Fourth Circuit affirms lower court ruling allowing New Orleans WTC development to move ahead

By Karen Kidd | Apr 24, 2016

NEW ORLEANS – Depending on which side is issuing the statement, a Fourth Circuit Court of Appeal's decision handed down on April 20 in the former World Trade Center development dispute either is hugely important or just a procedure.

On its face, it certainly seems the Fourth Circuit found for the city of New Orleans, named defendants in a lawsuit filed by Two Canal Street Investors, losing bidders in the former World Trade Center development. The Fourth Circuit affirmed an earlier ruling by Orleans Civil District Judge Tiffany Chase that denied Two Canal Street Investor's motion for preliminary injunction to stop Four Seasons development from moving forward.

The Fourth Circuit found the $360 million development proposal, including a Four Season Hotel, accepted by the city last winter could move forward because the city's selection process was legal and proper.

"Uncertainty created by an injunction at this stage could result in hesitation among the project's lenders and investors, which, in turn, could materially alter the economics of the project as a whole," the Fourth Circuit ruling said. "A potential delay in this development continues to allow an enormous public asset to lie dormant and not generate any revenue for the city."

A statement released by a spokesman for the Carpenter-Woodward litigation team called the decision strongly worded and comprehensive, stating the court soundly rejected each and every claim by Two Canal Street Investors.

"Today’s ruling effectively dissects each and every allegation made by TCSI and is a clear determination that TCSI’s claims in this lawsuit are frivolous," Greg Beuerman, spokesman for the Carpenter-Woodward litigation team, which works with developer Four Seasons New Orleans, said in a statement released to the Louisiana Record. "This ruling is only the latest in a series of rulings that have confirmed the validity of NOBC’s selection process and its decision to award the World Trade Center project to Carpenter-Woodward."

An attorney who represents Two Canal Street Investors dismissed the ruling, however, as little more than a necessary procedure.

"There was never an injunction in effect, though TCSI is required to apply for such relief procedurally," Charline K. Gipson, an attorney with the New Orleans Davillier Law Group, said in an email to the Louisiana Record. "In that regard, the status quo is maintained by the Fourth Circuit’s ruling, and an injunction is not critical to our case. TCSI’s litigation is concerned with the loss of revenues to the taxpayers of New Orleans in the amount of $60 million in the first year of the lease, and $2.4 billion over the lease term, at a time when the mayor wants to raise taxes."

Beuerman and Gipson said their respective sides intend to move forward after the Fourth Circuit's ruling as the Oct. 24 trial date in the case moves closer.

"We believe this ruling sends a clear signal that TCSI’s suit should be dismissed entirely so that this vitally important and transformative development project can move ahead as planned," Beuerman's statement said. "We look forward to doing just that and to helping continue the city’s growth and progress through the creation of thousands of well-paying jobs and economic benefits for the city."

Two Canal Street Investors will focus on discovery procedures prior to the trial in October, Gipson said.

"We will continue to push forward based on what we now know occurred in the city’s placement of this lucrative lease of public property with Carpenter-Woodward," she said. "The ruling here was based on limited discovery from a year ago, prior to the revelation of serious undisclosed conflicts of interest by the city’s consultant charged with evaluating its business partner’s bid."

Gipson also alluded to legislation orchestrated by the New Orleans mayor's office that could cost Two Canal Street Investors millions of dollars to keep the lawsuit going. That legislation passed the Senate by a near unanimous vote the same day the appeals court handed down it ruling.

"If anything, the opinion only highlights the impropriety of proposed Senate Bill 447, which the city concocted to circumvent the court process underway for the past year," Gipson said. "The courts are capable of determining whether the existing law has been violated at trial. There is no legitimate basis for eliminating the public protections from the Public Lease Law ... (this) ill-advised amendment would affect the entire state of Louisiana."

The development of New Orleans' 33-story World Trade Center, located on the riverfront, was leased last year to the development team led by Carpenter & Company of Massachusetts and Woodward Interests of New Orleans.

Chase has said she may order New Orleans to scrap the 99-year lease granted to Four Seasons and restart its search for a developer, but that she could not award the bid to Two Canal Street Investors.

Two Canal Street Investors maintains its bid should have prevailed because it offered the highest rent payments to the city. For its part, the city claims that Four Seasons' proposal will bring in greater economic benefit above and beyond rents paid to the city.

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