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Jenner & Block won a significant victory for client Marriott International, Inc. on December 16, 2015, when Florida’s Third District Court of Appeal reversed a $16.5 million jury verdict on claims against Marriott tied to a Bahamian marina construction project. Civil engineering firm American Bridge Bahamas sought damages from Marriott in connection with the planned construction of a 300-slip marina as part of a planned private development of hotel, condominiums and townhomes on Rose Island in the Bahamas. The project involved financing by Lehman Brothers Holdings.
American Bridge began construction in 2007, but when Lehman Brothers went bankrupt and became unable to finance the project the following year, Ritz-Carlton Rose Island Hotel Company Ltd. (RCRI)—the entity created to construct the resort, in which Marriott was a minority shareholder—asked American Bridge to stop construction.
American Bridge sued RCRI in the Bahamas for breach of contract in May 2010, and obtained a default judgment in the amount of approximately $7.5 million plus interest. American Bridge then filed an action in Miami-Dade Circuit Court against Marriott, RCRI and Gencom Group, an investment and development firm that had a stake in RCRI, to “enforce” the Bahamian judgment. The complaint also included various conspiracy and fraud claims alleging that Marriott had misled American Bridge about the funds available for the project.
In 2014, after a multi-week trial in which Jenner & Block was not involved, the Miami-Dade jury found that American Bridge could not hold Marriott liable for RCRI’s Bahamian judgment on a veil-piercing theory. But the jury did find that Marriott was vicariously liable for RCRI’s breach as a member of a supposed joint venture that had RCRI as its agent. The jury further found that Marriott fraudulently induced American Bridge to enter into the contract with RCRI by misrepresenting the availability of funding for the project at the outset. And it found that Marriott had conspired with Gencom to misrepresent the status of project funding during the performance of the contract to keep American Bridge working. All told, the trial resulted in a $16.5 million verdict including compensatory and punitive damages for these claims.
Jenner & Block took over representation for the appeal and convinced the Third District panel that the verdict against Marriott should be reversed on all counts. The appellate court found that American Bridge Bahamas did not prove the existence of a joint venture and that Marriott’s role was instead that of a limited liability shareholder, such that it could not be liable for any breach of contract by RCRI. “None of the alleged joint venturers had the authority to legally bind the other adventurers within the scope of the alleged joint venture. Marriott’s control over the project was limited to its role as a minority shareholder of RCRI,” according to the opinion. The court also reversed the awards for fraudulent inducement and conspiracy to commit fraud during the contract, finding that there was no evidence to support the former claim, and that American Bridge had never pled the latter claim in its complaint.
The team representing Marriott includes Partner Matthew S. Hellman, who argued the appeal; Partner David A. Handzo; and Associate Zachary C. Schauf. Senior paralegal Cheryl L. Olson provided paralegal support and Legal secretary Beth E. Gulden provided administrative assistance. News of the reversal was reported in the Daily Business Reviewof South Florida and Law360 (subscriptions required).