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Law Firm to Pay $1.6m in Fire-fee Scandal By Michael Vasquez His law firm once stood to earn a $2 million fee for negotiating a settlement on behalf of taxpayers suing Miami -- but the agreement brokered by attorney Hank Adorno excluded scores of taxpayers. That settlement became Miami's now-infamous fire-fee scandal, sparking taxpayer anger and prompting a judge to overturn the hefty fee once headed to Adorno's firm. On Friday, the money started flowing the other way: Adorno & Yoss announced in court it would pay taxpayers $1.6 million. That payment, the terms of which still must be finalized, will be combined with $15.55 million that Miami City Hall has agreed to refund taxpayers who paid Miami's illegal fire fee but were initially excluded from the settlement. Taxpayers could see checks in the mail by next spring. The original deal that Adorno negotiated in 2004 cost City Hall $7 million -- and paid money to only seven people. While the so-called ''lucky seven'' enjoyed a windfall, the rest of Miami's thousands of taxpayers got nothing. The money paid to the ''lucky seven'' has since been recovered. New attorneys were assigned to represent taxpayers, and Adorno's initial $2 million legal fee vanished. Attorney David Hartnett, who appeared in court on behalf of Adorno & Yoss, did not acknowledge any wrongdoing on Adorno's part when telling Circuit Court Judge Jose Rodriguez of the firm's proposed $1.6 million payout. Hartnett declined to comment after the hearing. In court filings, attorneys now representing the public accused Adorno of legal malpractice and deceiving the courts when working to get his original deal approved. Those allegations against Adorno would be dropped under the proposed $1.6 million settlement. Earlier this year, The Third District Court of Appeal chided Adorno's firm in stark terms. ''Plain and simply, this was a scheme to defraud,'' the judges wrote. ``More unethical and reprehensible behavior by attorneys against their own clients is difficult to imagine.'' A Florida Bar investigation into Adorno remains pending. Miami's government leaders emerged battered from the scandal. The city claimed it never realized its deal with Adorno left out almost every taxpayer -- but the explanation was greeted with skepticism from the public. A former assistant city attorney and a deputy fire chief testified that Miami, hoping to save money, knowingly left out most taxpayers. In July, city leaders announced a proposed $15.55 million refund that would include all taxpayers. The additional cash from the Adorno firm increases that payout to $17.15 million, though an undetermined portion will go toward legal and administrative costs. The exact refund taxpayers will pocket depends on how much they paid -- apartment buildings and businesses were charged more than single-family homes -- and how many of the roughly 156,000 eligible taxpayers file for a refund. Taxpayers will be notified of the refund procedure through the mail and local media in the coming months. Refund information is also available by calling 1-800-981-7567 or at www.MiamiFireFeeSettlement.com. All Miami Fire-fee Payers Will Get Deal By Michael Vasquez One of the most embarrassing Miami City Hall sagas in recent memory took a giant step toward closure Wednesday evening, as city leaders said they had reached a tentative settlement with taxpayers over Miami's unpopular fire fee. Miami commissioners still must approve the $15.55 million deal, but that approval is expected to come later this month. A taxpayers' attorney said Wednesday that he supports the deal. In six months or so, about 80,000 eligible taxpayers could begin receiving checks in the mail -- though, as with any litigation, unforeseen delays are possible. ''It frankly puts to bed an issue that should have been put to bed a long time ago,'' Miami Mayor Manny Diaz said. Diaz was among a host of city leaders whose image took a beating over the controversial fee, begun in 1998 to help rescue Miami from the brink of bankruptcy. Miami had attempted to settle litigation over the fee in 2004, when city leaders signed on to a little-debated deal to pay $7 million to only seven individuals and their attorneys. That $7 million deal, which was later overturned by a court order, sparked citizen outrage because it left every other taxpayer with nothing. A former assistant city attorney testified last year under oath that Miami struck the first deal specifically to avoid a massive payout -- city lawyers had pegged Miami's liability as high as $24 million -- to all who had paid the fee. Miami's deputy fire chief said the same thing. `Mistake' Former City Manager Joe Arriola, who had hammered out the deal over a breakfast meeting with the plaintiffs' attorney, said he thought the $7 million would pay to settle with all fee-payers. Diaz said at the time that he had relied on Arriola to negotiate the deal. On Wednesday, Diaz, echoing earlier comments, referred to the 2004 deal as a ''mistake.'' The controversy over the fee centered on its constitutionality; in a 2004 ruling, the Florida Supreme Court deemed fees like Miami's unconstitutional because they helped pay for emergency medical services that did not directly benefit property -- essentially, you can't give CPR to a building. These days, the city charges an altered fire fee that it says passes constitutional muster. Earlier Settlement Only the first half of the $7 million settlement was ever paid out -- before a firestorm of criticism stopped the deal in its tracks. The city is still trying to recover all of that $3.5 million. Roughly $2 million has been recouped so far. ''They wasted our money; they threw our money away,'' said Little Havana activist Yvonne Bayona, who was nonetheless glad Miami has finally agreed to pay its taxpayers. ``It's something that's been lingering for a long time.'' It is unlikely the $15.55 million settlement figure will be enough to allow a full refund of all fire-fee monies taxpayers paid since 1998. Factors Each individual taxpayer's share of the settlement will depend on a number of factors: how many properties in the city that person owns or owned (people with more properties will get more); how many people file claims for the money, and lastly, whether attorneys for taxpayers are also able to obtain money from the Adorno & Yoss law firm. Taxpayers' attorney Richard Williams made it clear Wednesday that he would pursue additional claims against Adorno & Yoss -- which represented the ''lucky seven'' and negotiated the deal that netted the windfall for the group. ''We are hoping to get additional funds for the taxpayer,'' Williams said. `Very Resentful' Miami City Manager Pete Hernandez said the city has set aside $12 million that can be used toward the settlement payout, so the cost will not place a burden on Miami's budget. Hernandez said he has tried to explain to some citizens the city's position that not all the fire fee was illegal -- just the portion devoted to rescue services. But given the scandal over the past $7 million deal, Hernandez said, the public wasn't buying that argument. ''It's been tainted beyond repair,'' Hernandez said of the fee. Taxpayers, he said, are ``very resentful.'' In addition to the chance for a refund soon, taxpayers may no longer see the fire fee on future tax bills. Several city commissioners have expressed a desire to do away with the fee during this fall's budget process. Mayor Diaz said he wants that to happen as well. ''That'll be my goal,'' he said. Miami Offers Taxpayers $5.2m as Fire-fee Refund By Michael Vasquez The city of Miami has made a refund offer in the highly publicized fire-fee scandal, according to an attorney who represents city taxpayers: roughly $5.2 million, to be split among some 80,000 property owners who paid the fee. That amount is far less than what the city has previously estimated it owes the public -- and almost $2 million less than a 2004 settlement Miami agreed to pay seven people who spearheaded a lawsuit challenging the fee. That $7 million secret deal, which was later overturned by a court order, sparked citizen outrage because it left every other taxpayer with nothing. The so-called ''lucky seven'' who got the money are appealing that court order in hopes of keeping the cash. The city was accused of agreeing to pay so much to just a handful of people because it was cheaper than refunding all taxpayers -- a refund some estimates had pegged at up to $75 million. A former assistant city attorney testified last year under oath that Miami struck the deal specifically to avoid a massive payout to its citizens. Miami's deputy fire chief said the same thing. Fee Goes Back to 1998 Miami leaders, their city then on the brink of bankruptcy, began charging the fire fee in 1998. The fee was swiftly challenged in court, and in 2004 the Florida Supreme Court deemed fees like Miami's unconstitutional. The city now charges an altered fire fee that it says passes constitutional muster. However, that fee, too, is being legally challenged. City Commissioner Marc Sarnoff lobbied other commissioners Thursday for elimination of the current fee, and though other commissioners were receptive to the idea, no official action was taken. About a year ago, the courts invalidated the $7 million settlement and ordered the ''lucky seven'' it enriched to pay back what they had received so far. Only the first half of that $7 million settlement -- $3.5 million -- was ever paid. Less than half that payout, about $1.6 million, has been returned. Of that initial payout, $1 million went to the Adorno & Yoss law firm and the rest to the seven people, one of whom didn't even live in the city. Meanwhile, Miami's offer Thursday to all its taxpayers is likely to receive a cold reception. Although attorneys representing taxpayers have not formally responded, one of them, Richard Williams, called $5.2 million ``not acceptable.'' Williams, along with two other attorneys, became taxpayers' representatives after the courts ruled Adorno & Yoss lost that privilege after striking a deal that benefited only seven individuals. $24 Million Estimate Miami's own in-house legal team at one time estimated the city's potential liability for the fire fee to be as much as $24 million. A story in Thursday's editions of The Miami Herald noted that Miami Mayor Manny Diaz had promised a quick resolution to the legal saga over the fire fee -- and a refund to citizens -- almost a year ago, but as of Wednesday, Miami had not made any citywide settlement offer. City Attorney Jorge Fernandez said Wednesday evening, ``we will be engaging them very soon with an offer.'' That offer came within a day. Williams, the attorney representing Miami taxpayers, said the city finally made an offer Thursday only ``because The Herald did the article.'' ''It's an offer that they made specifically so they could say they made an offer,'' he said. Fernandez, during a City Hall discussion on the fire fee Thursday, told city commissioners that ''there has been a good-faith offer made,'' though he did not reveal the amount or that it had just occured. Told of the exact amount by a reporter, City Commissioner Joe Sanchez declined to comment on the fairness of the dollar figure because the litigation is pending. Mayor Diaz also declined to comment on the merits of the offer -- though he confirmed one had been made -- and noted the troublesome fire fee began being charged years before he became mayor. ''We're working as hard as we can to put this issue behind us,'' Diaz said. Regalado: `A Joke' City Commissioner Tomás Regalado was more outspoken on the city's new offer -- calling it ``a joke.'' ''Seven people got seven million dollars,'' Regalado said. ``We cannot offer five million dollars to the people of Miami, to the whole city. . . . This will be adding insult to injury.'' ''It's ridiculous,'' chimed in Little Havana activist Yvonne Bayona, a critic of City Hall's handling of the issue. ``They're still playing games.'' Miami
Mayor Faces Bar Ethics Probe By Carl Jones The Florida Bar has launched an ethics investigation into Miami Mayor Manny Diaz’s role in the city of Miami’s controversial $7 million settlement of a suit over the city’s illegal fire-rescue fee. The Bar is also investigating the conduct of city attorney Jorge Fernandez and former assistant city attorney Charles Mayes, both of whom were involved in the settlement talks. Diaz, a Florida-licensed attorney, did not return a call for comment. Reached this morning, Fernandez would say only that he was unaware of any investigation. Mayes, who is now in private practice, could not be reached for comment. The Bar acknowledged today that it is examining the role of the lawyers one day after confirming that Henry "Hank" Adorno, the chairman of Adorno & Yoss in Miami, is being investigated for his role in the settlement negotiations. Tony Boggs, director of lawyer regulation for the Bar, said he could not comment on which Bar rules might have been broken. Under the 2004 fire fee settlement, four lead plaintiffs in the proposed class action received a combined amount of just over $3 million, and three entities with no apparent connection to the case were allotted nearly $2 million, according to court documents. Adorno’s Miami-based firm, Adorno & Yoss, was set to receive a $2 million contingency fee. The suit was settled before the judge in the case decided whether or not to certify it as a class action. By settling at that point, the city could avoid much larger payouts that could have been due to every city property owner who paid the illegal tax. Controversy over the settlement has rocked the administration of Mayor Diaz, who with City Manager Joe Arriola negotiated the deal with Adorno. But Miami-Dade Circuit Judge Peter Lopez vacated the settlement this month and ordered those who received money under the settlement, including Adorno & Yoss, to return the money to the city. Adorno & Yoss faces a legal malpractice suit over its handling of the case. A group of city property owners who did not benefit from the settlement filed the suit in Miami-Dade Circuit Court last year. The plaintiffs contend that the law firm used its position as class counsel to "leverage the class claims for their own personal aggrandizement." Review
Conduct in Miami Fire-fee Case Editorial The recent decision by Miami-Dade Circuit Court Judge Peter Lopez to toss out the city of Miami's controversial $7 million settlement in the fire-rescue fee debacle ended one phase of the case and began another. The next phase will settle other legal issues in the case, including possible compensation for all members of the original class-action lawsuit. Resolving these issues, however, should not be the final word in the matter. The Florida Bar Association also has a part to play: The Bar should investigate the conduct of all of the lawyers involved -- and punish any who has violated legal standards. Public interest An investigation by the Bar can determine if there is probable cause that an ethical violation has occurred. Full disclosure of any such transgression is warranted because of the keen public interest in the fire-rescue fee fiasco and because many Miami property owners and residents were directly affected. Residents have a right to know if the behavior of the lawyers crossed the line and what steps, if any, will be taken to discipline wayward behavior. Miami Mayor Manny Diaz and City Manager Joe Arriola negotiated the $7 million settlement that ended up benefitting only seven plaintiffs -- not the entire class -- in a meeting with the plaintiffs' attorney, Hank Adorno. The mayor and city manager have testified that they didn't know the settlement benefitted only seven people. The City Commission unanimously approved the deal. In his order setting aside the settlement, Judge Lopez was critical of the ambiguous language of the settlement agreement and the apparent attempt by all of the parties involved, including the lawyers, to prevent the court from performing a ''fairness hearing'' on the merits of the case. The settlement agreement and letters supporting it ''are written with such ambiguity that determination of the contract's scope cannot be ascertained,'' Judge Lopez wrote. Deliberate review Moreover, the judge questioned a so-called stand-still agreement between Mr. Adorno and the city's lawyers that obliged them to remain silent about the settlement until a later date, thereby preventing most of the plaintiffs from being certified for the class-action lawsuit. The judge wrote that the stand-still agreement 'is surely sufficient evidence to support a finding that the class claims were compromised solely for the pecuniary advantage of the plaintiffs and plaintiffs' counsel.'' These are serious issues that require a thorough and deliberate review by the Bar. The judge's order suggests that the lawyers' conduct was inappropriate. The Bar should determine if any ethical or criminal violations occurred and, if so, severely punish any lawyer who violated his duty as an officer of the court. Lessons
From the Fire-rescue Fee Fiasco Editorial In his blunt and brief order last week, Circuit Court Judge Peter R. Lopez cleared up much of the confusion surrounding the city of Miami's fire-rescue fee fiasco. All of the parties directly involved in making the deal -- the city's lawyers, City Manager Joe Arriola and plaintiffs' lawyer Hank Adorno -- colluded to deny other class-action members a share of the $7 million settlement, the judge said. As a result, Mr. Adorno and the others who divvied up the payout must return the money. That is only fair. Even though some recipients have spent significant amounts of the settlement money, they were never entitled to it in the first place and, therefore, should give it back. Although this case is far from being over -- other lawsuits are pending, including one alleging improper conduct by Mr. Adorno -- there are several lessons city officials should take from this botched episode. The city manager should never negotiate a deal with opposing counsel without having the city's own legal advisor on hand. It doesn't matter how smart or savvy the city manager is; having a deal negotiated with an attorney who is representing your interest is good business. A clever lawyer can often gain an advantage because of his depth of knowledge about the case at hand, the way the law, judges, court rules, legal protocol, etc. will apply to the case. Elected officials should always understand the issue on which they are voting. This may seem obvious, but Commission Vice Chairman Angel Gonzalez acknowledged that he voted for the settlement although he didn't understand the ''legal terms'' of the resolution approving the deal. This is unacceptable. Yes, commissioners have busy schedules and must process reams of information. But they have staff and city lawyers to sort through data for them. There is no excuse for a commissioner not asking questions to learn all that is necessary about an issue before voting on it. Commissioners were fortunate in this case because the legal threshold for such a failure to perform is high. In Florida, an official's mistake must also result from ``an inexcusable lack of due care.'' Ambiguous language City lawyers must be clear in their communications with city officials. Judge Lopez said that language in the settlement agreement and letters confirming the deal was so ambiguous that ''determination of the contract's scope cannot be ascertained.'' It may be acceptable, on occasion, for a lawyer to be less than clear in a document as part of a legal tactic. But a lawyer who doesn't clearly describe the contents of a deal to those he reports to isn't doing his job.
Judge Orders Firm to Return $1 Million Fee Miami-Dade Circuit Judge Peter Lopez threw out the controversial settlement, ordering the plaintiffs and the law firm that negotiated the deal, Adorno & Yoss, to return the $3.5 million the city already had paid out. Adorno & Yoss’s attorneys fees in the case were $2 million. It will have to pay back the $1 million that it had received. The $7 million settlement which was signed in 2004 but first reported by the Daily Business Review last April was to be doled out in two payments, one in 2004 and another in 2005. Before the second payment, however, an intervening group of plaintiffs protested the settlement, halting the second payment. The case arose from an illegal fire fee assessed on city property owners in the 1990s. A group of residents filed a class action suit seeking a refund. Estimates of the full refund amount in the case exceed $20 million. But before the class was certified, the lead plaintiffs quietly settled for $7 million, leaving the rest of the city’s property owners in the cold. By the time the settlement became public knowledge, the statute of limitations on the case had run, leaving the other property owners no way to recover the illegal fire rescue fees they had paid. On learning of the settlement, a group of property owners intervened in the case, alleging that the settlement was illegal and that it had been reached in an attempt to profit at the entire class’s expense. Last year, Judge Lopez granted the intervening plaintiffs’ motion to replace the original plaintiffs as class representatives. The new class plaintiffs then began arguing that the settlement should be rescinded. In hearings earlier this year, city officials claimed they had been duped into entering the settlement by Hank Adorno and his firm’s lawyers, while Adorno & Yoss said the city officials, including Mayor Manny Diaz and City Manager Joe Arriola, knew what they were getting into. Some property owners also sued Adorno & Yoss and Adorno, for legal malpractice in representing the original class and negotiating a settlement that benefited only seven members of the class. Adorno & Yoss and the City of Miami’s attorney Scott Cole of Cole Scott & Kissane of Miami did not immediately respond to requests for comment on Judge Lopez’s ruling.
Fire-fee Deal Draws Heat Peter Clancy, a 65-year-old retiree, is not a Miami property owner, and has not had to pay the city's unpopular fire-rescue fee. When Miami leaders agreed to a controversial $7 million legal settlement stemming from court battles over the fee, Clancy got a share of the pot -- $752,713. But almost every Miami property owner who paid the annual fee got nothing, even though the lawsuit was filed as a class action on behalf of all property owners. Only seven individuals -- who together paid less than $100,000 in fire fees over the years -- split the multimillion-dollar settlement, something they were able to do because the legal class was not certified by a judge before the settlement was reached. The whole deal has given city leaders a political black eye, and they and about 80,000 property owners have gone to court to void the settlement. Some taxpayers are fuming -- accusing the city of trying to cheat them of a fee refund they were entitled to, and accusing those folks who got paid of selling out their fellow citizens. But Clancy testified Tuesday in Miami-Dade Circuit Court that he deserved the money. The comments came during the first day of a three-day hearing to decide whether the settlement should stand. Beginning in the late 1990s, Clancy said he had spent hundreds of hours a year volunteering his time to the citizen-funded legal battle to invalidate Miami's fire fee. ''I don't consider it a windfall,'' Clancy said of his $752,713 share of the settlement money. He was president of the nonprofit citizen's group that spearheaded the eight-year-old anti-fire fee lawsuit. A reduced fee is still being charged by the city. Others who had been active in the fee battle and served with Clancy on that same citizens group never even knew there had been a $7 million settlement until media reports began to surface late last year. The first half of the settlement was paid in late 2004. The second $3.5 million is on hold while the fate of the settlement is debated. The settlement called for $400,000 of the $7 million to go to the citizens group, but in testimony Clancy admitted that he and a couple of the other settlement money recipients formed another corporation and put the money there.
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A Feast
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