The developer of the Watson Island mega-yacht marina who also has plans for hotels, stores and parking won the latest dispute with the city of Miami.

Miami-Dade Circuit Court Judge William Thomas ruled in favor of Flagstone Island Gardens LLC, saying it complied with its obligations under its ground leases with the city. Instead, the city was in the wrong for delaying approval of the project and ending Flagstone's lease, according to a March 22 order.

Flagstone Island, led by Mehmet Bayraktar, was picked in the early 2000s to develop nearly 11 acres of city-owned land and another 13.4 acres of adjacent submerged land on the northwest side of Watson Island along the MacArthur Causeway. City voters then approved a referendum allowing the city to lease the land to Flagstone.

But over the years, things went awry, project opposition arose and issues spilled over into Miami-Dade Circuit Court lawsuits.

In one case, Flagstone sued the city for breach of contract in June 2017, amending its complaint in September, shortly after the City Commission voted to end the developer's lease by saying Flagstone missed a construction deadline.

Thomas' order followed a bench trial held from Feb. 28 and March 6.

Stearns Weaver Miller Weissler Alhadeff & Sitterson shareholders Eugene Stearns and Maria Fehretdinov and associates Jason Koslowe and David Coulter, all in Miami, represented Flagstone and Bayraktar.

Stroock & Stroock & Lavan partner Laura Besvinick, special counsel Julie Nevins and Hans Hertell and associate Christina Himmel, all in Miami, represented the city.

Dorta Law partners Gonzalo Dorta and Matias Dorta of Coral Gables also worked on behalf of the city.

Stroock & Stroock and Dorta Law attorneys didn't return requests for comment by deadline.

It's unclear what the city plans to do next.

“The city is currently reviewing its options,” City Attorney Victoria Mendez said in an email.

CAUSEWAY CHAOS

In part, the issues between Flagstone and the city revolve around allegations the city delayed approval of requested project modifications. Flagstone asked for a change to a major use special permit, which establishes the parameters of the project and future permits. The company asked to change a planned multi-story garage to build parking under the retail segment to essentially conceal the parking from view, according to the order.

The proposal was something that could have been approved administratively by city staff, and city staff members hailed it as an improvement to the project, according to the order. Yet the city delayed signing off on the change by requesting multiple meetings with Flagstone and its development team.

“Flagstone was required to meet with the city over and over to address the same issues over and over, often addressing decisions that had been made by city staff and reversed by city staff,” Thomas wrote in the order.

The delay was at least in part prompted by a vocal opposition group, Coalition Against Causeway Chaos, the judge wrote.

The group sent letters to the city from November 2016 to May 2017 expressing concern with the permit change, which in part could have influenced the city, Thomas found.

“As a result of CACC's actions, all formal action taken by the city related to the project was overly examined and overly inspected beyond the normal approval process. This never having been done level of scrutiny delayed an otherwise routine decision,” he wrote.

CONSTRUCTION DEADLINE

Other issues in the case dealt with whether Flagstone started construction on the retail and parking by the April 30, 2017, deadline.

In court filings, the city argued Flagstone missed the deadline and alleged Flagstone didn't finish the marina construction in time and misled the city when it said it could self-fund the project, according to a Nov. 13 city response and counterclaims.

The court determined Flagstone started construction by the deadline and said there was no fraudulent inducement by Flagstone over the financing.

While Bayraktar told the city he was unable to secure financing for the project, he sent the city affidavits saying he could self-fund the project, according to the order.

The first goal is to get approval for the special permit modification for the altered parking design, Stearns said Tuesday.

The case, however, is not over. Flagstone and the city are heading to trial to determine remedies. The amount of damages that will be sought is unclear.

Stearns said Flagstone and its attorneys are now calculating how much in damages they will seek in the next trial, taking into account the changed interest rate environment from when Bayraktar started work.

“It's not going to be a small number,” Stearns said.

Flagstone has said it invested more than $120 million in the project, according to a media release.

The mega-yacht marina already has been built, Bayraktar said.

The rest of the project includes a luxury hotel, one lifestyle hotel, timeshare units, a spa, a gym, restaurants and more commercial space, according to Flagstone's amended complaint.