Settlements of hotel, pipeline lawsuits in the works
City and county officials, and the operators of the downtown Marriott, are poised to settle a lawsuit that grew out of the governments’ 2011 decision to hire another firm to run the Durham Convention Center.
Filings in state court indicate that the three sides reached a tentative agreement late last month, following mediation.
Terms remain undisclosed for the moment, with City Attorney Patrick Baker saying the deal still needs approval from elected officials. That process should begin with a City Council closed session Thursday.
But Baker suggested the odds are good that the council, at least, will sign off on it.
When it comes to settling lawsuits, “usually we have a good idea of what the council is willing to accept before we make a recommendation to them,” he said.
City Manager Tom Bonfield, who participated in the mediation, likewise voiced optimism while declining to offer specifics.
“We’re both very satisfied,” he said, indicating the various sides are happy with the deal.
The Marriott’s operator, Shaner Hotels, filed suit against the city and county in 2012 in federal court.
The case didn’t raise a direct objection to the government’s decision to replace Shaner as operator of the adjoining convention center.
It instead addressed a use-of-space dispute between Shaner and the governments. Shaner claimed it was entitled to rent-free use of kitchen and office spaces city and county officials regard as part of the convention center.
The hotel and convention center occupy what is, to all appearances, a single building. The governments own the convention center and the land the building occupies.
Shaner occupies the hotel portion via a lease from the governments of the “air rights” over the property.
The complicated contract, struck between the governments and a company later bought out by Shaner, facilitated construction of the complex in the 1980s.
City and county lawyers insisted that the deal clearly spelled out the hotel owner’s rights to space within the building. Shaner, however, argued the building was designed to operate as one and said it had been deprived of space needed for hotel operations.
The governments opted to bring in an outside operator, Global Spectrum, for the convention side of the building in hopes of reducing the subsidies that it requires from them.
State law bars cities and counties from entering terms-undisclosed lawsuit settlements, so the agreement Durham officials have with Shaner will become public once it’s signed.
The prospective settlement with Shaner isn’t the only recent piece of good news from the courts Baker and his staff have offered the council.
The city also is close to settling an unrelated lawsuit with Triangle Grading and Paving Inc., the contractor it hired in 2010 to install a new water line along U.S. 70 to link the Durham and Raleigh water systems.
The project ran behind schedule, sparking a city staff decision to withhold part of the money the contractor had been promised.
Triangle sued last year, attributing the delays to the city’s failure to secure all the necessary right of way. It also complained of being “strong-armed” by the city into offering a discount on rock-excavation costs once it was evident that there was more rock than officials had expected along the pipeline’s route.
The city countersued, arguing the contractor had asked for the green light to start despite knowing there was a gap in the right of way. It also said the delays were partly attributable to a construction accident that killed two workers.
The two sides worked out their differences at mediation late last month. Baker said the council has already approved the terms of that deal. All that remains is for lawyers to finish and sign the necessary documents.