HomeMy WebLinkAboutR-82-0003RESOLUTION NO. 8 2 . 3
A RESOLUTION AUTHORIZING THE PAYMENT OF
$2000000 TO THE LAW FIRM OF FLOYD, PEARSON,
STEWART, RICHMAN, GREER & WEIL, P.A., AND
$50*000 TO WILLIAM S. FRATES, ESQ., FOR
LEGAL SERVICES IN CONNECTION WITH THE
ACQUISITION OF THE FLORIDA EAST COAST RAILWAY
CO. PROPERTY AND AUTHORIZING A TOTAL ALLOCATION
OF $250,000 FOR THIS PURPOSE FROM THE CAPITAL
IMPROVEMENT FUND.
BE IT RESOLVED BY THE COMMISSION OF THE CITY OF MIAMI,
FLORIDA:
Section 1. The payment of $200,000 to the Law Firm
of Floyd, Pearson, Stewart, Richman, Greer & Weil, P.A.,
and $50,000 to William S. Frates, Esq., for legal services,
in connection with the acquisition of the Florida East
Coast Railway Co. property,is hereby approved and the
total allocation of $250,000 from the Capital Improvement
Fund is hereby authorized for this purpose.
PASSED AND ADOPTED this 14 day of January 1982.
Maurice A. Ferre
M A Y O R
ATTEST:
C fg-' �-'-Vo
RALP G. ONGIE, CITY CLEW
PREPARED AND APPROVED BY:
ROBERT F. CLARK
DEPUTY CITY ATTORNEY
APED AS T FORM AND RRECTNESS:
GEORA F. KNOX, LJft.
CITYI,XTTORNEY
CITY COMMISSION
MEETING OF
J A N 14 1982
82 -3
AMUT1ON NO ......................
LAW OFFICES
FLOYD Pr -ARSON StEWARt RICHMAN OREER 31 WEIL
PROFESSIONAL AS30CIATION
tj V (91
.0
0101tNT L.PLOYD
pAY N. PEARSON
LARRY S. STEWART
GERALD OF. RICHMAN
ALAN G. CREEP
KENNETH J.WtIL
SERTNA CLAIRE LEE
JOHN M.SRUMSAUGH
STEPHEN N. ZACK
ANDREW J. MIRASITO
JAMES S.TILGHMAN, Jot.
S. DANIEL PONCE
SRUCE A.CHRISTENSEN
GARY 0.VO%
PHILLIP t.WALKER
SCOTT D.3HEFTALL
tLLEN C.FREIOIN
ROStRT S. GALT, III
DAVID W. SIANCHI
CNARLES E.SUKER,M
NERMAN J.RUSSOMANNO
ROSEPTO MARTINET
WILLIAM C. HEARON
JAMES R.OAILEY
ROSERT C.SIEGEN
MOWAROP. GROSS
THOMAS MEEKS
CNARLES H.JOHNSON
The Honorable Howard V. Gary
City Manager
City of Miami
3500 Pan American Drive
Miami, Florida 33133
Dear Mr. Gary:
January 119 198"
ONE BtSCAYNE TOWER
TWENTY-FIFTH FLOOR
MIAMI, FLORIDA 33131-18168
AREA CODE 30S
TELEPHONE 377.0241
BROWARD S23-4297
The current status of the FEC property (P & O Docks), 32.6
acres, is as follows:
1) Legal title is in the City of Miami as of March 13, 1978 -
the day the City deposited $149500,000.00 in an escrow account at the
Florida National Bank with the interest accruing to the benefit of the City.
2) The City has had possession of the P & O property since
November 129 1981 pursuant to an order entered by Judge Hoeveler (Federal
Trial Court in Miami) with the restriction only that the City not interfere
with the use of the railroad track or the docks until there has been a judicial
determination of whether the City must obtain a certificate of abandonment
from the Interstate Commerce Commission.
3) The City has tendered to the FEC all additional funds that
in our opinion are legally due. The City deposited into the escrow account
in the Florida National Bank the sum of $1,699,929.04 which represents the
difference between $23,350,000.00, the amount of the jury verdict, and
$21,651,467.01, the amount available on November 9, 1981, the day Judge
Hoeveler authorized the City to take possession, plus $1,396.05 which is
three days interest at 10% on $1,698,532.99. The total sum paid by the City
into the Bank is $16,199,929.04.
4) There presently is in the repository of the Florida National
Bank the sum of $23,796,121.16.
5) Both FEC and the City have appealed the valuation
judgment to the Third District Court of Appeal (state court). The City has
restricted its appeal solely to the issue of interest. The amount of interest
involved is $1,43.,986.24. The City filed its brief on December 14, 1981 and (�
FEC has requested an extension of 30 days.
^�: sn �,•,�.. P wl •fir-. ^...�.... ►+ ....� �/1 1".M113- 1 A /
The Honorable Howard V. Gary
January 11, 1982
Page 2
6) The City is collecting rent from FEC's former tenants and
it is our opinion that these leases can be cancelled by the City upon 30 days
notice.
7) We have requested that FEC meet with us to determine the
reasonable rent FEC owes the City for the use of the City's railroad track
and the docks. FEC has taken the position that it is not required to pay any
rent and has refused to discuss a rental fee.
8) The City has the absolute right to use any and all portions
of the property for any purpose that does not directly interfere with the
track and the docks. The City can pave, landscape, construct buildings,
museums, etc.
9) Presently pending in the Eleventh Circuit Court of Appeals
(Federal Appellate Court in Atlanta) is the issue of whether the Interstate
Commerce Commission has any jurisdiction over the property. These
consolidated appeals were argued before the Court on February 4, 1981 and
we anticipate a decision any day.
The Eleventh Circuit will (1) affirm the Interstate Commerce
Commission's decision that the City must obtain an abandonment certificate
or (2) reverse the Interstate Commerce Commission and rule that it has no
jurisdication over the property or (3) refer the matter to Judge Hoeveler for
resolution.
We have repeatedly urged against the City's filing an application
for a certificate of abandonment before the Interstate Commerce
Commission for the following reasons:
First, we are of the firm conviction that the rail line and the P &
O property are not a "line of railroad" and that the Interstate Commerce
Commission has no jurisdiction over it and that the federal court,
considering all the evidence will so rule. That, of course, is the position we
have taken from the outset, and upon which we prevailed in the state courts
and which we are presently vigorously asserting in the federal courts. Were
we to file an application for abandonment now, we would render moot all
federal appeals and irreparably damage the City's position in the future.
FEC owns substantial land within the City and County - most of which has
sometime in the past contained spur tracks or served other long abandoned
railroad purposes. E.g. The proposed Buena Vista site for a new stadium. As
the City grows, if and when it again becomes necessary to condemn FEC
property, FEC could (and no doubt would) invoke Interstate Commerce
Commission jurisdiction even if there were no valid basis therefor if FEC
deemed it expedient to place vexatious and unnecessary road blocks in the
City's or County's way.
FLOYD PEARSON STEWART RICHMAN GREER S WEIL
PROF'CSSIONAI ASSOCIAf1ON
82=3 .4
6
The Honorable Howard V. Gary
January 11p 1982
Page 3
Second, FEC can and does exert significant pressure upon the
Interstate Commerce Commission to do its bidding. That fact is apparent
from cursory examination of the court files in these cases. That means that
if FEC believed it to be to its best interests to continue to hamper and
impede the City's exclusive occupancy of the P & O, it is indeed likely that
FEC might prevail upon the Interstate Commerce Commission to delay
issuance of the abandonment certificate for many years. If the federal
courts determine that the P & O is not a "line of railroad" that is the end of
the matter.
Third, the possibility exists that the Interstate Commerce
Commission, under the considerable influence of the FEC, might even go so
far as to deny the application.
Fourth, under the present posture the City can use the P & O
property for a_y purpose that will not require removal of the single spur
track or closing the port to the few ships that use it. If the City desires, it
can cancel the present leases or it can continue to receive the income
therefrom.
Fifth, it is obvious that FEC is most anxious to have the City
apply for the certificate of abandonment since it will prejudice the City's
position and benefit FEC's. It appears that FEC has not yet abandoned hope
that eventually the City will tire of the battle, capitulate and permit FEC
to build a megastructure between the two parks. If this were not the "game
plan", why hasn't FEC filed for abandonment as the trial court suggested in
its order?
When we undertook to represent the City in July or August of
1977, several of the law firms who were most experienced in eminent
domain cases had rejected the case because of their fear of the risks
inherent in "quick takings". In addition, taking on the Florida East Railway
that had never lost a condemnation case in the Florida courts was a
formidable task. We choose to assume that awesome responsibility for a
reduced fee that reflected our desire to serve the City and achieve a major
public purpose at minimal cost to the City.
When we were retained real estate values in the downtown area
were on a strident, upward march. Thus, it was necessary to act quickly and
we believed that we could bring to successful conclusion the City's right to
take the property within a matter of 4 to 6 months. We were of the opinion
(and time has proven us correct) that without the "quick take" procedures
the City would never be able to acquire the property at current values. The
jury's verdict for the property was based on $16.57 a square foot. We call
your attention to the latest sale of property at Brickell Avenue and 13th
Street at $150. a square foot.
FLOYD PEARSON STEWART RICHMAN GREER S WEIL
PpOres SIGNAL ASSOCI1.710N
82 �3
r
L. J
1W
The Honorable Howard V. Gary
January 11, 1982
Page 4
Prior to our involvement, the City had unsuccessfully attempted
to take the P & O since 1971 and when we were retained in 1977, the City
was back to Square One. When we first accepted this employment we were
advised - and a cursory examination of the file reflected - that the City had
employed competent, qualified valuation experts and while the legal issues
were complicated, the case was ready to be tried. Since we considered the
matter of great importance, the undersigned, as senior partner, Stephen N.
Zack, Bertha Claire Lee, S. Daniel Ponce, partners plus Edward Kreiger, a
former associate as well as two paralegals, Sue Sorenson and Judy Blair
were assigned to the case. Most of my time and the time of my above
mentioned partners were devoted to this trial.
The two experts previously referred
at a cost of $15090009 J.I. Wilson and Bates
value to us as they had based their appraise
although there was no reasonable probability
changed from its actual C-1 category to C-3.
is
to which the City had hired
Cole, were of absolutely no
on a C-3 zoning category
that the zoning would be
We ultimately prevailed on the issue of the C-1 zoning. This
made a difference of millions of dollars when we finally convinced the court
and FEC that we were correct on this legal issue. J. I. Wilson just dropped
from the appraisal picture and we were unable to use him as his testimony
would have played right into FEC's hands. That left us with Bates Cole.
After hours of conferences and preparation of legal memoranda we were
able to convince him that the basis of his appraisal on the C-3 zoning
category was error. However, as we approached trial, Cole decided that his
health would not permit him to testify and in spite of our urging he refused
to participate in the trial. This created an additional burden of obtaining
expert appraisal testimony. We advised then City Manager Fosmoen and the
City Attorney of our dilemma and even seriously considered suing for
recovery of the substantial fees that had been paid to them. We spent
additional endless hours in obtaining appraisal experts which was extremely
difficult to do on such short notice in such a complicated case.
Nevertheless, we were able to do so through the combined efforts of all the
lawyers working with me on the case.
If FEC's appraisers could have based their appraisals on a C-3
mean value of $50 per square foot instead of the $22 one of its appraisers
actually utilized, the upper limit presented to the jury could have been a
possible fair market value of $70,619,750 instead of $31,000,000 with the
real danger of a jury verdict more than double the $23,350,000 amounting to
$16.57 per square foot.
One week before the trial on necessity, FEC made a two -pronged
effort to stop the trial. First, FEC filed a petition before the Interstate
Commerce Commission asking that agency to determine that it had
exclusive jurisdiction and second, the railroad brought suit in federal court
FLOYD PEARSON STEWART RICHMAN GREER S WEIL
PROrESSIONAL ASSOCIATION
a-,
82-3 6Al
.. , • ow 1W
The Honorable Howard V. Gary
January 11, 1982
Page 5
to enjoin the trial. Determined to obtain the order on necessity as quickly
as possible, we prevailed upon Judge Aronovitz to hear the matter on an
expedited basis. Witnesses for both sides testified, extensive exhibits were
presented and Judge Aronovitz refused to stay the trial. FEC had never
taken this position before in the long history of this litigation since 1971.
This separate federal proceeding was never anticipated. The legal issues
evolving therefrom are involved and for purposes of this report irrelevant. r
That the state trial proceeded as planned was of enormous financial benefit
to the City. Thus, in the major effort to obtain judgment quickly, we were
successful since the Order of Necessity was entered on March 6, 1978. (Suit
was filed in September, 1977).
The trial on the City's right to take the P & O Docks lasted for
eight days. FEC did every thing in its power to confuse, delay and drag out
the proceedings, apparently with the hope that its previous tactics of
confusing the legal issues would again succeed. However, the City prevailed
and obtained the orders of taking and necessity - the first major
breakthrough since 1971. FEC appealed these orders to the'Third District
Court of Appeal (state appellate court). Ultimately the Court rendered a
landmark decision affirming the City's right to take the property for use as
a park. This took longer than we anticipated but the opinion was worth
waiting for.
Thereafter FEC both appealed and petitioned for certiorari to
the Florida Supreme Court which we resisted and the Supreme Court ruled
in the City's favor. We are informed that this was the first time that the Ed
Ball interests and/or the FEC had ever lost a condemnation case in Florida.
In a "quick take", after the orders of necessity and taking have
been entered, there is a preliminary valuation trial which requires the City
to place into the registry of the court a sum determined by the trial judge.
As a result of the speed with which we obtained these orders we forced FEC
to agree to permit the City to deposit $14,500,000.00 in the Florida National
Bank with the specific proviso that the interest would belong to the City.
This was an innovative proposition devised by our firm which resulted in the
City's acquisition of $7,151,467 in interest. We take a great deal of pride in
this accomplishment.
After all of FEC's efforts to regain ownership failed in the
Florida courts, the Interstate Commerce Commission suddenly became
aggressive in its assertion that it, not the Florida courts, was the final
arbiter as to whether the City could take the P & O without Interstate
Commerce Commission approval. The City maintains that its right to
ownership of the P do O unfettered by Interstate Commerce Commission
interference was an accomplished fact. This question culminated in two
appeals in the U.S. Court of Appeal Eleventh Circuit which are still pending.
FLOYD PEARSON STEWART RICHMAN GREER S WEIL
PROFe SSIONAI ASSOCIATION Q 2-3
W
IV
The Honorable Howard V. Gary
January 11, 1982
Page 6
Still unresolved, however, was the question of valuation. To
forestall thisp this time Interstate Commerce Commission (as opposed to
FEC) filed a petition in federal court to again enjoin the trial. The case was
set for trial on valuation before Judge O'Connell on an expedited basis at
least three times before trial actually commenced. Trial was postponed
twice after we had prepared ourselves and our experts and other witnesses
to permit settlement negotiations between the City and FEC to proceed. `
Although settlement negotiations were unsuccessful, they did
necessitate many conferences in which we participated. Consistent with
FEC's prior efforts, the Interstate Commerce Commission's attempt to
enjoin the state proceedings on valuation also failed but resulted in Judge
Hoeveler's order refusing to stay the trial but required the City to maintain
the status quo.
The trial was long and difficult. We believed that the jury
verdict of $23,3509000 resulted from a trial that was error -ridden and we
filed an appeal on the full merits. After hundreds of hours of preparation of
our appellate brief, the City advised us that it was desirous of abandoning
the appeal and taking possession of the P & O as quickly as possible. On
November 9, 1981 we appeared before Judge Hoeveler seeking permission to
take possession of the P & O. On November 120 1981 the City paid into the
escrow fund the difference between the $14,5009000 plus the earned interest
and $23,350,000 ($1,699,929.04) and limited its appeal to the issue of
interest.
Judge O'Connell ordered the City to pay interest of 10 percent
per annum on the entire $23,350,000 from April 2, 1981 until the date of
payment. We believe that under Section 724.061 that order is patently and
egregiously erroneous. Accordingly, our brief has been submitted to the
Third District Court of Appeal and we are optimistic about our chances of
prevailing on that issue at a savings of between $1,4329986.24 and double
that amount depending on the outcome of the appeals, to the City.
Since 1977 this litigation has occupied over 50% of my time,
even more of Bertha Claire Lees, and substantial portions of Stephen Zack's
time as well as other partners of my firm and the Floyd, Pearson firm. The
many difficult and unforeseen factors with which we have contended for the
past four years on an almost daily basis, justify our request for a $250,000
fee. The City now has title and possession of the property. We are
responsibile for obtaining many millions of dollars in interest. The
additional federal court litigation, two separate lawsuits and the current
proceedings before the Interstate Commerce Commission were never
foreseen. All of the above justify our request for $250,000 for services
rendered. The City attorney who counseled with us and was kept advised
has stated that our request is reasonable and justified. Then acting City
Manager Richard Posmoen was constantly advised of the complications and
FLOYD PEARSON STEWART RICHMAN GREER S WEIL 8 2 - 3
PROFCSSIONAL ASSOCIATION
. 4 • 4v, W
The Honorable Howard V. Gary
January 11, 1982
Page 7
was informed that there would be additional charges which we estimated to
be $250,000 - no objection was voiced as he personally was acquainted with
the additional unexpected work involved due to the factors stated in this
letter. Based on all the criteria set forth in the Canons of Legal Ethics
relevant to fees, this request is substantially less than the customary fee
charged for these services rendered by six partners, two associates, two
paralegals, a staff of secretaries and office personnel.
Very truly yours,
m. Snow Frates
WSF/dpj
cc: George Knox
FLOYD PEARSON STEWART RICHMAN GREER S WEIL
GPOFr SSION.L F550CIATION V 2 - V 1�
t
I
if INTER -OFFICE NIMMORANOUV) V
Honorable Members
To of the City Commission
FPC G o a F. Knox, Jr.
Cit Attorney
VATZ December 15, 1981. FILE:
,.:r. �i:cr.
FEC Property Condemnation
REFERENCES Special Counsel Fees
ENCLOSURES: ( l )
V '
As you are aware, the City of Miami was authorized by the
U.S. Federal District Court to take possession of the above -
referenced property on November 9, 1981. This step repre-
sents a significant point in the current process which began
in 1977 with "Quick Take" proceedings being initiated. The
law firm of Frates, Floyd, Pearson, Stewart, Richman &
Greer, P.A. was engaged as special counsel for the City in
this undertaking.
The proceeding developed into involved litigation in state
and federal courts. The additional litigationwas not
contemplated. The state court condemnation was successfully
pursued through the trial court, Third District Court of
Appeal and the Supreme Court of Florida, and resulted in a
favorable ruling for the City on a highly complex matter.
During the litigation the FEC initiated proceedings in the
U.S. District Court for the Southern District of Florida in
an unsuccessful attempt to prevent the City from proceeding
with the "Quick Take" in the state court. Subsequently the
FEC persuaded the Interstate Commerce Commission (ICC) to
take jurisdiction of the property and that action went
through the ICC procedural hearings and is presently pending
in the City's appeal in the Fifth, now Eleventh, Circuit
Court of Appeal in Atlanta.
In the course of the proceedings, William S. Frates continued
to represent the City even after his departure from his orig-
inal law firm which is presently known as Floyd, Pearson,
Stewart, Richman, Greer & Weil, P.A. Mr. Frates and his
associates actively participated in all of the above proceed-
ings and are presently awaiting a decision from the Eleventh
Circuit Court of Appeal in Atlanta. In addition, they have
82 •3 .4
r
7
V
Honorable Members of -2- Re: FBC Property Condemnation
the City Commission Special Counsel Fees
been actively involved on behalf of the City in the ICC-initiated
injunction proceeding against the City before Judge Hoeveler in the
U.S. District Court for the Southern District of Florida.
The amount of fees previously expended for legal services at the
trial level on the issue of taking was $300,000 as authorized by
Resolution No. 77-721, September 8, 1977.
As of November 12, 1981, the fee submitted for additional legal
services by the City's special counsel is $250,000, as follows:
$200,000 payable to Floyd, Pearson, Stewart, Richman,
Greer & Weil, P.A.; and
$50,000 payable to William S. Frates, Esq.
Payment of this amount ($250,000) will cover the legal services of
Mr. Frates for the appeal of the evaluation issue presently pending
in the Third District Court through an appeal to the Florida Supreme
Court. Barring any unforeseen protracted litigation, this payment
will also cover the legal services of special counsel with the ICC's
intervention in the federal court.
This office has reviewed the fee submitted and is aware of the time
and effort expended by special counsel in their representation of
the City's interests. Monies are available to be allocated for this
expenditure from the Capital Improvement Fund and this office recom-
mends adoption of the attached proposed resolution.
CFK/RFC/rr
82 - 3
6%-