Castille pushed aside doubts on court deal

After trying to put the brakes on an agreement to spend millions in fees for a new Philadelphia Family Court building, the city's top court administrator broke the news in an e-mail.

"All this is moot," David C. Lawrence wrote in November 2008 in one of a series of e-mails obtained by The Inquirer. "The Chief Justice just told me to sign which I did. He counter signed as well."

As chief justice of the Pennsylvania Supreme Court, Ronald D. Castille controlled all state courts and personally supervised the $200 million Family Court deal. His order to sign the letter turned on a multimillion-dollar gusher of payments to lawyer Jeffrey B. Rotwitt, developer Donald Pulver and others.

The e-mails, between Lawrence and lawyers at the firm of Ballard Spahr, provide new insight into the interplay among the key players in the now-scuttled courthouse deal.

They especially spotlight the close working relationship between Castille and Rotwitt, who received payments on both ends of the deal as a court adviser and codeveloper. Castille now says Rotwitt deceived him.

The e-mails show that Lawrence and the Ballard lawyers repeatedly raised questions and doubts about the spending proposed by Rotwitt, only to be rebuffed by Castille.

"Bottom line is, people are making a whole lot of money and I don't know what they are doing to earn it," Lawrence wrote.

And Lawrence complained that Rotwitt was able to exploit his relationship with Castille, a golfing buddy, to circumvent them and get what he wanted.

"He's got the boss' ear," Lawrence wrote of Rotwitt last year, after another failed try to rein in the spending. Lawrence griped that Rotwitt would have to put in hundreds of hours to justify his $55,000 monthly payments.

"That hardly leaves any time to play golf with the Chief," he wrote.

Lawrence declined to comment on the e-mails, referring questions to William G. Chadwick, the lawyer hired by Castille to review the transaction. Chadwick said he also would speak for Castille.

He said Castille's priority was making sure the badly needed courthouse finally was built. The courts, which hear cases involving domestic abuse, juvenile crimes, and custody fights, are now split between two outdated and inadequate buildings.

Rotwitt kept telling Castille that the development team would fall apart unless the courts started paying fees, said Chadwick, adding that it was difficult to draw conclusions from some "isolated" e-mails.

"Rotwitt was a known expert in the field of complex real estate transactions," Chadwick said. "He advised that this fee structure was the best deal that could be had."

But it turned out that at the time Rotwitt was pushing for those payments, he also was partners with Pulver. Castille said he had no idea about his arrangement for a 50-50 split of the development fee; Rotwitt says Castille did know.

Ballard lawyers, who were supposed to be monitoring the deal, declined to comment.

Castille canceled the Pulver-Rotwitt plan after The Inquirer reported on Rotwitt's dual roles last month. Rotwitt has been fired by his law firm, Obermayer, Rebmann, Maxwell & Hippel, and Castille is trying to figure out if he can recover any of the $12 million paid for the court project so far.

About $1.1 million of that went to Rotwitt's firm, while Rotwitt himself collected $500,000 from Pulver as codeveloper.

The state is now supposed to put up the $200 million building at 15th and Arch Streets, on a Philadelphia Parking Authority parking lot. But Pulver and the authority last week filed competing lawsuits, and control of the site will likely have to be sorted out by the courts. Meanwhile, the FBI has begun a criminal investigation into possible fraud.

Rotwitt's lawyer, Catherine M. Recker, declined to comment. A spokesman for Pulver also declined to comment.

The documents obtained by The Inquirer offer a glimpse into a behind-the-scenes struggle, beginning two years ago, over the financial terms pushed by Rotwitt and Pulver, a Conshohocken developer.

Rotwitt had been hired by former Supreme Court Justice Sandra Schultz Newman in 2006 to find a site and secure the funding for the new courthouse. He originally agreed to work free and take his payment at the end of the deal.

Castille, after being approached independently by the Parking Authority, eventually settled on the 15th and Arch site, and the state legislature appropriated the $200 million in 2007.

The money for the fees came from a special fund controlled by Castille and generated through a surcharge on all Philadelphia court filings.

Starting in April 2008, Rotwitt and Pulver began sending proposals to the courts, laying out a rough structure for the transaction, plus a fee schedule.

One June 2008 letter set a $3.9 million fee for Rotwitt, a $2.6 million development fee for Pulver, another $2.6 million in unspecified general and administrative costs, and $1.7 million in "land cost," along with money for architects and others.

The payments were to begin as soon as the deal was signed.

In May 2008, Castille hired another law firm, Ballard Spahr, largely on the strength of its connections to Gov. Rendell and his administration. Rendell controlled the $200 million appropriation and thus had the power to decide whether the courthouse would be built.

Leading the Ballard team was John H. Estey, Rendell's former chief of staff. Part of his job was to persuade Rendell to release the money. He was already familiar with the plan; while in the Governor's Office, he had met with Newman and Rotwitt about it.

Castille said he decided to go ahead and start paying for design and other costs - even without a development deal in place - in a gamble that the state funding would follow.

The first agreement capped design fees at $250,000. But when Rotwitt and Pulver continued to push more-generous fee proposals, e-mails show that Lawrence and Ballard lawyers were skeptical.

"We will ask for some rationale for what Rotwitt is asking for," Ballard lawyer Alan S. Ritterband wrote in November, after a meeting with Lawrence and a construction consultant, Majid Alsayegh.

Ritterband, a real estate lawyer, listed 10 questions and proposed changes, including reductions in some of the payments.

One of Ritterband's concerns was the $1.7 million in "land costs."

The Parking Authority was not charging Pulver anything for the development rights; rather, his obligation was to build an underground parking garage at the site once construction started.

In an earlier interview, Pulver said that was compensation for past expenses related to the garage and other plans for the location that never got off the ground.

It is unclear whether Lawrence and Ritterband got an answer about the land costs. Lawrence said those questions were "moot" after Castille ordered him to sign the fee letter.

Estey and Ritterband declined to comment.

The internal debate began again the next year. The project was taking longer than anticipated, and the courts canceled the original deal to avoid millions in balloon payments to Pulver and Rotwitt.

"Can we get some accountability built into this thing?" Lawrence wrote in May 2009, in the same e-mail that contained his gibe about Rotwitt golfing with Castille.

"$102,000 a month for 'General and Administrative?' I think I want to administer something for Mr. Pulver," Lawrence wrote to Ritterband and Estey, with copies to Family Court Judges Kevin M. Dougherty and Margaret Murphy.

"Bottom line is people are making a whole lot of money and I don't know what they're doing to earn it," Lawrence wrote.

"How can we structure this to provide something I could explain, if asked?"

In a reply, Estey agreed that "this is a public project and we need to be accountable for the funds." He said the courts should use a counterproposal from Ballard and say "that is all we are willing to do going forward."

In June, in another e-mail obtained by The Inquirer, Rotwitt sent Castille an extension of the fee agreement - "my attempt at a compromise between the Pulver/Ballard tug-of-war."

"Hit 'em straight this weekend!" he wrote Castille, in a golfing reference.

(Castille has said that he golfed only occasionally with Rotwitt. "I play golf with tons of lawyers," he said in an earlier interview.)

In the same e-mail, Rotwitt wrote that the extension was "identical" to the original, but in fact there was a difference: The second one added the name of Rotwitt's company, Deilwydd Property Group FC L.L.C., as a codeveloper. Rotwitt's name is not mentioned. In a prior interview, Castille said that "slipped by us."

Ritterband told Lawrence about another looming mess: an agreement negotiated by Rotwitt said that Pulver, not the courts, owned the architectural drawings. That dispute is still unresolved.

"The Chief is going to be all over this and I can't afford down time on the project," Lawrence wrote, fretting that he might have to "start all over."

Again, Lawrence and the other lawyers tried to change the terms. Estey wrote that he didn't see a need to keep paying Pulver and Rotwitt. Pulver had no other options anyway, he said.

"The project is not certain to go forward and I would hate to have to justify some of the expenses . . . if the project ends up dying," Estey wrote.

But in July, Lawrence signed the Pulver-Rotwitt proposal. The numbers were just as Rotwitt laid out. Lawrence forwarded the signed document to Ritterband and Estey.

"Read 'em and weep," he said.

Estey replied that he thought he was in the middle of talks with Rotwitt: "We were scheduled to talk again tomorrow," adding a common abbreviation for an obscenity.

"Precisely," Lawrence said, adding that he was looking forward to Rotwitt's explanation.

"He's got the boss' ear," he said. "It will be interesting to hear what he has to say."