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U.S. Supreme Court turns down Brooksville's petition to hear bond appeal

BROOKSVILLE — It was a long shot at best. But news last week that the U.S. Supreme Court had refused to hear arguments in Brooksville's appeal against a bond company that insured infrastructure improvements for a defunct developer means the matter is officially dead.

In denying a petition for a writ of certiorari, the court left the city with no legal recourse in the matter, said George Angeliadis, an attorney for Hogan Law Firm, which represents the city.

"I would say at this point it's over," Angeliadis said. "You can't bring the same claim twice. This was the final opportunity to have the case heard in another court."

The case, which dates to 2010, is centered on the city's attempt to collect $5.3 million from performance bonds issued in 2003 by Westchester Fire Insurance Co. for infrastructure such as water and sewer lines, plus streets, sidewalks and drainage facilities, in Phase 2 of the Cascades subdivision, on the city's far south side.

After the 2007 bankruptcy of Cascades developer Levitt & Sons, the city demanded that Westchester make good on the bonds. When the company refused to do so, the city sued in U.S. District Court in Tampa. Attorneys for Westchester convinced the judge that no substantial work had been completed in the second phase of the development, and therefore no compensation was warranted.

A year later, the city appealed to the 11th U.S. Circuit Court of Appeals in Atlanta and lost there as well.

Atlanta attorney John Watkins, who filed the U.S. Supreme Court brief on the city's behalf, argued that appellate judges found no authoritative Florida case law covering the subject, which, according to the attorney, should have necessitated sending the case to the Florida Supreme Court.

"The city's argument has been that a contract is a contract," Angeliadis said. "The federal court should have let Florida's highest court preside over it."

Nonetheless, the court's decision created a ripple effect that Brooksville Vice Mayor Lara Bradburn said could have profound ramifications for future development throughout the country.

"It basically tells local and state governments that performance bonds are worthless, so if you're a developer you'd better find a way to pay for the infrastructure up front," Bradburn said Tuesday. "I don't think many companies would be willing to take that chance."

The Brooksville City Council voted Monday to officially distance itself from any further obligations toward future property owners of the unbuilt second phase at the Cascades, which was sold in 2010 to Tampa-based CaSHP Homes for $2.2 million.

Bradburn stressed that the failed lawsuit has no effect on the completion of infrastructure in the subdivision's initial phase, which is being paid for through a separate performance bond.

Logan Neill can be reached at lneill@tampabay.com or (352) 848-1435.

U.S. Supreme Court turns down Brooksville's petition to hear bond appeal 11/06/12 [Last modified: Tuesday, November 6, 2012 8:11pm]
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