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Date of Issue: April 16, 2008

Case closed on Pier Cafe suit

A settlement between the city of Bradenton Beach and the operators of the now defunct Bradenton Beach Pier Cafe closed the book on the case.

Bradenton Beach city commissioners voted on March 20 to approve the settlement and pay $38,500, arrived at during a daylong negotiation in Tampa between the former restaurant’s owners, Mayor Michael Pierce, attorneys and mediator Rob Daisley.

A transcript from a closed-door meeting between the commission and their attorney, Greg Hootman, offers details as to how the settlement was reached and that the deal was a good one for the city.

The meeting took place March 19 at city hall, with Hootman, Pierce, Vice Mayor John Chappie, Commissioners Janie Robertson, Bob Connors and John Shaughnessy and court reporter Elsa Rohow attending.

Hootman, at the start of the meeting, provided a timeline of events in the cafe case, beginning in November 2002, when John and Karen Gallo purchased 98 percent of the Pier Cafe, located on the city-owned Bridge Street Pier. The purchase price was $200,000 and included 98 percent of the restaurant, as well as equipment. The lease with the city at that time was scheduled to end in seven months.

In July 2003, the city and the Pier Cafe extended the lease two years to June 30, 2005.

Hootman said the city had a problem with late payments from the Pier Cafe under the contract and “there was at one point a notice to them of a default because they were late.” He said the restaurant caught up on payments but “it wasn’t a good relationship with them from a business point of view because there was always this problem of delay in payment.”

The restaurant continued to operate on the pier. In September 2004, weather associated with Hurricane Frances damaged the pier, including the restaurant. “There was wind damage and water damage and structural damage inside the restaurant facility,” Hootman said.

The Gallos claimed that the city failed to properly repair and maintain the roof. In 2003, the city had responded to the Gallos’ complaint of leaking in the roof and hired Holmes Construction to “put some felt down, put the top of the roof on, the drip line, and this, that and the other thing,” Hootman said.

He added that there is no city record that anyone “ever signed off” on the work and “that’s important because when Hurricane Frances comes, that’s the area where the damage occurs.”

Hootman said Joe Duennes, Holmes Beach’s superintendent of public works, inspected the roof after the storm and said the felt was not tacked down sufficiently. However, Duennes also had noted that the installation complied with the 2003code, according to Hootman.

Facing the pier damage, the city commission met on Sept. 16, 2004, and voted to terminate the lease with the Pier Cafe based on a clause that said either party may terminate the lease if the property becomes untenable.

The Gallos then went to court, maintaining that the city breached the contract by failing to maintain the roof.

The case moved slowly through the system - it was set for trial several times and delayed for various reasons.

Most recently, Manatee County Circuit Court Judge Edward Nicholas ordered the case to mediation.

The mediation session took place March 7.

In discussing how the settlement amount was reached, Hootman noted that the Gallos saved some equipment in evacuating before the hurricane. The restaurant net profit loss for nine months remaining on the contract was about $4,000. The Gallos invested $200,000 in the restaurant in 2003, when the contract was set to expire in seven months.

Hootman said as the mediator worked with the two parties, they discussed the financial issues, as well as the potential liability: Was the city partly responsible for the damage to the roof?

In the end, the $38,500 settlement was agreed upon, as well as a statement that the city was not admitting any wrongdoing and a commitment on both sides that there would be no further legal action. That included any complaint on the Gallos’ part that the city violated Florida’s Sunshine Lawon open government.

Gallos attorney Don Scarlett previously said a tape of the commission’s Sept. 16, 2004, meeting contained recess comments by commissioners discussing the motion to terminate the lease.

Scarlett had sought to amend the complaint to assert that the city didn’t terminate the contract because of pier damage, but rather because it wanted to get rid of the Pier Cafe.

Hootman told commissioners during their March 19 meeting that “the plaintiffs are still threatening, you know, if we don’t settle, we’re still going to file our Sunshine Law violation and our breach of contract and we’re going to ask for a jury trial, and we’re going to do all this stuff.”

The settlement was a good deal, largely because it put an end to what would be an expensive legal fight, Hootman said.

The attorney said, “For a number of reasons, risk analysis, cost analysis, what it will cost the city to continue to go forward with the litigation, what its potential exposure is to fees by the other attorney, appeals, cost, all of that, we discussed, the mayor and I, with the mediator at some length, and the bottom line is a mediator’s proposal that the plaintiff has agreed to and which the mayor and I agree to recommend to the commission. It’s a payment of $38,500 over two years.”

Robertson asked about the risk if the case went to trial.

Hootman reiterated the expensive attorneys fees that might be involved on both sides if a judge heard the case and that a Sunshine Law case is “just waiting to be filed, maybe.”

The settlement, Hootman said, “puts it to sleep and we’re done with it and we don’t have to think about it again and have it hanging over our shoulders.”

Commissioners indicated consensus support for the settlement on March 19 and made their vote to approve the agreement and payment during a regular meeting March 20.

On March 25, Nicholas issued an order dismissing the case.