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HomeMy WebLinkAboutR-84-0293RESOLUTION NU, C7`t O+"" A RESOLUTION AUTHORIZING THE DIRECTOR OF FINANCE TO PAY TO N.K. , INC., O/B/A TOBACCO ROAD AND NE IL KATZMAN T11E SUM OF F I F T Y TWO -THOUSAND, FIVE HUNDRED DOLLARS ($52,500.00`, WITHOUT THE. ADMISSION OF LIABILITY, IN FULL AND COMPLETE SE f TLEMENT OF ANY AND ALL CLAIMS AND DEMANDS AGAINST THE CITY OF MIAMI AND JOHN HATTON AS POLICE OFFICER OF THE CITY OF MIAMI UPON EXECUTION OF A RELEASE, REI_FASING THE CITY OF MIAMI AND JOHN HAT TON AS POI. ICL OFF ICLR Of' THE CI T Y OF MIAMI FROM ALL CLAIMS AND DEMANDS. 'V 1 Katzman WHEREAS, N.K., Inc., d/b/a Tobacco Road and .et Filed claims against the City of Miami and John Hattont individually and as Police Officer of the City of Miami For injuries and damages substained by them resulting from certain incidents involving the City of Miami and Police Sergeant John Hatton between September 1980 and August 1981; and WHEREAS, the above claims have been investigated by the Tort Division of the City Attorney's Office, and in accordance with Ordinance No. 84-17, which created the City of Miami's Self - Insurance Program, the City Attorney's Office recommends that these claims be settled without the admission of liability, for the sum of Fifty -Two Thousand, Five Hundred Dollars ($52,500.00); NOW, THEREFORE, BE IT RESOLVED BY THE COMMISSION OF THE CITY OF MIAMI, FLORIDA: Section 1. The Director of Finance is hereby authorized to pay to N.K., Inc., d/b/a Tobacco Road and Neil Katzman the sum of Fifty -Two Thousand, Five Hundred Dollars ($52,500.00), without the admission of liability, in full and complete settlement of any and all claims and demands against the City of Miami and Sergeant John Hatton as Police Officer of the City of Miami upon execution of a release, releasing the City of Miami and John Hatton as Police Officer of the City of Miami from said claims and demands. PASSED AND ADOPTED, this 8th day of March , 1984, AT T ity Clerk Maurice A. Ferre A. FERRE, Mayor CITY COMMISSION i MEETING OF 84-293 MAR H 1954 L:r,.. �..._ _.__. .......... j 84-291 TO honorable Mayor and Members DATE of the City Commission SUBJECT REFERENCES: FROM` Jose Garcia -Pedrosa J,�7 / City Attorney ;r ENCLOSURES: f, r February 27, 1984 FILEL-82-108 N.K., Inc. d/b/a Tobacco Road and Neil Katzman, Plaintiffs, vs. John Hatton, individually and as Police Officer for the City of Miami and the City of Miami, Florida D/I: Oct., 1980 thru July, 1981 South Miami venue a/k/a Tobacco Road In September, 1980, Sgt. John Hatton was assigned as the sector Sergeant for 60 Sector in the south end of the City of Miami, which sector included the bar known as Tobacco Road, located at 626 So. Miami Avenue, Miami, Florida. This is one block removed from Brickell Avenue in the vicinity of the Northern Trust Company or 7th Street. Tobacco Road is a neighborhood bar in a somewhat run down neighborhood adjacent to the high-rise condo and business area of Brickell Avenue. Tobacco Road holds the oldest liquor license in the City of Miami and has had the name Tobacco Road continuously as far as I have been able to determine through the Division of Alcoholic Beverages and Tobacco. Neil Katzman, the Plaintiff in this action, is the sole shareholder of the subchapter S corporation known as N.K., Inc. d/b/a Tobacco Road, which he acquired in 1977. Neil Katzman was a City of N.iami Police Officer from 1968 to 1972, when he resigned with merit. beginning with Sgt. Hatton's assignment to 60 Sector, it is alleged that Sgt. Hatton engaged in a series of harassing and oppressive acts against the business and in particular, Neil Katzman, by continually enforcing the 5 A.M. closing hours of Tobacco Road. It is alleged, and numerous depositions in this case reveal, that Sgt. Hatton, while riding 60 Sector, would either park in front of the premises shortly before closing hours or enter the premises at 5 A.M. and order all people out of the bar and drinks removed from the bar. He made no arrests other than those which will be mentioned later in this factual recita- tion. Two internal security complaints were lodged against Sgt. Hatton, Nos. 6869 and 7133. The former was lodged on December 19, 1980 by Neil Katzman alleging that Sgt. Hatton was harassing the business by continuing to enforce the closing hours and coming in and disturbing the patrons. It is alleged that his enforcement with reference to Tobacco Road was far and above that of any 84-293 t6norable Mayor and Members Februaty 27# 1984 of the City Commission Page 2 other bar, lounge or restaurant operating within his sector and zone; that is, he discriminated against Tobacco Road. However, at this juncture, it should be noted that, in November of 1980, that which was known as "Tent City" was located a few blocks away from Tobacco Road thereby causing increased police presence or surveillance in that area. However, there is also no doubt that Sgt. Hatton entered the Tobacco Road bar on numerous occasions during late October, November and December, 1980 for the specific purposes of making sure that no alcoholic beverages were served after 5 A.M. and clearing the bar at 5 A.M. There is some discrepancy in our own internal operating orders as to exactly how the 5 A.M. closing law should be enforced, that is, whether it requires that no alcoholic beverages may be served after that hour, but patrons may be permitted to finish what they had on the bar, or that all drinks must be cleared from the premises. Sgt. Hatton interpreted the regulation in the latter fashion and cleared the place of patrons and drinks, causing already served drinks to be emptied. It is alleged that this is a high handed and harassing tactic which caused a drop off of patronage in Tobacco Road. Tobacco Road was a bar which was known for its late night traffic and generated most of its revenues from the late night crowd. It is only one of three licenses in the City of Miami that allows an establishment to be open after 3:00 A.M. and was therefore a common meeting place for all those people who work as bartenders, managers, and waitresses in establishments such as restaurants, lounges, etc. Thus, this was the peak hour for this business. The second internal security complaint lodged against Sgt. Hatton was for an incident which occurred on the day of June 3, 1983 wherein a six member "bar check" squad of the City of Miami Police Department entered the premises at 3:30 I.M. in uniform and with at least one (Carlos de los Santos) having a shotgun. De los Santos allegedly stood at the door with the shotgun across his chest while the other five officers ordered all patrons in the bar to put their hands on the bar and spread their legs and proceeded to pat them all down. (De los Santos denies this). In addition, it is alleged and has come forth in a deposition by one of the former employees of Plaintiffs that a woman's purse was opened and emptied and returned to her. The squad then left the premises without making any arrests. Prior to that occasion they had made similar checks at other "notorious" bars on Southwest 8th Street such as the Inca and El Pescador. There is factual doubt whether or not a shell was racked in the chamber of the shotgun upon entering. 84-293 Honorable Mayor and Members February 27i 1984 of the City Commission page 3 Sgt. Hatton consulted with his immediate C Shift Commander, Capt. Glover, with reference to the problems he was having with Tobacco Road enforcing closing hours. In June of 1981, Capt. Glover accompanied Sgt. Hatton to the premises after first having chastised him for not taking more affirmative action sooner, i.e. issuing "will appear" for violation of the closing hours. At 5:01 A.M. on June 8th, 1981, Capt. Glover ordered Sgt. Hatton to issue a "will appear" to the bartender Ira Margolies for failure to close on time. In addition, Capt. Glover ordered Hatton to issue a citation to a cab driver outside for "high flagging". The charges against Ira Margolies were dropped. The appearance of the Plaintiff, which we expected to be quite shabby, is, in fact, quite good. He is a professional witness, well briefed, well schooled, and well prepared for this case. It appears that there is some animosity between Hatton and Katzman. The second prong of Plaintiff's attack comes from a January, 1981 Order of Suspension issued to Tobacco Road by the Division of Alcoholic Beverages and Tobacco which caused the closure of the Plaintiff's premises for a period of ten (10) days. It is alleged that we provided the name of Tobacco Road as one of the ten most "notorious bars" in the State of Florida for drug traf- ficking to the State Division of Alcoholic Beverages and Tobacco. We do acknowledge that we did have some liaison and contact with the Department of Alcoholic beverages and Tobacco with reference to a list they were compiling in order to comply with Gov. Bob Graham's order to crack down on drug trafficking in the State of Florida. We knew, although we had never made an arrest, that the street talk was that there was drug trafficking going on in Tobacco Road. The problem here is that we had never made an arrest at the premises; and in fact, depositions revealed that the head of the VIN squad, Ed 'westpy, never had any suspicions that drug trafficking was going on inside the premises. We did assist the State by providing members of the vice and narcotics squad to help them monitor their "bugs" while they placed undercover personnel within the premises. In particular, Officer Ken Racine manned the truck or van parked outside of the 84-293 Honorable Mayor and Members February 27, 1984 of the City Commission page 4 premises. Our police officers knew what was going on with reference to the State since they can pick up on their radio frequencies certain messages going back and forth between the State agents. In addition, Sgt. Hatton, among others, was called upon to come to the scene and to follow cars that left the premises which allegedly were transporting individuals who had initiated drug buys at Tobacco Road. We provided our computer system to get the tag number and to furnish the identities of the owners of the vehicles. DAMAGES Plaintiffs are suing for compensatory damages for the harassment and mental anguish experienced by Plaintiff, Neil Katzman and for loss of profits of the business due to our stringent, continued and allegedly harassing enforcement of the closing hours, as well as the "storm trooper" tatics of our bar check squad. In addition, Sgt. Hatton is being sued individually for compensatory damages, as well as punitive damages for his allegedly willful and wanton acts and disregard of their constitutional rights. Plaintiffs' attorneys asked for four million dollars. Their theory is based upon the life expectancy of Katzman and the revenues he would have derived from the business. He contends that as a result of our enforcement action and the notoriety received by the bar, that the bar became worthless and had to be sold for land value alone at $194,000.00. At the time of our actions, Plaintiffs were trying to upgrade the premises by bringing in a "Broadway Play" and other entertainment to attract University of Miami students and local Brickell Avenue condo inhabitants. This theory is verified by the numbers showing a manifold increase in entertainment expenses during that period. There is no question that the numbers show a marked decrease in gross revenues during the period of our enforcement, to wit, $241,000.00 to $121,000.00. We retained the firm of Laventhol & Howarth in the person of Mr. Richard Hoffman, C.P.A., to evaluate the numbers. Mr. Hoffman's theory would be that any business of this nature is capitalized over a ten year period and that based upon the numbers, the value of the business falls in the $193,000.00 range for which it was sold. There is definite evidence that Katzman invested approximately $50,000.00 in building improvements to the premises while he was there, as well as bringing in entertainment. We are faced with certain intangi- bles here in that there was a general decline in the economy in 1980 and 1981 which was reflected in the Hospitality Industry in South Florida. A complete and detailed analysis of the account- 84-293 Honorable Mayor and Members February 27, 1984 of the City Commission page 5 ing methods and theories involved is complicated, but Mr. Hoffman maintains that if the profit margin of 25%, which he has calcu- lated as a reasonable profit on the business, decreases, then the numbers could skyrocket, thereby giving the business a value in the area of $500,000.00. The records, which were provided to us upon a Request to Produce, (the only records which Plaintiffs claims to have) were incom- plete and inconclusive. They do not show the number of patrons per hour, the average bar check, etc. Therefore, we are unable to draw any conclusions as to whether or not the enforcement actions decreased the patronage of the bar at any specific time or hour and most certainly at the later hours of the evening or the early morning when this bar did its volume. However, with reference to lost profits alone, our outside figure and high figure would be a half million dollars, if Plaintiff is able to prove his damage case. LIABILITY From the testimony of the principal witnesses, as well as the six individual officers who did conduct the bar check in the manner and fashion alleged by the Plaintiff (although we dispute whether or not the shotgun was racked), it does appear that we have exposure on at least these two points. With reference to the third point concerning the State investi- gation, the Plaintiff's case is rather thin, although we do admit having had conversations with the State concerning its investi- gation. If we are held liable under §1983 in any respect, the 51988 attorney's fees that we will be liable to pay to Shutts & Bowen, will be in the area of $30,000.00 to $35,000.00. Considerable time and effort has been spent on this case by my staff and the other side has two attorneys working on the case full time. The case presents problems with reference to the loss of profits, since the numbers bear them out. Whether they can be causally connected to our actions, of course, is a matter of proof. Based upon these factors and the factual pattern recited above and the $35,000.00 legal fee that may be attendant to any verdict, we recommend a settlement of $52,500.00. The Police Department agrees with this recommendation. JGP/RAG/wpc/ab/248 Enclosures (Resolution) 84-293 ing methods and theories involved is complicated, but Mr. Hoffman maintains that if the profit margin of 25%, which he has calcu- lated as a reasonable profit on the business, decreases, then the numbers could skyrocket, thereby giving the business a value in the area of $500,000.00. The records, which were provided to us upon a Request to Produce, (the only records which Plaintiffs claims to have) were incom- plete and inconclusive. They do not show the number of patrons per hour, the average bar check, etc. Therefore, we are unable to draw any conclusions as to whether or not the enforcement actions decreased the patronage of the bar at any specific time or hour and most certainly at the later hours of the evening or the early morning when this bar did its volume. However, with reference to lost profits alone, our outside figure and high figure would be a half million dollars, if Plaintiff is able to prove his damage case. LIABILITY From the testimony of the principal witnesses, as well as the six individual officers who did conduct the bar check in the manner and fashion alleged by the Plaintiff (although we dispute whether or not the shotgun was racked), it does appear that we have exposure on at least these two points. With reference to the third point concerning the State investi- gation, the Plaintiff's case is rather thin, although we do admit having had conversations with the State concerning its investi- gation. If we are held liable under §1983 in any respect, the §1988 attorney's fees that we will be liable to pay to Shutts & Bowen, will be in the area of $30,000.00 to $35,000.00. Considerable time and effort has been spent on this case by my staff and the other side has two attorneys working on the case full time. The case presents problems with reference to the loss of profits, since the numbers bear them out. whether they can be causally connected to our actions, of course, is a matter of proof. Based upon these factors and the factual pattern recited above and the $35,000.00 legal fee that may be attendant to any verdict, we recommend a settlement of $52,500.00. The Police Department agrees with this recommendation. 84-293