A delay with invasive testing and disagreements over cost-splitting led to an extension for the Dubai developer’s due diligence in its bid for the Surfside collapse site, likely pushing the auction to April.
Court-ordered mediation in ongoing litigation will also occur sooner than expected, the judge decided at a hearing on Friday.
Damac Properties entered its 60-day due diligence period at the beginning of December. The company is the stalking horse bidder for the oceanfront property at 8777 Collins Avenue, the former site of Champlain Towers South, which collapsed last summer, killing 98 people.
Michael Goldberg, the receiver for the Champlain condo association, said during Friday’s hearing that the extension is needed because Damac has not been able to perform necessary invasive environmental and geotechnical testing at the site, though the company has been able to complete land surveys and non-invasive testing. The due diligence period will now end in mid-March.
Geosyntec Consultants of Boca Raton was tapped to perform the testing.
Miami-Dade Circuit Court Judge Michael Hanzman approved the motion, but said he will “not look favorably” on any further extensions. It comes less than two weeks after Hanzman agreed to move the trial start date tied to litigation to March 2023.
“They better get on that property on January 31 and get that buyer what they need,” Hanzman said. “I am not going to be very tolerant of further delays of this.”
The delay means that if other developers bid for the property, the auction would likely occur in April. Goldberg said it is his understanding that the brokers marketing the site, led by Michael Fay and John Crotty of Avison Young, expect to secure at least one other bidder.
Meanwhile, the judge ordered mediation in the lawsuit that survivors and families of victims filed against the development team of the condo tower Eighty Seven Park, next to Champlain Towers South. The suit claims construction next door, including the use of sheet pile driving, contributed to the collapse.
Defendants in the suit include 8701 Collins Development LLC, Terra World Investments and Terra Group, project general contractor John Moriarty & Associates, geotechnical engineer NV5, and structural engineer DeSimone Consulting Engineers. The Champlain Towers South association; its law firm, Becker & Poliakoff; and engineering firm Morabito Consultants, which had inspected Champlain for its 40-year recertification, also are being sued.
Mediation could avoid a trial, but only for the defendants that reach an agreement with the plaintiffs. Attorney Bruce Greer is the court-appointed mediator.
Hanzman said at the hearing that it would not “shock” him if the litigation budget, covering defense attorney and expert fees, escalated quickly, reaching $100 million.
“Before we get so far down the road that there is no turning back, I am going to make everybody take at least one shot at early mediation,” he said.
Under his order, the Terra-led 8701 Collins Development, Terra World Investments and Terra Group will go to mediation with the plaintiffs within 120 days.
That is sooner than David Weinstein, a Greenberg Traurig attorney for these entities, had requested, as he proposed that mediation start in late October. Hanzman countered this is too far down the line.
Becker & Poliakoff had agreed prior to Friday’s hearing to begin mediation on Feb. 8, according to the law firm’s attorney Rob Klein of Klein Park & Lowe.
NV5, DeSimone and Morabito will go to mediation “immediately,” Hanzman said in court.
A mediation agreement likely would involve the defendants tendering part or all of their insurance policies. Becker & Poliakoff has $23 million in general liability insurance and $30 million in professional coverage, Klein told the court. Morabito’s attorney, Aron Raskas, said the engineering firm has a $2 million policy.
“We firmly believe that the best use of those policy funds is to compensate the persons who suffered in this tragedy rather than” paying for experts’ testing, said Raskas of Gunster.
Also at the court hearing, Hanzman required the parties to the suit to disclose their experts by Aug. 31 if they go to trial. The experts’ written opinions are due by December.
In court filings, the defendants have denied allegations against them, with some of them deflecting blame to others that are sued.