Lawsuits fly as upstart company inks parking management deals with local towns
SOUTHEASTERN, N.C. (WECT/Port City Daily) - The parking company with a combined 30 years of experience managing operations for Wrightsville Beach and downtown Wilmington has had its regional stronghold undercut in the past year by an upstart competitor called Pivot Parking.
Lanier Parking, long a heavyweight presence in local parking, lost its Wrightsville Beach contract last year after 17 seasons. Its successor company Reef Technology, which acquired Lanier in 2019, is now on the brink of officially losing its Carolina Beach deal too.
Pivot Parking was founded last July by a former partner at Lanier, who helped build the legacy company after joining in 1993. Another Lanier long-timer, Tina Reid, who oversaw operations in the Carolinas, joined the infant company last August. Pivot Parking scored the Wrightsville Beach contract a few months later, and now enlists a former Wrightsville Beach mayor as a consultant.
Amid rising gripes about Lanier’s parking services, some of which reportedly stemmed from disruptions related to the ownership switchover, elected officials in Carolina Beach voted to terminate their contract with Reef in September. It had been on the books since 2018.
Having lost out on lucrative contracts to a firm founded by former employees, Lanier is currently suing Reid and Pivot Parking in federal court over trade secrets and breach of contract. The other side has launched counterclaims.
On Tuesday, Carolina Beach’s Town Council was set to award a contract to Pivot but delayed future action until later this month. The breakaway company’s latest acquisition of the Carolina Beach contract follows previous deals made elsewhere around the Carolinas, including the inaugural parking management contract with Surf City in its first year of paid parking.
When deciding to move on from Reef, officials cited customer service concerns, but it wasn’t made clear that Carolina Beach taxpayers would be on the hook for paying the company tens of thousands of dollars just to terminate the contract early.
“They had to pay out, it was a prorated amount of approximately $36,000 to pay out. We think, with the improvements we are going to make in parking this year, it will more than pay for itself. We’ll get that money back,” Carolina Beach Town Manager Bruce Oakley said.
Other parking firms, witnessing how Pivot easily snagged the Carolina Beach contract, are wondering what makes the one-year-old company so attractive compared to established presences with years of experience.
Dan McNutt is the founder of United Parking Partners, which manages a handful of private parking lots in the Carolina Beach boardwalk area. Like Reef and Pivot, his company also threw its hat into the ring when Carolina Beach put the contract up for grabs.
“The only frustrating thing for me is, I feel like we weren’t given an opportunity to present our proposal and answer questions,” McNutt said. “Pivot was afforded the opportunity to come in and present their proposal and answer questions, and we were not invited or afforded that opportunity.”
Lanier filed suit in February, alleging breach of contract on Reid’s part. The complaint claims Reid retained confidential company information and that, among other things, Pivot’s bid to Wrightsville Beach illegally made use of trade secret data.
The lawsuit accused Pivot of “raiding Lanier Parking’s customer and employee base” in Greenville, S.C., where Reid had previously overseen operations for Lanier. After Reid left for Pivot, so did at least three Greenville parking contracts, according to the lawsuit.
It’s happening in southeastern North Carolina too.
Pivot Parking was founded by Scott Diggs, who joined Lanier as its first partner in 1993. He worked as a senior advisor to Lanier until 2019, during the period in which the company managed Wrightsville Beach parking; he bought a seven-figure property on Causeway Drive in 2016.
He co-founded Pivot Parking last July. Reid left Lanier last August and joined Diggs soon thereafter. A few weeks later, Wrightsville Beach ended its 17-year relationship with Lanier Parking.
Current Board of Adjustment member and former Mayor of Wrightsville Beach Bill Blair is now a consultant with Pivot Parking. The company highlighted his involvement in its recent pitch to Carolina Beach, name dropping him as a “Parking Operations Support Director.”
Previous mayoral candidate and Wrightsville Beach resident Greg Buscemi says something does not sit right with him regarding the sudden switch to a young company now in league with a town official.
“I think at the very least, in the broader sense, it kind of just adds more to the skepticism to the decision-making process. It seems like this contract was lined up in perfect time with starting this new company with familiar people — unless that was a project that was guaranteed to be successful, it seems like a risky business decision,” Buscemi said.
In November 2020, four parking firms competed to earn the management contract on Wrightsville Beach. Then representing their brand new company, Diggs and Reid pitched data integration with the police department and their previous experience navigating the throes of hurricane season as two cornerstones of Pivot Parking’s mission.
On the brink of losing its contract after nearly two decades, Lanier made a pitch too. Reef’s deputy general counsel, writing on behalf of Lanier, sent Reid a cease-and-desist one week prior to the November 2020 meeting. The Nov. 10, 2020 letter accused Reid of interfering with the company’s business relationships and disclosing trade secrets
On Nov. 11, 2020, the next day, Reid filed a complaint against Lanier in the S.C. Court of Common Pleas. She claimed Lanier failed to pay her wages owed around the time of her exit that August.
Wary about siding with Lanier in the absence of Diggs, Mayor Darryl Mills quickly directed the discussion toward Pivot Parking at the board of aldermen meeting last year, according to the minutes.
“To be fair, for the most part, Lanier has been OK,” Mills said at the parking meeting, weighing the options.
“But every time I’ve had problems or issues, Scott [Diggs] has been the one that addressed it and took care of it. The difference since he has not been actively involved is dramatic and not in a good way. That’s just my experience.”
Pivot pushes back
In response to the lawsuit, attorney Jefferey Lehrer, who represents Reid and Pivot, painted Lanier’s claims as frivolous and retaliatory. Lehrer declined on-camera interviews with WECT but was willing to provide written statements on behalf of his clients.
“Pivot Parking has filed counterclaims against Lanier Parking including claims for tortious interference with contract and for unfair trade practices. Despite Lanier Parking’s efforts to prevent fair competition, Pivot Parking continues to properly serve all of its clients’ parking services needs,” Lehrer said.
Attorneys for both sides exchanged accusations earlier this year: Lanier accused Reid in January of trying to poach a “recently resigned” Lanier Parking employee, allegedly in violation of employment agreements. In April, Pivot sent Lanier a cease-and-desist that claimed two Lanier management employees “have been making false accusations and disparaging statements about the Company to, among other individuals, officials at the City of Wilmington and Town of Carolina Beach.”
“It is clearly just a retaliatory fishing expedition designed to interfere with Reid’s employment, and impede appropriate and legally permissible competition in the marketplace,” according to legal filings for the defense.
Lehrer also said Reid’s previous suit against Lanier Parking over unpaid wages is still playing out in South Carolina state court.
In their written pitch to Wrightsville Beach last year, Diggs and Reid positioned Pivot as an upstart company then managing five garages and surface lot operations. It was founded during the pandemic out of a desire to provide “a more transparent and financially stable approach during these unprecedented times,” according to the company’s package.
The pitch also referenced Diggs’ and Reid’s past experience with Lanier, managing lots for several local governments across New Hanover County and elsewhere. Included in Pivot’s bid to Wrightsville Beach was data about the number of spaces, contact information for references and other facts about the Lanier-managed lots.
In the February 2021 lawsuit, Lanier claimed that the customer information was confidential, and that therefore Pivot’s use of it was illegal. Pivot’s response, filed in September, argues Lanier’s claims are in bad faith, given that since the information at hand related to dealings with government customers, it all exists in the public record.
“Furthermore, Defendants are using Lanier Parking’s trade secrets and confidential information and raiding of Lanier Parking employees to compete unlawfully against Lanier Parking,” according to the lawsuit.
Just over one month after Lanier filed suit, Oakley, Carolina Beach’s town manager, reported to council there were issues with parking afoot early in the spring season.
Reef received the formal notice for contract termination on Oct. 1. The company recently competed against Pivot Parking to hold its beach town post amid the rising dissatisfaction, just as the company did in Wrightsville Beach last year.
Reef acknowledged an uptick in complaints to town council after Lanier first took over Carolina Beach in 2018. According to Reef’s October proposal, citations were initially increased by 197% back then; so it pitched a first-time warning program. (“In 2021 parking citations issued increased by 83% from 2019,” according to Reef’s Carolina Beach application package.)
Reef also stated: “In 2021 the Town of Carolina Beach purchased nine new Flowbird Parkeon pay stations. The pay stations have not worked properly and caused additional complaints about the parking program. Flowbird admits the pay stations are problematic and have committed to working with Lanier/Reef to correct all issues for the 2022 Parking Season.” (Flowbird is a mobile parking company with an app also used by Pivot Parking at Wrightsville Beach.)
On Oct. 26, council tapped Pivot to manage its parking program for the upcoming season but hasn’t yet made it official (though the town’s website has been updated to name Pivot as its parking manager). In advance of the meeting, a Reef employee told town leaders she intended to travel to Carolina Beach to answer questions at the workshop if needed; Oakley told her they’d be going in another direction.
As word spread that Carolina Beach would contract with the young company for the next season, snappy takes from the parking community rolled into Oakley’s inbox. Jim Varner, the president of a competing firm, emailed the town manager to apologize for not sending in a proposal.
“Second, I’m doubly sorry to hear about your selection of Pivot Parking - given their poor performance in Wrightsville and general dissatisfaction as observed in Surf City based on customer support, and mis-charging for parking,” he wrote.
Another parking company representative emailed Oakley comparisons between his company’s submission and Pivot’s: “With the main expense variance being the $261,787 in higher expenses by Pivot.”
“Hopefully, things go better for you than they did with Reef last season, but if they don’t, we are right down the street,” Timothy Hoppenrath, market president for Premium Parking, wrote to Oakley. “Have a happy holiday season!”
McNutt, the UPP founder, said he was surprised to be passed over by Carolina Beach, especially considering the aggressive guarantees offered in his company’s proposal and its competitive structure. He showed up at Town Council Tuesday night but was told official talk on parking was postponed until a future meeting.
“I would be quite confident that if you matched our proposal side-by-side with Pivot, it’d be significantly stronger,” McNutt said. “I would bet anything on that.”
When reached for comment, Blair said he was told not to speak to the media about Pivot Parking due to the ongoing lawsuit; however, he confirmed he is a contracted employee, not a full-time worker. Representatives from Lanier Parking did not provide comment after several attempts to reach them via email and phone.
This story was a collaboration between WECT Reporter Michael Praats and Port City Daily Reporter Preston Lennon
Copyright 2021 WECT. All rights reserved.