Sunset Lounge update: West Palm Beach's CRA, attorney dispute legal fees; site still closed

West Palm Beach's Community Redevelopment Agency disputes the amount of money owed to an attorney who has represented a group hoping to manage the Sunset Lounge, the latest in a long line of battles that have marred efforts to rebuild and re-open the iconic, 1920s era supper club.

After the CRA lost a court battle to bar Vita, LLC, a local group of Black business and entertainment venue officials, from managing the lounge, a Palm Beach County Circuit Court judge ordered the CRA to pay Vita's legal fees.

Vita's attorney, F. Malcolm Cunningham, said he made a settlement demand for "under $1 million" that was ignored by the CRA and the city.

The CRA, which uses taxpayer money to redevelop distressed sections of the city, has pumped at least $16 million into rebuilding the lounge, which is seen as a linchpin to the revitalization of the city's largely-Black Northwest community. That $16 million does not include any money the CRA might pay Cunningham or an outside firm working to limit his fee.

The backstory: Sunset Lounge has hosted James Brown, Ella Fitzgerald and Duke Ellington

The Sunset Lounge, which hosted the likes of James Brown, Ella Fitzgerald and Duke Ellington before falling on hard times and closing, was scheduled to be re-opened in late 2022 or early 2023. But cost overruns and a long-running dispute over who should manage the lounge has delayed that re-opening, frustrating city officials and Mayor Keith James, who has made the Northwest's revitalization a priority of his administration.

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Today, the Sunset building, located at 609 8th Street, sits rebuilt but empty, validating — for now, at least — the criticism of those who argued that the city should not invest millions to rebuild an entertainment venue, no matter how iconic or historic.

Nearly everything connected to the lounge has generated dispute during the past few years.

Sunset Lounge attorneys fee fight between the CRA and Vita sprung from past disputes

In June of 2022, Vita won its bid to manage the Sunset in what had been an emotional, racially charged process that drew complaints from City Commission members, who said some of Vita's supporters suggested allowing a Miami-based group to manage the lounge would be racially insensitive given the lounge's importance to the Black community of West Palm Beach.

James, who backed the bid of the Miami-based group, Mad Room Hospitality, asked city staffers if Vita violated city rules against lobbying during a bidding process.

The city's procurement officer determined that Vita did violate the anti-lobbying rules. Vita sued, saying it had not violated the anti-lobbying rules and asking a judge to order the CRA to begin negotiations with it on a management agreement.

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Not only did Vita win that suit, but Palm Beach County Circuit Court Judge Carolyn Bell determined that the CRA should pay Vita's legal fees.

Bell ordered the CRA and Cunningham, Vita's lawyer, to "meet and confer" on how many hours Cunningham had put into the case and how much he is owed. The CRA was also to share details of its legal work.

But in a motion for a case management conference filed on Oct. 12, Cunningham said the CRA "has failed and refused to provide the information requested by Vita, in contravention of the court’s announced order which the CRA agreed was reasonable."

Before that motion for a case management conference, the city asked an outside law firm, Akerman LLP of West Palm Beach, to handle its fee dispute with Vita and Cunningham.

James, who would not discuss the legal case, insisted that "the fee dispute will not, in any way, delay the opening of the Sunset Lounge as negotiations with Vita Lounge are currently ongoing."

Cunningham sees it differently.

"We made a settlement demand to the CRA to resolve the attorney’s fee issue for under $1 million," Cunningham said. "The city ignored Vita’s settlement demand and, instead, hired 'a relatively large firm' to continue the fight, rather than concede its mistake, pay the consequences of its mistake and devote its tax dollars to consummating a contract with Vita and opening the Sunset Lounge."

The Sunset Lounge dispute: Where do things stand now?

Cunningham said he sees the fee dispute as part of a strategy to bleed Vita financially and prevent it from being able to move forward with a management contract.

"Vita paid substantial legal fees to prove the CRA arbitrarily and capriciously disqualified Vita," he said. "Vita needs the money it spent on attorney's fees 'now' so it can devote those resources to its negotiations with the CRA and opening of the Sunset."

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Cunningham said management contract negotiations are underway, "but the CRA hired a large Chicago consulting company to negotiate with Vita.

"Vita needs its resources to meet the unlimited tax dollars the CRA has to hire a large consulting company, which sends unending requests to Vita under the guise of negotiations. With its resources spent on attorney’s fees, Vita is hampered in its efforts to respond to the CRA and its consultant, which slows the negotiations and delays the opening of the Sunset."

Wayne Washington is a journalist covering West Palm Beach, Riviera Beach and race relations at The Palm Beach Post. You can reach him at wwashington@pbpost.com. Help support our work; subscribe today.

This article originally appeared on Palm Beach Post: West Palm Beach CRA, attorney locked in fee dispute over Sunset Lounge