Columbia does not have to pay a group of designers, architects and builders up to $4 million for a city-funded hotel that was never built, a judge ruled Wednesday.
But winning that victory cost the city $1.3 million, including $462,114.86 for expert witnesses and $778,886 for legal fees.
"Litigation is very expensive," said Columbia Mayor Bob Coble, an attorney whose law firm was not involved in the case. "If you're sued, you have to defend yourself. That's the reality of the American legal system."
The lawsuits - brought by Gary Realty, Garfield Traub Development, Turner Construction and the architectural firm Stevens & Wilkinson - stemmed from the city's 2003 plan to build and operate a hotel to complement the Columbia Metropolitan Convention Center.
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The city eventually decided against owning the hotel and instead opted for a private owner - Greenville-based Bo Aughtry, who developed what is now the Hilton Columbia Center Hotel in the Vista.
The companies that worked on the publicly funded hotel plan sued the city, saying they had done work on that plan that they had not been paid for. The companies argued a memorandum of understanding that the city signed on April 17, 2003 constituted a contract.
Fifth Circuit Court Judge George C. James Jr. disagreed.
"An examination of the four corners of the (memorandum) reveals that it was not a binding and enforceable contract but, rather, was an unenforceable, nonbinding agreement to agree in the future," James wrote in his order. "The first page of the (memorandum) states that the parties intended to negotiate further."
Attorney Reece Williams, with the Callison Tighe & Robinson law firm, represented Columbia in the case and called the ruling "a major victory."
Williams noted the ruling was a summary judgment, coming prior to a lengthy and expensive trial.
"It's a huge advantage in terms of cost and time," Williams said. "I would estimate a range of $80,000 to $100,000 in legal fees for a five-week trial, and we had some right expensive experts."
The experts included forensic accountant Charles Phillips from the Acuitas company and consultant Jeff Sachs from Strategic Advisory Group, who was brought in for his expertise on hotels.
"When you are in litigation, you spend to get the experts you need," said City Councilman E.W. Cromartie, also an attorney.
Attempts to reach attorney Ken Suggs, who represented Gary Realty and Garfield Traub Development, were unsuccessful. However, the companies are expected to appeal.
The order dismisses every claim brought by the companies except one - a $1.6 million claim by Stevens & Wilkinson for "interim architectural fees."
Stevens & Wilkinson, represented by Columbia attorney Dick Harpootlian, argued this summer the city owes it money for work it did on the hotel from July 2003 to March 2004.
In March, 5th Circuit Court Judge Casey Manning agreed with Stevens & Wilkinson, ruling that City Council's July 2003 vote to pay the firm $650,000 constituted a contract. Manning did not rule how much Columbia owed Stevens & Wilkinson, leaving that to be decided at trial.
Tuesday's ruling by Judge James does not affect Manning's ruling. James wrote architectural fees "may be determined in the normal progression of this case."
Columbia has appealed Manning's ruling to the state Court of Appeals, which has not yet heard the case.
In March, Stevens & Wilkinson offered to settle the case for $1.6 million. The city refused. According to state law, if the city loses at trial for that sum or more, it has to pay the money plus 8 percent interest - calculated from the time of the original settlement offer.
"If they want to take two years to litigate it or three years to litigate it, the interest is running. That's fine with us," Harpootlian said.
City Council voted to pay Stevens & Wilkinson $697,000 in December 2003. That satisfied any debt owed to the design firm, said Williams, the attorney for the city.
But Stevens & Wilkinson says it continued to work after December with the city's consent.
"Our position is that we've agreed to pay them and did pay them," Williams said. "The judge ruled he was entitled to the money that he got."