1036-00003 · Ridgemark Development Partners · Analysis

status-conference-strategy-memo.docx DOCUMENT Litigation

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PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP 1725 K Street NW, Suite 1100 Washington, DC 20006

MEMORANDUM

I. EXECUTIVE SUMMARY

This memorandum outlines the recommended litigation strategy for the three-way status conference scheduled for Tuesday, March 22, 2022, at 2:00 p.m. before the Honorable Eleanor V. Cassin, Circuit Court of the Eighteenth Judicial Circuit in and for Seminole County, Florida. The conference will be the first proceeding at which all three parties — Ridgemark Development Partners LLC ("Ridgemark" or "Plaintiff"), Fairwater Real Estate Investment Trust ("Fairwater" or "Defendant"), and Pinnacle Shores Bank, N.A. ("Pinnacle Shores" or "Intervenor") — will appear before Judge Cassin since the court granted Pinnacle Shores' Motion to Intervene on February 28, 2022.

The central development since the last conference is Pinnacle Shores' disclosure that it has suspended all further draws on its $14.6 million construction-to-permanent loan to Ridgemark pending judicial resolution of the Cross-Parcel Easement dispute that is the subject of this action. This suspension effectively deprives Ridgemark of the funds necessary to pursue both its planned Ridgemark Commerce Village development on the 16.3-acre southern parcel and the continued prosecution of this litigation. The intervention has fundamentally altered the dynamics of the case, creating a three-party stalemate that, for the reasons set forth below, strongly favors Fairwater.

Our core recommendation is that Fairwater should consent to placing the case in inactive status (i.e., case dormancy). Dormancy preserves the status quo — under which no easement access exists across Fairwater's 42.7-acre Sanford Logistics Center property in favor of the Ridgemark southern parcel — while simultaneously halting the accrual of defense costs for Fairwater. Every day that passes without a judicial determination that the Cross-Parcel Easement remains enforceable is a day that Fairwater's sole tenant, Condor Supply Chain Solutions, Inc., enjoys unencumbered control over the truck-court ingress and egress at its 614,000-square-foot Class-A cross-dock distribution facility, and a day that Ridgemark's development plans remain frozen.

This memorandum addresses the following topics:

(A) the current procedural posture of the case, including the limited discovery that has been exchanged and the absence of any pending dispositive motions;

(B) the impact of Pinnacle Shores' intervention on Ridgemark's ability to fund and prosecute this litigation, and the resulting three-party dynamic;

(C) the strategic benefits and risks of consenting to dormancy, including the preservation of the status quo, protection of tenant operations, reduction of defense costs, and the possibility of resolution through external events;

(D) monitoring and reactivation considerations, including a recommended quarterly monitoring protocol; and

(E) a summary of fees and costs incurred to date and estimated savings from dormancy.

We request that this memorandum be reviewed and that client authorization be obtained from Denise M. Whitford (General Counsel, Fairwater) and Gerald K. Sung (SVP, Asset Management, Fairwater) in advance of the March 22 conference so that our local counsel, Brenda Hargrove of Hargrove & Liddell, P.A., may proceed accordingly at the hearing.

II. CURRENT POSTURE OF THE CASE

A. Procedural History

The procedural history of this action is set forth below in chronological order. As will be apparent, the case remains at a relatively early stage, with limited written discovery exchanged, no depositions taken, and no dispositive motions pending. The entry of Pinnacle Shores as an intervenor is the most significant recent development and has altered the trajectory of the litigation in ways that Fairwater should exploit.

July 19, 2021 — Filing of the Complaint. Ridgemark Development Partners LLC filed a Complaint for Declaratory Judgment in the Circuit Court of the Eighteenth Judicial Circuit in and for Seminole County, Florida, Case No. 2021-CA-002748-18-W. The Complaint seeks a judicial declaration that the 60-foot-wide Cross-Parcel Easement, originally recorded on June 22, 1998, in Official Records Book 4517, Page 1283, of the Public Records of Seminole County, Florida, was not extinguished by the Commerce Park Boulevard Phase II Replat recorded on September 15, 2014, in Plat Book 78, Pages 44–46, of the Public Records of Seminole County, Florida. Ridgemark contends that the Cross-Parcel Easement continues to run with the land in favor of Ridgemark as the successor-in-interest to the southern parcel (Parcel ID 25-20-30-500-0030-0000), a 16.3-acre tract that Ridgemark acquired from the Estate of Roland P. Thurmond in 2019.

The Cross-Parcel Easement, as originally granted in 1998, provides a 60-foot-wide corridor for vehicular access connecting the southern parcel to Commerce Park Boulevard, a public right-of-way, by traversing the northern parcel — which is now owned by Fairwater and constitutes the 42.7-acre Sanford Logistics Center. Ridgemark's Complaint asserts that this easement is an appurtenance to the southern parcel and that it survived the 2014 replat because the replat did not expressly extinguish the easement and because the easement was created by a separate instrument rather than by the original plat.

August 30, 2021 — Fairwater's Answer and Affirmative Defenses. Fairwater timely filed its Answer and Affirmative Defenses, denying the material allegations of the Complaint and asserting four affirmative defenses:

(i) Extinguishment by the 2014 Replat. Fairwater contends that the Commerce Park Boulevard Phase II Replat, recorded on September 15, 2014, superseded all prior easements not expressly reserved or depicted on the replat, and that the Cross-Parcel Easement was neither reserved nor depicted. Under Florida law, a replat that vacates a prior plat extinguishes easements created by that plat unless expressly preserved. Fairwater argues by extension that the easement, though created by a separate instrument, was effectively nullified because the replat reconfigured the lot lines and access points of the northern parcel in a manner inconsistent with the continued existence of the easement corridor.

(ii) Estoppel and Laches. The Estate of Roland P. Thurmond, Ridgemark's predecessor-in-interest, took no action to challenge the replat or assert easement rights for over six years following the recording of the 2014 replat. During that period, Fairwater acquired the northern parcel in 2016, constructed the 614,000-square-foot Sanford Logistics Center distribution facility, and leased the facility to Condor Supply Chain Solutions, Inc. — all without any objection from the Thurmond Estate or any subsequent owner of the southern parcel. Ridgemark and its predecessors slept on their rights, and it would be inequitable to permit them to assert the easement now, after Fairwater has made substantial investments in reliance on the absence of any easement encumbrance.

(iii) Merger of the Dominant and Servient Estates. During the period of common Thurmond family ownership (approximately 2012 to 2014), when both the northern and southern parcels were held by the Estate of Roland P. Thurmond or by members of the Thurmond family acting in concert, the dominant and servient estates merged, extinguishing the easement by operation of law. While this defense requires further factual development through discovery, the chain-of-title records suggest that the two parcels were under common ownership or control during the relevant period.

(iv) Failure to State a Cause of Action. Fairwater reserved its right to argue that the Complaint fails to state a cause of action for declaratory relief because Ridgemark has not alleged facts sufficient to establish the continued legal existence of the easement in light of the 2014 replat and the doctrine of merger.

October 4, 2021 – December 17, 2021 — Written discovery. Limited written discovery was exchanged during this period. On October 4, 2021, Fairwater served its First Set of Interrogatories (Nos. 1–25) and First Requests for Production of Documents (Nos. 1–30) on Ridgemark. Ridgemark served its responses on November 15, 2021. Ridgemark's responses were adequate in scope, though several responses included objections that we noted for potential follow-up. On November 1, 2021, Ridgemark served its own First Set of Interrogatories (Nos. 1–20) and Requests for Production (Nos. 1–25) on Fairwater. Fairwater, through this firm and Hargrove & Liddell, served its responses and document production on December 17, 2021, consistent with the applicable response deadlines under the Florida Rules of Civil Procedure. No discovery disputes have arisen, and no motions to compel are pending.

January 14, 2022 — Pinnacle Shores' Motion to Intervene. Pinnacle Shores Bank, N.A., Ridgemark's construction lender, filed its Motion to Intervene as of right under Florida Rule of Civil Procedure 1.230(a). Pinnacle Shores argued that it holds a first-priority mortgage on the 16.3-acre southern parcel (Ridgemark's property), that the enforceability and value of its collateral depend directly on whether the southern parcel has legally enforceable vehicular access to a public right-of-way, and that its interests are not adequately represented by Ridgemark because Ridgemark's interests as a developer are distinct from Pinnacle Shores' interests as a secured lender.

Fairwater filed a Response in Opposition to the Motion to Intervene on February 4, 2022. Our opposition argued on two grounds: first, that Ridgemark adequately represents Pinnacle Shores' interests because both parties seek the same outcome — a declaration that the Cross-Parcel Easement remains enforceable — and second, that Pinnacle Shores' $14.6 million mortgage encumbers only the southern parcel, not the Fairwater property, and thus the bank has no direct interest in the disposition of an easement across the northern parcel. We recognized at the time of filing that this opposition was unlikely to prevail, given Florida's liberal standards for intervention as of right, but we filed it to preserve the record and to avoid any inference that Fairwater welcomed the bank's participation.

February 28, 2022 — Order Granting Intervention. Judge Cassin granted Pinnacle Shores' Motion to Intervene, finding that the bank has a direct, substantial, and presently existing interest in the easement determination because the enforceability and value of its collateral — the southern parcel — depends on whether that parcel has legally enforceable vehicular access to a public right-of-way. The court specifically noted that Lakemont Trail, the only alternative frontage for the southern parcel, is an unpaved county right-of-way that does not support the commercial truck traffic necessary for the planned development. The court further found that Ridgemark does not adequately represent Pinnacle Shores' interests because the bank has independent concerns regarding lien priority, consent rights over any modification or compromise of the easement, and the protection of its collateral value.

Pinnacle Shores is represented by Carolyn F. Dubrow, Esq. (FL Bar No. 0412389) of Whitmore Dane LLP, located at 100 North Tampa Street, Suite 2600, Tampa, Florida 33602. Ms. Dubrow is an experienced real-estate litigator with a strong reputation in the Tampa Bay commercial lending bar. Her involvement suggests that Pinnacle Shores intends to participate actively if the case moves forward.

B. Plaintiff's Counsel and Current Posture

Ridgemark is represented by Castellon Foley & Ruiz LLP, a mid-size Orlando firm with a general commercial and real-estate litigation practice. The lead attorneys are Marco D. Castellon, Esq. (FL Bar No. 0653117) and Rebecca Shin-Torres, Esq., both of 228 South Orange Avenue, Suite 1400, Orlando, Florida 32801. Mr. Castellon is a competent litigator with significant experience in real-property disputes in Central Florida.

Based on informal communications between counsel — principally between Yuki Nakamura and Rebecca Shin-Torres — it appears that Ridgemark is under significant financial pressure. Hector J. Vilanova and Claudia R. Vilanova, who are the 50/50 members of Ridgemark Development Partners LLC, have indicated through their counsel that the continued prosecution of this action depends on the availability of further construction-loan draws from Pinnacle Shores. With those draws now suspended, Ridgemark lacks the financial resources to fund depositions, expert witnesses, and other litigation activities. Mr. Castellon has informally suggested that he may seek an agreed continuance or inactive status at the March 22 conference, though he has not yet made a formal proposal.

We caution that these communications were informal and should not be treated as binding representations. Nevertheless, the pattern is consistent with what we would expect given the financial dynamics described in Section III below.

C. Discovery Status and Absence of Pending Motions

As noted above, only written discovery has been exchanged. No depositions have been noticed by any party. No motions for summary judgment, motions to dismiss, or any other dispositive motions are pending. No expert witnesses have been designated. The case is, by any measure, at an early stage procedurally. This posture makes dormancy a natural and non-prejudicial course of action — the case can be suspended without prejudice to any party's right to resume litigation at a later date.

III. IMPACT OF PINNACLE SHORES' INTERVENTION

A. Pinnacle Shores' Financial Leverage Over Ridgemark

The intervention of Pinnacle Shores Bank, N.A. has fundamentally altered the financial and strategic landscape of this litigation. To understand why, it is necessary to examine the structure of the Pinnacle Shores loan and the conditions under which draws may be made.

Pinnacle Shores committed $14.6 million in a construction-to-permanent loan to Ridgemark pursuant to a Construction Loan Agreement dated November 12, 2020 (the "Pinnacle Loan"). The Pinnacle Loan is secured by a first-priority mortgage on the 16.3-acre southern parcel (Parcel ID 25-20-30-500-0030-0000), recorded in the Public Records of Seminole County. The loan was originated by Patricia Leung, SVP, Commercial Real Estate Lending, at Pinnacle Shores' Tampa headquarters.

The Pinnacle Loan is structured as a draw-down facility, meaning that Ridgemark does not receive the full $14.6 million upfront but instead submits draw requests as construction milestones are met. Each draw request must be accompanied by documentation demonstrating compliance with specified conditions, including — critically for purposes of this litigation — proof of legally enforceable vehicular access to a public right-of-way. This access condition is standard in commercial construction lending, as lenders require assurance that the completed development will have adequate physical access for its intended use. In the case of Ridgemark Commerce Village, the planned development is a 96-unit light-industrial flex-space park that will require substantial commercial truck traffic for tenant operations.

The southern parcel's only alternative frontage is Lakemont Trail, an unpaved county right-of-way that runs along the western boundary of the property. Lakemont Trail is inadequate for commercial truck traffic — it is a narrow, unpaved road that serves primarily as a rural access route for a handful of residential properties. It lacks the capacity, surface quality, and turning radii necessary for tractor-trailer access to a 96-unit light-industrial park. The only realistic vehicular access to a public right-of-way (Commerce Park Boulevard) runs through the 60-foot-wide Cross-Parcel Easement corridor across Fairwater's northern parcel. This is the very easement whose continued existence is the subject of this declaratory-judgment action.

As of the date of the draw suspension, approximately $1.9 million had been drawn against the $14.6 million commitment. These draws funded initial site work (clearing, grading, and preliminary utility stubbing) and architectural and engineering costs associated with the Ridgemark Commerce Village project. The total estimated project cost is approximately $18.75 million, broken down as follows:

• Land acquisition cost: $2.15 million

• Hard construction costs: $13.2 million

• Soft costs (architecture, engineering, permitting, legal, financing): $3.4 million

With only $1.9 million drawn and $12.7 million in remaining availability frozen, Ridgemark is unable to advance the project beyond its current rudimentary stage. The Vilanovas reportedly invested approximately $2.15 million of their own equity in the land acquisition, and there is no indication that they have the personal financial capacity to fund either the development or the litigation independently.

Pinnacle Shores has disclosed through its counsel, Carolyn Dubrow, that the bank has suspended all further draws pending judicial resolution of the easement dispute. The bank's position is straightforward: until a court determines that the southern parcel has legally enforceable vehicular access to Commerce Park Boulevard via the Cross-Parcel Easement, Pinnacle Shores cannot satisfy itself that the access condition for further draws has been met. The bank is unwilling to advance additional construction funds for a development that may ultimately lack adequate access — a situation that would impair both the viability of the development and the value of the bank's collateral.

This suspension effectively freezes Ridgemark's entire development program and, by extension, its ability to generate the revenue and financing necessary to fund this litigation.

B. Pinnacle Shores' Litigation Objectives

Pinnacle Shores' intervention is protective in nature. The bank's primary objective is to ensure that any judicial determination regarding the Cross-Parcel Easement preserves or enhances the value of its collateral — the 16.3-acre southern parcel. From the bank's perspective, a finding that the easement has been extinguished would be a catastrophic outcome, because it would mean that the southern parcel has no viable commercial vehicular access, which would in turn dramatically reduce the parcel's value as developable commercial land and impair the bank's ability to recover on its $14.6 million loan commitment (of which $1.9 million has already been advanced).

In addition to this protective interest, Pinnacle Shores has asserted lien-priority and consent rights over any modification, relocation, or compromise of the easement. Specifically, the Pinnacle Shores mortgage contains standard provisions requiring the mortgagor (Ridgemark) to obtain the mortgagee's (Pinnacle Shores') written consent before modifying, releasing, or encumbering any easement that is appurtenant to the mortgaged property. This means that even if Ridgemark and Fairwater were to reach a settlement agreement — for example, a negotiated easement relocation, a reduced-width access corridor, or a financial payment in lieu of access — Pinnacle Shores would have a contractual veto right over any such resolution. No settlement can be consummated without the bank's approval.

This consent requirement creates a significant procedural and strategic complication for Ridgemark. Not only must Ridgemark secure Fairwater's agreement to any resolution, it must also obtain the affirmative consent of its own lender — a lender that has already demonstrated its willingness to exercise financial leverage by suspending construction draws. The bank's interests in any settlement are distinct from Ridgemark's: the bank cares primarily about collateral value and loan repayment, while Ridgemark cares about development viability and profit. These interests may diverge in ways that make settlement more difficult to achieve.

C. The Three-Party Dynamic and Its Implications for Fairwater

The resulting three-party dynamic creates what amounts to a strategic stalemate — one that strongly favors Fairwater. The dynamics are as follows:

• Ridgemark cannot settle with Fairwater without Pinnacle Shores' consent.

• Ridgemark cannot fund continued litigation without Pinnacle Shores' construction-loan draws.

• Pinnacle Shores will not release construction-loan draws until the easement dispute is judicially resolved.

• Pinnacle Shores' participation in any settlement requires satisfaction of the bank's independent interests regarding collateral value and lien priority, adding complexity and potential obstacles to any negotiated resolution.

The net effect is that Ridgemark is caught in a financial and procedural vice. It cannot move forward with its development, it cannot fund the litigation necessary to break the impasse, and it cannot settle the case without its lender's approval. This is an extraordinarily favorable position for Fairwater.

While Fairwater and Pinnacle Shores are nominally adverse in the sense that both parties will ultimately take positions on the easement's enforceability, the practical effect of Pinnacle Shores' intervention has been beneficial to Fairwater in every material respect. The intervention has deprived Ridgemark of funding, stalled the prosecution of the declaratory-judgment action, and introduced a third party whose consent is required for any settlement. Fairwater should not antagonize Pinnacle Shores in the upcoming conference. We should treat the bank's participation as a neutral or positive factor and avoid any statements or positions that could align Pinnacle Shores more closely with Ridgemark's interests.

IV. STRATEGIC ANALYSIS: RECOMMENDATION TO CONSENT TO INACTIVE STATUS

A. Benefits of Dormancy to Fairwater

For the reasons set forth below, we recommend that Fairwater consent to an agreed order placing the case in inactive status. The benefits of dormancy are substantial and align with Fairwater's long-term strategic interests.

1. Preservation of the Status Quo. The single most important benefit of dormancy is that it preserves the status quo — and the status quo favors Fairwater. As matters currently stand, no easement access exists across Fairwater's 42.7-acre Sanford Logistics Center property in favor of the Ridgemark southern parcel. Ridgemark's development is frozen. The Sanford Logistics Center operates without interference. Every day the case remains dormant is a day that Ridgemark cannot develop its parcel, cannot route commercial truck traffic through the Fairwater property, and cannot access Commerce Park Boulevard through the Cross-Parcel Easement corridor. This is precisely the outcome Fairwater seeks on the merits. Dormancy achieves Fairwater's practical objectives — preservation of unencumbered control over its property — without the expense, uncertainty, and risk of a contested trial.

It bears emphasis that Ridgemark bears the burden of proof in this declaratory-judgment action. Ridgemark must prove that the Cross-Parcel Easement was not extinguished by the 2014 replat and that it continues to run with the land. If the case never proceeds to trial — whether because of dormancy, abandonment, or involuntary dismissal for failure to prosecute — the practical result is the same as a defense verdict: no easement, no access, no disruption to Fairwater's operations.

2. Protection of Tenant Operations. Fairwater's Sanford Logistics Center property is improved with a 614,000-square-foot Class-A cross-dock distribution facility located at 4250 Commerce Park Boulevard, Sanford, Florida 32771. The facility is leased in its entirety to Condor Supply Chain Solutions, Inc. ("Condor") under a 12-year triple-net (NNN) lease with a term running from October 2016 through September 2028. The base rent is $3.89 per square foot, yielding annual base rent of approximately $2,386,460. Condor is a creditworthy tenant with a strong payment history.

Critically, the Condor lease grants Condor exclusive control over truck-court ingress and egress at the facility. The distribution operation depends on unobstructed flow of tractor-trailer traffic through the truck court, which is the primary point of access for inbound and outbound freight. Nathan H. Brierly, VP of Real Estate at Condor, has communicated written opposition to any shared-access arrangement that would route additional traffic — particularly commercial truck traffic from a 96-unit flex-space park — through or adjacent to Condor's truck-court area.

If the Cross-Parcel Easement were judicially declared to be enforceable, the 60-foot-wide easement corridor would traverse a portion of the Fairwater property in close proximity to the existing truck court. Shared use of the access corridor could create conflicts with Condor's operations, including traffic congestion, safety hazards, and interference with Condor's exclusive-control rights under the lease. Such conflicts could give rise to a lease dispute, a claim for constructive eviction, or — in the worst case — a termination right in favor of Condor.

Dormancy eliminates the near-term risk of a court-ordered easement that could disrupt Condor's operations, jeopardize the lease, and impair the value of Fairwater's most significant asset in the Sanford submarket. As long as the case remains dormant, there is no proceeding in which a court could enter an order declaring the easement enforceable, and Condor's operations continue unimpeded.

3. Reduction of Defense Costs. Active litigation through the next twelve months would require substantial expenditures, including depositions of fact witnesses, engagement and preparation of expert witnesses, briefing of dispositive motions, and potentially trial preparation. Our original defense-budget estimate, provided in the engagement letter dated July 12, 2021, projected total defense costs of $350,000 to $475,000 through trial. As of the anticipated dormancy date, approximately $168,160 has been incurred (as detailed in Section V below), leaving an estimated remaining budget of approximately $181,840 to $306,840.

Dormancy halts the accrual of these costs almost entirely. The only ongoing expenses during dormancy will be modest monitoring costs (quarterly docket reviews, periodic outreach to the client, and correspondence with Meridian Title Underwriters), which we estimate at no more than $3,000 to $5,000 annually. This represents an enormous reduction in near-term expenditure compared to the active-litigation trajectory.

If the case eventually reactivates, the full remaining defense budget will be available. But there is a meaningful possibility — discussed immediately below — that the case may never reactivate at all.

4. Possible Resolution Without Further Litigation. There are several plausible scenarios under which the case could resolve itself through external events during a period of dormancy, eliminating the need for further litigation entirely:

(a) Pinnacle Shores Foreclosure. If Ridgemark defaults on the Pinnacle Shores construction loan — a realistic possibility given that the development is frozen, no revenue is being generated, and the Vilanovas' personal financial resources appear limited — Pinnacle Shores may exercise its right to foreclose on the 16.3-acre southern parcel. If the bank forecloses, the purchaser at the foreclosure sale (whether Pinnacle Shores itself as a credit-bid purchaser or a third-party buyer) may not pursue the easement claim. A bank-owned REO asset or a new developer may have different strategic priorities, including the possibility of pursuing alternative access solutions, selling the parcel to a buyer with a different development concept, or simply holding the property passively. In any event, a foreclosure would disrupt the continuity of Ridgemark's legal position and require any successor to re-evaluate whether prosecution of the easement claim is worthwhile.

(b) Abandonment of Development Plans. Even without a formal foreclosure, Ridgemark may simply abandon its development plans for Ridgemark Commerce Village. The Vilanovas may conclude that the easement dispute, the draw suspension, and the three-party stalemate make the project infeasible and elect to cut their losses. Abandonment of the development would eliminate Ridgemark's primary motivation for pursuing the easement claim, as the easement is valuable principally as a means of providing commercial vehicular access for the planned flex-space park.

(c) Strengthening of Fairwater's Laches Defense. The passage of time during dormancy further strengthens Fairwater's laches defense. Ridgemark's predecessor, the Estate of Roland P. Thurmond, took no action for over six years following the 2014 replat. Each additional month of inactivity adds to the total period of delay and reinforces the argument that it would be inequitable to permit Ridgemark to assert the easement after Fairwater has invested tens of millions of dollars in the Sanford Logistics Center in reliance on the absence of any easement encumbrance. While the running of the dormancy period itself may not be directly attributable to Ridgemark's unreasonable delay (because the inactivity is by agreed order), the cumulative effect of the pre-filing delay and the post-filing dormancy strengthens the overall equitable narrative.

B. Risks and Mitigation

While dormancy is strongly favorable to Fairwater, it is not without risks. We have identified four principal risks, along with recommended mitigation measures for each.

1. Risk: Reactivation by Ridgemark. Under Florida practice, any party to an action that has been placed in inactive status may file a Notice of Activation and a proposed scheduling order to reactivate the case. Reactivation could occur if Ridgemark secures alternative financing — for example, by obtaining equity capital from a new investor, securing a replacement construction lender willing to advance funds notwithstanding the easement dispute, or if the Vilanovas obtain personal resources sufficient to fund the litigation. Reactivation could also occur if Ridgemark resolves its dispute with Pinnacle Shores, perhaps by negotiating modified draw conditions or by persuading the bank to resume draws based on a revised project plan that addresses the access issue.

Mitigation: We recommend quarterly monitoring of the Seminole County Circuit Court docket (Case No. 2021-CA-002748-18-W) for any Notice of Activation or other filings. In addition, Gerald K. Sung (SVP, Asset Management, Fairwater) should instruct the property management team at the Sanford Logistics Center to report any observable physical activity on the adjacent southern parcel — including resumed construction activity, surveying, or the presence of construction equipment — as such activity could signal that Ridgemark has secured alternative funding and may be preparing to reactivate the case. If reactivation occurs, Fairwater will have adequate time to respond, reassemble its defense team, and prepare for the resumption of litigation.

2. Risk: Pinnacle Shores Foreclosure and Successor Claims. As discussed above, Pinnacle Shores may foreclose on the 16.3-acre southern parcel if Ridgemark defaults on the construction loan. While foreclosure could eliminate Ridgemark as a plaintiff, the purchaser at the foreclosure sale — whether Pinnacle Shores itself or a third-party buyer — may inherit the easement claim and elect to pursue it. A new owner of the southern parcel would step into Ridgemark's shoes as the alleged holder of the appurtenant easement and could seek to reactivate the case or file a new action.

Mitigation: Any successor plaintiff would face the same legal defenses that Fairwater has asserted against Ridgemark: extinguishment by the 2014 replat, merger of the dominant and servient estates, and estoppel and laches. Indeed, a successor plaintiff may be in an even weaker position than Ridgemark, because the passage of additional time and the disruption of the chain of prosecution would further support the laches defense. Fairwater should maintain readiness to defend against any successor plaintiff and should monitor Seminole County public records for any foreclosure filings or conveyances affecting the southern parcel.

3. Risk: Meridian Title Coverage Determination. Fairwater tendered the defense of this action to Meridian Title Underwriters, Inc. on August 6, 2021, under Owner's Policy of Title Insurance No. MTU-2016-FL-089312, which has a policy limit of $47,300,000. Meridian acknowledged receipt of the tender on August 19, 2021, and issued a Reservation of Rights letter on September 10, 2021. The Reservation of Rights letter identifies potential Policy Exclusion 3(a) — which excludes coverage for "defects, liens, encumbrances, adverse claims, or other matters created, suffered, assumed, or agreed to by the insured" — as a possible basis for denying coverage.

No final coverage determination has been issued to date. Dormancy may further delay Meridian's coverage decision, as the insurer may take the position that the absence of active litigation reduces the urgency of the determination. A prolonged delay in the coverage decision is adverse to Fairwater's interests because it leaves Fairwater uncertain about whether defense costs and any adverse judgment will be covered by insurance.

Mitigation: We recommend that a follow-up letter be sent to Owen R. Hatch, Senior Claims Counsel, Meridian Title Underwriters, Inc., at 4800 Semoran Boulevard, Suite 220, Orlando, Florida 32822, promptly following the March 22 conference. The letter should press for a final coverage determination, reiterate Fairwater's position that Exclusion 3(a) does not apply, and preserve Fairwater's rights under the policy, including any rights to seek recovery of defense costs incurred during the pendency of the coverage review. Our prior work-product analysis of the Reservation of Rights (prepared in September 2021) concluded that Exclusion 3(a) likely does not apply because Fairwater neither created, suffered, assumed, nor agreed to the Cross-Parcel Easement. Fairwater acquired the northern parcel in 2016 and reasonably relied on Tidewater Abstract & Title, LLC's title commitment (No. TWA-2016-09821), which did not list the Cross-Parcel Easement as a Schedule B-II exception. This omission by the title company — rather than any act or agreement by Fairwater — is the source of the current dispute, and it supports Fairwater's claim for coverage under the policy.

4. Risk: Kensington Capital Markets Notification. Fairwater's first-priority mortgage on the northern parcel (the Sanford Logistics Center property) is held by Kensington Capital Markets, LLC. The original principal amount of the Kensington loan was $28.4 million; the outstanding principal balance as of October 2021 was approximately $26.1 million. The loan bears a fixed interest rate of 4.25% and has a 10-year term maturing in October 2026. The mortgage is recorded in Official Records Book 6312, Page 0988, of the Public Records of Seminole County, Florida.

The Kensington loan documents may contain provisions requiring Fairwater to provide notice of pending litigation affecting the collateral (i.e., the Sanford Logistics Center property). While the Cross-Parcel Easement dispute involves an easement across the Fairwater property rather than a direct claim to ownership, it is arguable that a judicial determination declaring the easement enforceable could affect the property's use, value, or access — all of which could implicate Kensington's collateral interests.

Mitigation: We should confirm with Denise M. Whitford (General Counsel, Fairwater) that Kensington Capital Markets has been appropriately notified of this pending litigation and that the dormancy of the case does not trigger any default or additional reporting obligations under the loan documents. If notification has not yet been provided, it should be provided promptly to avoid any claim that Fairwater breached its disclosure obligations under the mortgage. We should also confirm whether the loan documents contain any provisions that could be triggered by the entry of an agreed order placing the case in inactive status, such as provisions requiring notice of any material change in the status of pending litigation.

C. Proposed Approach at the March 22 Conference

Based on the foregoing analysis, we recommend the following approach at the March 22, 2022 status conference:

Consent to Dormancy. Fairwater should indicate its willingness to consent to an agreed order placing the case in inactive status. The agreed order should provide that any party may reactivate the case by filing a Notice of Activation and a proposed scheduling order, with service on all other parties. We should not insist on conditions that might alienate Ridgemark or Pinnacle Shores, as both parties are expected to favor dormancy and we do not want to create unnecessary obstacles to the entry of the order.

No Concessions on the Merits. Fairwater should not volunteer any concessions, admissions, or statements regarding the merits of the easement dispute. The status conference is a procedural hearing, not a merits hearing, and Fairwater should confine its statements to the procedural question of whether to place the case in inactive status. Any comments on the merits — even seemingly innocuous observations — could be used against Fairwater in future proceedings and could undermine our affirmative defenses.

Response to Settlement or Mediation Inquiries. If Judge Cassin inquires about the prospect of settlement or mediation — as judges in the Eighteenth Judicial Circuit often do at status conferences — Fairwater should state that it is willing to discuss resolution of the dispute at the appropriate time but that the current procedural posture makes productive settlement discussions premature. Specifically, Fairwater should note that the recent intervention of Pinnacle Shores, the suspension of construction-loan draws, and the resulting uncertainty about the parties' respective positions make this an inopportune moment for settlement negotiations. This response is accurate, non-committal, and avoids any suggestion that Fairwater is unwilling to engage in good-faith settlement discussions in the future.

Neutral Posture Toward Pinnacle Shores. Fairwater should not object to Pinnacle Shores' participation in the conference. The bank's presence reinforces the three-party stalemate that benefits Fairwater, and any objection to the bank's participation would be counterproductive. If Ms. Dubrow addresses the court on behalf of Pinnacle Shores, Fairwater's counsel should listen attentively and avoid any statements that could align Pinnacle Shores more closely with Ridgemark.

Counsel Attendance. Brenda Hargrove, Esq. (FL Bar No. 0987214), of Hargrove & Liddell, P.A., 501 East Church Street, Suite 300, Orlando, Florida 32801, will appear at the conference in person as Fairwater's local counsel. Francesca Morano may appear telephonically or by video if the court's standing orders permit remote appearances by out-of-state counsel at status conferences. We should confirm the court's policy on remote appearances in advance of the hearing and file any necessary motions for pro hac vice appearance or telephonic participation as required.

V. FEES AND COSTS SUMMARY

A. Calderwood & Harkness LLP

Calderwood & Harkness LLP was retained pursuant to an engagement letter dated July 12, 2021 to serve as lead defense counsel for Fairwater in this matter. The applicable hourly rates under the engagement letter are as follows:

• Partners: $895 per hour

• Associates: $525 per hour

• Paralegals: $295 per hour

Total fees billed through the anticipated dormancy date (i.e., through March 22, 2022) are approximately $137,400. This figure encompasses all work performed by the Calderwood & Harkness team, including Francesca Morano (partner supervision and strategy), Jeffrey Park (lead associate, day-to-day case management, research, drafting, and discovery), and Yuki Nakamura (working associate, research and document review).

Total hard costs and disbursements billed through the anticipated dormancy date — including court filing fees, service-of-process charges, court reporter fees for hearings, and legal research database charges — are approximately $8,260.

The combined total of Calderwood & Harkness fees and costs through dormancy is approximately $145,660.

B. Hargrove & Liddell, P.A. (Florida Local Counsel)

Hargrove & Liddell, P.A. serves as Fairwater's Florida local counsel, handling court filings, in-person hearing appearances, and coordination with the Seminole County Clerk's office. Brenda Hargrove, Esq. is billed at $475 per hour, and associates at the firm are billed at $325 per hour.

Total fees billed by Hargrove & Liddell through the anticipated dormancy date are approximately $22,500.

C. Aggregate Defense Costs to Date

The aggregate defense costs incurred in this matter through the anticipated dormancy date are summarized as follows:

Based on the original defense budget of $350,000 to $475,000 (estimated total through trial), the estimated remaining defense budget — if the case reactivates and proceeds to trial — is approximately $181,840 to $306,840.

D. Cost Savings from Dormancy

If the case were to continue in active litigation over the next twelve months, the following litigation activities would be expected:

• Depositions of fact witnesses, including Hector J. Vilanova and Claudia R. Vilanova (the Ridgemark members), representatives of the Estate of Roland P. Thurmond (to address the chain of title and the period of common ownership), and representatives of Seminole County planning and zoning (to address the 2014 replat process and the status of Lakemont Trail);

• Retention and preparation of a licensed surveyor expert to opine on the location, dimensions, and physical characteristics of the Cross-Parcel Easement corridor and its relationship to the 2014 replat;

• Potential briefing of a motion for summary judgment, either by Fairwater (asserting extinguishment as a matter of law) or by Ridgemark (asserting the continued enforceability of the easement); and

• Associated travel, transcript, and expert-fee costs.

The estimated cost for these active-litigation activities over the next twelve months is $80,000 to $120,000. Dormancy defers all such expenditures indefinitely, preserving the defense budget for a future phase if reactivation occurs and eliminating these costs entirely if the case resolves through external events or is dismissed for failure to prosecute.

The ongoing monitoring costs during dormancy — quarterly docket reviews, periodic client communications, correspondence with Meridian Title, and miscellaneous administrative tasks — are estimated at approximately $3,000 to $5,000 annually, a fraction of the active-litigation costs that would otherwise be incurred.

VI. RECOMMENDED MONITORING PROTOCOL

To protect Fairwater's interests during the period of dormancy, we recommend the implementation of the following monitoring protocol:

1. Quarterly Docket Review. On a quarterly basis (beginning in June 2022), a member of the Calderwood & Harkness litigation team will review the Seminole County Circuit Court docket for Case No. 2021-CA-002748-18-W to identify any Notice of Activation, motion for reactivation, or other filing by any party. Any filing will be immediately communicated to Francesca Morano, Brenda Hargrove, and the Fairwater client team.

2. Quarterly Outreach to Gerald K. Sung. On a quarterly basis, we will contact Gerald K. Sung (SVP, Asset Management, Fairwater) to inquire whether the property management team at the Sanford Logistics Center has observed any activity on the adjacent Ridgemark southern parcel — including resumed construction activity, surveying, the presence of construction equipment, marketing signage, or any other indicia that Ridgemark or a successor has resumed development activities. Such activity could signal the availability of alternative financing and a potential reactivation of the case.

3. Semi-Annual Follow-Up with Meridian Title Underwriters. On a semi-annual basis, we will send a follow-up letter to Owen R. Hatch, Senior Claims Counsel, Meridian Title Underwriters, Inc. (4800 Semoran Boulevard, Suite 220, Orlando, FL 32822), pressing for a final coverage determination under Policy No. MTU-2016-FL-089312 and preserving Fairwater's rights under the policy. We will continue to assert Fairwater's position that Exclusion 3(a) does not apply and that defense costs should be covered retroactively to the date of tender.

4. Kensington Capital Markets Notification Confirmation. Promptly following the March 22 conference, we will confirm with Denise M. Whitford (General Counsel, Fairwater) that Kensington Capital Markets, LLC has been appropriately notified of the pending litigation and the dormancy order. We will review the relevant provisions of the Kensington loan documents to confirm that dormancy does not trigger any default, reporting obligation, or other adverse consequence under the loan.

5. Annual Failure-to-Prosecute Assessment. On an annual basis, we will assess whether Florida's procedural rules regarding dismissal for failure to prosecute could result in involuntary dismissal of the case. Florida Rule of Civil Procedure 1.420(e) permits the court, on its own motion or on the motion of any party, to dismiss an action for lack of record activity for a period of one year. However, an agreed order of inactivity may toll or modify this standard, and the precise effect of such an order on the Rule 1.420(e) timeline requires further analysis. If dormancy extends beyond one year, we will evaluate whether Fairwater should affirmatively seek dismissal under Rule 1.420(e) or whether it is strategically preferable to allow the case to remain dormant without triggering the adversarial dynamics that a dismissal motion would create. This assessment will be documented in a supplemental memorandum for the client team.

VII. CONCLUSION AND NEXT STEPS

For the reasons set forth in this memorandum, we recommend that Fairwater consent to an agreed order placing the case in inactive status at the March 22, 2022 status conference. Dormancy preserves the status quo that Fairwater seeks to maintain, protects Condor's tenant operations, halts the accrual of defense costs, and creates a meaningful possibility that the case will resolve itself through external events without the need for further litigation. The risks of dormancy — principally the possibility of reactivation and the delay in the Meridian Title coverage determination — are manageable and can be mitigated through the monitoring protocol outlined above.

The immediate action items are as follows:

1. Attend the March 22, 2022 Status Conference. Brenda Hargrove will appear in person before Judge Cassin on Fairwater's behalf. Francesca Morano will appear telephonically or by video if the court permits remote participation by out-of-state counsel. The conference is scheduled for 2:00 p.m. at the Seminole County Courthouse.

2. Obtain Client Approval. Prior to the conference, communicate this recommendation to Denise M. Whitford (General Counsel, Fairwater) and Gerald K. Sung (SVP, Asset Management, Fairwater) and obtain their authorization to consent to the agreed dormancy order.

3. Follow-Up with Meridian Title Underwriters. Promptly following the conference, send a follow-up letter to Owen R. Hatch, Senior Claims Counsel, Meridian Title Underwriters, Inc., pressing for a final coverage determination under Policy No. MTU-2016-FL-089312 and preserving Fairwater's rights under the policy.

4. Confirm Kensington Notification Status. Confirm with Denise M. Whitford that Kensington Capital Markets, LLC has been appropriately notified of the pending litigation and that the dormancy order does not trigger any adverse consequences under the Kensington loan documents.

5. Implement Quarterly Monitoring Protocol. Establish the quarterly docket-review and client-outreach schedule described in Section VI, with the first monitoring cycle to commence in June 2022.

6. Advise Condor Supply Chain Solutions. Through Gerald K. Sung, inform Condor Supply Chain Solutions (specifically Nathan H. Brierly, VP, Real Estate) of the dormancy order. Mr. Brierly should be informed that no immediate action is required on Condor's part but that the easement claim filed by Ridgemark remains pending and that Fairwater will continue to defend Condor's interests, including Condor's exclusive control over truck-court ingress and egress at the Sanford Logistics Center.

This memorandum reflects the mental impressions, conclusions, opinions, and legal theories of counsel and is protected by the attorney-client privilege and the work-product doctrine. It should be preserved as attorney work product and should not be shared with any party outside the attorney-client relationship, including Condor Supply Chain Solutions, Pinnacle Shores Bank, Meridian Title Underwriters, Kensington Capital Markets, or any other third party, without the express prior consent of counsel.

Jeffrey Park Lead Associate, Litigation (General) Calderwood & Harkness LLP 1725 K Street NW, Suite 1100 Washington, DC 20006 Telephone: (202) 555-4800

Email: jpark@calderwoodharkness.com

Engagement No. 1036-00003

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT This memorandum is protected by the attorney-client privilege and the work-product doctrine. Unauthorized disclosure is prohibited.

TO:	Francesca Morano, Responsible Partner, Litigation (General); Samuel Eklund, Billing Partner, Litigation (General)
CC:	Yuki Nakamura, Working Associate, Litigation (General)
FROM:	Jeffrey Park, Lead Associate, Litigation (General)
DATE:	March 18, 2022
RE:	Strategy for March 22, 2022 Three-Way Status Conference and Recommendation to Consent to Case Dormancy — Ridgemark Development Partners LLC v. Fairwater Real Estate Investment Trust, Case No. 2021-CA-002748-18-W (Circuit Court, 18th Judicial Circuit, Seminole County, FL)
CLIENT:	Fairwater Real Estate Investment Trust
MATTER NO.:	1036-00003
PRIVILEGE:	This memorandum is protected by the attorney-client privilege and the work-product doctrine. It reflects the mental impressions, conclusions, opinions, and legal theories of counsel and is intended solely for the use of the client and members of the legal team identified above. It should not be disclosed to any third party without the express written consent of counsel.
Category	Amount
Calderwood & Harkness LLP — Fees	$137,400
Calderwood & Harkness LLP — Costs/Disbursements	$8,260
Hargrove & Liddell, P.A. — Fees	$22,500
Total Defense Costs to Date	$168,160

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP 1725 K Street NW, Suite 1100 Washington, DC 20006
MEMORANDUM
I. EXECUTIVE SUMMARY
This memorandum outlines the recommended litigation strategy for the three-way status conference scheduled for Tuesday, March 22, 2022, at 2:00 p.m. before the Honorable Eleanor V. Cassin, Circuit Court of the Eighteenth Judicial Circuit in and for Seminole County, Florida. The conference will be the first proceeding at which all three parties — Ridgemark Development Partners LLC ("Ridgemark" or "Plaintiff"), Fairwater Real Estate Investment Trust ("Fairwater" or "Defendant"), and Pinnacle Shores Bank, N.A. ("Pinnacle Shores" or "Intervenor") — will appear before Judge Cassin since the court granted Pinnacle Shores' Motion to Intervene on February 28, 2022.
The central development since the last conference is Pinnacle Shores' disclosure that it has suspended all further draws on its $14.6 million construction-to-permanent loan to Ridgemark pending judicial resolution of the Cross-Parcel Easement dispute that is the subject of this action. This suspension effectively deprives Ridgemark of the funds necessary to pursue both its planned Ridgemark Commerce Village development on the 16.3-acre southern parcel and the continued prosecution of this litigation. The intervention has fundamentally altered the dynamics of the case, creating a three-party stalemate that, for the reasons set forth below, strongly favors Fairwater.
Our core recommendation is that Fairwater should consent to placing the case in inactive status (i.e., case dormancy). Dormancy preserves the status quo — under which no easement access exists across Fairwater's 42.7-acre Sanford Logistics Center property in favor of the Ridgemark southern parcel — while simultaneously halting the accrual of defense costs for Fairwater. Every day that passes without a judicial determination that the Cross-Parcel Easement remains enforceable is a day that Fairwater's sole tenant, Condor Supply Chain Solutions, Inc., enjoys unencumbered control over the truck-court ingress and egress at its 614,000-square-foot Class-A cross-dock distribution facility, and a day that Ridgemark's development plans remain frozen.
This memorandum addresses the following topics:
(A) the current procedural posture of the case, including the limited discovery that has been exchanged and the absence of any pending dispositive motions;
(B) the impact of Pinnacle Shores' intervention on Ridgemark's ability to fund and prosecute this litigation, and the resulting three-party dynamic;
(C) the strategic benefits and risks of consenting to dormancy, including the preservation of the status quo, protection of tenant operations, reduction of defense costs, and the possibility of resolution through external events;
(D) monitoring and reactivation considerations, including a recommended quarterly monitoring protocol; and
(E) a summary of fees and costs incurred to date and estimated savings from dormancy.
We request that this memorandum be reviewed and that client authorization be obtained from Denise M. Whitford (General Counsel, Fairwater) and Gerald K. Sung (SVP, Asset Management, Fairwater) in advance of the March 22 conference so that our local counsel, Brenda Hargrove of Hargrove & Liddell, P.A., may proceed accordingly at the hearing.
II. CURRENT POSTURE OF THE CASE
A. Procedural History
The procedural history of this action is set forth below in chronological order. As will be apparent, the case remains at a relatively early stage, with limited written discovery exchanged, no depositions taken, and no dispositive motions pending. The entry of Pinnacle Shores as an intervenor is the most significant recent development and has altered the trajectory of the litigation in ways that Fairwater should exploit.
July 19, 2021 — Filing of the Complaint. Ridgemark Development Partners LLC filed a Complaint for Declaratory Judgment in the Circuit Court of the Eighteenth Judicial Circuit in and for Seminole County, Florida, Case No. 2021-CA-002748-18-W. The Complaint seeks a judicial declaration that the 60-foot-wide Cross-Parcel Easement, originally recorded on June 22, 1998, in Official Records Book 4517, Page 1283, of the Public Records of Seminole County, Florida, was not extinguished by the Commerce Park Boulevard Phase II Replat recorded on September 15, 2014, in Plat Book 78, Pages 44–46, of the Public Records of Seminole County, Florida. Ridgemark contends that the Cross-Parcel Easement continues to run with the land in favor of Ridgemark as the successor-in-interest to the southern parcel (Parcel ID 25-20-30-500-0030-0000), a 16.3-acre tract that Ridgemark acquired from the Estate of Roland P. Thurmond in 2019.
The Cross-Parcel Easement, as originally granted in 1998, provides a 60-foot-wide corridor for vehicular access connecting the southern parcel to Commerce Park Boulevard, a public right-of-way, by traversing the northern parcel — which is now owned by Fairwater and constitutes the 42.7-acre Sanford Logistics Center. Ridgemark's Complaint asserts that this easement is an appurtenance to the southern parcel and that it survived the 2014 replat because the replat did not expressly extinguish the easement and because the easement was created by a separate instrument rather than by the original plat.
August 30, 2021 — Fairwater's Answer and Affirmative Defenses. Fairwater timely filed its Answer and Affirmative Defenses, denying the material allegations of the Complaint and asserting four affirmative defenses:
(i) Extinguishment by the 2014 Replat. Fairwater contends that the Commerce Park Boulevard Phase II Replat, recorded on September 15, 2014, superseded all prior easements not expressly reserved or depicted on the replat, and that the Cross-Parcel Easement was neither reserved nor depicted. Under Florida law, a replat that vacates a prior plat extinguishes easements created by that plat unless expressly preserved. Fairwater argues by extension that the easement, though created by a separate instrument, was effectively nullified because the replat reconfigured the lot lines and access points of the northern parcel in a manner inconsistent with the continued existence of the easement corridor.
(ii) Estoppel and Laches. The Estate of Roland P. Thurmond, Ridgemark's predecessor-in-interest, took no action to challenge the replat or assert easement rights for over six years following the recording of the 2014 replat. During that period, Fairwater acquired the northern parcel in 2016, constructed the 614,000-square-foot Sanford Logistics Center distribution facility, and leased the facility to Condor Supply Chain Solutions, Inc. — all without any objection from the Thurmond Estate or any subsequent owner of the southern parcel. Ridgemark and its predecessors slept on their rights, and it would be inequitable to permit them to assert the easement now, after Fairwater has made substantial investments in reliance on the absence of any easement encumbrance.
(iii) Merger of the Dominant and Servient Estates. During the period of common Thurmond family ownership (approximately 2012 to 2014), when both the northern and southern parcels were held by the Estate of Roland P. Thurmond or by members of the Thurmond family acting in concert, the dominant and servient estates merged, extinguishing the easement by operation of law. While this defense requires further factual development through discovery, the chain-of-title records suggest that the two parcels were under common ownership or control during the relevant period.
(iv) Failure to State a Cause of Action. Fairwater reserved its right to argue that the Complaint fails to state a cause of action for declaratory relief because Ridgemark has not alleged facts sufficient to establish the continued legal existence of the easement in light of the 2014 replat and the doctrine of merger.
October 4, 2021 – December 17, 2021 — Written discovery. Limited written discovery was exchanged during this period. On October 4, 2021, Fairwater served its First Set of Interrogatories (Nos. 1–25) and First Requests for Production of Documents (Nos. 1–30) on Ridgemark. Ridgemark served its responses on November 15, 2021. Ridgemark's responses were adequate in scope, though several responses included objections that we noted for potential follow-up. On November 1, 2021, Ridgemark served its own First Set of Interrogatories (Nos. 1–20) and Requests for Production (Nos. 1–25) on Fairwater. Fairwater, through this firm and Hargrove & Liddell, served its responses and document production on December 17, 2021, consistent with the applicable response deadlines under the Florida Rules of Civil Procedure. No discovery disputes have arisen, and no motions to compel are pending.
January 14, 2022 — Pinnacle Shores' Motion to Intervene. Pinnacle Shores Bank, N.A., Ridgemark's construction lender, filed its Motion to Intervene as of right under Florida Rule of Civil Procedure 1.230(a). Pinnacle Shores argued that it holds a first-priority mortgage on the 16.3-acre southern parcel (Ridgemark's property), that the enforceability and value of its collateral depend directly on whether the southern parcel has legally enforceable vehicular access to a public right-of-way, and that its interests are not adequately represented by Ridgemark because Ridgemark's interests as a developer are distinct from Pinnacle Shores' interests as a secured lender.
Fairwater filed a Response in Opposition to the Motion to Intervene on February 4, 2022. Our opposition argued on two grounds: first, that Ridgemark adequately represents Pinnacle Shores' interests because both parties seek the same outcome — a declaration that the Cross-Parcel Easement remains enforceable — and second, that Pinnacle Shores' $14.6 million mortgage encumbers only the southern parcel, not the Fairwater property, and thus the bank has no direct interest in the disposition of an easement across the northern parcel. We recognized at the time of filing that this opposition was unlikely to prevail, given Florida's liberal standards for intervention as of right, but we filed it to preserve the record and to avoid any inference that Fairwater welcomed the bank's participation.
February 28, 2022 — Order Granting Intervention. Judge Cassin granted Pinnacle Shores' Motion to Intervene, finding that the bank has a direct, substantial, and presently existing interest in the easement determination because the enforceability and value of its collateral — the southern parcel — depends on whether that parcel has legally enforceable vehicular access to a public right-of-way. The court specifically noted that Lakemont Trail, the only alternative frontage for the southern parcel, is an unpaved county right-of-way that does not support the commercial truck traffic necessary for the planned development. The court further found that Ridgemark does not adequately represent Pinnacle Shores' interests because the bank has independent concerns regarding lien priority, consent rights over any modification or compromise of the easement, and the protection of its collateral value.
Pinnacle Shores is represented by Carolyn F. Dubrow, Esq. (FL Bar No. 0412389) of Whitmore Dane LLP, located at 100 North Tampa Street, Suite 2600, Tampa, Florida 33602. Ms. Dubrow is an experienced real-estate litigator with a strong reputation in the Tampa Bay commercial lending bar. Her involvement suggests that Pinnacle Shores intends to participate actively if the case moves forward.
B. Plaintiff's Counsel and Current Posture
Ridgemark is represented by Castellon Foley & Ruiz LLP, a mid-size Orlando firm with a general commercial and real-estate litigation practice. The lead attorneys are Marco D. Castellon, Esq. (FL Bar No. 0653117) and Rebecca Shin-Torres, Esq., both of 228 South Orange Avenue, Suite 1400, Orlando, Florida 32801. Mr. Castellon is a competent litigator with significant experience in real-property disputes in Central Florida.
Based on informal communications between counsel — principally between Yuki Nakamura and Rebecca Shin-Torres — it appears that Ridgemark is under significant financial pressure. Hector J. Vilanova and Claudia R. Vilanova, who are the 50/50 members of Ridgemark Development Partners LLC, have indicated through their counsel that the continued prosecution of this action depends on the availability of further construction-loan draws from Pinnacle Shores. With those draws now suspended, Ridgemark lacks the financial resources to fund depositions, expert witnesses, and other litigation activities. Mr. Castellon has informally suggested that he may seek an agreed continuance or inactive status at the March 22 conference, though he has not yet made a formal proposal.
We caution that these communications were informal and should not be treated as binding representations. Nevertheless, the pattern is consistent with what we would expect given the financial dynamics described in Section III below.
C. Discovery Status and Absence of Pending Motions
As noted above, only written discovery has been exchanged. No depositions have been noticed by any party. No motions for summary judgment, motions to dismiss, or any other dispositive motions are pending. No expert witnesses have been designated. The case is, by any measure, at an early stage procedurally. This posture makes dormancy a natural and non-prejudicial course of action — the case can be suspended without prejudice to any party's right to resume litigation at a later date.
III. IMPACT OF PINNACLE SHORES' INTERVENTION
A. Pinnacle Shores' Financial Leverage Over Ridgemark
The intervention of Pinnacle Shores Bank, N.A. has fundamentally altered the financial and strategic landscape of this litigation. To understand why, it is necessary to examine the structure of the Pinnacle Shores loan and the conditions under which draws may be made.
Pinnacle Shores committed $14.6 million in a construction-to-permanent loan to Ridgemark pursuant to a Construction Loan Agreement dated November 12, 2020 (the "Pinnacle Loan"). The Pinnacle Loan is secured by a first-priority mortgage on the 16.3-acre southern parcel (Parcel ID 25-20-30-500-0030-0000), recorded in the Public Records of Seminole County. The loan was originated by Patricia Leung, SVP, Commercial Real Estate Lending, at Pinnacle Shores' Tampa headquarters.
The Pinnacle Loan is structured as a draw-down facility, meaning that Ridgemark does not receive the full $14.6 million upfront but instead submits draw requests as construction milestones are met. Each draw request must be accompanied by documentation demonstrating compliance with specified conditions, including — critically for purposes of this litigation — proof of legally enforceable vehicular access to a public right-of-way. This access condition is standard in commercial construction lending, as lenders require assurance that the completed development will have adequate physical access for its intended use. In the case of Ridgemark Commerce Village, the planned development is a 96-unit light-industrial flex-space park that will require substantial commercial truck traffic for tenant operations.
The southern parcel's only alternative frontage is Lakemont Trail, an unpaved county right-of-way that runs along the western boundary of the property. Lakemont Trail is inadequate for commercial truck traffic — it is a narrow, unpaved road that serves primarily as a rural access route for a handful of residential properties. It lacks the capacity, surface quality, and turning radii necessary for tractor-trailer access to a 96-unit light-industrial park. The only realistic vehicular access to a public right-of-way (Commerce Park Boulevard) runs through the 60-foot-wide Cross-Parcel Easement corridor across Fairwater's northern parcel. This is the very easement whose continued existence is the subject of this declaratory-judgment action.
As of the date of the draw suspension, approximately $1.9 million had been drawn against the $14.6 million commitment. These draws funded initial site work (clearing, grading, and preliminary utility stubbing) and architectural and engineering costs associated with the Ridgemark Commerce Village project. The total estimated project cost is approximately $18.75 million, broken down as follows:
• Land acquisition cost: $2.15 million
• Hard construction costs: $13.2 million
• Soft costs (architecture, engineering, permitting, legal, financing): $3.4 million
With only $1.9 million drawn and $12.7 million in remaining availability frozen, Ridgemark is unable to advance the project beyond its current rudimentary stage. The Vilanovas reportedly invested approximately $2.15 million of their own equity in the land acquisition, and there is no indication that they have the personal financial capacity to fund either the development or the litigation independently.
Pinnacle Shores has disclosed through its counsel, Carolyn Dubrow, that the bank has suspended all further draws pending judicial resolution of the easement dispute. The bank's position is straightforward: until a court determines that the southern parcel has legally enforceable vehicular access to Commerce Park Boulevard via the Cross-Parcel Easement, Pinnacle Shores cannot satisfy itself that the access condition for further draws has been met. The bank is unwilling to advance additional construction funds for a development that may ultimately lack adequate access — a situation that would impair both the viability of the development and the value of the bank's collateral.
This suspension effectively freezes Ridgemark's entire development program and, by extension, its ability to generate the revenue and financing necessary to fund this litigation.
B. Pinnacle Shores' Litigation Objectives
Pinnacle Shores' intervention is protective in nature. The bank's primary objective is to ensure that any judicial determination regarding the Cross-Parcel Easement preserves or enhances the value of its collateral — the 16.3-acre southern parcel. From the bank's perspective, a finding that the easement has been extinguished would be a catastrophic outcome, because it would mean that the southern parcel has no viable commercial vehicular access, which would in turn dramatically reduce the parcel's value as developable commercial land and impair the bank's ability to recover on its $14.6 million loan commitment (of which $1.9 million has already been advanced).
In addition to this protective interest, Pinnacle Shores has asserted lien-priority and consent rights over any modification, relocation, or compromise of the easement. Specifically, the Pinnacle Shores mortgage contains standard provisions requiring the mortgagor (Ridgemark) to obtain the mortgagee's (Pinnacle Shores') written consent before modifying, releasing, or encumbering any easement that is appurtenant to the mortgaged property. This means that even if Ridgemark and Fairwater were to reach a settlement agreement — for example, a negotiated easement relocation, a reduced-width access corridor, or a financial payment in lieu of access — Pinnacle Shores would have a contractual veto right over any such resolution. No settlement can be consummated without the bank's approval.
This consent requirement creates a significant procedural and strategic complication for Ridgemark. Not only must Ridgemark secure Fairwater's agreement to any resolution, it must also obtain the affirmative consent of its own lender — a lender that has already demonstrated its willingness to exercise financial leverage by suspending construction draws. The bank's interests in any settlement are distinct from Ridgemark's: the bank cares primarily about collateral value and loan repayment, while Ridgemark cares about development viability and profit. These interests may diverge in ways that make settlement more difficult to achieve.
C. The Three-Party Dynamic and Its Implications for Fairwater
The resulting three-party dynamic creates what amounts to a strategic stalemate — one that strongly favors Fairwater. The dynamics are as follows:
• Ridgemark cannot settle with Fairwater without Pinnacle Shores' consent.
• Ridgemark cannot fund continued litigation without Pinnacle Shores' construction-loan draws.
• Pinnacle Shores will not release construction-loan draws until the easement dispute is judicially resolved.
• Pinnacle Shores' participation in any settlement requires satisfaction of the bank's independent interests regarding collateral value and lien priority, adding complexity and potential obstacles to any negotiated resolution.
The net effect is that Ridgemark is caught in a financial and procedural vice. It cannot move forward with its development, it cannot fund the litigation necessary to break the impasse, and it cannot settle the case without its lender's approval. This is an extraordinarily favorable position for Fairwater.
While Fairwater and Pinnacle Shores are nominally adverse in the sense that both parties will ultimately take positions on the easement's enforceability, the practical effect of Pinnacle Shores' intervention has been beneficial to Fairwater in every material respect. The intervention has deprived Ridgemark of funding, stalled the prosecution of the declaratory-judgment action, and introduced a third party whose consent is required for any settlement. Fairwater should not antagonize Pinnacle Shores in the upcoming conference. We should treat the bank's participation as a neutral or positive factor and avoid any statements or positions that could align Pinnacle Shores more closely with Ridgemark's interests.
IV. STRATEGIC ANALYSIS: RECOMMENDATION TO CONSENT TO INACTIVE STATUS
A. Benefits of Dormancy to Fairwater
For the reasons set forth below, we recommend that Fairwater consent to an agreed order placing the case in inactive status. The benefits of dormancy are substantial and align with Fairwater's long-term strategic interests.
1. Preservation of the Status Quo. The single most important benefit of dormancy is that it preserves the status quo — and the status quo favors Fairwater. As matters currently stand, no easement access exists across Fairwater's 42.7-acre Sanford Logistics Center property in favor of the Ridgemark southern parcel. Ridgemark's development is frozen. The Sanford Logistics Center operates without interference. Every day the case remains dormant is a day that Ridgemark cannot develop its parcel, cannot route commercial truck traffic through the Fairwater property, and cannot access Commerce Park Boulevard through the Cross-Parcel Easement corridor. This is precisely the outcome Fairwater seeks on the merits. Dormancy achieves Fairwater's practical objectives — preservation of unencumbered control over its property — without the expense, uncertainty, and risk of a contested trial.
It bears emphasis that Ridgemark bears the burden of proof in this declaratory-judgment action. Ridgemark must prove that the Cross-Parcel Easement was not extinguished by the 2014 replat and that it continues to run with the land. If the case never proceeds to trial — whether because of dormancy, abandonment, or involuntary dismissal for failure to prosecute — the practical result is the same as a defense verdict: no easement, no access, no disruption to Fairwater's operations.
2. Protection of Tenant Operations. Fairwater's Sanford Logistics Center property is improved with a 614,000-square-foot Class-A cross-dock distribution facility located at 4250 Commerce Park Boulevard, Sanford, Florida 32771. The facility is leased in its entirety to Condor Supply Chain Solutions, Inc. ("Condor") under a 12-year triple-net (NNN) lease with a term running from October 2016 through September 2028. The base rent is $3.89 per square foot, yielding annual base rent of approximately $2,386,460. Condor is a creditworthy tenant with a strong payment history.
Critically, the Condor lease grants Condor exclusive control over truck-court ingress and egress at the facility. The distribution operation depends on unobstructed flow of tractor-trailer traffic through the truck court, which is the primary point of access for inbound and outbound freight. Nathan H. Brierly, VP of Real Estate at Condor, has communicated written opposition to any shared-access arrangement that would route additional traffic — particularly commercial truck traffic from a 96-unit flex-space park — through or adjacent to Condor's truck-court area.
If the Cross-Parcel Easement were judicially declared to be enforceable, the 60-foot-wide easement corridor would traverse a portion of the Fairwater property in close proximity to the existing truck court. Shared use of the access corridor could create conflicts with Condor's operations, including traffic congestion, safety hazards, and interference with Condor's exclusive-control rights under the lease. Such conflicts could give rise to a lease dispute, a claim for constructive eviction, or — in the worst case — a termination right in favor of Condor.
Dormancy eliminates the near-term risk of a court-ordered easement that could disrupt Condor's operations, jeopardize the lease, and impair the value of Fairwater's most significant asset in the Sanford submarket. As long as the case remains dormant, there is no proceeding in which a court could enter an order declaring the easement enforceable, and Condor's operations continue unimpeded.
3. Reduction of Defense Costs. Active litigation through the next twelve months would require substantial expenditures, including depositions of fact witnesses, engagement and preparation of expert witnesses, briefing of dispositive motions, and potentially trial preparation. Our original defense-budget estimate, provided in the engagement letter dated July 12, 2021, projected total defense costs of $350,000 to $475,000 through trial. As of the anticipated dormancy date, approximately $168,160 has been incurred (as detailed in Section V below), leaving an estimated remaining budget of approximately $181,840 to $306,840.
Dormancy halts the accrual of these costs almost entirely. The only ongoing expenses during dormancy will be modest monitoring costs (quarterly docket reviews, periodic outreach to the client, and correspondence with Meridian Title Underwriters), which we estimate at no more than $3,000 to $5,000 annually. This represents an enormous reduction in near-term expenditure compared to the active-litigation trajectory.
If the case eventually reactivates, the full remaining defense budget will be available. But there is a meaningful possibility — discussed immediately below — that the case may never reactivate at all.
4. Possible Resolution Without Further Litigation. There are several plausible scenarios under which the case could resolve itself through external events during a period of dormancy, eliminating the need for further litigation entirely:
(a) Pinnacle Shores Foreclosure. If Ridgemark defaults on the Pinnacle Shores construction loan — a realistic possibility given that the development is frozen, no revenue is being generated, and the Vilanovas' personal financial resources appear limited — Pinnacle Shores may exercise its right to foreclose on the 16.3-acre southern parcel. If the bank forecloses, the purchaser at the foreclosure sale (whether Pinnacle Shores itself as a credit-bid purchaser or a third-party buyer) may not pursue the easement claim. A bank-owned REO asset or a new developer may have different strategic priorities, including the possibility of pursuing alternative access solutions, selling the parcel to a buyer with a different development concept, or simply holding the property passively. In any event, a foreclosure would disrupt the continuity of Ridgemark's legal position and require any successor to re-evaluate whether prosecution of the easement claim is worthwhile.
(b) Abandonment of Development Plans. Even without a formal foreclosure, Ridgemark may simply abandon its development plans for Ridgemark Commerce Village. The Vilanovas may conclude that the easement dispute, the draw suspension, and the three-party stalemate make the project infeasible and elect to cut their losses. Abandonment of the development would eliminate Ridgemark's primary motivation for pursuing the easement claim, as the easement is valuable principally as a means of providing commercial vehicular access for the planned flex-space park.
(c) Strengthening of Fairwater's Laches Defense. The passage of time during dormancy further strengthens Fairwater's laches defense. Ridgemark's predecessor, the Estate of Roland P. Thurmond, took no action for over six years following the 2014 replat. Each additional month of inactivity adds to the total period of delay and reinforces the argument that it would be inequitable to permit Ridgemark to assert the easement after Fairwater has invested tens of millions of dollars in the Sanford Logistics Center in reliance on the absence of any easement encumbrance. While the running of the dormancy period itself may not be directly attributable to Ridgemark's unreasonable delay (because the inactivity is by agreed order), the cumulative effect of the pre-filing delay and the post-filing dormancy strengthens the overall equitable narrative.
B. Risks and Mitigation
While dormancy is strongly favorable to Fairwater, it is not without risks. We have identified four principal risks, along with recommended mitigation measures for each.
1. Risk: Reactivation by Ridgemark. Under Florida practice, any party to an action that has been placed in inactive status may file a Notice of Activation and a proposed scheduling order to reactivate the case. Reactivation could occur if Ridgemark secures alternative financing — for example, by obtaining equity capital from a new investor, securing a replacement construction lender willing to advance funds notwithstanding the easement dispute, or if the Vilanovas obtain personal resources sufficient to fund the litigation. Reactivation could also occur if Ridgemark resolves its dispute with Pinnacle Shores, perhaps by negotiating modified draw conditions or by persuading the bank to resume draws based on a revised project plan that addresses the access issue.
Mitigation: We recommend quarterly monitoring of the Seminole County Circuit Court docket (Case No. 2021-CA-002748-18-W) for any Notice of Activation or other filings. In addition, Gerald K. Sung (SVP, Asset Management, Fairwater) should instruct the property management team at the Sanford Logistics Center to report any observable physical activity on the adjacent southern parcel — including resumed construction activity, surveying, or the presence of construction equipment — as such activity could signal that Ridgemark has secured alternative funding and may be preparing to reactivate the case. If reactivation occurs, Fairwater will have adequate time to respond, reassemble its defense team, and prepare for the resumption of litigation.
2. Risk: Pinnacle Shores Foreclosure and Successor Claims. As discussed above, Pinnacle Shores may foreclose on the 16.3-acre southern parcel if Ridgemark defaults on the construction loan. While foreclosure could eliminate Ridgemark as a plaintiff, the purchaser at the foreclosure sale — whether Pinnacle Shores itself or a third-party buyer — may inherit the easement claim and elect to pursue it. A new owner of the southern parcel would step into Ridgemark's shoes as the alleged holder of the appurtenant easement and could seek to reactivate the case or file a new action.
Mitigation: Any successor plaintiff would face the same legal defenses that Fairwater has asserted against Ridgemark: extinguishment by the 2014 replat, merger of the dominant and servient estates, and estoppel and laches. Indeed, a successor plaintiff may be in an even weaker position than Ridgemark, because the passage of additional time and the disruption of the chain of prosecution would further support the laches defense. Fairwater should maintain readiness to defend against any successor plaintiff and should monitor Seminole County public records for any foreclosure filings or conveyances affecting the southern parcel.
3. Risk: Meridian Title Coverage Determination. Fairwater tendered the defense of this action to Meridian Title Underwriters, Inc. on August 6, 2021, under Owner's Policy of Title Insurance No. MTU-2016-FL-089312, which has a policy limit of $47,300,000. Meridian acknowledged receipt of the tender on August 19, 2021, and issued a Reservation of Rights letter on September 10, 2021. The Reservation of Rights letter identifies potential Policy Exclusion 3(a) — which excludes coverage for "defects, liens, encumbrances, adverse claims, or other matters created, suffered, assumed, or agreed to by the insured" — as a possible basis for denying coverage.
No final coverage determination has been issued to date. Dormancy may further delay Meridian's coverage decision, as the insurer may take the position that the absence of active litigation reduces the urgency of the determination. A prolonged delay in the coverage decision is adverse to Fairwater's interests because it leaves Fairwater uncertain about whether defense costs and any adverse judgment will be covered by insurance.
Mitigation: We recommend that a follow-up letter be sent to Owen R. Hatch, Senior Claims Counsel, Meridian Title Underwriters, Inc., at 4800 Semoran Boulevard, Suite 220, Orlando, Florida 32822, promptly following the March 22 conference. The letter should press for a final coverage determination, reiterate Fairwater's position that Exclusion 3(a) does not apply, and preserve Fairwater's rights under the policy, including any rights to seek recovery of defense costs incurred during the pendency of the coverage review. Our prior work-product analysis of the Reservation of Rights (prepared in September 2021) concluded that Exclusion 3(a) likely does not apply because Fairwater neither created, suffered, assumed, nor agreed to the Cross-Parcel Easement. Fairwater acquired the northern parcel in 2016 and reasonably relied on Tidewater Abstract & Title, LLC's title commitment (No. TWA-2016-09821), which did not list the Cross-Parcel Easement as a Schedule B-II exception. This omission by the title company — rather than any act or agreement by Fairwater — is the source of the current dispute, and it supports Fairwater's claim for coverage under the policy.
4. Risk: Kensington Capital Markets Notification. Fairwater's first-priority mortgage on the northern parcel (the Sanford Logistics Center property) is held by Kensington Capital Markets, LLC. The original principal amount of the Kensington loan was $28.4 million; the outstanding principal balance as of October 2021 was approximately $26.1 million. The loan bears a fixed interest rate of 4.25% and has a 10-year term maturing in October 2026. The mortgage is recorded in Official Records Book 6312, Page 0988, of the Public Records of Seminole County, Florida.
The Kensington loan documents may contain provisions requiring Fairwater to provide notice of pending litigation affecting the collateral (i.e., the Sanford Logistics Center property). While the Cross-Parcel Easement dispute involves an easement across the Fairwater property rather than a direct claim to ownership, it is arguable that a judicial determination declaring the easement enforceable could affect the property's use, value, or access — all of which could implicate Kensington's collateral interests.
Mitigation: We should confirm with Denise M. Whitford (General Counsel, Fairwater) that Kensington Capital Markets has been appropriately notified of this pending litigation and that the dormancy of the case does not trigger any default or additional reporting obligations under the loan documents. If notification has not yet been provided, it should be provided promptly to avoid any claim that Fairwater breached its disclosure obligations under the mortgage. We should also confirm whether the loan documents contain any provisions that could be triggered by the entry of an agreed order placing the case in inactive status, such as provisions requiring notice of any material change in the status of pending litigation.
C. Proposed Approach at the March 22 Conference
Based on the foregoing analysis, we recommend the following approach at the March 22, 2022 status conference:
Consent to Dormancy. Fairwater should indicate its willingness to consent to an agreed order placing the case in inactive status. The agreed order should provide that any party may reactivate the case by filing a Notice of Activation and a proposed scheduling order, with service on all other parties. We should not insist on conditions that might alienate Ridgemark or Pinnacle Shores, as both parties are expected to favor dormancy and we do not want to create unnecessary obstacles to the entry of the order.
No Concessions on the Merits. Fairwater should not volunteer any concessions, admissions, or statements regarding the merits of the easement dispute. The status conference is a procedural hearing, not a merits hearing, and Fairwater should confine its statements to the procedural question of whether to place the case in inactive status. Any comments on the merits — even seemingly innocuous observations — could be used against Fairwater in future proceedings and could undermine our affirmative defenses.
Response to Settlement or Mediation Inquiries. If Judge Cassin inquires about the prospect of settlement or mediation — as judges in the Eighteenth Judicial Circuit often do at status conferences — Fairwater should state that it is willing to discuss resolution of the dispute at the appropriate time but that the current procedural posture makes productive settlement discussions premature. Specifically, Fairwater should note that the recent intervention of Pinnacle Shores, the suspension of construction-loan draws, and the resulting uncertainty about the parties' respective positions make this an inopportune moment for settlement negotiations. This response is accurate, non-committal, and avoids any suggestion that Fairwater is unwilling to engage in good-faith settlement discussions in the future.
Neutral Posture Toward Pinnacle Shores. Fairwater should not object to Pinnacle Shores' participation in the conference. The bank's presence reinforces the three-party stalemate that benefits Fairwater, and any objection to the bank's participation would be counterproductive. If Ms. Dubrow addresses the court on behalf of Pinnacle Shores, Fairwater's counsel should listen attentively and avoid any statements that could align Pinnacle Shores more closely with Ridgemark.
Counsel Attendance. Brenda Hargrove, Esq. (FL Bar No. 0987214), of Hargrove & Liddell, P.A., 501 East Church Street, Suite 300, Orlando, Florida 32801, will appear at the conference in person as Fairwater's local counsel. Francesca Morano may appear telephonically or by video if the court's standing orders permit remote appearances by out-of-state counsel at status conferences. We should confirm the court's policy on remote appearances in advance of the hearing and file any necessary motions for pro hac vice appearance or telephonic participation as required.
V. FEES AND COSTS SUMMARY
A. Calderwood & Harkness LLP
Calderwood & Harkness LLP was retained pursuant to an engagement letter dated July 12, 2021 to serve as lead defense counsel for Fairwater in this matter. The applicable hourly rates under the engagement letter are as follows:
• Partners: $895 per hour
• Associates: $525 per hour
• Paralegals: $295 per hour
Total fees billed through the anticipated dormancy date (i.e., through March 22, 2022) are approximately $137,400. This figure encompasses all work performed by the Calderwood & Harkness team, including Francesca Morano (partner supervision and strategy), Jeffrey Park (lead associate, day-to-day case management, research, drafting, and discovery), and Yuki Nakamura (working associate, research and document review).
Total hard costs and disbursements billed through the anticipated dormancy date — including court filing fees, service-of-process charges, court reporter fees for hearings, and legal research database charges — are approximately $8,260.
The combined total of Calderwood & Harkness fees and costs through dormancy is approximately $145,660.
B. Hargrove & Liddell, P.A. (Florida Local Counsel)
Hargrove & Liddell, P.A. serves as Fairwater's Florida local counsel, handling court filings, in-person hearing appearances, and coordination with the Seminole County Clerk's office. Brenda Hargrove, Esq. is billed at $475 per hour, and associates at the firm are billed at $325 per hour.
Total fees billed by Hargrove & Liddell through the anticipated dormancy date are approximately $22,500.
C. Aggregate Defense Costs to Date
The aggregate defense costs incurred in this matter through the anticipated dormancy date are summarized as follows:
Based on the original defense budget of $350,000 to $475,000 (estimated total through trial), the estimated remaining defense budget — if the case reactivates and proceeds to trial — is approximately $181,840 to $306,840.
D. Cost Savings from Dormancy
If the case were to continue in active litigation over the next twelve months, the following litigation activities would be expected:
• Depositions of fact witnesses, including Hector J. Vilanova and Claudia R. Vilanova (the Ridgemark members), representatives of the Estate of Roland P. Thurmond (to address the chain of title and the period of common ownership), and representatives of Seminole County planning and zoning (to address the 2014 replat process and the status of Lakemont Trail);
• Retention and preparation of a licensed surveyor expert to opine on the location, dimensions, and physical characteristics of the Cross-Parcel Easement corridor and its relationship to the 2014 replat;
• Potential briefing of a motion for summary judgment, either by Fairwater (asserting extinguishment as a matter of law) or by Ridgemark (asserting the continued enforceability of the easement); and
• Associated travel, transcript, and expert-fee costs.
The estimated cost for these active-litigation activities over the next twelve months is $80,000 to $120,000. Dormancy defers all such expenditures indefinitely, preserving the defense budget for a future phase if reactivation occurs and eliminating these costs entirely if the case resolves through external events or is dismissed for failure to prosecute.
The ongoing monitoring costs during dormancy — quarterly docket reviews, periodic client communications, correspondence with Meridian Title, and miscellaneous administrative tasks — are estimated at approximately $3,000 to $5,000 annually, a fraction of the active-litigation costs that would otherwise be incurred.
VI. RECOMMENDED MONITORING PROTOCOL
To protect Fairwater's interests during the period of dormancy, we recommend the implementation of the following monitoring protocol:
1. Quarterly Docket Review. On a quarterly basis (beginning in June 2022), a member of the Calderwood & Harkness litigation team will review the Seminole County Circuit Court docket for Case No. 2021-CA-002748-18-W to identify any Notice of Activation, motion for reactivation, or other filing by any party. Any filing will be immediately communicated to Francesca Morano, Brenda Hargrove, and the Fairwater client team.
2. Quarterly Outreach to Gerald K. Sung. On a quarterly basis, we will contact Gerald K. Sung (SVP, Asset Management, Fairwater) to inquire whether the property management team at the Sanford Logistics Center has observed any activity on the adjacent Ridgemark southern parcel — including resumed construction activity, surveying, the presence of construction equipment, marketing signage, or any other indicia that Ridgemark or a successor has resumed development activities. Such activity could signal the availability of alternative financing and a potential reactivation of the case.
3. Semi-Annual Follow-Up with Meridian Title Underwriters. On a semi-annual basis, we will send a follow-up letter to Owen R. Hatch, Senior Claims Counsel, Meridian Title Underwriters, Inc. (4800 Semoran Boulevard, Suite 220, Orlando, FL 32822), pressing for a final coverage determination under Policy No. MTU-2016-FL-089312 and preserving Fairwater's rights under the policy. We will continue to assert Fairwater's position that Exclusion 3(a) does not apply and that defense costs should be covered retroactively to the date of tender.
4. Kensington Capital Markets Notification Confirmation. Promptly following the March 22 conference, we will confirm with Denise M. Whitford (General Counsel, Fairwater) that Kensington Capital Markets, LLC has been appropriately notified of the pending litigation and the dormancy order. We will review the relevant provisions of the Kensington loan documents to confirm that dormancy does not trigger any default, reporting obligation, or other adverse consequence under the loan.
5. Annual Failure-to-Prosecute Assessment. On an annual basis, we will assess whether Florida's procedural rules regarding dismissal for failure to prosecute could result in involuntary dismissal of the case. Florida Rule of Civil Procedure 1.420(e) permits the court, on its own motion or on the motion of any party, to dismiss an action for lack of record activity for a period of one year. However, an agreed order of inactivity may toll or modify this standard, and the precise effect of such an order on the Rule 1.420(e) timeline requires further analysis. If dormancy extends beyond one year, we will evaluate whether Fairwater should affirmatively seek dismissal under Rule 1.420(e) or whether it is strategically preferable to allow the case to remain dormant without triggering the adversarial dynamics that a dismissal motion would create. This assessment will be documented in a supplemental memorandum for the client team.
VII. CONCLUSION AND NEXT STEPS
For the reasons set forth in this memorandum, we recommend that Fairwater consent to an agreed order placing the case in inactive status at the March 22, 2022 status conference. Dormancy preserves the status quo that Fairwater seeks to maintain, protects Condor's tenant operations, halts the accrual of defense costs, and creates a meaningful possibility that the case will resolve itself through external events without the need for further litigation. The risks of dormancy — principally the possibility of reactivation and the delay in the Meridian Title coverage determination — are manageable and can be mitigated through the monitoring protocol outlined above.
The immediate action items are as follows:
1. Attend the March 22, 2022 Status Conference. Brenda Hargrove will appear in person before Judge Cassin on Fairwater's behalf. Francesca Morano will appear telephonically or by video if the court permits remote participation by out-of-state counsel. The conference is scheduled for 2:00 p.m. at the Seminole County Courthouse.
2. Obtain Client Approval. Prior to the conference, communicate this recommendation to Denise M. Whitford (General Counsel, Fairwater) and Gerald K. Sung (SVP, Asset Management, Fairwater) and obtain their authorization to consent to the agreed dormancy order.
3. Follow-Up with Meridian Title Underwriters. Promptly following the conference, send a follow-up letter to Owen R. Hatch, Senior Claims Counsel, Meridian Title Underwriters, Inc., pressing for a final coverage determination under Policy No. MTU-2016-FL-089312 and preserving Fairwater's rights under the policy.
4. Confirm Kensington Notification Status. Confirm with Denise M. Whitford that Kensington Capital Markets, LLC has been appropriately notified of the pending litigation and that the dormancy order does not trigger any adverse consequences under the Kensington loan documents.
5. Implement Quarterly Monitoring Protocol. Establish the quarterly docket-review and client-outreach schedule described in Section VI, with the first monitoring cycle to commence in June 2022.
6. Advise Condor Supply Chain Solutions. Through Gerald K. Sung, inform Condor Supply Chain Solutions (specifically Nathan H. Brierly, VP, Real Estate) of the dormancy order. Mr. Brierly should be informed that no immediate action is required on Condor's part but that the easement claim filed by Ridgemark remains pending and that Fairwater will continue to defend Condor's interests, including Condor's exclusive control over truck-court ingress and egress at the Sanford Logistics Center.
This memorandum reflects the mental impressions, conclusions, opinions, and legal theories of counsel and is protected by the attorney-client privilege and the work-product doctrine. It should be preserved as attorney work product and should not be shared with any party outside the attorney-client relationship, including Condor Supply Chain Solutions, Pinnacle Shores Bank, Meridian Title Underwriters, Kensington Capital Markets, or any other third party, without the express prior consent of counsel.
Jeffrey Park Lead Associate, Litigation (General) Calderwood & Harkness LLP 1725 K Street NW, Suite 1100 Washington, DC 20006 Telephone: (202) 555-4800
Email: jpark@calderwoodharkness.com
Engagement No. 1036-00003
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT This memorandum is protected by the attorney-client privilege and the work-product doctrine. Unauthorized disclosure is prohibited.
TO: | Francesca Morano, Responsible Partner, Litigation (General); Samuel Eklund, Billing Partner, Litigation (General)
CC: | Yuki Nakamura, Working Associate, Litigation (General)
FROM: | Jeffrey Park, Lead Associate, Litigation (General)
DATE: | March 18, 2022
RE: | Strategy for March 22, 2022 Three-Way Status Conference and Recommendation to Consent to Case Dormancy — Ridgemark Development Partners LLC v. Fairwater Real Estate Investment Trust, Case No. 2021-CA-002748-18-W (Circuit Court, 18th Judicial Circuit, Seminole County, FL)
CLIENT: | Fairwater Real Estate Investment Trust
MATTER NO.: | 1036-00003
PRIVILEGE: | This memorandum is protected by the attorney-client privilege and the work-product doctrine. It reflects the mental impressions, conclusions, opinions, and legal theories of counsel and is intended solely for the use of the client and members of the legal team identified above. It should not be disclosed to any third party without the express written consent of counsel.
Category | Amount
Calderwood & Harkness LLP — Fees | $137,400
Calderwood & Harkness LLP — Costs/Disbursements | $8,260
Hargrove & Liddell, P.A. — Fees | $22,500
Total Defense Costs to Date | $168,160

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

MEMORANDUM

I. EXECUTIVE SUMMARY

II. CURRENT POSTURE OF THE CASE

III. IMPACT OF PINNACLE SHORES' INTERVENTION

IV. STRATEGIC ANALYSIS: RECOMMENDATION TO CONSENT TO INACTIVE STATUS

V. FEES AND COSTS SUMMARY

VI. RECOMMENDED MONITORING PROTOCOL

VII. CONCLUSION AND NEXT STEPS

Record

Parties

Dates

Amounts