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A Review of the Charleston Naval Complex  Redevelopment Authority's 1999 Lawsuit Settlement With Braswell Services Group
March 2000

REPORT (PDF)     SUMMARY (PDF)

We reviewed a December 1999 lawsuit settlement in which the Charleston Naval Complex Redevelopment Authority (RDA) agreed to pay $4 million to a ship repair company called Braswell Services Group, Inc.

Since 1994, the RDA has been responsible for redeveloping property at the former Charleston Naval Base, which was closed in 1996. Because the Navy still owns the base, the RDA enters into master leases with the Navy and then subleases the properties to other organizations. One of the primary goals of the RDA is to replace the jobs lost by the closing of the base.

History of the Lawsuit
In a March 1997 agreement, Braswell Services Group, Inc., agreed to drop prior legal actions against the RDA and the State Budget and Control Board regarding the manner in which the RDA awarded subleases for piers and buildings. In exchange, the RDA agreed to give Braswell a sublease for a pier and several buildings at the naval complex after the RDA entered into a master lease with the Navy for the properties.

In June 1997, the Navy submitted a master lease to the RDA that Navy officials were prepared to sign for the properties sought by Braswell. The RDA, however, never signed the master lease with the Navy or a sublease with Braswell. The RDA stated that it did not sign these leases because Braswell had not obtained or applied for certain environmental permits. Also, the RDA stated that until it signed a master lease with the Navy, it was not required to sign a sublease with Braswell.

Braswell contended that it was entitled to a sublease because the Navy had approved the master lease and that environmental permits were not a prerequisite. In October 1997, Braswell sued the RDA for breach of contract.

Findings

  • There is evidence that the RDA complied with a literal interpretation of the March 1997 agreement. However, a reasonable argument can be made that the agreement required the RDA to sign a master lease with the Navy and a sublease with Braswell after the Navy submitted a master lease it was prepared to sign.
  • There were valid reasons for the RDA’s December 1999 decision to settle its lawsuit with Braswell Services Group out of court, although it is not clear how the RDA determined that $4 million was an appropriate amount for the settlement.
  • The RDA agreed to the $4 million settlement without obtaining prior written approval of the State Budget and Control Board, as required by the South Carolina Code of Laws.