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HomeMy WebLinkAboutOutside Counsel MemorandumOUTSIDE COUNSEL MEMORANDUM TO: Honorable Mayor and Members of the City Commission FROM: Outside Counsel DATE: September 26, 2024 RE: City Commission Meeting — September 26, 2024 Proposed Settlement — The Mad Room LLC d/b/a Ball and Chain, Altos Mexicano, LLC d/b/a Taquerias El Mexicano, Little Havana Arts Building, LLC, and La Gran Fiesta, LLC v. City of Miami, Case No. 21-CV-23485- RKA, pending in the United States District Court for the Southern District of Florida File No.: 16670 The proposed resolution seeks authorization for the settlement of the above referenced case by authorizing the City Manager to enter into a Settlement Agreement with The Mad Room LLC d/b/a Ball and Chain, Altos Mexicano, LLC d/b/a Taquerias El Mexicano, Little Havana Arts Building, LLC, La Gran Fiesta, LLC, together with certain affiliated non-parties further described therein, and with the City of Miami's insurer, QBE Specialty Insurance Company, and negotiate and execute any and all necessary documents for the purposes stated therein. The Office of the City Attorney has investigated and evaluated this case and has approved the recommendation of this settlement. Funds not to exceed the amount of twelve million five hundred thousand dollars, less the dollar amount of any mitigation or forgiveness of liens or fines imposed on any plaintiff on or before August 12, 2024, will be paid from Account No. 50001.301001.545014.0000.00000, in two installments. Attachment(s) cc. Art Noriega, V, City Manager Miriam M. Santana, Agenda Coordinator City of Miami Legislation Resolution Enactment Number: R-24-0390 City Hall 3500 Pan American Drive Miami, FL 33133 www.miamigov.com File Number: 16670 Final Action Date:9/26/2024 A RESOLUTION OF THE MIAMI CITY COMMISSION, AUTHORIZING THE CITY MANAGER TO ENTER INTO A SETTLEMENT AGREEMENT WITH THE MAD ROOM LLC D/B/A BALL AND CHAIN, ALTOS MEXICANO, LLC D/B/A TAQUERIAS EL MEXICANO, LITTLE HAVANA ARTS BUILDING, LLC, AND LA GRAN FIESTA, LLC (THE "MAD ROOM LITIGATION SETTLEMENT AGREEMENT") AND NEGOTIATE AND EXECUTE ANY AND ALL NECESSARY DOCUMENTS, IN A FORM ACCEPTABLE TO THE CITY ATTORNEY, FOR THE PURPOSES STATED HEREIN; AUTHORIZING THE CITY MANAGER TO ENTER INTO A SETTLEMENT AGREEMENT AND RELEASE WITH QBE SPECIALTY INSURANCE COMPANY (THE "QBE SETTLEMENT AGREEMENT") WITH RESPECT TO QBE PUBLIC OFFICIALS AND EMPLOYMENT PRACTICES LIABILITY POLICY # QPO01103-04 ISSUED TO THE CITY; POLICY PERIOD 11/01/20 TO 11/01/21 (THE "POLICY"); FURTHER AUTHORIZING THE DIRECTOR OF FINANCE TO MAKE OR DIRECT PAYMENT, PURSUANT TO THE TERMS OF THE MAD ROOM LITIGATION SETTLEMENT AGREEMENT, IN AN AMOUNT NOT TO EXCEED TWELVE MILLION FIVE HUNDRED THOUSAND DOLLARS AND NO CENTS ($12,500,000.00) ("SETTLEMENT AMOUNT") TO MAD ROOM PLAINTIFFS, AS DEFINED BELOW, WITHOUT ADMISSION OF LIABILITY, IN FULL AND COMPLETE SETTLEMENT OF ALL CLAIMS AND CONTROVERSIES THAT WERE RAISED OR THAT COULD HAVE BEEN RAISED IN THE CASE STYLED THE MAD ROOM LLC D/B/A BALL AND CHAIN, ALTOS MEXICANO, LLC D/B/A TAQUERIAS EL MEXICANO, LITTLE HAVANA ARTS BUILDING, LLC, AND LA GRAN FIESTA, LLC V. CITY OF MIAMI, CASE NO. 21-CV-23485- RKA, PENDING IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF FLORIDA, AS FOLLOWS: (A) INITIAL PAYMENT OF NINE MILLION DOLLARS AND NO CENTS ($9,000,000.00) ("INITIAL PAYMENT") DELIVERED BY OR ON BEHALF OF THE CITY ON OR BEFORE NOVEMBER 8, 2024; AND (B) PAYMENT OF AN AMOUNT EQUAL TO THE REMAINING BALANCE OF THE SETTLEMENT AMOUNT AFTER REDUCTION FOR THE INITIAL PAYMENT AND THE DOLLAR AMOUNT OF ANY MITIGATION OR FORGIVENESS OF LIENS OR FINES IMPOSED ON ANY PLAINTIFF PRIOR TO AUGUST 12, 2024, DELIVERED BY OR ON BEHALF OF THE CITY ON OR BEFORE OCTOBER 31, 2025; ALLOCATING FUNDS FROM ACCOUNT NO. 50001.301001.545014.0000.00000; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, on September 30, 2021, The Mad Room LLC d/b/a Ball and Chain, Altos Mexicano, LLC d/b/a Taquerias El Mexicano, Little Havana Arts Building, LLC, and La Gran Fiesta, LLC (collectively, "Mad Room Plaintiffs") filed a lawsuit against the City of Miami ("City") in the U.S. District Court for the Southern District of Florida styled as The Mad Room LLC d/b/a Ball and Chain, et al. v. The City of Miami, Case No. 21-cv-23485-RKA ("Mad Room Litigation"). WHEREAS, on November 17, 2022, Mad Room Plaintiffs filed their First Amended Complaint ("Amended Complaint") against the City, alleging (1) substantive due process violations under the United States Constitution; (2) substantive due process violations under the Florida Constitution; (3) procedural due process violations under 42 U.S.C. § 1983; (4) procedural, facial, quasi -facial, and as -applied challenges to a provision of the City Code under 42 U.S.C. § 1983; (5) an equal protection claim under 42 U.S.C. § 1983; (6) an unlawful search and seizure claim under 42 U.S.C. § 1983; and (7) violation of the City Charter; and WHEREAS, on January 9, 2024, the City filed its Answer and Affirmative Defenses to the Amended Complaint and Counterclaim ("Counterclaim") against Mad Room Plaintiffs, alleging violations of Fla. Stat. §§ 772.103, 895.03 and 772.103(4), and common law fraud; and WHEREAS, the City denies liability regarding all claims asserted by Mad Room Plaintiffs, and Mad Room Plaintiffs deny liability regarding the City's Counterclaim; and WHEREAS, the City and Mad Room Plaintiffs have reached an agreement to settle the Mad Room Litigation that would fully and finally settle all claims and controversies that were raised or that could have been raised in the Mad Room Litigation; and WHEREAS, Benjamin N. Bush, Zachary B. Bush, Barry H. Bush, Susan Bush, Giovanna Bush, Regina Bush, and entities owned in whole or part by Benjamin N. Bush or Zachary B. Bush, including, but not limited to, BNZ ALS, LLC, BNZ Bar, LLC, BNZ Beach, LLC, BNZ Brickell, LLC, BNZ Enterprises, LLC, BNZ Fiesta, LLC, BNZ Financial, LLC, BNZ Gables, LLC, BNZ Giralda, LLC, BNZ Key Largo, LLC, BNZ KFC, LLC, BNZ Little Havana, LLC, BNZ LL LLC, BNZ MK LLC, BNZ Moonshot, LLC, BNZ Operations LLC, BNZ Opportunities LLC, BNZ Partners Ltd, BNZ Partners GP, LLC, BNZ Publishing, LLC, and BNZ Real Estate LLC, and such entities' respective members, managers, predecessors, successors, and assigns ("Bush - Related Parties"), will join portions of the agreement between the City and Mad Room Plaintiffs; and WHEREAS, the City, Mad Room Plaintiffs, and the Bush -Related Parties have agreed to execute a written settlement agreement memorializing the terms of the settlement; and WHEREAS, on May 13, 2024, QBE Specialty Insurance Company ("QBE") filed a Complaint for Declaratory Judgment against the City and other defendants in the U.S. District Court for the Southern District of Florida, styled as QBE Specialty Insurance Company v. City of Miami et al., Case No.: 24-cv-21854 ("Coverage Lawsuit"); and WHEREAS, QBE Specialty Insurance Company ("QBE") has agreed to fund a portion of the settlement of the Mad Room Lawsuit, which will be paid to the City from QBE Public Officials and Employment Practices Liability Policy # QPO01103-04 issued to the City; Policy Period 11/01/20 to 11/01/21 (the "Policy"), in full and final settlement of all claims and controversies between the City, QBE and the Mad Room Plaintiffs as they relate to the Mad Room Lawsuit and under the aforementioned Policy, provided that the settlement agreement and documents executed between the City and Mad Room Plaintiffs meet certain conditions required by QBE; and WHEREAS, the City and QBE have agreed to execute a written settlement agreement and mutual release of all claims and controversies between them as to the aforementioned Policy only, memorializing the terms of the QBE's contribution to the Mad Room Litigation settlement; and WHEREAS, the Mad Room Plaintiffs have agreed to execute a release in favor of QBE in consideration for QBE's contribution to the Mad Room Litigation settlement; NOW, THEREFORE, 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 adopted by reference and incorporated as fully set forth in this Section and represent findings of the City Commission. Section 2. The City Commission hereby authorizes1 the City Manager to enter into a Settlement Agreement with The Mad Room LLC d/b/a Ball and Chain, Altos Mexicano, LLC d/b/a Taquerias El Mexicano, Little Havana Arts Building, LLC, and La Gran Fiesta, LLC (the "Mad Room Litigation Settlement Agreement") and negotiate and execute any and all necessary documents, in a form acceptable to the City Attorney, for the purposes stated herein. Section 3. The City Commission hereby authorizes1 the City Manager to enter into a Settlement Agreement and release with QBE Specialty Insurance Company (the "QBE Settlement Agreement") with respect to the aforementioned Policy and negotiate and execute any and all necessary documents, in a form acceptable to the City Attorney, for the purposes stated herein. Section 4. The City Commission hereby authorizes1 the Director of Finance to make or direct payment, pursuant to the terms of the Mad Room Litigation Settlement Agreement, in an amount not to exceed twelve million five hundred thousand dollars and no cents ($12,500,000.00) ("Settlement Amount") to Mad Room Plaintiffs, without admission of liability, in full and complete settlement of all claims and controversies that were raised or that could have been raised in the case styled The Mad Room LLC d/b/a Ball and Chain, Altos Mexicano, LLC d/b/a Taquerias El Mexicano, Little Havana Arts Building, LLC, and La Gran Fiesta, LLC v. City of Miami, Case No. 21-CV-23485-RKA, pending in the United States District Court for the Southern District of Florida, as follows: (a) initial payment of nine million dollars and no cents ($9,000,000.00) ("Initial Payment") delivered by or on behalf of the City on or before November 8, 2024; and (b) payment of an amount equal to the remaining balance of the Settlement Amount after reduction for the Initial Payment and the dollar amount of any mitigation or forgiveness of liens or fines imposed on any Plaintiff prior to August 12, 2024, delivered by or on behalf of the City on or before October 31, 2025.2 Section 5. Further allocating funds from Account No. 50001.301001.545014.0000.00000for payment pursuant to the Settlement Agreement. Section 6. This Resolution shall become effective immediately upon adoption. APPROVED AS TO FORM AND CORRECTNESS: Outside Counsel Outside Counsel 9/17/2024 1 The herein authorization is further subject to compliance with all legal requirements that may be imposed, including but not limited to, those prescribed by applicable City Charter and City Code provisions. 2 If QBE pays any Policy proceeds directly to the Mad Room Plaintiffs instead of to the City, such amount shall be deducted from the portion of the Settlement Amount payable by the City.