v.
ARGUMENT
Flagstone requires preliminary injunctive relief to maintain the status quo and to protect
its rights while the Court adjudicates Flagstones claims. Without such relief, Flagstone will
suffer significant irreparable damage to its leasehold and development rights. Specifically, if the
City is not made to remit its semi-annual payment by July 1, the State can unilaterally revoke
Flagstones Deed modifications that provide Flagstone its leasehold interest and ability to use the
Land. Likewise, Flagstone will suffer the unrecoverable loss of its leasehold rights, even when it
ultimately succeeds on its claims, if the City is permitted to terminate Flagstones certificate of
occupancy pursuant to the Citys invalid Notice of Default. Absent the Courts protection of
Flagstones status quo use of the Land and a pause in the Project development deadlines,
Flagstones property rights will be significantly diminished (if not extinguished) while the Notice
of Default is pending as (a) Flagstone is effectively unable to develop and construct the Project
and (b) the City will proceed to exercise its purported right to retake the Land and its
improvements.
Museum Tower 150 West Flagler Street, Suite 2200 Miami, FL 33130 (305) 789-3200
Case No.: 2017-013829-CA-01 (44)
Thus, Flagstone requests that the Court: (1) direct the City to remit to the State on or
before July 1, 2017 the payments already made by Flagstone, as required under the Compliance
Agreement and the Second Partial Modification, and to continue to remit semi-annually
Flagstones payments pursuant to those agreements; (2) enjoin the City from revoking
Flagstones temporary certificate of occupancy with respect to the Marina Component, and either
require the City to extend that temporary certificate of occupancy during the pendency of this
litigation or to issue Flagstone all ancillary permits and to grant Flagstone a final certificate of
occupancy; (3) preserve the status quo with respect to the Land and the Project by (a) preventing
the City from altering Flagstones leasehold interests and use of the Land during the pendency of
this suit; (b) preventing the City from interfering with Flagstones collection of rents and
payments and from undertaking its day-to-day operations on the Marina during the pendency of
this suit; and (c) suspending and extending all deadlines under the Agreements and with respect
to the Project during the pendency of this suit; and (4) direct Flagstone to deposit monthly in an
escrow account during the pendency of the case the payments that it owes to the City in the
regular course per the Agreements. To protect the City and further preserve the status quo, the
Court should direct Flagstone to deposit monthly in an escrow account during the pendency of
the case the payments that it owes to the City in the regular course per the Agreements.
Under both the Compliance Agreement and the Second Partial Modification, the City is
required to remit the semi-annual payment on July 1, 2017 to the State regardless of whether the
City had a valid basis to notice an event of default by Flagstone (it did not).
Museum Tower 150 West Flagler Street, Suite 2200 Miami, FL 33130 (305) 789-3200
Case No.: 2017-013829-CA-01 (44)
No party disputes that both the Compliance Agreement (between the City and Flagstone)
and the Second Partial Modification (between the City and the Board of Trustees) are valid and
enforceable agreements. Section 2(a) of the Compliance Agreement provides that Flagstone
shall pay monthly to the City fifteen percent of its total gross rental payments due under the
Amended Agreement to Enter and Marina Lease (as applicable). Section 2(a) of the Compliance
Agreement and the Second Partial Modification then requires the City to remit, on a semi-annual
Flagstone fails to make the requisite payments under section 2; or (b) a Ground Lease is
terminated and there is no other valid and active Ground Lease. Id. at 3(a) and (b). Likewise,
the City will be in default of the Second Partial Modification if: (1) it fails to remit the semi-
annual payments to the Board of Trustees; or (2) a Ground Lease is terminated and there is no
Flagstone has made all required payments pursuant to the Compliance Agreement via
monthly checkson January 1, 2017 through June 1, 2017. Ex. Y to Bayraktar Decl. And even
if the Citys Notice of Default with respect to the Retail/Parking Lease was valid (it is not) and
such Notice effectively terminated the Lease (it did not)the Marina Lease remains in full force
and effect. Therefore, the City has no right to abandon its obligations under the Compliance
Agreement and the Second Partial Modification. The Citys semi-annual payment to the Board
of Trustees is due by or before July 1, 2017. Without any legal justification, the City has made
clear its intention to breach the Compliance Agreement and Second Partial Modification and not
10
Museum Tower 150 West Flagler Street, Suite 2200 Miami, FL 33130 (305) 789-3200
Case No.: 2017-013829-CA-01 (44)
To be clear: Flagstone has paid the City in full; the City is required to remit that
payment, which it has in hand, to the Board of Trustees. Flagstone is simply asking the Court to
require the City to remit a payment the City is contractually obligated to make, using money it
already has. In addition, Flagstone asks that the Court preserve the parties rights by directing
Flagstone to put in escrow all future payments it owes to the City in the normal course, and to
have the City make all required payments to the State out of such escrow, for the remainder of
this case.
Flagstone has fully complied with all of its duties and obligations under the Agreements.
The City has nevertheless repudiated the Agreements by falsely asserting an Event of
Flagstones Default through the Default Resolution and the Notice of Default. The Notice of
Default declares a default under the Amended Agreement to Enter and the Retail/Parking Lease
by reference to two discrete issues: starting construction with respect to the Retail/Parking
Component, and financing conditions prior to entry into the Retail/Parking Lease. Flagstone will
succeed on the merits of its claims in establishing that it has not defaulted with respect to either
issue.
deadline (the stated deadline of April 30, 2017 being a Sunday) to Start Construction of both the
Retail/Parking Components. The Retail/Parking Lease, including at section 1.5(n) and Revised
Exhibit A to Composite Attachment 3, defines Start Construction to mean that all material
plans and permits are approved and issued and the actual act of physical construction has begun.
Section 6.1.13(b) of the Amended Agreement to Enter further provides, in relevant part:
11
Museum Tower 150 West Flagler Street, Suite 2200 Miami, FL 33130 (305) 789-3200
Case No.: 2017-013829-CA-01 (44)
Flagstone shall ... (ii) apply to the City for Foundation Permits and commence site
utility relocation work by such time period as necessary to begin such site utility
work for the applicable Major Project Components, (iii) obtain and provide any
other necessary governmental approvals for commencement of construction for
the applicable Major Project Component(s), and (iv) continue to use good faith
efforts to keep active and in full force and effect such FDOT Approvals, City
Approvals, Foundation Permits, other necessary governmental approvals ... .
Should any of the FDOT Approvals, the City Approvals, the Foundation Permits,
the Miami- Dade County Class I Permit for the Marina, or any other
governmental approvals temporarily lapse, (i) such lapse shall not be a reason to
extend the Outside Dates for construction commencement of any Major Project
Component, and (ii) such temporary lapse shall not constitute an Event of
Flagstones Default as long as Flagstone continues to use good faith efforts to
reinstate any such lapsed FDOT Approval(s), City Approval(s), Class I
Permit, the Foundation Permits, or any other governmental approval, as
applicable.
(emphasis added). Finally, sections 25.1(i) and 25.2(b)(i) of the Retail/Parking Lease provide
Flagstone with the explicit right to cure any default with respect to the deadline to start
construction.
First, Flagstone obtained the Phased Foundation Permit for the Retail/Parking
construction on the Retail/Parking Component. This was eight months prior to the May 1, 2017
deadline. On those two facts alone, Flagstone satisfied its deadline to Start Construction under
the Retail/Parking Lease. Between June 2015 and April 2017, Flagstone proceeded apace with
than a dozen state and local permits and approvals. That is, Flagstone has been actually building
the retail and parking facilities, with State and City departments issuing permit after approval, for
nearly a year.
During Flagstones construction of the Retail/Parking Component, the Phased Foundation Permit
temporarily lapsed. However, Flagstone used good faith efforts to obtain a new Phased
12
Museum Tower 150 West Flagler Street, Suite 2200 Miami, FL 33130 (305) 789-3200
Case No.: 2017-013829-CA-01 (44)
Foundation Permit, which was issued on May 4, 2017. The City made much of this issue at the
Amended Agreement to Enter, the temporary lapse of the Phased Foundation Permit does not
constitute an Event of Flagstones Default. That is, even considering the temporary lapse of the
Phased Foundation Permit, Flagstone complied with the May 1, 2017 deadline to Start
Third, even if, because of the temporarily lapsed Phased Foundation Permit, Flagstone
failed to Start Construction by the May 1 deadline (it did not), the Retail/Parking Lease explicitly
provides that Flagstone shall have the right to cure any cross default under Composite
Attachment 3including the construction deadline subject of the Notice of Default. Flagstone
indisputably cured the purported deadline default three days after the May 1 deadline, on May 4,
There are five relevant sections in the Amended Agreement to Enter that govern
Flagstones alleged breach of its financing obligations. Section 6.1.2 provides, in relevant part,
13
Museum Tower 150 West Flagler Street, Suite 2200 Miami, FL 33130 (305) 789-3200
Case No.: 2017-013829-CA-01 (44)
Section 6.2.1 provides that Flagstones failure to satisfy any Article 6 condition precedent
including the preconditions in section 6.1.2prior to the parties entry into the applicable
Ground Lease gives the City the right to terminate the Agreement only if the City provides
Flagstone written notice within five business days after the deadline to enter into such Lease.
At such time as Flagstone enters into the related Ground Lease(s) for each of the
applicable Major Project Component(s), Flagstone shall represent and warrant to
the City that, to the best of Flagstones knowledge as of the Lease Delivery
Date, Flagstone will have closed upon an Initial Construction Loan for the
applicable Major Project Component(s).
Section 6.1 provides that the City Manager, on behalf of the City, in his or her sole and absolute
discretion may waive[] or defer[] any such conditions precedent that are not satisfied.
Finally, pursuant to section 2.1.3, the City could not enter into any Ground Lease for any
component of the Project unless Flagstone had met any and all conditions precedentfor
construction of the related Major Project Component(s). These provisions of the Amended
Agreement to Enter apply equally to the Marina Component, the Retail/Parking Component, the
With respect to both the Marina Component and Retail/Parking Component, and with
respect to both the Marina Lease and Retail/Parking Lease, Flagstone did not need to obtain, and
thus did not obtain, an Initial Construction Loan (as defined by the Agreements). Instead,
Flagstone self-financed with respect to both the Marina Component and Retail/Parking
Component and with respect to both the Marina Lease and Retail/Parking Lease. In connection
with both the Marina Lease and the Retail/Parking Lease, Flagstone provided the City an
affidavit attesting that (1) there was no construction loan for the development of the relevant
Component; (2) Flagstone and its affiliates were funding the complete development and
14
Museum Tower 150 West Flagler Street, Suite 2200 Miami, FL 33130 (305) 789-3200
Case No.: 2017-013829-CA-01 (44)
construction of the relevant Component; and (3) Flagstone and its affiliates have sufficient funds
to fund the complete development and construction of the relevant Component. Ex. O & P to
Bayraktar Decl. The City Manager, who was authorized to do so on behalf of the City, accepted
in writing those financing affidavits and Flagstones self-financing of the development and
construction of the Marina Competent and the Retail/Parking Component. 2 Id. at Ex. Q. The
City then entered into both the Marina Lease and the Retail/Parking Lease.
On those facts, which the City cannot dispute, Flagstone complied with the financing
First, because Flagstone did not require any construction loan with respect to either the
Marina Lease or the Retail/Parking Lease, the Initial Construction Loan and Approved Initial
Construction Lender provisions of sections 6.1.2 and 12.1.2 are simply inapplicable to those
Project Components and to those Ground Leases. That is, the requirement to close a construction
loan only applied if Flagstone required a construction loan. It did not. It self-financed. So the
term simply did not apply. Accordingly, Flagstone complied with the relevant provisions of the
Second, pursuant to section 2.1.3, the City could not have entered into the Retail/Parking
Lease if it did not believe that Flagstone had adhered to and satisfied all conditions precedent,
including the construction loan closing and financing requirements. In fact, the City did enter
into the Retail/Parking Lease: executed by the City Attorney, City Manager and the Citys Risk
Management Interim Director, and attested to by the City Clerk. That affirms that according to
2
Pursuant to section 8.1.1 of the Amended Agreement to Enter, the Citys Ombudsman, Aldo
Bustamante, is authorized to, among other things, coordinate, expedite and respond for the City
on behalf of the City Manager with respect to construction and development issues.
15
Museum Tower 150 West Flagler Street, Suite 2200 Miami, FL 33130 (305) 789-3200
Case No.: 2017-013829-CA-01 (44)
the City itself Flagstone complied with all relevant covenants in the Agreements related to
Third, the City Manager, as authorized and contemplated by section 6.1, accepted in
writing the condition precedent regarding closing of a construction loan with respect to both the
Marina Lease and the Retail/Parking Lease. That is, even if the construction loan closing term
was applicable, the City affirmatively waived that condition as expressly contemplated by section
Fourth, at least with respect to the section 6.1.2 Closing of Construction Loan
requirements, the City by its inaction waived its right to terminate by failing to notice any
default (in writing or otherwise) due to that condition precedent within five days of the
Retail/Parking Lease execution deadline, as required by section 6.2.1. The City executed the
Retail/Parking Lease in August 2016. That notice of default deadline passed nearly a year ago.
Finally, on equitable grounds, the City should be held to have affirmatively and
intentionally waived any rights under the Agreements related to Flagstone obtaining financing
through the Citys entering into the Leases and its repeated affirmations that Flagstone was in
full compliance. The process by which Flagstone and the City addressed Flagstones financing
obligations under the Marina Lease and the Retail/Parking Lease was identical. Flagstone self-
financed with respect to the Marina Lease. The City accepted Flagstones financial affidavit
when entering into the Marina Lease. The parties did the same thing when entering into the
Retail/Parking Lease, with one relevant difference: Flagstone provided, and the City accepted,
construction. The City then proceeded to act as if the leases were valid, repeatedly confirming
that Flagstone was in full compliance. On the equities, the City should be enjoined from having
16
Museum Tower 150 West Flagler Street, Suite 2200 Miami, FL 33130 (305) 789-3200
Case No.: 2017-013829-CA-01 (44)
approved Flagstones self-financingnot once through the Marina Lease, not twice when
confirming the Marina financing in connection with the Retail/Parking Lease, but three times
when entering into the Retail/Parking Leaseand then trying to enforce a contrary construction
loan precondition.
For any and all of those reasons, Flagstone is not in default of any of the provisions
B. Flagstone Has No Remedy at Law and Will Suffer Irreparable Harm Absent
Injunctive Relief.
Flagstone will succeed on the merits of its central claims. But in the interim, Flagstone
stands to suffer irreparable injury to its property and leasehold rights absent temporary injunctive
relief to preserve the status quo. Flagstones requested standstill order targets three discrete and
limited issues: (1) the Citys required semi-annual payments to the State; (2) Flagstones
certificate of occupancy of the Marina Property; and (3) Flagstones continued use of the Land,
and inability to move forward with development of the Project, during the pendency of this
litigation.
Florida law has long and consistently made available injunctive relief to remedy the
rights or restrictive covenants affecting the use of real propertywithout the need to show
irreparable harm. Clark v. Bluewater Key RV Ownership Park Prop. Owners Assn, Inc., --- So.
3d ---, 2017 WL 1908373, at *5 (Fla. 3d DCA May 10, 2017); Autozone Stores, Inc. v. Northeast
Plaza Venture, LLC, 934 So. 2d 670, 672-75 (Fla. 2d DCA 2006); Coffman v. James, 177 So. 2d
25, 31 (Fla. 1st DCA 1965). The bedrock rationale is that every piece of land in the world has a
17
Museum Tower 150 West Flagler Street, Suite 2200 Miami, FL 33130 (305) 789-3200
Case No.: 2017-013829-CA-01 (44)
law. Daniel v. May, 143 So. 2d 536, 538 (Fla. 2d DCA 1962) (citing Stephl v. Moore, 114 So.
455, 455 (Fla. 1927)). That principle applies with equal strength to commercial properties and to
commercial leases: A tenant seeking to enforce a restrictive covenant under a commercial lease
is no less entitled to the strong protection afforded property interests by specific remedies
designed to secure enjoyment of the intended benefit than is the owner of a residential property
seeking to enforce a setback requirement or other restrictive covenant. Autozone, 934 So. 2d at
opportunities where the immediate impact of the continuing harm would be difficult for the court
to discern. U.S. 1 Office Corp. v. Falls Home Furnishings, Inc., 655 So. 2d 209, 210 (Fla. 3d
DCA 1995) (affirming temporary injunctive relief where plaintiff faced the destruction of its
business without the opportunity to counter the immediate threat to its property rights);
Fountainebleau Hotel Corp. v. Kaplan, 108 So. 2d 503, 505 (Fla. 3d DCA 1959).
Each of the Leasesthe Marina Lease and the Retail/Parking Leaseprovides Flagstone
with a wide array of significant property and leasehold rights and interrelated obligations. To list
just a few:
Flagstone has the right to use and maintain the subject Properties and to operate
on them a mega-yacht marina and a 200,000-plus square-foot retail space. See
Leases 7.3(a), 1.5(fff); Exhibit E; Composite Attachment 3.
Flagstone has the right to generate revenues from the marina, parking and retail
operations. See Leases 1.5(dd), Exhibit G.
Flagstone has the right to develop and construct the relevant Component of the
Project, and is required to do so on a set schedule. See Leases 14.1, 14.2,
Composite Attachment 3.
18
Museum Tower 150 West Flagler Street, Suite 2200 Miami, FL 33130 (305) 789-3200
Case No.: 2017-013829-CA-01 (44)
Flagstone has the right to lawfully and quietly hold, occupy and enjoy the
Properties during the Lease Terms. See Leases Art. XXVII.
Flagstone requires each segment of its requested relief to protect its property rights
a. Semi-Annual Payments
The Citys failure to fulfill its contractual obligations and remit the semi-annual payments
would fatally undermine Flagstones property rights with respect to the entire development.
Most concretely, the Citys default on its obligations under the Second Partial
Modification to timely remit the July 1, 2017 semi-annual payment would allow the Board of
Trustees to terminate the States approvals required for (i) the Ground Leases to Flagstone, (ii)
Flagstones use of the property for development of the Project, and (iii) the Amended Agreement
to Enter governing the entire development. See Second Partial Modification 3(a), 1. The
Citys default under, thereby permitting the termination of, the Second Partial Modification
would further result in the automatic and immediate reimposition of the original restrictions
under the Deed. Id. 3(c). The Deed modifications, approved though the Second Partial
Modification, are a prerequisite to the Ground Leases and necessary for Flagstones development
of the Project. The termination of the States approvals and removal of the Deed modifications
3
Flagstones marina tenants under current dockage agreements would also be adversely affected.
They would be effectively evicted, and, due to the size and number of Flagstones mega-yacht
tenants, would find it likely impossible to re-dock anywhere else in this country.
19
Museum Tower 150 West Flagler Street, Suite 2200 Miami, FL 33130 (305) 789-3200
Case No.: 2017-013829-CA-01 (44)
Only injunctive relief directing the City to remit the funds paid by Flagstone for the State
can protect Flagstone from the disastrous consequences of the Citys breach of the Compliance
Flagstone validly obtained the temporary certificate of occupancy for the Marina.
Flagstone would have been in a position validly to obtain a final certificate of occupancy prior to
the temporary certificates June 30, 2017 expiration. But the City refused to process Flagstones
permits required to obtain the permanent certificate. The City has made clear that it has no
intention of entertaining Flagstones applications for a routine extension or final certificate. Ex.
V & W to Bayraktar Decl. Given the Citys recent misconduct, Flagstone cannot be secure in its
status quo property rights absent a Court order requiring the City to attend to Flagstones permits
applicant has satisfied the relevant requirements. See Charlotte Cty. v. Vetter, 863 So. 2d 465,
468-69 (Fla. 2d DCA 2004) (affirming preliminary injunction ordering county to complete
permit process pending final hearing and to lift moratorium imposed with respect to subject
property, where developer relied on countys strong support of development); City of Oviedo v.
Alafaya Utils., Inc., 704 So. 2d 206, 207 (Fla. 5th DCA 1998) (affirming preliminary injunction
amount of loss that would occur to developers and home buyers if [citys] prohibitions continued
until resolution of the dispute); accord Hollywood Beach Hotel Co. v. City of Hollywood, 329
So. 2d 10, 15-16 (Fla. 1976) (affirming injunction against citys change to development and
20
Museum Tower 150 West Flagler Street, Suite 2200 Miami, FL 33130 (305) 789-3200
Case No.: 2017-013829-CA-01 (44)
compliance impossible).
The Citys improper Notice of Default has succeeded in derailing development of the
Project. Flagstones relationships and contracts with third partiescontractors, hotel flags,
fractional unit managers, retailers, etc.have been strained and disrupted in the wake of the
inherent uncertainty surrounding the Default Resolution and Notice of Default. With the cloud
of default hanging over the development, Flagstone is unable to obtain financing or attract new,
Of course, that was the Citys stated intention. The City Commission determined to walk
away from the Agreements and walk out on development of the Project. As the Commissioners
made clear in the May 30 meeting authorizing the Default Resolution, the City intended the
Notice of Default to halt Flagstones development and, ultimately, to eject Flagstone from the
But even if that wasnt the Citys stated intention, it would be the direct legal effect of the
Notice of Default, were it valid. Again, the Notice purports to default Flagstone under both the
Amended Agreement to Enter and the Retail/Parking Lease, and with respect to the two issues
First, with respect to the pre-lease financing issue, the Notice references requirements
under sections 6.1.2 and 12.1.2 of the Amended Agreement to Enter. Section 11.1.1 of the
Amended Agreement to Enter generally provides that [t]he failure of Flagstone to perform or
observe any of the covenants, conditions and agreements on the part of Flagstone to be
performed hereunder within thirty (30) days . . . after written notice of such failure constitutes
21
Museum Tower 150 West Flagler Street, Suite 2200 Miami, FL 33130 (305) 789-3200
Case No.: 2017-013829-CA-01 (44)
an Event of Flagstones Default. Inasmuch as the City is attempting to apply that notice and
default provision, 4 Flagstone has no facially available cure recourse during that thirty day period.
Flagstone either satisfied the construction loan closing condition precedent and properly
warranted as much to the City back in August 2016, or it didnt. If Flagstone did default (and the
City satisfied all relevant conditions), under section 11.2, the City could terminate the Amended
Agreement to Enter. Flagstones ongoing development and leasehold rights would then revert to
the City, and the City would no longer be obligated to move forward with any of the future
Ground Leases towards the development of the Project. See Amended Agreement to Enter
Second, with respect to beginning construction, sections VI(a) and VII(c) of Composite
Attachment 3 provide:
4
As explained above, under section 6.2.1, the City would have been required to notice an event
of default as to the construction loan closing conditions precedent provisions of section 6.1.2
within five days of the Retail/Parking Lease execution deadlinenearly a year ago.
22
Museum Tower 150 West Flagler Street, Suite 2200 Miami, FL 33130 (305) 789-3200
Case No.: 2017-013829-CA-01 (44)
Under those cross-default provisions, a valid deadline default (unlike the Notice of Default here)
would result in the termination of the entire network of Flagstones rights with respect to the
The Citys intentions and the legal implications aside, the practical effect of the Notice of
Default has been to stop Flagstones development and construction of the Project. Flagstone
cannot move forward with construction, and cannot maintain and attract third party participants,
with the Notice of Default outstanding. Flagstone is already suffering those injuries. At the
same time, all of the relevant deadlines in the Agreements are marching forward. Flagstone
requires injunctive relief now both to maintain the status quo as to its property rights, and to
protect its property rights for the eventuality of Flagstones success on the merits. Absent a
standstill orderrequiring the City to respect the Ground Leases and Flagstones leasehold and
development rights with respect to the Properties during the pendency of this litigation
Flagstone is at risk of the City moving forward with retaking Flagstones leasehold Properties.
And absent a pause of the deadlines under the Agreements, even when Flagstone succeeds on the
merits, Flagstone will trigger other purported defaults for failing to meet construction deadlines.
5
Of course, as noted above, Flagstone has explicit cure rights under sections 25.1(i) and
25.2(b)(i) of the Retail/Parking Lease. Even if there was an Event of Flagstone Default with
respect to the deadline to start construction (there was not), Flagstone cured it three days later.
Further, even if Flagstone had defaulted under the Retail/Parking Lease (it did not), the City
would not be able to simply take back the Properties. The SDNA provides Flagstones third-
party lender a host of rightssubordinating the Citys lien and development rights, to notice and
cure, and the ability to effectuate a new Marine Leasepreventing the City from moving against
Flagstones leasehold. And the Agreements provide Flagstone a series of other protections. Not
to mention the Notice of Defaults several independent defects, the least of which is the Citys
failure to provide any factual detail about Flagstones purported breach. It goes without saying
that, by identifying here what the City intends and purports to do, Flagstone in no way admits to
the validity of the Citys actions, any default by Flagstone, or any abridgment of Flagstones
rights with respect to the Land or the Project.
23
Museum Tower 150 West Flagler Street, Suite 2200 Miami, FL 33130 (305) 789-3200
Case No.: 2017-013829-CA-01 (44)
Injunctive relief is required generally to protect Flagstones property rights and to enforce
the covenants on use and development of the Properties granted by the City in the Ground
Leases. See Clark, --- So. 3d ---, 2017 WL 1908373, at *5; Autozone, 934 So. 2d at 672-75;
Coffman, 177 So. 2d at 31. Such relief is further recommended where the immediate impact of
the continuing harm would be difficult for the court to discern, as it would be here. See U.S. 1
Office, 655 So. 2d at 210; Fountainebleau, 108 So. 2d at 505. And courts regularly issue
injunctive relief to preserve the status quo between parties to contracts while the court resolves
the dispute on the merits. See Precision Tune Auto Care, Inc. v. Radcliff, 731 So. 2d 744, 746
(Fla. 4th DCA 1999) (affirming temporary injunction preserving the status quo until the court
determines whether there has been a breach of contract); Angelis v. Tarpon Springs Sponge
Producers Assn, 149 So. 630, 630 (Fla. 1933) (affirming temporary injunction preserving the
status of the parties under a written contract); Bailey v. Christo, 453 So. 2d 1134, 1136-37 (Fla.
1st DCA 1984) (The purpose of a temporary injunction is to preserve the status quo until a final
hearing may be held and the dispute resolved. The status quo preserved by a temporary
injunction is the last peaceable noncontested condition that preceded the controversy.).
Temporary injunctive relief to protect property rights of the type Flagstone requests here
serves a fundamental public interest. Our courts have described private property rights as
sacrosanct in the face of government encroachment. See CNL Resort Hotel, L.P. v. City of
Doral, 991 So. 2d 417, 420-21 (Fla. 3d DCA 2008) (Private property rights have long been
further protects these sacrosanct private property rights when evaluating a comprehensive
development plan.). Accordingly, they enjoin interference with private property rights while
24
Museum Tower 150 West Flagler Street, Suite 2200 Miami, FL 33130 (305) 789-3200
Case No.: 2017-013829-CA-01 (44)
attending to underlying disputes. See Hall v. City of Orlando, 555 So. 2d 963, 966 (Fla. 5th
DCA 1990) (reversing and directing imposition of temporary injunction in favor of private
owner preventing city from use of disputed easement); see also Manheim Remarketing, Inc. v. J
& B Auto Sales & Brokerage, LLC, 2012 WL 12873223, at *4 (S.D. Fla. Apr. 13, 2012) ([T]he
defense and preservation of [movants] property rights and security interest is in the public
Flagstones proposed escrow payments, consisting of all of its amounts due under the
Agreements in the normal course, satisfy the Rule 1.610(b) bond requirement by providing the
City complete security against a potential wrongful enjoinder. Chiefly, Flagstones escrow
payments would act as an increasing bond to protect the City. Accordingly, no additional bond
is required.
positions and to thereby prevent any prejudice to either Flagstone or to the City. The City stands
to lose nothing from the Courts preservation of the status quo. Absent any potential loss to the
City stemming from the possibility of wrongful enjoinder, nothing beyond a de minimus bond is
required. See Southards v. Motel Mgmt. Co., 567 So. 2d 523, 524 (Fla. 3d DCA 1990) (nominal
Second, because it is beyond peradventure that, under the Compliance Agreement and the
Second Partial Modification, the City owes the July 1, 2017 semi-annual payment to the State
regardless of Flagstones conduct with respect to the Retail/Parking Lease, and because
Flagstone has in fact already provided the monies for that payment to the City, the City could not
suffer any adverse impact from being enjoined to remit the payment to the State. With respect to
25
Museum Tower 150 West Flagler Street, Suite 2200 Miami, FL 33130 (305) 789-3200
Case No.: 2017-013829-CA-01 (44)
the July 1, 2017 semi-annual payment, there is no possibility of wrongful enjoinder, and no
potential losses against which to protect the City. See Montville v. Mobile Med. Indus., Inc., 855
So. 2d 212, 216 (Fla. 4th DCA 2003) (court can consider any mitigating factor, including the
adverse partys chances of overturning the temporary injunction, in setting bond amount).
Third, in accordance with the Amended Agreement to Enter, the Marina Lease and the
Parking/Retail Lease, Flagstone has already escrowed over $1 million to protect the City
specifically from risks associated with litigation (and other losses). The Court should permit
Flagstone to rely on those escrowed funds to secure the City with respect to Flagstones
Fourth, and most important, Flagstone has requested that the Court direct Flagstone to
escrow future payment owed to the City. Because Flagstones rental obligations accrue going
forward, the amount in escrow will increase as this case progresses. Those increasing funds will
act as adequate security to protect the City in the event Flagstone does not ultimately succeed on
the merits. Accord Commodore Plaza at Century 21 Condo. Assn, Inc. v. Century 21
Commodore Plaza Inc., 290 So. 2d 539, 540 (Fla. 3d DCA 1974) (affirming escrow requirement
continuing obligation to make any rental payments to the City. The City has repudiated the
Agreements; Flagstone has the right to treat that repudiation as a complete breach of the
Agreements, and does not need to perform under those Agreements going forward. See Hosp.
Mortg. Grp. v. First Prudential Dev. Corp., 411 So. 2d 181, 182 (Fla. 1982) ([W]here an
obligor repudiates . . . the nonbreaching party is relieved of its duty to tender performance and
has an immediate cause of action against the breaching party); Craigside, LLC v. GDC View,
LLC, 74 So. 3d 1087, 1090 (Fla. 1st DCA 2011) (same). Further, the rental payments assume
26
Museum Tower 150 West Flagler Street, Suite 2200 Miami, FL 33130 (305) 789-3200
Case No.: 2017-013829-CA-01 (44)
and depend on Flagstones ability to develop and use the Properties. But the invalid Notice of
those rental payments, into escrow, to preserve the status quo and to act as the bond for its
CONCLUSION
For the reasons and upon the authority stated herein, Plaintiffs request that the Court
enter a standstill order preliminary enjoining the City as stated herein and provide Plaintiffs such
27
Museum Tower 150 West Flagler Street, Suite 2200 Miami, FL 33130 (305) 789-3200
Case No.: 2017-013829-CA-01 (44)
I HEREBY CERTIFY that on June 16, 2017, pursuant to Rule 4.3 of the Complex
Business Litigation Division Procedures, I conferred via telephone with Christopher A. Green,
Defendants counsel. Mr. Green advised that Defendant opposes the Motion on the basis that the
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that undersigned counsel has electronically filed the foregoing
document with the Clerk of the Court using the Florida Courts E-Portal. Pursuant to Florida R.
Jud. Adm. 2.516(b), I also certify that the foregoing document has been furnished to all counsel
of record or pro se parties identified below in the manner specified, either via transmission of
Notices of Service of Court Document generated by the E-Portal or in some other authorized
manner for those counsel or parties who are excused from email service, this 16th day of June,
2017.
28
Museum Tower 150 West Flagler Street, Suite 2200 Miami, FL 33130 (305) 789-3200
IN THE CIRCUIT COURT OF THE 11TH
JUDICIAL CIRCUIT IN AND FOR
MIAMI-DADE COUNTY, FLORIDA
Plaintiffs,
v.
Defendant.
_________________________________________/
1. I, Mehmet Bayraktar, am over the age of 21, and I have personal knowledge of
the facts set forth herein.
3. I hereby verify that the facts contained in the Factual Background section of
Flagstones Emergency Motion for Preliminary Injunction are true and correct.
4. A true and correct copy of the Amended and Restated Agreement to Enter into
Ground Lease, dated as of February 1, 2010, is attached hereto as Exhibit A.
5. A true and correct copy of the Form of Ground Lease (exhibit C to the Amended
Agreement to Enter) is attached hereto as Exhibit B.
8. A true and correct copy of the Compliance Agreement, dated June 2, 2014, is
attached hereto as Exhibit E.
10. A true and correct copy of the Retail/Parking Component and Restated Ground
Lease, dated as of August 31, 2016, is attached hereto as Exhibit G.
11. A true and correct copy of an excerpt of the July 10, 2014 City Commission
Meeting Minutes is attached hereto as Exhibit H.
12. A true and correct copy of a May 4, 2017 Email from A. Bustamante to D.
Rotenberg re: Flagstone deadline to begin retail construction? is attached hereto as Exhibit I.
13. A true and correct copy of a May 5, 2017 Email from A. Bustamante to D.
Rotenberg re: Flagstone deadline to begin retail construction? is attached hereto as Exhibit J.
14. A true and correct copy of the Miami Herald article by D. Smiley, After 16 Years,
Billion Dollar Projects Fate Rests in the Hands of Miami, dated May 26, 2017 is attached hereto
as Exhibit K.
15. A true and correct copy of the Miami Herald article by D. Smiley, Did Flagstone
Island Gardens Just Break Ground? Or Break Its Lease?, dated May 6, 2017 is attached hereto
as Exhibit L.
16. A true and correct copy of the Default Resolution, R-17-0263, dated as of May
30, 2017, is attached hereto as Exhibit M.
17. A true and correct copy of the Notice of Default, dated June 7, 2017, is attached
hereto as Exhibit N.
18. A true and correct copy of the Affidavit of M. Bayraktar in connection with the
Marina Lease, dated May 27, 2014, is attached hereto as Exhibit O.
19. True and correct copies of the Affidavits of M. Bayraktar in connection with the
Retail/Parking Lease, dated August 30, 2016, are attached hereto as composite Exhibit P.
20. A true and correct copy of the A. Bustamantes Retail/Parking Lease Closing
Checklist is attached hereto as Exhibit Q.
21. A true and correct copy of the May 12, 2017 Email from K. Russell to J. Jones
and T. Hannon re: Flagstone statement, is attached hereto as Exhibit R.
22. A true and correct copy of the May 30, 2017 City Commission Hearing Transcript
is attached hereto as Exhibit S.
23. A true and correct copy of the June 14, 2017 Email from D. Witkins (lessee of the
Island Gardens Deep Harbour Marina) to Marina Manager W. Goncalves, re: Nirvana Island
Gardens Deep Harbour Marina Contract, is attached hereto as Exhibit T.
24. True and correct copies of the Marina Temporary Certificates of Occupancy are
attached hereto as composite Exhibit U.
25. A true and correct copy of the June 7, 2017 Email from A. Yurttas to N. Goulet,
et al. re: Building Department-Electrical Permit Issues, is attached hereto as Exhibit V.
26. A true and correct copy of the June 9, 2017 Email from A. Bustamante to R.
Suarez-Rivas and J. Camero, et al., re: Marina Sewer Extension Work, is attached hereto as
Exhibit W.
27. A true and correct copy of Flagstones bank records reflecting its Rent payments
to the City for the past twelve months is attached hereto as Exhibit X.
28. A true and correct copy of the Flagstones bank records reflecting its payments to
the City for remittance to the State per the Compliance Agreement and Second Partial
Modification is attached hereto as Exhibit Y.
29. A true and correct copy of the May 26, 2017 Letter from S. Pique of Flagstone to
A. Bustamante is attached hereto as Exhibit Z.