PBAU, Frisbie Group settle lawsuit over WPB land. What's next for S. Flagler House condo?

Palm Beach Atlantic University in West Palm Beach and Frisbie Group of Palm Beach last week quietly settled a 2021 federal lawsuit filed by Two Roads Development, a real estate developer that was shut out of a deal for PBAU's prime waterfront land.

In a U.S. District Court lawsuit, Two Roads Development of Palm Beach had unsuccessfully accused the private Christian college and the real estate group of conspiracy and racketeering involving the sale of PBAU property along the Intracoastal Waterway.

Frisbie and PBAU consistently denied the allegations, saying Two Roads' claims were nothing more than sour grapes.

After 1½ years of fierce litigation, the lawsuit was settled on July 10, according to court records. Terms were not disclosed.

The settlement of the lawsuit could pave the way for Frisbie Group's restart of sales at South Flagler House, the ultraluxury condo project planned for 3 acres at 1355 S. Flagler Drive, according to real estate sources familiar with the project.

Pre-sales in the 89-unit condominium had hit nearly half a billion dollars last year until the lawsuit created so much uncertainty that the project had to be halted.

Prior to the project's pause, the twin, 27-story complex was on target to be one of the most expensive residential developments in the nation, according to Robert Frisbie, managing partner of the Frisbie Group, one of the project's developers. The ballyhooed luxury project was designed by Robert A.M. Stern Architects, marking the global architecture firm's first luxury residential high-rise in Florida.

On Monday, a lawyer for Frisbie Group acknowledged the case was over.

"The parties have agreed to resolve this matter for the betterment and benefit of the entire West Palm Beach community," attorney John Shubin said.

A Two Roads Development representative said the company wasn't available for comment.

In West Palm Beach: South Flagler House condos selling for upper Manhattan-like prices

Legal dispute centered on PBAU's dealings with developers

At issue in the case: the sale of the sought-after land, part of PBAU's downtown waterfront campus. The site contained two old, three-story dormitories at 1315 and 1401 South Flagler Drive.

Two Roads alleged PBAU violated a 2018 binding letter of intent that outlined Two Roads' plan to pay $41.5 million for university land and build condominiums. Despite lengthy talks, a sales contract between PBAU and Two Roads never was executed.

Instead, PBAU ended up selling the site in 2022 to a group that included Frisbie Group and Houston-based real estate giant Hines. The price was $41.5 million.

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In 2021, when Two Roads found out PBAU was under contract to sell to Frisbie Group, the development company filed a 66-page federal lawsuit replete with allegations of racketeering, conspiracy and fraud.

In addition to Frisbie Group and PBAU, also named in the complaint were PBAU trustee Patrick Koenig and three members of the Frisbie family, David Frisbie, Robert Frisbie Jr. and Cody Crowell.

Among the allegations: Frisbie and PBAU were said to have conspired to "steal" the plan to build luxury condominiums on PBAU's downtown land. Frisbie and PBAU called Two Roads "failed and disappointed bidders."

Two Road's lawsuit had asked U.S. District Court Judge Aileen Cannon — the judge also presiding over the indictment of former President Donald Trump in the federal documents case — to require that PBAU sell its land to Two Roads, and stop Frisbie Group from moving forward with city approval for its condo.

More on this case: Judge tosses key claims in lawsuit over waterfront land destined for South Flagler House condos

Neither request happened.

Instead, in April, Cannon tossed Two Roads' racketeering claim against PBAU and Frisbie Group. Cannon also threw out Two Roads' breach of contract claim against PBAU.

Other issues remained, however, including allegations of fraud and theft of trade secrets.

In April, Two Roads' New York-based lawyer, Reed Brodsky, expressed optimism the stripped-down lawsuit would continue to be litigated. "Our evidence on those claims is strong, and we look forward to vindicating them as this case moves to trial," Brodsky said in a statement.

By June, Two Roads had replaced Brodsky with lawyers from a different New York firm.

Terms of the July 10 settlement were not disclosed in a mediation report filed in the case.

Previous coverage: Lawsuit could doom ultra-luxury condo planned for South Flagler in West Palm Beach

Lawsuit uncertainty removed; what's next for development of former Palm Beach Atlantic University site?

In April, when Cannon threw out Two Roads' claims of racketeering and breach of contract, people familiar with the project hinted the luxury condominium project could be revived soon.

The ruling was a major victory for Frisbie Group because the issues had clouded the land's title, or legal ownership, lawyers said at the time.

The ownership issue stopped Frisbie Group from being able to obtain a construction loan, according to a Frisbie Group filing in the case. The issue not only halted future sales, but also imperiled Frisbie Group's existing pre-construction sales, the filing said.

In early 2022, Frisbie Group's presales at South Flagler House hit $480 million for the units, which average about $10 million each, with penthouses selling for a whopping $70 million each.

Shubin, the Frisbie Group attorney, declined to comment on whether plans are to restart the condominium.

Since early 2022, the real estate market has cooled, thanks to rising interest rates and increased taxes and insurance rates.

Nevertheless, developers in West Palm Beach continue to peddle proposed new condominium projects, especially along North Flagler Drive. And along South Flagler Drive, where South Flagler House was slated to be built, residents are starting to move into the neighborhood's newest luxury condo, La Clara.

Meanwhile, Two Roads continues construction on its own upscale condo on South Flagler Drive: the 25-story Forté, which is mostly sold out.

Alexandra Clough is a business writer and columnist at the Palm Beach Post. You can reach her at aclough@pbpost.com. Twitter: @acloughpbp. Help support our journalism. Subscribe today.

This article originally appeared on Palm Beach Post: PBAU, Frisbie Group settle lawsuit over West Palm Beach waterfront land