HomeMy WebLinkAboutR-96-0880r
J-96-1234
11/12/96
RESOLUTION NO.9 6 -- 8 8 0
A RESOLUTION AUTHORIZING THE CITY ATTORNEY TO
PURSUE LEGAL ACTION AGAINST AETNA LIFE
INSURANCE COMPANY ("AETNA") TO ENFORCE THE
CITY'S RIGHTS AND REMEDIES UNDER THE LEASE
AGREEMENT BETWEEN THE CITY OF MIAMI AND AETNA
(THE "LEASE") FOR THE MIAMI HYATT REGENCY
HOTEL ("HYATT"), INCLUDING AN ACTION TO
COMPEL PRODUCTION OF REQUESTED RECORDS OR TO
TAKE SUCH OTHER ACTION AS IS NECESSARY TO
TERMINATE THE LEASE
d WHEREAS, the City and Aetna have entered into a Lease
Agreement which provides, among other things, for the payment of
Additional Rent once the annual gross sales generated by Aetna
from the operation of the Hyatt reaches $19,000,000.00; and
WHEREAS, throughout the life of the Lease, the lessee has
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never reported gross sales reaching the threshold amount; and
WHEREAS, in order to verify the amount of "gross sales"
reported by Aetna for year 1995, the City retained the services
of a private consultant/CPA ("Consultant") and requested from
Aetna certain books and records related to the operation of the
Hyatt, as stipulated in Section 3.5 of the Lease Agreement; and
WHEREAS, Aetna produced some of the records requested by the
City, but has consistently failed to make available to the City
other certain documents despite the City's repeated requests.
("the Outstanding Documents"); and
CITY COMMISSION
MEETING OF
NOV 2 1 1996
Resolution No.
96-a880
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WHEREAS, a preliminary report of an audit performed by the
Consultant, based upon incomplete documents, reveals that Aetna
has likely exceeded the $19,000,000.00 threshold amount; and
WHEREAS, Aetna is interfering with the City's right to audit
its records by refusing to allow the City to inspect the
Outstanding Records; and
WHEREAS, in the process of auditing Aetna's records, the
City has learned of, and has notified Aetna of, other defaults
committed by Aetna under the Lease; and
WHEREAS, Aetna is currently in default of the Lease by,
among other things, failing to produce the Outstanding Documents
and by violating certain other sections of the Lease.
BE IT RESOLVED BY THE COMMISSION OF THE CITY OF MIAMI,
FLORIDA:
Section 1. The recitals and findings contained in the
Preamble to this Resolution are hereby adopted by reference
thereto and incorporated herein as if fully set forth in this
Section.
Section 2. The City Attorney is hereby authorized to
pursue all appropriate legal actions against Aetna Life Insurance
Company ("AETNA") to enforce the City's rights and remedies under
the Lease Agreement between the City of Miami and AETNA for the
Miami Hyatt Regency Hotel, including an action to compel
production of requested records or such other action as is
necessary to terminate the Lease.
Section 3. This Resolution shall become effective
immediately upon its adoption.
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PASSED AND ADOPTED this 21st day of November 1996.
k-ROaLO,LMAYOR
ATT T
WALTER J. F E
CITY CLERK
PREPARED AND APPROVED BY:
+0LGRAMIREZ-S 'IJNT CITY AT ORNEY
APPROVED AS TO FORM AND CORRECTNESS:
NF
j A. Q 0 S, III
CITY TT Y
W1246:csk:ORS
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Honorable Mayor and
Members of the Commission
CITY OF MIAMI, FLORIDA
INTER -OFFICE MEMORANDUM
DATE:
SUBJECT :
November 12, 1996
FILE
Resolution Authorizing the
i
City Attorney to Pursue
FROM REFERENCES: Legal Action Against Aetna
/err eim �—""'�'�"^` Life Insurance Company
Manager ENCLOSURES:
RECOMMENDATION:
It is respectfully recommended that the City Commission adopt the attached Resolution
authorizing the City Attorney to pursue legal action against Aetna Life Insurance
Company, including an action for termination of the Lease, for its failure to cure certain
defaults under the Lease Agreement between the City of Miami and Aetna Life Insurance
Company (the "Lease"), including its failure to provide books and records related to the
operation of the Hyatt Regency Miami Hotel, in compliance with Section 3.5 of the Lease.
BACKGROUND:
The Lease grants the City of Miami as "Additional Rent", a percentage of gross sales once
the total amount of said sales exceeds $19,000,000. The potential revenue to the City,
should Aetna reach the $19,000,000 threshold, is at least $304,000, less applicable set-
offs. To date, the lessee has never reported sales reaching the threshold amount.
In order to verify the amount of "Gross Sales" reported by Aetna, in May, 1996, the
Department of Conferences, Conventions and Public Facilities (the "Department")
requested from Aetna certain books and records related to the operation of the Hyatt
Regency Miami Hotel, as stipulated in Section 3.5 of the Lease.
In this connection, the Department engaged the services of a private Consultant/CPA, to
audit Aetna's books and records to determine whether the $19,000,000 threshold had
been reached.
After several months of trying, unsuccessfully, to obtain all necessary books and records,
the Consultant issued a preliminary report which shows that "gross sales" for calendar
year 1995 exceeded $19,000,000. In order to issue the final report, the Consultant needs
to examine certain books and records which Aetna has yet failed to deliver.
[1
MEMORANDUM . ......� _
Honorable Mayor anti ..embers of the Commission
RE: Resolution Authorizing the City Attorney to Pursue Legal Action
Against Aetna Life Insurance Company
11/13/96
Page 2
Aetna has failed to provide the requested books and records, thereby failing to comply
with Section 3.5 of the Lease. Aetna has also committed other events of default under the
Lease such as failing to operate the Hyatt as a "first-class hotel" and failing to maintain the
Replacement Reserve Account as required by the Lease.
Attachments: Resolution
I ORS:W 152MemoHonMayor&Comdoc
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FROM Panasonic FAX SYSTEM pi -ONE No. ;
OTof
46� I& ant
1p-r�\
City A!Iarnev
uno '
November 1, 1996
Mn William A. Kuzel
Investment Officer
Portfolin Management Group
Aetna Life Insurance Company
151 Farmington Avenue
Hartford, Connecticut 06156-3124
RE: Lease Agreement between the City of Mixtzai ("City") and
Aetna Life Insurance Company ("Aetna") for the
Hyatt Regency Miami
Dear Mr. Kuzel:
Nov, 14 199G 11:14AM pl
t S051 416.,800
rek:LUPiri: t3031 416.1001
On June 7, 1996, the City declared Aetna to be in default of the referenced Lease
for failure to comply with Sections 3.4 and 3.5 of the Lease. Aetna failed to cure the
default within the time stipulated in the. Lease, and on July 12, 19%, the City advised
Aetna that it would submit the issue of Aetna's default to the City Commission thr a
determination regarding the City's course*of action.
Following receipt of the City's letter of July 12, 1996, Aetna agreed to make
available to the City certain records described in the letter (the "Hyatt Records") to give
the City the opportunity to consider the information being provided and whether
additional records would be required. In accordance with the terms of the July 121, letter,
the City agreed to postpone the submission of Aetna's default to the City Commission
pending review of the Hyatt Records.
During the City's inspection of the Hyatt Records, the City requested additional
records and materials in order to complete its examination pursuant to Section 3.5 of the
Lease. Despite repeated requests Crom the City, Aetna has failed to make available to the
City the additional records requested (the -"Additional Records"). Aetna's failure to
provide the City with the Additional Records violates Section 3.5 of the Lease and
prevents the City from finalizing its audit.
The purpose of this letter is to provide Aetna with notice of all outstanding
,d,ofautsa under the LesecP, both previously noticed and identified during the City's
I
nspection. These defaults may be Summarized as follows;
OFFICE OF THE CITY ATTORNEY./444 S.W. 2nd Avenue, Suite 94SUami. Florida 3_413U-1 y i u
96-8$03
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FROM : Panasonic FAX SYSTEM PHONE NO. Nov. 14 1996 11:15AII P2
t
Mr. William A Kurt.
November 1. 1996
Page 2
1. Failure to submit a statement which satisfies the requirements of Section 3.4 of the
Lease.
2. Failure to comply with Swiuri 3.5 of the Lease by, among other things and
specifically, refusing to make available to the City the Additional Records requested in
writing on September 13, 19%, and again verbally on October 28, 1996, at the meeting
between counsel for Aetna and the City.
3. Failure to comply with Section 12.1 of the Lease by failing to continue to operate
a restaurant in the trace &,rmerly om . .pied by The Esplanade Restaurant.
4. Failure to comply with Section 1.16 of the Lease by failing m maintain the required
.number of rooms available for rental.
5, Failure to comply with Sections 1,1 b, 10.2 and 12.1 of the Lease by failing to
operate the Hotel as a "first-class hotel."
6. Failure to maintain all books of account of the Hotel in accordance with the
standard provided in Section 3.7 of the Lease.
7. Violation of Section 15.2 of the Lease, as amended, by withdrawing all funds from the
Replacement Reserve Account.
As we indicated to Mr, Suarez, representatives of the City are willing to meet with
Aetna after the City has had an opportunity to review the Additiunal Records. However,
if you continue to refuse to provide the City with the Additional Records, to which the
City is clearly entitled under the Lease, it is our intontion to prod to enforce our client's
rights under the Tease, including termination.
Very Truly Yours, l
Assist�t City Attorney
ORS/et
cc: A. Quinn Jones. U1, City Attorney
Merrett R. Stierheim, City Manager
Ms. Christina Abrams, Director
Warren Bittaer, Asst. City Atty,
Mr. E. P. Iaconis, CPA
Xavier Suarez, Esq.
URS; W 149LTRFuzd.dao
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FROM : Panasonic FAX SYSTEM
MERRETT R. STIERMIZIM
CITY MANAOFA
October 7, 1996
PHONE RD.
c
Mr. William Kuzel
Investment Officer
Aetna Life Insurance Company
151 Farmington Avenue
Hartford, CT 06156.3124
Re: Lease Agreement with City of Miami-_H�y„att Regency
Dear Mr. Kuzel:
Nov. 14 1996 04: 3OPM P2
P.O. Sox 330YAa
MIAMI, FLORIDA 33233.0704
(305) 250-5:00
FAX (305) 28s•183s
As City Manager of the City of Miami, it is my responsibility to the City
Commission to review all City contracts and leases. Upon review of the Lease and
Agreement with Amendments between the City of Miami and Aetna, as the Owner of the
Hyatt Regency Hotel in Miami, I have been advised, and hereby give notice, that
Additional Rent for 1995 is due and owing to the City.
This Additional Rent was calculated by the City in accordance with Section 3.2 of
the Lease, as a result of the City's inspection of the Hyatt's 1995 accounting books and
records to date. The preliminary report of the City's external auditor, shows that, upon
preliminary inspection of the Hyatt's accounting bwks and records produced thus far,
Gross Sales for 1995 has been calculated as S21,549;270.22. After the contractual
exclusion was subtracted, the Additional Rent was Computed to be $344,789-32. This
amount would be subject to further revision upon receipt of additional documents Aetna
has bcxu requested to provide.
In addition, pursuant to the terms of Section 2.5 of the Lease, since a variance of
1 greater than five percent (5%) has been disclosed by the report of the City's external
auditor, the cost of the external suditar thsll he at Aetna's expense, to be immediately
paid to the City by Aetna.
96 8Z-30
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FROM Panason i c FAX SYSTRI PHONE N0.
Mr. William Kuzel
October i, 1996
Page Two
A
Nov. 14 195E 04: 3 rPM F1
The auditor's report also indicates that Aetna has not complied with the terms
and conditions of several Sections of the Lease, wid may be in technical default, With
many significant matters concerning the City at this time. I cannot be personalty involved
with each and every issue. I, therefore, expect these matters to be handled expeditiously
and directly between you and Mrs. Christina Abrams, the City's Director offonferences,
Conventions and Public Facilities, concerning payment of the Additional Rent and
auditor's fees, as well to resolve the question of compliance with the Lease terms. While
I am confident that these matters can be resolved without my involvement, if there is
significant contention, this may have to be brought to the attention of the City
Comic ssion for resolution. However, I trust that this %ill not be necessary.
In any event, however, I am expecting that Aetna will act in speedy compliance
with the Lease terms, and will melee prompt payments of the Additional Rent due and the
cost of the City's inspection of Hyatt's books and records.
I request that you contact Mrs. Abrams at your earliest convenience to resolve any
questions related to compliance with the Lease, and to determine the exact amounts of
payments to be made.
Your swift handling of this matter would be upprcuiatcd.
truly yours,
' Merrett R. Stierheim
City Manager
cc: Honorable Mayor and Members of the City Commission
Christina M. Cuervo
Christina P. Abrams
G
"n.
A. QUINN (ONES. III
City At
VIA TELECOPIER AND
CERTIFIED U.S, MAIL,
RETURN RECEIPT REQUESTED
Mr. William A. Kuzel
investment Officer
Portfolio Management Group
Aetna Life Insurance Compicny
IS I Farmington Avenue
Hartford, Connecticut 06156.3124
Darr Mr. Kuzel:
�Y
� ♦j f r�.`,Qi`
June 7, 1996
(3051: 579•67OU
Telecopier: 1305) 579.33"
Christina Abrams, Direcrnr of the Department of Public Facilities, has forwarded
your letter of June 3, 1996 to this office for handling.
In the interest of clarity and with the hope of finding a prompt and amicable
resolution to this apparent problem, please allow me to summarize the events.
1. Section 3.4 of the Lease requires the Developer to submit to the City,
within ninety (96) days after the close of each calendar year, two things:
(a) a detailed statement for the preceding calendar year showing gross
Wes (as defined in Section 3.2(a) of the Lease) and operating expenses and
cash reserves required under the Lraw mid the llotel Managcmcnt
Agreement, Lqd
(b) a certificate of the Developer's independent certified public
accountant, addressed to the City, stating (i) that he is familiar with the
provisions of the Lease, (ii) whether his examination has disclosed any
default in any payment required to be made under the Lease, and (iii)
attesting to the accuracy of the report and conformity with the
requirements of Section 3.7 of the LeAne
2. On or about March 29, 1996 the City received the Hotel's fnancial
satements for years ended December 31, 1995 and 1994, presumably in
OFFICE Of THE CITY ATTORNEY/Dupont Plaza Center. Suite 300/300 Siscayne Boulevard Way/Miami, Florida 33131
. 96 - 880 ,
:170 966T bT '"ON 'ON 3N0Hd 1,21SAS „dd 01uoSpued : WD"
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Mr. William A. Kuze'1'""
June 7, 1996
Page 2
satisfaction of Developer's cbligations under section 3.4 of the Lease, The
fnancial statements, however, do not satisfy the Developer's obligation under
Section 3.4 of the Lease. As stated in the Report of Independent Accountants and
explained in the !dotes to Financial Statements, "the . , . financial statements were
prepared for the purpose of complying with the terms of the Management
Agreement between Aetna Life insurance CurrVany anti Hyatt Cutpuratiucl .. .
and are not intended to be a presentation in conformity with generally accepted
accounting principles."
3, As a result of the Developer's failure to comply with Section 1.4 of the
Lease and in light of the apparent dispute between Aetna and the City with regards
to the definition of "Gross SAies" the City elected to exercise its right'to inspect
the records and books of account of the Developer pursuant to Section 3.5 of the
Lease. A request for the records and books of account was made by letter dated
May 3, 1996 received by your office on May 1 ath.
4. Although the first request for records stated a desire to commence the
inspection on May 13, 1996 and requested your designation of a. coordinator by
that date, it was not until May 21, 1996 that you responded to the City by stating
that the request was "vague and very broad," You requested a more precise
indication of the items that the City would like to review whereupon you would
make arrangements for the review of those materials.
5. On May 24, 1996, the City made its second request to inspect all records
j pertaining to the operation of the Hotel. As stated in that letter, the City does not
have any information concerning the records maintained in connection with the
Hotc1 turd tltaterafe it is not able to mahc a rcqucst for specific documents. MS.
Abrams, again, requested that you notify her if, for whatever reason, the inspection
could not commence on May 30, 1996,
6. Ott May 28, 1996 you faxed Ms. Abrams a memorandum setting forth the
agenda for a meeting scheduled at your request on May 29, 1996. The topics for
discussion had absolutely nothing to do with the request for documents. At this
meeting you stated that neither Aetna nor Hyatt had the manpower to make
available to the City the documentation that the City had requested. Again, you
requested that the City submit to you a request for specific documents which you
would make available for inspection within 48 hours.
7. On May. 30, 1996 Ms. Abrams again requested all books and records
pursuant to Section 3.5 of the Lease and, specifically, requested certain records
which Aetna was required to have in order to submit the detailed statement
required under Section 3 A of the Lease. Addltionally, a request was made for the
Hotel Management and Valet Parking Agreements, for all concessionaire
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Mr. William A, Kuaeh�
June 7, 1996
Page 3
agreements and a demand was made for Aetna's compliance with Section 3.4 of
the Lease.
Notwithstanding the spec: fk;ily uC the tWrd request, no documents have yet been
received nor made available to the City for its inspection.
It is the City's opinion that Aetna does not wish to comply with the City's request
under Section 3,S of the Lease even where specific documents, such as those detailed in
the third request, are requested. Further, it is the City's position that Aetna has breached
the terms of the Lease by failing to comply with the previsions of Section 3.4 and 3.5 of
the Lease. Accordingly, pursuant to Section 18.1(c) of the Lease the City hereby gives
Aetna notice of such failure and demands that the breach be cured within thirty (30) days
of your receipt of this notice.
In the interest of cooperation let me suggest that you immediately comply with the
provisions of Section 3.4 of the Lease and make available to the City, for inspection, all
records which must be examined in order to prepare the statement required therein as well
as the contracts . and other specific information detailed in the third request. After
reviewing these records, the City and Aetna will be in a better position to evaluate the time
and cost involved in a complete examination under Section 3.5 of the Lease.
We sincerely hope this can be resolved amicably.
Sincerely,
oL R�Z-s fJn
" s tant CityAttorn ey
ORS/et
co; A. Quinn Jones, HT, City Attorney
W. Christina Abrams
Ms. Christina Cuervo, Asst. City Manager
Mr. E.P. Iaconis
Eric Johnson, Esq. - Aetna Insurance Company
ETVI 171 U.DOG
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LESLIE ALAN ROZENCWAIG, PA.
LOREN S. GRANOFF, PA. M
MARITZA PENA
ROSARIO FERRERO-CARR
BARRY S. YARCHIN
OF COUNSEL
ALSO ADMITTED IN NY S GA
ROZENGWAIG & GRANOFF
A PARTNERSHIP OF PROFESSIONAL ASSOCIATIONS
SUNTRUST INTERNATIONAL CENTER
ONE SOUTHEAST THIRD AVENUE
SUITE 960
MIAMI, FLORIDA 33131
July 11, 2000
Sent Via Facsimile and Regular U.S. Mail
Walter Foeman
City Clerk's Office
3500 Pan American Drive
Miami, Florida 33311
Phone: (305) 250-5360
Fax: (305) 858-1610
TELEPHONE (305)37 -6100
TELEFAX (305) 3 9-6808
E-MAIL: B[ZLITLAvi@aol.com
as
PV
Re: Daniela Hernandez Corrales vs. City of Miami;: et al., If
Eleventh Judicial Circuit, Miami -Dade County, Florida S
Case No.: 97-016669 CA 27
Dear Mr. Foeman,
This letter will confirm our telephone conversation this :morning wherein I informed your
office that our firm has been retained to represent the City of Miami and Miami Center
Associates, Ltd. in the above -styled action regarding a slip and fall that occurred in July, 1996 at
the James L. Knight Center. During Christina Abrams' June 30, 2000 deposition, Plaintiff s
counsel requested copies of the following documents:
Copies of any maintenance and operation agreements between Aetna Life
Insurance and Hyatt Corporation;
Copies of Exhibits A and B to the September 1979 Lease and Agreement
for Development between the City of Miami and Miami Center
Associates, Ltd.
Copies of the lease assumption agreements between Aetna Life Insurance '
and Hyatt Corporation;
Copies of any gross sales/payment of rent agreements between Aetna and
City of Miami.
Untitled
For
Date
Expiration Date
Gathered from z:\CityHall\CLERKS_OFFICE\_SHARE\TXBASE Research\B20 Con
version Labels\Labels by Year\1978min.doc (24-Aug-98)
-----------------------------------------------------------
-----------------------------------------------------------
AMEND AGREEMENT WITH MIAMI CENTER ASSOCIATES LTD.
R 78-599
9/28/78
25
Gathered from z:\CityHall\CLERKS_OFFICE\_SHARE\TXBASE Research\320 Con
version Labels\Labels by Year\1979min.doc (24-Aug-98)
AUTHORIZE CITY MANAGER TO SIGN AMENDED LEASE AGREEMENT - MIAMI CENTER
ASSOCIATES LTD.
R 79-616
9/13/79
7929
Gathered from z:\CityHall\CLERKS_OFFICE\_SHARE\TXBASE Research\B20 Con
version Labels\Labels by Year\1980min.doc (16-Jul-98)
-- -----------------------
AUTHORIZE EXECUTION OF FIRST SUPPLEMENTAL TO LEASE
AGREEMENT FOR DEVELOPMENT WITH MIAMI CENTER ASSOCIATES,
LTD.
Page 2
Fji
Untitled
R 80-500
6/30/80
1-3
Gathered from z:\CityHall\CLERKS_OFFICE\_SHARE\TXBASE Research\B20 Con
version Labels\Labels by Year\1980min.doc (16-Jul-98)
APPROVE EXECUTION OF REVISED PARKING AGREEMENT -
MIAMI CENTER ASSOCIATES, LTD.
R 80-600
7/24/80
Page 3
Untitled
Gathered from z:\CityHall\CLERKS_OFFICE\_SHARE\ESTHER - Agreements\EST
HER - Agreements\FILE CONVERSION\agreements-l.doc (12-Jul-99)
AMENDMENT #1/LEASE AGREEMENT
WITH MIAMI CENTER ASSOCIATES
OF 9/13/79.
LETTER AGMT TO JOSEPH GRASSIE
FROM ROGER CARLTON OF 8/8/86
LETTER AGMT. TO CESAR ODIO FROM
ROGER CARLTON OF 8/8/86
LETTER AGMT. TO JOSEPH GRASSIE
FROM CESAR ODIO OF 8/8/86--- (SEE # 4227 }/ REF:6331/5326
AMENDMENT #4 DATED: 12/23/92 - 12/18/92(DEED)
AIDA LEVITAN & ASSOCIATES
8/15/86
CONSULTANT .--------------------- -5869
Gathered from z:\CityHall\CLERKS_OFFICE\_SHARE\ESTHER - Agreements\EST
HER - Agreements\FILE CONVERSION\agreements.doc (24-May-00)
Name MIAMI CENTER ASSOCIATES, LTD. (MCA)
For FIRST-CLASS EXHIBITION SPACE / UNIVERSITY OF MIAMI JAMES L.
KNIGHT INTERNATIONAL CENTER (CONVENTION CENTER)
Date 9/1/87
Expiration Date
File Number 6331 (SEE AGMT.#4227)
AMENDMENT #2 / COPY OF AMENDMENT #3, DATED: 9/1/88 / AMENDMENT #4, DAT
ED:
12/23/92Name
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