MONDAY, DECEMBER 10, 2012SPECIAL REPORT

Pro bono 2Public interest 4Appellate 6Arbitration 8

Bankruptcy 9Business litigation 10Class action 12

Corporate securities 13Criminal justice 14Intellectual property 15

Personal injury 16Product liability 17Real estate 19

Table of ConTenTs

The alleged crime seems almost lu-dicrous — a 13-year-old girl arrested, fingerprinted and charged for stealing a can of Coke from a Miami Beach store.

For the Florida Department of Law Enforcement to make money by allow-ing the girl’s juvenile record to be sold on the Internet, though, made it serious.

“It’s frightening because of the explo-sion of data mining around the country, which has really capitalized on this kind of access to these kinds of records,” said Effie D. Silva, a complex commercial litigation and arbitration attorney with Baker and McKenzie who wound up handling the pro bono case on the girl’s behalf. “She at that time was a 13-year-old girl that had her future ahead of her. She hoped to get a job, financial aid, fu-ture employment, and this really caused a serious threat.

“Everybody just assumes that juve-nile records are confidential. There’s never this assumption that they’re not.”

Originally, Miami-Dade Public Defender Carlos Martinez seized upon the case of the girl, known only as “G.G.” to shield her identity, as the perfect case for challenging FDLE’s practice of re-leasing juvenile records for profit. But because one public agency can’t sue an-other in Florida, Martinez sought help from Baker and McKenzie.

Enter Silva.“The G.G. case was exactly in the

parameters of the confidentiality rules,” she said. Nonetheless, she added, “I went online and I actually purchased her arrest record for $23.”

The release of G.G.’s arrest informa-tion came about because FDLE inter-preted state law as requiring their re-lease. Silva immediately recognized the sweeping impact of FDLE’s practice.

“It’s not just her,” she said. “There were tons of kids and still are tons of kids trapped in this same scenario. Once we filed the lawsuit I received calls from mothers and daughters throughout the state in similar situations.”

Last month, the First District Court of Appeal issued its opinion. It found that G.G. “was entitled to confidential treat-ment of her juvenile record.”

“When I got the opinion,” Silva said, “there was a deep feeling in me that this was something good.”

And, as a result of the opinion, FDLE has already begun withholding juvenile records in similar cases.

“After the First District Court’s ruling, the FDLE has certainly received a mes-sage from the court, and I think that it’s clear that the FDLE is going to change their policy with respect to keeping these confidential records really confi-dential,” Silva said.

NOTABLE ACHIEVEMENTS SPECIAL REPORTPro Bono

Attorney fought for girl whose confidential juvenile record was sold online

Effie D. SilvaBaker McKenzie

In many respects, the Year 2012 was a year of Recovery and Redemption.

The Troubles, as some legal market observers have called it, eased a bit as law firms recalibrated business plans, signed up laterals with strong books of business and in some cases, took the merger route and got married. Some veteran lawyers, meanwhile, abandoned the perceived se-curity of Big Law and started their own new firms from scratch.

Despite all of the changes — there has been one constant with the South Florida bar. A vast majority of our legal commu-nity did what they were hired to do: In both the private and public sectors, they served their clients well.

To prove it, the Daily Business Review is again recognizing some of the best work delivered by private and public sec-tor lawyers from Miami-Dade, Broward and Palm Beach Counties through its eighth Most Effective Lawyers in South Florida.

This year, in its eighth annual special report, the Review is recognizing more than 70 attorneys in 13 categories.

They include: Appellate, Arbitration, Bankruptcy, Business Litigation, Class Action, Corporate Securities, Criminal Justice, Intellectual Property, Personal Injury, Pro Bono, Product Liability, Public Interest and Real Estate.

As always, the attorneys were mea-sured on one critical benchmark: the re-sults for the client.

This year, there were plenty. Among them:• For the long-suffering investors who

were pushed off their own fiscal cliff by the Ponzi schemer Scott Rothstein, liti-gators obtained stunning verdicts and

settlements to place clients on the road to more than just a modest recovery.

• For a woman who ended up with de-formed hands as a result of mistreat-ment by a doctor, one litigator turned to arbitration – at her client’s insistence – to win a multimillion dollar award.

• For a foreign insurance company that needed appellate help to beat back a multimillion dollar federal court ver-dict, a former Supreme Court justice teamed with two law firm colleagues to get the result overturned.

• For homeowners who saw a mort-gage origination fraud lead to one of the biggest bank failures in U.S. histo-ry, an area lawyer and his team helped creditors recover millions lost through fraudulent or preference conveyances.

• For other homeowners whose houses were fouled by toxic Chinese drywall, class action lawyers reached an agree-ment for a payout of between $600 million and $1 billion. Throughout the pages of today’s spe-

cial pullout section, readers will learn the details about these and other cases that impacted both the public and private sec-tors.

Holding to custom, the Review’s selec-tions began with the assistance of bar members, their non-lawyer colleagues and the clients who believed their law-yers deserved recognition for what was achieved.

The nominees’ work was evaluated by the Review editorial staff and based on both tangible results and an outcome’s impact on public policy and/or business interests.

Review editors conducted a three-month selection process that focused on

not only the outcomes but the complexity of cases.

Only South Florida-based lawyers qualified for the program. The results had to be achieved between Oct. 1, 2011 and Sept. 30, 2012.

An initial cut was made to eliminate nominations that were incomplete, did not meet the criteria or clearly did not belong in the program.

The DBR’s research director reached out to many of the nominees for informa-tion to buttress the nominations.

The editors then scored the nominees before meeting to select the semifinalists.

Some of the categories that proved to be the most competitive were appellate, business litigation, criminal justice, real estate and public interest.

The DBR’s staff reporters and several outside contributors researched and fur-ther reported on the cases handled by the finalists. In some cases, they talked to the adversaries of those who were nomi-nated.

The editors reconvened in November to review the findings and research by the staff writers and contributors.

Finally, in each category, the editors undertook the difficult task of selecting one case that featured attorneys who should be recognized as a Most Effective Lawyer.

While today’s section identifies lead-ers in each category, the editors sought to be sensitive to the teamwork that went into each result. Thus, readers will see the names of many who were in the sup-porting cast.

J. AlBert DiAz

Effie Silva challenged records release.

AA2 dailybusinessreview.com MONDAY, DECEMBER 10, 2012 DAILY BUSINESS REVIEW

Michelle Tanzer knew what the par-ents faced. She had been through it her-self, with her own son.

Alex was diagnosed as being severely autistic 15 years ago.

“It was suggested that Alex be institu-tionalized, really,” she said. “That he did not have the brain work to communi-cate, let alone succeed in a mainstream environment. So his prognosis was very bleak, very bleak.”

But she fought. She used her experi-ence as an attorney to learn the work-ings of the state education system and the individual education plans (IEPs) for students with disabilities to get Alex ad-ditional attention at school.

Today, Alex has a 4.2 GPA in a main-stream high school.

“It’s a miracle, really,” she said. “Navigating the maze through the edu-cational system and the IEPs was very difficult.”

Her experience, and her success, led to a realization — and a promise.

“Having a student or child with a dis-ability is overwhelming generally to the family. They don’t know where to turn or how to get the support that they need,” she said. “While I was going through the process I realized that what I learned would be of benefit to so many other, thousands of other families ... I promised myself going forward that I would do

whatever I could to help anyone facing a similar situation.”

First she shared her experience as a parent, connecting with others facing the same challenges — not just for those with autistic chil-dren, but anyone

with a child with a disability. She didn’t give legal advice, but she offered support and anecdotal, parent to parent insights.

Then, in 2010, she got a call asking if she would take on some cases. It was a total departure for Tanzer, a real estate attorney specializing in the hospitality sector. She had no experience in disabil-ity rights, but she took them, pro bono.

With the support of the firm she works for, Holland & Knight, that ini-tial foray grew into Assisting Students with Disabilities, which she created with Disability Rights Florida, offering free legal aid to parents in need. Two years into the project, it now involves more than 30 attorneys throughout the state. They’ve successfully tackled a couple of dozen cases so far and won a positive result every time.

Now Tanzer hopes to spread the word so that more parents become aware of ASD, and expand the reach of the proj-ect.

“I’m committed to helping any stu-dent in the state of Florida that needs our help.”

FINALIST

FINALIST

Michelle TanzerHolland & Knight

Michelle Tanzer

Monica Vila Eleni Kastranakes

Attorney, firm work together to offer legal aid to parents in need

Attorneys help defend ex-official who was forced to flee the Bahamas

For Monica Vila and Eleni Kastranakes, the case of a former Bahamian official who served as an in-formant for the U.S. Drug Enforcement Administration was “haunting.”

Death threats forced him to flee with his family to the United States, but he ex-hausted his appeals over a twelve-year battle for asylum and faced deportation back to the islands.

That’s when the Holland & Knight as-sociates stepped in with a team of pro bono attorneys and pursued a prece-dent-setting line of defense that could have a far-reaching impact on future cases involving those who speak out against political corruption.

“It opened up one more avenue un-der the political opinion umbrella that didn’t exist before,” Vila said.

The case of “Mr. Smith” (as the attor-neys have asked that he be identified to protect him) began when he witnessed government corruption that included drug smuggling by members of the Royal Bahamas Defense Force. He felt duty-bound to do something about it. He went to the DEA and became a confiden-tial informant.

When he was discovered, he started receiving death threats against him and

his family. Fearing for their lives, he took his wife and three children to the United States. His attorneys says he went to the DEA, but soon realized the agency had no intention of keeping a promise to protect him. So he sought asylum, and wound up in front of an immigration judge who repeatedly interrupted him during his testimony, asking more than 200 “rapid-fire” questions and making “sarcastic and insulting comments,” Vila said.

The complaint the team of attorneys filed in the case noted that when the pre-sentation of evidence ended, the judge said: “This is so vague and general you could vomit and I could vomit because I can’t. He wants me to become a magi-cian here and grant it merely based on this kind of testimony. ... I think this case quite frankly — I hate to use the word — but I think it stinks. It smells bad because there’s no way. This is pie in the sky.”

Monica Vila and Eleni Kastranakes, Holland & Knight

See pAge AA5

DAILY BUSINESS REVIEW MONDAY, DECEMBER 10, 2012 dailybusinessreview.com AA3

Ed Mullins has been an advocate for First Amendment issues his entire ca-reer, representing Telemundo, ABC, Fox News, Newhouse Publications, the Palm Beach Post and others.

So when lawyers at the firm Ropes & Gray asked him in May to help chal-lenge a bill signed by Governor Rick Scott barring physicians from asking their patients if they owned guns, he agreed without hesitation.

Physicians, particularly pediatri-cians, sometimes ask patients about gun ownership during physicals as a preventative medicine measure. The new physician gag law, heavily backed by the National Rifle Association, would block doctors from discussing the issue with patients. Scott signed this first-in-the-nation law in June 2011.

Mullins, a Republican, said, “The statute made no sense.”

“What always floored me is there has never been justification for this,” he said. “Everyone agrees that people need to know about gun safety, even the NRA.

Yet despite all this they lobbied for passing this stat-ute. It’s an inde-fensible statute in my mind.”

Mullins viewed the law as a slip-pery slope. What if a food company like McDonald’s lobbied Scott and the Legislature

for a law barring doctors from asking patients about their diets, he wondered.

Dr. Stuart Himmelstein, governor of the Florida chapter of the American College of Physicians, said, “Reversing this law is essential in order to preserve the sanctity of the doctor-patient rela-tionship by keeping the government out of the exam room.”

In June 2011, a group of physicians in conjunction with the Brady Center to Prevent Gun Violence sued the state in Miami federal court, claiming the law

was unconstitutional and a violation of their First Amendment rights.

The state fought vigorously, and the case was heavily briefed on both sides. The NRA filed a motion to intervene, and the American Civil Liberties Union filed an amicus brief on the doctors’ side. Meanwhile, other states kept a close eye on the Florida case.

Working with lawyers at Ropes & Gray, Mullins worked on strategy, all key motions and briefings.

In July, U.S. District Judge Marcia Cooke tossed the law, deeming it uncon-stitutional and a violation of the doctors’ right to free speech.

The state has appealed to the U.S. Court of Appeals for the Eleventh Circuit, which has not scheduled oral arguments.

Mullins donated his time to the cause on a pro bono basis but has now sub-mitted a fee request to the state.

Since 1985, immigration attorney Cheryl Little has worked tirelessly on behalf of Haitians, Cubans and other im-migrants at various nonprofit organiza-tions.

In recent years, she has been fo-cused on getting the DREAM Act passed to award asylum to youths brought to the United States by their immigrant parents. In 2007, clients Alex and Juan Gomez, twin brothers from Colombia who face deportation, became the face of

the so-called DREAMers after storming Washington in a major lobbying effort. But the DREAM Act never made it out of congressional committees.

Still, Little achieved scores of deferred actions on behalf of her young clients over the years, giving them the ability to obtain work permits and driver licenses.

Last April, Little made the case that temporary relief for DREAMers would best be done administratively, not legis-latively. That day, she was flooded with

calls — one of them from former Miami Mayor Manny Diaz.

Coincidentally, Diaz, who serves on the board of the Homeland Security Council, was going to see Homeland Security Secretary Janet Napolitano in a few days. An immigrant himself, he jumped on Little’s cause and started sifting through his hefty contact list to lobby for Deferred Action for Childhood Arrivals, starting with a call to Vice President Joe Biden.

Diaz also helped draft a resolution passed by the U.S. Conference of Mayors, which he had served as president, ask-ing the administration to move forward with DACA.

Little crafted a legal memo laying out the basis for DACA and got the memo in the hands of White House aides. On May 29, she flew to Washington to meet with Obama policy advisers at the White House, walking them through the strat-egy.

At the same time, Miami immigration attorney Nera Shefer was looking for a test case to challenge the removal policy on childhood arrivals. She believed she found it in Daniela Pelaez, the valedicto-rian of North Miami Senior High School and the top-ranked student in her class of 700.

A Miami immigration judge ordered Pelaez last February to be deported to her native Colombia and gave her 30 days to leave. She called Shefer, who agreed to take the case pro bono.

Shefer immediately petitioned the Department of Homeland Security for a two-year deferred action so Pelaez could deliver her commencement speech. She then jumped from lawyering to lobbying and public relations, helping organize a protest. More than 2,500 students, teachers and school board members marched in front of the school, attract-ing national attention.

Shefer then took Pelaez to Washington to meet with members of Congress as well as President Obama’s chief immigra-tion policy adviser. Marco Rubio, David Rivera, Ileana Ros-Lehtinen, Frederica Wilson and Bill Nelson all wrote letters in support of Pelaez to Napolitano.

Shefer blitzed the airwaves with Pelaez, making the articulate young woman the new face of DREAMers.

Napolitano granted both Daniela and her sister, Dayana, deferred action, put-ting off deportation for two years. They also received permission to work and to obtain driver licenses and Social Security numbers.

On June 15, Obama announced the new DACA policy — up to 1 million people under age 31 who arrived in the United States before age 16 are eligible for two-year deportation deferrals.

Cheryl LittleAmericans for immigrant JusticeManny Diazlydecker DiazNera SheferGrisales-racini, Shefer, Hershey, Gonzalez-rabagh, Miculitzki

PuBLIC InTEREST

J. AlBert DiAz

Cheryl Little with Florida Immigrant Advocacy Center.

J. AlBert DiAz

Manny Diaz of Lydecker Diaz.J. AlBert DiAz

Nera Shefer of Grisales, Racini, Shefer, Hershey, Gonzalez-Rabagh, Miculitzki.

Legal, lobbying efforts helped produce deferred deportation policy

Ed MullinsAstigarraga Davis

Attorney helped defeat law stopping doctors from asking patients if they have guns at homes

Ed Mullins

FiNaLiST

AA4 dailybusinessreview.com MONDAY, DECEMBER 10, 2012 DAILY BUSINESS REVIEW

FiNaLiST

A review by the Justice Department’s Office of Professional Responsibility found that the judge “engaged in pro-fessional misconduct when he acted in reckless disregard of his obligation to be fair and impartial.”

As a result of the OPR finding, the case

was reopened. Now, said Kastranakes, “We’re hopeful that this decision in this case will be helpful to other people trying to get asylum here for fighting corrup-tion.”

FROM PAgE AA3

Pro bono: Judicial misconduct on partiality

DAILY BUSINESS REVIEW MONDAY, DECEMBER 10, 2012 dailybusinessreview.com AA5

The American Civil Liberties Union of Florida and the Florida Justice Institute began their bat-tle against a law mandating drug testing for all welfare recipi-ents the day it was signed.

The law signed by Governor Rick Scott on May 5, 2011 made Florida the first state in the na-tion to require people receiving welfare to pass a drug test since a Michigan fed-eral court struck down a similar law in 2000.

The two pub-lic interest law groups imme-diately joined forces to draft pleadings, con-duct research and, most impor-tantly, search for a test case.

They found that case when Luis Lebron called the ACLU after reading an article about the new law in a newspaper. The 35-year-old Orlando resident was a Navy veter-an, a single father and a student at the University of Central Florida. He applied for assistance un-der the state’s

Temporary Assistance for Needy Families program but refused to sub-mit to a drug test, declining to waive his Fourth Amendment rights against un-reasonable search and seizure.

The law requires admittedly impov-erished applicants to pay for the test first and seek reimbursement from the state if they pass. Those failing the test would lose assistance for one year.

The team knew the stakes were high with other states such as Georgia look-ing to follow Florida’s example.

In every aspect, the five lawyers op-erated as a team. Every filing was done by committee.

“This was a true team effort,” said Maria Kayanan of the ACLU. “I don’t think there was any way to divide it up. There were more drafts of things writ-ten than there are stars in the sky. It was a true collaborative effort.”

The lawsuit against the state, with Lebron as the class representative, was filed on Sept. 6, 2011, in the Orlando federal court.

On Oct. 24, 2011, after a contested evidentiary hearing, U.S. District Judge Mary Scriven preliminarily enjoined the state Department of Children and Families from testing welfare recipi-ents. Six weeks later, the court certified the matter as a class action. In her 37-page ruling, Scriven said the collection of urine “entails intrusion into a highly personal and private bodily function” and noted there is a “substantial like-lihood” the law will be thrown out on constitutional grounds.

“We were ecstatic at the ruling,” Berg said. “When we left the 3½-hour hear-ing, we felt good, but you can’t be sure after a court hearing how a judge will rule. We’re particularly proud of the court in standing up for the Constitution and protecting the rights of poor people not to be trampled on by the state of Florida. It’s kind of a rarity these days that this happens.”

Kayanan, who has been a lawyer since 1980, calls the case “the most im-portant of my legal career.”

Lebron is no longer on assistance and works as an associate accountant at Walt Disney World. Georgia, mean-while, has dropped plans to implement a similar law.

Florida has appealed to the U.S. Court of Appeals for the Eleventh Circuit.

Maria Kayanan, Randall Marshall and Shalini Goel agarwalAmerican Civil liberties Union Randall C. Berg Jr. and Shawn HellerFlorida Justice institute

Law groups fought drug test mandate for welfare recipients

Shawn Heller

Randall C. Marshall

Maria Kayanan

Randall C. Berg Jr.

Shalini Goel Agarwal

You might assume it’s easier to argue before the Florida Supreme Court after serving as a justice, but according to Raoul Cantero, you’d be wrong.

“There’s extra pressure,” said Cantero, a member of the court from 2002 to 2008 who leads White & Case’s Miami appellate practice. “You want to make the best presentation possible whether they rule in your favor or not.

“You want them to think you are an excellent advo-cate, and you are not relying on the fact that you are a former judge but on your own skills and preparation.”

On May 31, Cantero’s insider knowledge and experi-ence as an appellate lawyer were rewarded when the court ruled unanimously for his client, QBE Insurance Corp., in an important case stemming from Hurricane Wilma.

Teamwork also helped. His co-counsel were two Holland & Knight lawyers: his friend Rodolfo Sorondo Jr., formerly a judge on the Third District Court of Appeal, and associate Monica Vila.

Chalfonte, a condo rental property in Boca Raton, was damaged in the 2005 hurricane. Unhappy with QBE’s treatment of its claim, the condo association sued for breach of contract, breach of the implied warranty of good faith and fair dealing, and violation of the state law on hurricane deductibles.

QBE is based in Australia, so the lawsuit proceeded in federal court, where a jury awarded Chalfonte $7.2 million. QBE appealed to the U.S. Court of Appeals for the Eleventh Circuit, which certified five questions of state law to the Florida Supreme Court.

Cantero joined forces with Sorondo and Vila, who handled the case in the Eleventh Circuit, to persuade the high court to answer the questions favorably to QBE. Creating a challenge for the QBE lawyers, there was no controlling precedent in Florida.

“The conclusion we proposed followed logically from the conclusions that it had reached previously,” Cantero said.

The most important result was the court’s ruling that when an issue is contractual, insured parties like Chalfonte cannot use the implied warranty of good faith as a cover to present prejudicial evidence of bad faith to a jury.

Questions answered, the case returned to the Eleventh Circuit. On Sept. 20, the court reversed the $7.2 million judgment and ordered a new trial.

APPELLATE

Raoul Cantero iiiWhite & CaseRodolfo Sorondo Jr. and Monica VilaHolland & Knight

Ex-justice handled extra pressure in win for Australian insurer

J. AlBert DiAz

Rodolfo Sorondo Jr. and Monica Vila with Holland & Knight and Raoul G. Cantero with White & Case landed a win for insurance company.

At the start of the May 24 oral argu-ment before three appellate court judg-es, Edward Mullins must have felt like Dwyane Wade at the free-throw line.

His partner Jose Astigarraga had won in the Miami trial court. As long as the panel stuck to the issue U.S. District Judge Donald Graham in Miami decided in their client’s favor, the repartee would flow easily, and he’d be home free.

But the judges wanted to discuss a more significant matter: the definition of tribunal when seeking discovery under 28 U.S. Code Section 1782.

Mullins was ready for that lob, too. “The lesson was being prepared for any-thing you need to do,” he said.

The June 25 holding that a private arbitration proceeding in Ecuador quali-fies as a tribunal entitled to U.S. courts’

help with discov-ery, made law in the U.S. Court of Appeals for the Eleventh Circuit.

M u l l i n s , a founding shareholder of Astigarraga Davis in Miami, has worked on about 100 appeals dur-ing his career as

a commercial litigator. He said the ap-plication of Consorcio Ecuatoriano de Telecomunicaciones v. JAS Forwarding was unusually enjoyable.

“In a few appeals like this one, you re-ally get a chance to make an academic argument on the law,” Mullins said. “Because the court was interested in the arbitration issue, we were able to engage in a discourse about what the law was and should be.”

Conocel and Jet Air Service Ecuador S.A. disputed the billing of a ship-ping contract. JASE started arbitration against Conocel, the Ecuadorean tele-com company, for alleged nonpayment. For its part, Conocel said it intended to take action in Ecuador against two ex-employees accused of overbilling. The company needed records from JASE’s U.S. counterpart, JAS Forwarding.

Because the Astigarraga Davis firm is recognized for its international arbitra-tion work, Conocel went there for help with obtaining the evidence.

Persuaded by Astigarraga, Graham granted the application. He did not reach the issue of whether the directorate-general for competition of the European Commission, where the arbitration was conducted, is a “foreign or international tribunal.” The judge relied on a 2004 U.S. Supreme Court decision, Intel Corp. v. Advanced Micro Devices.

The Eleventh Circuit had not ruled on

the tribunal issue, but before Intel, the Second and Fifth circuits had closed the doors of U.S. courts to discovery requests from foreign arbitral bodies. They did not interpret Intel to require revisiting those rulings.

“The Eleventh wasn’t constrained by a prior precedent and so looked at this fresh,” Mullins said. The court was free to consider the growing importance of arbitration around the world.

“International arbitration is by far the most popular and common method of dispute resolution in foreign countries when dealing with sophisticated litiga-tion,” he said.

A motion for rehearing en banc is pending.

In the meantime, the case is cited across the country to support broad dis-covery requests, Mullins said.

“It shows a progressive, pro-arbitra-tion stance for Miami and all the cities in the Eleventh Circuit.”

Commercial litigator gets favorable ruling on discovery in international arbitrationFInALIST

Ed MullinsAstigarraga Davis

Ed Mullins

AA6 dailybusinessreview.com MONDAY, DECEMBER 10, 2012 DAILY BUSINESS REVIEW

Timing is crucial in the shopping mall development business, and an extra $1 million is a lot of money. If the Sierra Club had its way, developers of a massive town center project would have had to spend that much and postpone building a year or two for an elaborate environ-mental review.

So when the Sierra Club filed suit in 2007 to stop construction of the Cypress Creek Town Center near Tampa, the de-velopers turned to a White & Case part-ner with environmental litigation experi-ence to help them out.

On Nov. 29, 2011, the U.S. Court of Appeals for the D.C. Circuit handed Douglas Halsey and his Miami legal team a victory. They had to overcome a federal district judge’s ruling that could have set an economically disastrous precedent for their clients, R.E. Jacobs Group LCC and Sierra Properties I LLC, and for other developers.

Instead, Halsey emerged with a de-cision that clarifies guidelines for cost considerations under the Clean Water Act, the federal law that governs every wetlands project.

“The important thing is it gave the ap-propriate level of discretion to the [U.S. Army] Corps of Engineers,” which issued permits for the 1.5 million-square-foot development in Wesley Chapel, Halsey said. The mall, restaurants, residences and movie theaters are expected to be completed in spring 2014.

“Courts are not supposed to second-guess the decisions of agencies in their areas of expertise,” Halsey said, and the appellate court agreed. “It’s a welcome reaffirmation of that because there are times when district court judges act like a superagency and think it’s their job to reweigh all the evidence.”

The Sierra Club’s “clients” were the indig-enous wood stork and the Eastern indigo snake, and the group argued the project’s im-pact on their habi-tat had not been fully explored be-fore the Corps is-sued the permits.

Under the Clean Water Act, the Corps must consider whether “practicable al-ternatives” with “less adverse effect” ex-ist for every wetlands project, taking into consideration logistics, technology and costs.

Determining the economic costs is the crux of the analysis before the court. The historical cost of the land purchase many years ago was low. But the opportunity cost of changing the project by moving it or offering less parking at the present site was high.

The Sierra Club, focusing on the his-torical cost, said it would be practicable to build elsewhere or shrink the parking.

Halsey argued the Corps was right to consider the property’s fair market value and an 8 percent rate of return. Otherwise, “the net return would be so low we couldn’t attract financing,” Halsey explained.

The circuit court sent one issue back to the district court: The Corps failed to address an expert’s comment that the project could result in habitat fragmen-tation for the protected snake. Alabama believes its Eastern indigo population has been wiped out.

Halsey said he expects the Corps to issue a revised environment assessment concluding the snake’s habitat is safe “but providing a more detailed, thought-ful explanation.”

Economic-costs analysis keys developer’s win over stork, snake

FInALIST

Douglas HalseyWhite & Case

Douglas Halsey

In the past year, Cantero also left his mark for client South Florida Racing Association, owner of Hialeah Park. The owner wanted to operate slot machines at the racetrack, but it did not qualify un-der a 2004 constitutional amendment.

The Legislature tried to fix that in 2009, but Hialeah’s competitors sued. They lost in the trial court and, thanks to Cantero, in the First District Court of Appeal in October 2011.

“Now it’s opened up this public de-bate about casinos,” he said. “If it had gone the other way — a ruling that the constitutional amendment foreclosed the Legislature from legalizing slots any-where in Florida — it was going to have a huge impact on the casino and gam-bling debate within the state.”

FROM PAgE AA5

aPPellaTe: Cantero won case for Hialeah slot machines

DAILY BUSINESS REVIEW MONDAY, DECEMBER 10, 2012 dailybusinessreview.com AA7

A trio of litigators from a Miami bou-tique took on two powerhouse law firms and won for their client, a community hospital that faced off against a multibil-lion-dollar pharmaceutical conglomer-ate.

After arbitration, Lash & Goldberg landed a $7 million judgment for the de-fense April 11.

Sidley & Austin of Los Angeles and Fowler White Boggs of Tampa repre-sented drug giant AstraZeneca, owner of Comprehensive Cancer Centers through its Aptium Oncology subsidiary. Though the cancer center lawyers kicked off the litigation with a $43 million damage claim, they finished with nothing but an IOU for attorney fees.

Lash got the job when he was con-tacted by the then-general counsel for the defendant, Boca Raton Community Hospital, now called Boca Raton Regional Hospital. Lash & Goldberg has a concentration in complex commercial health care disputes.

The case, which went to arbitration before former Third District Court of Appeal Judge Melvia Green, was cer-tainly complex.

Aptium terminated its contract to run the hospital’s cancer center in July 2009. Five months later it filed a fed-eral lawsuit claiming the hospital had violated the contract in several ways. It also accused the hospital of interfering with a prospective business relationship by contacting the University of Miami and threatening litigation hours before Aptium and UM were to sign an agree-ment to open a cancer center in Broward County.

The hospital countered with a wrong-ful termination demand. The defense al-leged the termination was a pretext for getting out of a deal that had unraveled because of Aptium’s mismanagement: Aptium lost more than $20 million on the Lynn Regional Cancer Institute-West, which it closed in 2010.

“There were numerous deposi-tions and thousands of documents ex-changed,” Lash said. “It was a very large, complicated case because of the many different issues that had to be tried.”

Multiple expert witnesses for each topic converged from across the country. The final hearing required two weeks in June 2011 and a third week in October 2011.

Lash, Goldberg and Fineberg worked the case as a team. At the final hearing, especially on cross-examination, their individual strengths shone, according to Lash.

Goldberg, a former federal prosecu-tor, would not let an Aptium expert es-tablish that the market reimbursement rate for cancer drugs was higher than Goldberg knew it to be.

“He completely refuted the theory that the expert was trying to advance,” Lash said.

Fineberg, who steeped himself in the details of a number of depositions, brought Aptium’s employees to heel, one in particular.

The employee was testifying about a document that revealed Aptium was try-ing to find a way out of the hospital con-tract because of its cancer center losses.

“That document was prepared by [the employee] who Justin crossed in the final hearing, and he just did a masterful job,” Lash recalled.

When Green issued her 61-page de-cision, the hospital got $4.5 million for Aptium’s breach of contract and $2.5 million that Aptium had collected from third parties.

Boca Raton Regional Hospital won against drug giant AstraZeneca

ARBITRATIOn

alan Lash, Martin Goldberg, Justin Fineberglash & Goldberg

J. AlBert DiAz Justin Fineberg, Martin Goldberg and Alan Lash took on two powerhouse law firms and won for their client, a community hospital that faced off against a multibillion-dollar pharmaceutical conglomerate.

FInALIST

The largest insurance liquidation in Florida history, a year after Hurricanes Katrina and Wilma hit the state, left be-hind an enormous number of financial casualties.

But when a reinsurance company claimed it had been the victim of a re-lated fraud, Richard Lydecker and two lawyers from his firm moved aggressive-ly to prove otherwise. Their success was demonstrated by a $9.7 million settle-ment wrested from Everest Reinsurance Co. before the case went to an arbitra-tion hearing, saving attorney fees that could easily have topped $1 million.

In 2006, regulators sued nine com-panies comprising the Poe Financial Group led by former Tampa mayor Bill

Poe Sr., alleging the officers and directors schemed to divert $144 mil-lion to themselves from storm claims while the compa-nies headed to-ward bankruptcy.

Unpaid claims totaled $1.1 bil-lion. The Florida

Insurance Guaranty Association im-posed a surcharge that still shows up on every Florida homeowner’s insurance bill: $20 for every $1,000 in premiums.

“It’s really unfair to the people of the state of Florida that they get stuck hold-ing the bag,” Lydecker said.

The Florida Department of Financial Services hired Lydecker, a former pros-ecutor, and his Miami firm, which does a lot of white-collar criminal and civil

work, to review the losses and retrieve as much as possible.

In addition to the $9.7 million from Everest, they have recovered about $10 million from a settlement in the bank-ruptcy of a Poe subsidiary.

Far bigger bucks remain out there. A suit against Deloitte, the Poe companies’ accounting firm, seeking $500 million to $1 billion, is still in discovery. The 2006 case against the officers and directors seeking damages of $600 million to $1 billion also is pending.

In July 2011, the state filed a claim against New Jersey-based Everest at-tempting to recover almost $13 million. Everest’s response was a counterclaim asserting it was a victim of the Poe com-panies’ fraud and seeking $90 million in damages.

Working with Lydecker, the lead at-

Nearly $10 million settlement helped ease insurance lossesRichard Lydeckerlydecker Diaz

Richard Lydecker

SEE PAgE AA11

AA8 dailybusinessreview.com MONDAY, DECEMBER 10, 2012 DAILY BUSINESS REVIEW

Nancy La Vista, a West Palm Beach litigator who spe-cializes in medical malpractice, has always preferred to take her case to a jury.

She’s had a lot of positive reinforcement. In 2008, she won a $35 million verdict for a brain-damaged child. It was the largest med mal verdict in Broward County and a top-100 verdict in the nation that year.

“I really believe in trial by jury,” said La Vista, a for-mer critical-care nurse. “I believe it’s the best system we have if everybody honors it honestly.”

Nevertheless, the client is the boss, and last year she listened to hers — a woman pushing 60 with useless, deformed hands that may eventually have to be am-putated.

The client wanted arbitration. She had been treated in 2006 and, five years later, faced more continuances that stalled her turn in court.

La Vista turned to arbitration and brought in associ-

ate Tim Murphy to assist. On Nov. 3, 2011, retired Broward Circuit Judge Leonard Fleet ordered a $6.32 million award for their clients Belinda and Scott Burns of Fort Pierce. Belinda Burns, who was a county maintenance worker, is to get $500,000 for lost earnings, $4.32 million for medical expenses and $1 million for pain and suffering. Her hus-band, Scott Burns, is to receive

$500,000 for loss of consortium.“They were pleased with the award,” La Vista said.

“Mrs. Burns’ biggest goal was to hold the doctor ac-countable, and that part she got. She’s able to tell the world, ‘Look what he did to me.’ ”

Belinda Burns went to the Mid-Florida Radiation Oncology Inc. clinic in Vero Beach to be treated for squamous cell skin cancer growths on her hands.

Dr. Ronald H. Woody III administered radiation in a dosage that was 50 percent above normal, a plaintiffs expert testified at the arbitration hearing. As a result,

“Burns’ hands are like rocks,” dermatologist Darrell Rigel said.

La Vista said her client needs assistance with all ac-tivities of daily life. “She can’t clean her own house. Her husband does all that. It’s truly tragic.”

Woody argued a dermatologist made all the de-cisions, he was just a technician, Burns agreed she wouldn’t sue in exchange for the clinic waiving her medical bill, and his treatment met the required stan-dard of care, La Vista said.

“The arbitrator found that his testimony about it be-ing acceptable care was not believable,” she said.

After the ruling, Woody claimed he never agreed to binding arbitration and filed an appeal in circuit court.

On Aug. 2, he sought Chapter 11 bankruptcy protec-tion. Records show his Port St. Lucie Ventures Inc. is doing business as Port St. Lucie Cancer Center. Woody’s medical license is clear and active with no recorded dis-ciplinary action.

La Vista referred the matter to a bankruptcy lawyer. Unless a judge decides the Burnses’ claim cannot be discharged, they will be treated as creditors.

Litigator helped woman win medical malpractice arbitrationFInALIST

Nancy La VistaClark Fountain la Vista Prather Keen & littky-rubin

Nancy La Vista

BAnkRuPTCy

berger singerman team tackles recovery effort in mortgage scam

Federal agents executed search warrants on Ocala-based Taylor, Bean & Whitaker Mortgage Corp., the largest independent mortgage originator in the United States, on Aug. 3, 2009.

In the month of its demise, operations froze on ser-vicing 512,000 loans with an unpaid principal balance exceeding $80 billion.

At the time, TBW was in the process of obtaining Troubled Asset Relief Program bailout funds on its ac-quisition of a controlling stake in Colonial BancGroup of Montgomery, Alabama. The TARP application triggered an investigation.

“A Colonial employee tipped off federal investiga-tors to fraud going on between Colonial and TBW. TBW was one of Colonial’s biggest customers,” said Howard Berlin, a partner at Berger Singerman in Miami.

Eleven days after the raid on TBW headquarters, the Federal Deposit Insurance Corp. seized Colonial Bank. It was the largest bank failure in 2009 and the sixth-largest bank failure in U.S. history.

A seven-year scheme was uncovered in which TBW chairman Lee B. Farkas fraudulently hid cash shortfalls through a series of fund diversions and fake transac-tions. In Farkas’ criminal case, losses to creditors were set at $2.9 billion. He received a 30-year prison sen-tence last summer.

U.S. Bankruptcy Judge Jerry Funk in Jacksonville made Neil Luria of Cleveland the plan trustee, and Luria retained Berger Singerman to oversee recovery efforts. Claims against TBW continued to mount and now stand at $10 billion.

Berger Singerman was named counsel for the credi-

tors committee in 2009. Paul Singerman was lead at-torney, and Howard Berlin, Kris Aungst and Jesse Cloyd assisted.

Berlin said the heavy lifting came in 2011 when the avoidance actions got a full head of steam — 387 cases were filed to recover transfers of more than $280 mil-

lion lost through preference or fraudulent conveyances.“Fraudulent conveyances were typically monies

TBW spent paying for Farkas’ lifestyle — he acquired jets, yachts, homes — and he bought businesses such

Paul Singerman, Howard Berlin, Kris aungst and Jesse CloydBerger Singerman

J. AlBert DiAz

Kristopher E. Aungst, Howard J. Berlin, Paul S. Singerman and Jesse Cloyd of Berger Singerman represented Taylor Bean’s trustee.

SEE PAgE AA12

DAILY BUSINESS REVIEW MONDAY, DECEMBER 10, 2012 dailybusinessreview.com AA9

Arnstein & Lehr attorneys worked bankruptcy case with $130 million at risk in Doral developement

FInALIST

The attorneys represented BTI Partners in a bankruptcy case where the Hollywood-based land developer had a $130 million investment at risk.

The real estate market crashed around the time the Town Center at Doral’s developer, Elie Berdugo, died. BTI asked Landmark at Doral Community Development District, the conduit for nearly $71 million in CDD bonds, to foreclose.

Town Center stayed the foreclosure suit by filing a Chapter 11 petition in September 2011. A third party, Miami developer Pedro Martin’s Terra World Investments LLC, offered up to $20 million to fund a reorganization plan,

but BTI and the district opposed a plan because it required a substantial write-down of the bond debt.

“We had to convince the bank this was not a valid bankruptcy,” said Hudson, who along with Betty Shumener, a part-ner at Shumener, Odson & Oh in Los Angeles, handled all litigation and the bankruptcy aspect for BTI Partners.

The CDD had legal standing to sue on behalf of BTI, which held the bonds

Berdugo obtained to pay for infrastruc-ture.

One problematic issue was that a bankruptcy judge in Tampa ruled in August 2011 that bondholders should not be considered creditors and there-fore had no say in reorganization plans.

Bond markets took notice, and there was fear this would have a chilling ef-fect if the Tampa ruling spread to other courts. Denberg, a real estate attorney, handled all transactional aspects related to the real estate and bond documents and worked with the bankruptcy attor-neys for more than a year.

The legal team had to creatively make a compelling argument that would give bondholders standing as creditors. Hudson and Denberg concentrated on the constitutional issues and federal and state taxing powers to argue bankrupt-cy courts cannot usurp the authority of

community development districts before U.S. Bankruptcy Judge Robert Mark in Miami.

“We filed our own plan. We convinced the judge that the landowner’s plan wouldn’t work,” Hudson said.

BTI submitted its own plan and on June 22 was allowed to take the prop-erty — almost 120 acres of land that will be split among two or three buyers ex-pected to pay a combined $80 million to $100 million. Ultimately, the land will be used for single-family residential, mul-tifamily housing and commercial pur-poses.

“It’s possible the entire outstanding debt will not be repaid,” Hudson said. “However, BTI is in a better position than it would have been otherwise.”

The decision means developers can-not come into bankruptcy court and get a discount at the expense of bondhold-ers.

The work of Hudson and Denberg is likely to have far-reaching consequenc-es for other CDD bondholders, Hudson said. There are more than 600 CDDs in Florida, and about one-third of them are in default.

Michael Denberg Phillip M. Hudson

Phillip M. Hudson and Michael DenbergArnstein & lehr

BuSInESS LITIgATIOn

Litigators reached $170M settlement for defrauded Rothstein investors in state court

It cost $50 million in legal fees to prepare a case on behalf of 55 Razorback investors defrauded in Scott Rothstein’s Ponzi scheme, but the effort paid off with a $170 million settlement — the largest in Broward Circuit Court history.

After two years of preparation and on the eve of trial in February, litigators William Scherer and Harley Tropin reached the agreement to settle their suit against TD Bank for conspiring to aid and abet Rothstein’s $1.2 billion dollar fraud.

The settlement amounted to more than 90 per-cent of the Razorback investor losses of $186 million, said Scherer, a partner at Conrad & Scherer in Fort Lauderdale. Within a week, the clients received their share — $120 million. Legal fees were $50 million.

A few days later, the attorneys reached a $10 million cash settlement for their clients with a co-defendant, Gibraltar Private Bank & Trust of Coral Gables. The at-torneys are still working to collect another $10 million from Gibraltar’s insurer.

A third co-defendant, New York-based Platinum hedge fund, settled for an undisclosed amount.

TD Bank and Gibraltar held accounts that were used to funnel investment funds to Rothstein. The bilked in-vestors accused the banks of colluding with Rothstein.

“We ran this case like a large business,” said Scherer. “We met every Friday for the two years that we litigated until the settlement, and we are still meeting. “We took over 100 depositions; the transcripts were hundreds of thousands of pages. Some of them went on for days.”

Scherer said early on he knew the case was too big for his 27-lawyer firm, and he asked Tropin to come in as co-counsel. The two firms had 21 lawyers and about the same number of legal assistants working on the case.

He said his firm had extensive experience with Ponzi scheme litigation.

“Our job was to shape the case in a way we could bring it to trial quickly and with the legal theory that would streamline and unify the case.” He said ultimate-ly they chose to go with a conspiracy-fraud strategy.

“They conspired together with Rothstein to aid and abet him in what he did.”

The firms split the depositions. “That was one of the reasons we needed the additional troops,” Scherer said.

They did a mock run of the trial nine times.Scherer coordinated 10 days of depositions of Scott

Rothstein last December. He spent 2½ days taking Rothstein’s deposition himself.

Settlement momentum picked up after TD Bank lost a $67 million verdict to the Coquina investor group in January in Miami federal court.

Scherer said the trial acted as a dry run for Razorback. “Of course our case was the same. I think

TD forced that case to go to trial because they wanted the experience for my case, which was a lot bigger.”

Razorback investors also received $4.5 million in a settlement with Rothstein’s accounting firm, Berenfeld Spritzer Schecter & Sheer of Coral Gables.

“We kept pressing and pressing, and we worked a lot of weekends, and we worked a lot of nights. We all felt this was going to be a milestone case for us,” Scherer said. “I kept telling my lawyers, ‘Cherish every moment of this. No matter how successful you are, these cases come around only once in a lifetime.’ ”

William SchererConrad & SchererHarley TropinKozyak tropin & throckmorton

J. AlBert DiAz

William Scherer, left, and Harley Tropin coordinated efforts for money-losing investors suing TD Bank.CAnDACe WeSt

AA10 dailybusinessreview.com MONDAY, DECEMBER 10, 2012 DAILY BUSINESS REVIEW

A $67 million federal jury verdict in favor of a group of Texas inves-tors revealed how TD Bank aided Fort Lauderdale attorney Scott Rothstein’s $1.2 billion Ponzi scheme and set in mo-tion a string of settlements to follow.

After 22 days of trial and only 4½ hours of deliberations, the jury award-ed Coquina Investments $32 million in compensatory damages and $35 million in punitive damages Jan. 18.

Since the Cherry Hill, New Jersey-based bank posted an appellate bond, the 15 Coquina investors cannot col-lect on the award with the case pend-ing in the U.S. Court of Appeals for the Eleventh Circuit.

Eventually, the Coquina investors’ share of the total award is expected to be $49 million plus interest and minus legal fees. The trustee in the Rothstein Rosenfeldt Adler bankruptcy case gets a portion of the award — $18 million — for the estate. When claims in bankrupt-cy against the estate are finally settled, Coquina will be eligible to get some of that back.

After the trial ended, evidence trickled out showing the bank and its law firm at the time, Greenberg Traurig, failed to turn over damaging evidence dur-ing pretrial discovey. U.S. District Judge Marcia Cooke in Miami ordered sanc-tions against the bank and the lawyers.

Plaintiffs attorney David Mandel, managing partner of the husband-and-wife litigation firm Mandel & Mandel in Miami, said the case has broader impli-cations because it’s the first time a major financial institution was held responsi-ble for a Ponzi scheme conducted by a customer.

“It established the high water mark for what is necessary in a sustained aid-ing and abetting fraud case,” he said. “The evidence in the case is unusual be-cause there is tremendous evidence of insider conspirators at the bank.”

The Mandels began work on the case in early 2010.

In addition to the Mandels, the team

included two associates and two para-legals. They hired an electronic discov-ery consultant to help sift through about 1.5 million documents. Nina Mandel handled most of the bank witnesses and took depositions of bank officials in New Jersey and New York.

Nina Mandel said one of the first things they did was seek preservation of surveillance videos at the Weston branch, where Rothstein put on road shows to attract new money.

“That was an unusual part of the fraud case — when we realized that Rothstein would go from his office on Las Olas [Boulevard] and drive across town to meet with investors at the branch in Weston,” she said. At trial, they played the videos showing fraudulent docu-ments and, at various times, Rothstein, his uncle, a bank official and unwitting investors.

The trial had its share of drama when the bank’s fired regional vice president, Frank Spinosa, repeatedly asserted his Fifth Amendment right to refuse to an-swer questions on the grounds that it might incriminate him.

“He took the Fifth to every question we asked. You can imagine the impact on the jury. He had a criminal defense attorney,” said David Mandel.

Since the verdict, cases brought by other investor groups against TD Bank and co-defendants have been settled for more than $200 million.

Mandel opened his practice in 1997. He and Nina Mandel are former Miami federal prosecutors.

“It was fun — we’ve been in practice for a while but we never tried a case [to-gether] before,” David Mandel said.

Mandel & Mandel is working on the appeal with the Washington office of Gibson Dunn & Crutcher.

Winn-Dixie’s effort to keep discount stores like Dollar Tree from competing by selling groceries in neighboring loca-tions was cut short by a federal ruling based on a creative defense by Kluger Kaplan Silverman Katzen & Levine.

“The economic impact is huge,” said Steve Silverman, the business litiga-tion partner who led the trial team for Chesapeake, Virginia-based Dollar Tree.

Silverman said the ruling struck down old definitions that Winn-Dixie has been using for “groceries” and “shelf space” and greatly expanded the ability of dis-count retailers like Dollar Tree to sell competing products.

When he was tapped in June 2011 by the general counsel of Dollar Tree to han-dle the trial, Silverman said he found he was up against a wall of case law from different courts in several states that fa-vored Jacksonville-based Winn-Dixie’s exclusivity rights in its leases.

“Winn-Dixie had litigated [exclusivity rights] about seven times … and won all seven of those cases. They had amassed a body of law from appellate decisions that was incredibly favorable, and this is why this case was challenging and in-credibly difficult to win,” he said.

On Aug. 13, U.S. District Judge Donald Middlebrooks in West Palm Beach ruled only 10 of 136 claims by Winn-Dixie against discount retailers broke the ex-clusivity agreements.

The case involved stores in five Southern states with the majority of lo-cations in Florida.

Silverman had to get the court to ac-cept updated definitions of groceries and shelf space — the two heavily contested issues in the case.

“The prior definitions were that gro-ceries included almost everything sold

in a supermarket from food to pa-per products to kitchen gadgets. We said, ‘Noooo, that’s not what it means. These leases were ex-ecuted in the ’50s. We went through the historic defini-tion of what gro-

ceries are … and [the judge] agreed — groceries means food.”

Next, discounters needed a ruling about the percentage of space their stores may devote to groceries.

“Winn-Dixie said the shelf area in-cludes half the aisle because that’s where people stand. Judge Middlebrooks said, ‘No, you don’t include the aisle space; you include the shelf space.’ ”

Winn-Dixie has appealed to the U.S. Court of Appeals for the Eleventh Circuit. Silverman will represent Dollar Tree in the appeal.

Winn-Dixie has been suing not only Dollar Tree, but other retailers like Big Lots and Dollar General over noncom-pete clauses in its leases.

It was Silverman’s first assignment for Dollar Tree. Since the ruling, he has been litigating cases for them in other courts.

Winn-Dixie sought $15 million in damages, but Silverman said the eco-nomic impact is much greater than that because Winn-Dixie wanted the dis-counters to stop selling groceries com-pletely.

“That could have shuttered some of these stores. When you think about the potential sales my client will be able to do in the future, it dwarfs the $15 mil-lion,” he said.

Winn-Dixie did not respond to a re-quest for comment by deadline.

FInALISTFInALIST

Litigator helped Dollar Tree fight Winn-Dixie on lease terms

Case set high bar for sustained aiding and abetting fraud case Steve Silverman

Kluger, Kaplan, Silverman, Katzen & levine

David Mandel and Nina MandelMandel & Mandel

Nina Mandel David Mandel

Steven Silverman

torneys for the Everest litigation were partner Alan Feldman and Seth Coblentz, a senior associate.

“We took a very hard-line approach in the settlement discussions and in the documents requested,” Feldman said.

At the same time, Coblentz built a rela-tionship with Everest’s in-house counsel. “We identified for them and their counsel Florida case law, when they were relying on New York case law,” he said.

With talks stalling, the Lydecker law-yers filed for arbitration. The counter-claim died with the settlement.

About 18,000 documents were pro-duced in a related state court proceed-ing, and every one was analyzed before about 50 useful papers were identified.

“You had to go through the haystack to get to the needles,” Lydecker said.

One was a 2005 letter from an Everest official to a Poe executive stat-ing audits had found an ongoing re-serve inadequacy. Yet Everest renewed Poe’s reinsurance.

“It’s a strong document to defeat their counterclaim and to bolster our position,” Feldman said.

FROM PAgE AA8

arbiTraTion: ‘Hard-line approach’

DAILY BUSINESS REVIEW MONDAY, DECEMBER 10, 2012 dailybusinessreview.com AA11

Attorney helped make deal with Chinese drywall manufacturerCLASS ACTIOn

In the summer of 2009, thousands of defective Chinese-made drywall claims surfacing nationwide were consolidated in New Orleans federal court.

A 15-member plaintiffs steer-ing committee was formed, and U.S. District Judge Eldon E. Fallon put three South Florida attorneys on it — Robert Josefsberg of Podhurst Orseck; Victor Diaz Jr., now with VM Diaz & Partners; and Ervin A. Gonzalez, a partner at Colson Hicks Eidson in Coral Gables.

“Ervin’s a constant source of en-ergy. He’s like the Energizer Bunny,” Josefsberg said. “He’s working very hard at it. He’s even got a place to stay in New Orleans. Ervin doesn’t do any-thing halfway. He’s devoted himself to that case, and he’s also working the BP case. The fact is Ervin’s done so much more than others on the com-mittee, including myself.”

Since at least 2004, defective Chinese drywall was being used by the home-building industry to the det-

riment of homeowners. Toxic fumes escaping from wallboard was suspect-ed of producing noxious odors and corroding air conditioning units and other metal fixtures. The only solution was to remove the drywall, but most homeowners could not afford the cost.

As a member of the PSC, Gonzalez was assigned a bellwether case, Armin and Lisa Seifart v. Banner Supply.

“It was a consolidated proceeding between the federal court and Miami-Dade Circuit Judge Joseph Farina,” Gonzalez recalled. “It was chosen be-cause it was well-suited to determine the liability of a distributor of Chinese drywall. The Seifart home had all its drywall from the same manufacturer, the same distributor and it was reflec-tive of damages in other homes.”

The 2010 trial had to prove a direct link between damage and the drywall manufacturer.

Gonzalez and partner Patrick Montoya showed a causal link and ob-tained a $2.5 million verdict. Liability was established, not just for the man-ufacturer but, under negligence and strict liability, for the distributors.

Concurrent with this seminal case, Gonzalez was part of the steering committee’s strategy development and participated in settlement talks.

Gonzalez traveled extensively for the global discovery process, conduct-ing key depositions in China, Europe and the United States.

He helped gather and analyze hun-dreds of documents and damage as-

sessment evidence to establish causa-tion, liability and total damages.

The steering committee faced a multibillion dollar manufacturer, Knauf, with virtually unlimited re-sources.

The scale of the litigation required enormous hours spent in discovery. And the major defendants were for-eign, which meant corporate officers and executives had to be served under Hague Convention requirements.

Gonzalez helped orchestrate a $55 million settlement with Banner Supply last year, and that appeared to be the turning point.

“Knauf recognized that as manu-facturer it had the most culpabil-ity and would be bearing the brunt,” Gonzalez said.

Last December, the steering com-mittee announced Knauf’s Chinese holding, Knauf Plasterboard Tianjin, reached an agreement that would pay out $600 million to $1 billion.

“Ervin has been a zealous advocate for what each of us believe is in the best interest of the homeowners,” Diaz said. “At times, we have disagreed. More often than not, we have agreed. We have enormous respect for each other’s talent and courtroom skills.”

Since the Knauf settlement, Gonzalez helped negotiate an $80 mil-lion settlement in June with insurance companies for many builders and in-stallers. At this point, the job is consid-ered half done.

Ervin a. GonzalezColson Hicks eidson

J AlBert DiAz

Ervin Gonzalez helped win a drywall verdict in a closely watched case.

Trio negotiated overdraft fee settlements with large banksFInALIST

For more than three years, multidis-trict litigation has been waged against many of the nation’s largest banks for their overdraft fee practices.

Class action litigation by custom-ers alleged the timing of transactions was manipulated to unjustly enrich the banks at the expense of account holders.

More than 150 lawyers from two dozen law firms nationwide have been managed by the coordinating team of Robert Gilbert at Grossman Roth in Coral Gables, Aaron Podhurst at Podhurst Orseck in Miami and Nova Southeastern University law professor Bruce Rogow.

From November 2011 to September 2012, the MDL coordinating counsel helped negotiate settlements to final or preliminary approval with 14 banks. These include settlements of $138 mil-lion with Citizens Financial Bank, $110 million with Chase Bank, $90 million with PNC Bank and $62 million with TD Bank.

In all, $584 million in settlements were reached in the past year. This is in addition to a $410 million settlement reached the previous year with Bank of

America.In describing the monumental coordi-

nating effort, Gilbert said he put in 18- to 20-hour days, six days a week.

“This involved organizing and over-seeing litigation teams, running day-to-day discovery and briefings against each of the individual banks, leading settle-ment discussions with banks in media-tion or, if settled, post-mediation direct-ly,” Gilbert said.

Rogow joined Gilbert in 2009 as chief architect of the arguments presented to Senior U.S. District Judge James Lawrence King in Miami, both in writ-ten briefings and oral argument.

Since 2011, Podhurst was by Gilbert’s side as co-counsel and was involved in nearly every settlement negotiation.

“As a senior statesman in the bar, Aaron is someone who’s been through these battles before,” Gilbert said. “His contribution has been invaluable.”

The overdraft fee litigation encoun-tered two major legal challenges. First,

every bank assert-ed as its primary defense a federal pre-emption un-der the National Bank Act, main-taining they could not be held liable for their practices under state com-mon law.

Wells Fargo, which did not

settle, is appealing a $210 million judg-ment in a California case on the federal pre-emption issue. Argument has been heard, and a decision is pending in the U.S. Court of Appeals for the Ninth Circuit.

However, King rejected the federal pre-emption argument at the motion for dismissal stage.

The second issue involved compel-ling arbitration. The U.S. Supreme Court protected the enforceability of arbitra-tion clauses in consumer contracts last year, but King ruled the banks weren’t protected.

Even with the legal questions unre-solved, many banks opted to settle in the interest of improving customer relations.

Robert GilbertGrossman rothaaron PodhurstPodhurst OrseckBruce RogowBruce rogow P.A.

Robert Gilbert Aaron Podhurst Bruce Rogow

as restaurants, nightclubs and gyms for himself, family and friends,” Berlin said.

Through September, Berger Singerman has recovered $132 million. The law firm also is helping the trustee sell assets and preparing other lawsuits with a goal of recovering more than $1 billion.

The case has involved formidable logistics. Each of the hundreds of cases had to be researched and analyzed be-fore filing. About 400 mediations were scheduled and held in Orlando and Miami.

Many of the defendants were busi-nesses that sold goods to Farkas, only to realize later their goods were bought with stolen funds.

This caused great frustration for the business owners as the fraud became apparent to them as well, Aungst said.

Nearly all matters identified in formal mediations or informal settlement dis-cussions were successfully resolved.

FROM PAgE AA9

bankruPTCy: 400 cases went to mediation

AA12 dailybusinessreview.com MONDAY, DECEMBER 10, 2012 DAILY BUSINESS REVIEW

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CORPORATE SECuRITIES

H&K trio successfully defended U.S.-listed Chinese companies

A team of Holland & Knight attorneys successfully resolved two securities class actions and a derivative action involving U.S.-listed Chinese companies.

One of the class actions and the de-rivative action targeted Elsa Sung, for-mer chief financial officer of Jiangbo Pharmaceuticals Inc., who lived in Plantation.

Jiangbo shareholders filed suit in July 2011 claiming the company overstated its cash balances, failed to disclose a related-party transaction and refused to cooperate in an internal investigation of accounting issues. The company’s China-based officials then failed to sub-mit required filings to the Securities and Exchange Commission, causing Jiangbo to be delisted from Nasdaq and adminis-tratively dissolved as a Florida corpora-tion. It also defaulted on the class action.

“The Chinese officers and directors essentially abandoned the company,” said Louise McAlpin, who was on the team with litigation leader Tracy Nichols and fellow Holland & Knight partner Stephen Warren.

The third case pitted angry share-holders against a U.S. company formed to acquire SearchMedia Holdings Ltd., one of China’s leading media companies. But after the acquisition, the new own-ers discovered that prior management inflated SearchMedia’s financial results. Shareholders said the American corpo-rate officials made misrepresentations just like the Chinese.

Nichols said her team argued the ac-quisition group also was duped.

“We basically made the argument that why would a U.S. company overpay for a Chinese company that overstated its profits,” Nichols said.

U.S. District Judge Kathleen Williams in Miami approved a partial settlement and granted partial final judgment and partial dismissal with prejudice April 24, allowing the new management to move beyond the prior management’s fraud. Importantly, SearchMedia’s directors and officers insurance fully covered the mediated settlement.

The Holland & Knight trio had to educate themselves and U.S. judges on Chinese law and the many differences in Chinese and U.S. businesses.

“Chinese law is an ever-moving tar-get. It’s not hard and fast,” McAlpin said.

Nichols said China lacks the strong protections that safeguard American in-vestors.

“They always keep two, maybe three sets of books,” she said.

In the Jiangbo cases, U.S. District Judge Marcia Cooke in Miami found the company’s reported cash balances were misleading but agreed with Nichols’ team that the plaintiffs had not shown Sung acted with knowledge of wrong-doing by other corporate officials. The shareholders did not name Sung in an amended complaint.

Although Cooke dismissed the deriva-tive case against Sung on Sept. 4, she al-lowed the plaintiffs to amend their com-plaint to state a cognizable claim.

“Now we’re on the second round of

motions and discovery,” McAlpin said.But the relatively speedy resolution

of the first round of complaints means there is still D&O insurance money for Sung’s defense, the lawyers said.

Nichols said she is perplexed by the actions of Chinese businessmen caught violating SEC rules.

“They have no problem hiding in China. I think you also see the [U.S.] judges are getting frustrated,” she said.

“The SEC has a difficult time, too, be-cause they don’t have jurisdiction over there.”

She said reverse mergers and spe-cial acquisitions were common vehicles to enter the Chinese market three or so years ago but now have become red flags.

“I won’t be investing in Chinese com-panies, I can tell you that,” Nichols said.

Tracy Nichols, Louise Mcalpin and Stephen WarrenHolland & Knight

J. AlBert DiAz

Louise McAlpin, Tracy A. Nichols and Stephen P. Warren of Holland & Knight.

DAILY BUSINESS REVIEW MONDAY, DECEMBER 10, 2012 dailybusinessreview.com AA13

FInALIST

Hunton team protected Bahamas investment fund with ties to Madoff

The 51 named plaintiffs were foreign-ers who invested in Optimal Strategic U.S. Equity Ltd., a Bahamas-based fund that invested most of its assets with con man Bernard Madoff. The $3.1 billion fund lost substantially all of its value as a result of Madoff’s Ponzi scheme.

The plaintiffs asserted federal securi-ties law and state common law claims against the fund’s Swiss investment manager, Optimal Investment Services, Madrid-based parent Banco Santander and an OIS employee.

“Our engagement began that night, the day Madoff was arrested. I remem-ber getting a call from the bank that night,” said Samuel Danon of Hunton & Williams, who with fellow partner Gustavo Membiela and associate Paulo Lima successfully won decisions dis-missing 13 of 18 claims — and eventu-ally dismissing the case on the basis of

forum non conveniens.“Our position was since this was a

Bahamian fund managed by a Swiss company and administered by an Irish firm, another country’s laws would ap-ply,” Danon said.

U.S. District Judge Shira Scheindlin in New York initially declined to dismiss the federal claims and rejected Optimal’s forum argument, saying U.S. courts had an interest in enforcing securities laws.

Alan Ellman of Labaton Sucharow in New York led the plaintiffs attorneys, who included Jack Reise and Michael Greenwald of Robbins Geller Rudman & Dowd in Boca Raton.

Danon’s team tailored its discovery

toward showing all fund purchas-es were private transactions in-volving only for-eign entities.

On March 1, the U.S. Court of Appeals for the Second Circuit ex-pounded on the issue of extrater-

ritoriality that undermined the Optimal plaintiffs’ argument that their purchas-es were subject to U.S. securities law. Danon succeeded in having five federal claims dismissed June 4.

“I think finally getting the securities claims dismissed is something we had to be persistent on,” Danon said.

Optimal renewed its motion to dis-miss based on the forum issue. In a July 16 brief, Danon’s team noted since there was no longer a federal securities claim, there was no longer a U.S. interest in the litigation. Also, they said critical wit-nesses in Switzerland were not subject to compulsory process.

“You had this intersection of European privacy laws combining with U.S. discov-ery rules,” Danon said.

Getting documents transferred to the United States also was troublesome. “Because of the privilege requirement, they were E.U. documents that had to stay in the E.U.,” Danon said.

On Aug. 10, Scheindlin agreed that Switzerland was the more convenient forum.

“We were persistent and fought hard to get the result,” Danon said.

As a plus, OIS and Santander no lon-ger face the potential of being named in class actions over the investments since Switzerland does not allow class actions.

The plaintiffs filed for reconsidera-tion, but Scheindlin denied the request, Danon said.

As a sidelight, Danon said the plain-tiffs attorneys took a jailhouse deposition of Madoff. Danon also scheduled time with Madoff, but the judge wound up dismissing the case days before.

“As far as I know, it is the only case where he was deposed,” Danon said.

Samuel Danon, Gustavo Membiela and Paulo LimaHunton & Williams

Samuel Danon Paulo Lima Gustavo Membiela

Trio’s defense strategy attacked integrity of sting

Deputy U.S. Attorney General Lanny Breuer called it the most significant Foreign Corrupt Practices Act lawsuit brought by the Justice Department, call-ing it a “game changer.”

Twenty-two executives and employ-ees of weapon manufacturers through-out the nation were charged with brib-ing foreign officials to grease a $15 mil-lion deal for guns and security gear to the African nation of Gabon.

The government employed old-fash-ioned sting techniques used primarily in drug trafficking cases to attract the exec-utives, meeting some of the defendants at the Miami Mandarin Oriental Hotel.

But after a series of acquittals and mistrials, federal prosecutors conceded they had been bested and dropped the entire case. Three of those attorneys came from Miami: Matthew Menchel, Stephen Bronis and Paul Calli.

The case, for logistical reasons, was

broken up into four trials. Menchel’s examination of the lead

agent in the first trial set the table for the second, where Bronis and Calli were successful.

There never was another trial. Prosecutors dropped all charges, even against three defendants who were awaiting sentencing after pleading guilty.

“I think it’s going to be a sea change as to the way the government prosecutes these cases,” Bronis said. “Certainly,

when it comes to the strategy of trying to use some sort of sting operation, the government will be hard-pressed to do this type of thing again.”

Menchel represented Pankesh Pantel, a U.K. weapons broker, in the first trial of four defendants. Despite opposition from other defense attorneys in the case, Menchel decided to call the lead FBI agent.

“The approach we took was to put the government on trial by attacking the in-tegrity of the investigation,” he said.

U.S. District Judge Richard J. Leon in Washington, who presided over the trial, praised Menchel in a recent speech, say-ing, “He systematically took apart the conducting of the sting operation.”

Menchel was able to show the jury that the word commission was used, but never bribe or kickback. He showed text messages between the lead agent and the lead informant about defendants who wanted out of the deal but were lured back in with assurances it was le-gal.

“It was no doubt the turning point of the case. It changed the entire dynamic of the trial,” Menchel said. “The govern-ment thought we were doing it as a bluff so they would call him. They were com-pletely caught by surprise.”

The jury was deadlocked on all four defendants in the first trial. In the sec-ond trial, the judge dismissed conspiracy and money laundering counts against six defendants. He also gave a direct-ed verdict of acquittal to Bronis’ and Calli’s client, Stephen Giodanella, CEO of Fort Lauderdale’s Protective Products International Inc.

Three others were acquitted, and a mistrial was declared for two other de-fendants.

Calli said Bronis was able to expose informant Richard Bistrong, who was prosecuted for his own FCPA violations.

“I think by the end of Steve’s cross, people understood that Bistrong wouldn’t know the truth if it bit him in the backside,” Calli said.

Matthew MenchelKobre & KimStephen J. Bronis and Paul a. CalliCarlton Fields

CRIMInAL JuSTICE

A.M. HOlt

Paul Calli, Stephen Bronis and Matthew Menchel gained acquittals in a Foreign Corrupt Practices Act sting.

AA14 dailybusinessreview.com MONDAY, DECEMBER 10, 2012 DAILY BUSINESS REVIEW

The corporate giants Peter Herman slays in court just keep getting bigger.

So do the jury verdicts.In 2010, Herman was the lead attor-

ney in a case pitting the inventor of a hand guard for tabletop saws against Home Depot stores, which hired a third party to copy his device. A Miami jury awarded Herman’s client $24 million in royalties, punitive damages, prejudgment interest, attorney fees and costs.

Just 1½ years later, Herman and fel-low Tripp Scott director Alex Brown had a repeat victory. A jury in Binghampton, New York, decided Security Mutual Life Insurance Co. owed a father-and-son team $26 million in compensatory and punitive damages.

“It was a larger company against a smaller company,” Herman said, calling both cases classic David-and-Goliath dis-putes.

Roger and Aaron Banks of Troutman, North Carolina, designed a computer program to sign up employees at Lowe’s home improvement stores for payroll deductions on life insurance. They chris-tened their company Member Services Inc. and their software CU@Work.

“The computer system linked up Lowe’s to the credit union and the insur-ance company to make it a virtually pa-perless system,” Herman said.

Member Services struck a deal in which Security Mutual agreed to provide the life insurance. But the insurance firm did more.

“They took the computer system back to New York, essentially copied it and shared it with other agents,” Herman said.

Binghampton was a less-than-ideal venue for someone challenging Security Mutual. The insurance company, the larg-est employer in town, had just pledged $25,000 to relieve recent flooding.

Despite that, jurors in U.S. Magistrate Judge David Peebles’ court agreed with the Bankses.

“They found for Roger and Aaron on all counts, and the counts included what we thought was fraud,” Herman said.

Security Mutual played hardball, at one point canceling policies the Bankses had written and having their cars towed, Herman said.

He considered an internal email from a Security Mutual vice president to be the most damaging evidence.

“The email basically said ... ‘Why don’t we just nuke them and go direct?’ ” Herman said. “I don’t think the jury was very happy with that email.”

He and Brown, on the other hand, were very happy with the verdict.

“Twenty-six million dollars in Binghampton is a big deal,” Herman said.

Jurors deliberated only 10 minutes on compensatory damages, “and $16 million was not far off from what we asked for,” Herman said. Punitive damages added $10 million.

The total made the case No. 1 on Verdict Search’s list of intellectual proper-ty awards in New York last year and No. 75 nationally. Verdict Search is an ALM af-filiate of the Daily Business Review.

Herman and Brown filed a satisfaction of judgment with the court on March 13, 2011. Peebles closed the case the next day after Member Services agreed to not seek $12.6 million in prejudgment interest and other costs. Signed stipulations prevent either side from making further appeals.

“We took it on a contingency basis, and it obviously worked out well for everyone,” Herman said.

Miami attorney Marc Seitles can’t stop making the movie analogy when it comes to his client, Carlos Ortega Bonilla.

But the removal of Ortega from the tangled mess of a 18-defendant cocaine trafficking case came about because of an extraordinary partnership. And it freed the former head of Colombia’s equivalent of the Federal Aviation Administration.

“I should have kept a journal of this case,” Seitles said. “There were so many twists and turns and ups and downs. The entire case from Colombia to extra-dition to freedom was a roller coaster.”

Seitles and associate Ashley Litwin teamed up with Ed Kacerosky, a well-re-spected former U.S. customs agent who helped bring down the Cali cartel. He is now a private investigator and consul-tant.

It also was a rare instance of a de-fense attorney sitting down with federal prosecutors and laying out his case of mistaken identity before trial in hopes of getting the charges dropped.

Seitles showed the Carlos speaking on taped phone calls was not his client.

Seitles ran into Kacerosky by happen-stance at a Bogotá hotel when Kacerosky was working another case and asked him to help.

At first skeptical, Kacerosky became convinced of Ortega’s innocence after meeting with him.

“Here is this guy who is a government agent who helped prosecute hundreds upon hundreds of Colombian drug traf-fickers working with a guy who repre-sents Colombian drug traffickers,” Seitles said. “We were like The Odd Couple.”

Ortega was a lifelong bureaucrat with Colombia’s aviation regulatory agency who blew the whistle on the lack of air-line safety in the Latin American country. Upon retirement, he went into the busi-ness of brokering aircraft.

He was arrested by the Colombian na-tional police and charged in Miami last year with supplying drug traffickers with

aircraft. Nine appeals in the Colombian justice system failed, and Ortega was ex-tradited to the United States.

Kacerosky went through hundreds of hours of recorded calls and confirmed Ortega had been misidentified.

He found a co-defendant who was willing to testify Ortega had nothing to do with the drug ring. They also dis-covered false grand jury testimony on Ortega’s role.

Litwin was key in writing all the sub-stantive motions in the case.

“She was the brains behind the mo-tions to try to get the disclosure of early discovery,” Seitles said.

The U.S. attorney’s office, though, said it had more than just the wiretaps. It had a cooperating witness.

Ortega gave Seitles permission to waive attorney-client privilege and show his evidence to prosecutors. In an unusual meeting in August, prosecutors heard what Seitles and Kacerosky had to say. Charges were dropped Aug. 31, and Ortega returned to his native Colombia. Seitles and Kacerosky waived their fees, knowing Ortega’s family did not have the money to pay.

“It was like unpeeling an onion,” Seitles said. “The more we kept digging, the more we were certain our client was 100 percent innocent.”

FInALIST FInALIST

Marc Seitles

David O. Markus

Ashley Litwin

Robin Kaplan

InTELLECTuAL PROPERTy

Marc Seitles and ashley Litwinlaw Office of Marc David Seitles

Attorneys untangle mess to prove wrong Carlos in custody

David O. Markus and Robin KaplanMarkus & Markus

12 years later, defense team erases woman’s life sentence

For a decade from the time he left the federal defender’s office, Miami criminal defense attorney David O. Markus tried to get Yuby Ramirez’s life sentence reduced without success.

Armed with a pair of U.S. Supreme Court decisions, Markus and associate Robin Kaplan finally succeeded this year — 12 years after she was sentenced for conspiracy to traffic in cocaine.

“She was young, naïve woman who was taken advantage of by really bad people,” Markus said. “She should have not have been given life in prison.”

Ramirez had been offered a five-year and then a 10-year plea deal before her attorneys persuaded her to go to trial in 2000, thinking she could do no worse.

But as a defendant tied to the ring run by outsized cocaine cowboys Willie Falcon and Sal Magluta, she faced life if convicted as a member of the drug conspiracy.

Ramirez was accused of allowing weapons to be stored at her Miami-Dade home. The guns were used to kill a wit-ness set to testify against Falcon and Magluta.

The irony is the hit men got six-year prison sentences in exchange for their testimony against Ramirez and others who went to trial.

Markus said after he left the federal de-fender’s office in 2002, he was approached by Ramirez’s co-counsel, Reuben Cahn, who wanted to right his mistake.

“He never gave up on her,” Markus said. “When you lose a case, it sticks in the craw for a long time.”

And it did take a long time. U.S. District Judge Joan Lenard twice refused to con-sider reducing Ramirez’s sentence. U.S. Magistrate Judge Barry Garber also said no.

“Over 10 years, we had four different appeals, two evidentiary hearings and eight different briefings in the court of ap-peals,” he said. “It was really a struggle.”

Markus brought in Kaplan in 2008, who worked closely with Ramirez in de-veloping the facts for an evidentiary hear-ing where she and Cahn testified.

The Supreme Court, in two March 21 opinions, extended the right to effective counsel to criminal defendants to the plea bargaining process.

Lenard determined in April that Ramirez’s trial attorneys were at fault for advising her to go to trial.

The U.S. Court of Appeals for the Eleventh Circuit directed Lenard to strike Ramirez’s conviction and ordered pros-ecutors to renew a 10-year plea deal.

“It was rewarding in a lot of ways, but it was also a relief to be honest,” Markus said. “Because when you take on a case like this, at first you don’t know what you are taking on and you learn more and more, you become attached to the person and more convinced you are doing im-portant and good work.”

For Tripp Scott duo, it’s David v. Goliath Part IIPeter Herman and alex Browntripp Scott

Peter Herman and Alex Brown of Tripp Scott pursued fraud claims on insurance software.

CAnDACe WeSt

DAILY BUSINESS REVIEW MONDAY, DECEMBER 10, 2012 dailybusinessreview.com AA15

A T-Mobile trafficking complaint tar-geted defendants with shallow pockets. Sherman Terry was serving time in fed-eral prison. George Collett does business as “Cell Phone George” with ads on eBay and Craigslist.

U.S. District Judge Ronald Leighton in Tacoma, Washington, awarded T-Mobile a little more than $1 million in July and issued a permanent injunction against Collett, who also operates a bricks-and-mortar shop in Tacoma.

“Definitely it sends a message to other people out there that T-Mobile is going to come after you,” said lead litigator James Baldinger of Carlton Fields in West Palm Beach.

Traffickers purchase and resell

T-Mobile SIM cards, often recruiting “runners” on college campuses and in-ner cities to buy cell phones with the promise that someone on the inside will wipe out the resulting accounts, Baldinger said. There is no inside per-son, and the accounts are suspended a month or two after they are opened.

But the SIM cards are used to keep other accounts operating in an almost Ponzi-like scheme. Google Voice technol-ogy enables the traffickers to add a new SIM card number to another customer’s existing account.

“There is a huge conspiracy, really worldwide,” Baldinger said.

He said customers think they’re buy-ing legitimate cell phones from legiti-mate dealers.

“They don’t know that the phone they got actually started out in a Wal-Mart in Fort Lauderdale,” Baldinger said.

They also are usually looking for a short-term deal instead of a two-year

contract.“Prepaid phones were the most

vulnerable to this type of trafficking,” Baldinger said. “In the last two years they’ve graduated to post-paid phones.”

The complaint alleged federal trade-mark infringement, false advertising, violations of the Computer Fraud and Abuse Act, theft of computer data and civil conspiracy.

Baldinger, who was assisted by Carlton Fields colleagues Stacey Sutton in West Palm Beach and Gail Podolsky in Atlanta, said the judge assessed the bulk of the judgment against Collett: tripled damages of $349,482 and attorney fees of $182,221.

“I don’t think we’re going to collect

much of anything from him,” Baldinger acknowledged.

But he will continue the battle against traffickers. So far he has filed 33 suits against 87 defendants for T-Mobile and won more than $131 million.

“What happens in almost all these cases is that the other side settles,” Baldinger said.

This complaint will make a differ-ence.

“It was really the first time we had a judge address our claims on the merits,” Baldinger said.

The Terry case also was unusual for Baldinger because the defendant was al-ready incarcerated. “It was the first time I took a deposition in federal prison,” he said.

Collett currently has ads on Craigslist for other brands of cell phones.

“Some of these guys we’ve had to sue multiple times for different carriers. It’s a shame,” Baldinger said.

And the traffickers, he said, are usu-ally “bright” individuals.

“If they could focus on doing some-thing legitimate, I think we’d all be better off,” Baldinger said.

Veteran trial lawyers John Shipley and Chris Searcy built a truck-crash death case so convincing that they made the defendants’ own shadow jury cry. Rather than put on a defense, the insur-ers ponied up an eight-figure settlement to end it.

Jacksonville retirees Vince Modica, 65, and his wife Judy, 63, were stopped in a long queue of traffic on southbound I-95 near the Dunn Avenue overpass in

Jacksonville due to an accident ahead in November 2006.

A leased tractor trailer operated by Michael Wright of the St. Augustine-area health food company Tree of Life Inc. slammed into the Modicas’ car, shov-ing them into the truck in front of them. A fireball erupted. The retirees likely burned alive.

Wright was returning from Brunswick, Georgia, at the time of the accident and had already worked a long day. He es-

caped his burning rig uninjured. He was fined $500, and his license was suspend-ed. No criminal charges were filed.

Shipley, a 34-year veteran trial lawyer who specializes in complex medical mal-practice and truck-crash cases, shared the witnesses with Searcy, the firm’s CEO, rainmaker and a past president of the American Academy of Trial Lawyers.

“This isn’t a typical car crash,” Shipley said. “These cases — truck crashes —

are a lot more akin to a medical malprac-tice case. There’s a ton of paper records available to help build these cases.”

Trucking expert Forrest Baker of Heyburn, Idaho, provided key linchpins for Shipley’s argument that Tree of Life provided plenty of incentive for drivers to break the maximum weekly hours per-mitted under federal law. Baker showed how the food distributor was rigging its records as part of a broader cover-up.

Baker speculated Wright fell asleep at the wheel before the collision. Wright, who told several inconsistent stories in sworn testimony, never drove commer-cially again.

The Modicas’ two adult sons, blue-collar workers in their mid-30s with families, and a brother-in-law who rep-resented the estate also testified.

Tree of Life’s defense team, headed by Earl W. Gunn and Mark R. Johnson of Weinberg, Wheeler, Hudgins, Gunn & Dial of Atlanta, hired a shadow jury to hear the trial.

When the plaintiffs rested, Gunn’s team lost the pro forma arguments for summary judgment — and never pre-sented a case. The insurance giant AIG ultimately settled the case for $17.5 mil-lion; the best pretrial offer was $4 mil-lion.

“After the family testified toward the end of our case, the real jury was doing a good job following the evidence,” Shipley said. But the defense’s shadow “jury — all of them had red eyes.”

Shipley said the Tree of Life settle-ment was noteworthy because it is dif-ficult to secure large pain-and-suffering awards when the victims are approach-ing their senior years and the survivors are already productive members of the community.

“What I think we proved here: It’s just as bad to lose your parents when you’re 35 or 45 and established in the world as it is when you’re much younger,” he said. “They just wanted somebody to take notice. They just wanted somebody to care.”

FInALIST

Carlton Fields team battled cell phone traffickers large and small

James Baldinger Stacey Sutton

PERSOnAL InJuRy

Duo’s work was so effective it made shadow jury cry, led to settlementJohn Shipley iii & Christian D. Searcy Sr.Searcy Denney Scarola Barnhart & Shipley

James Baldinger andStacey SuttonCarlton Fields

CAnDACe WeSt

Christian D. Searcy and John Shipley of Searcy Denney Scarola Barnhart & Shipley reached a $17.5 million settlement.

AA16 dailybusinessreview.com MONDAY, DECEMBER 10, 2012 DAILY BUSINESS REVIEW

T h e first bio-t e r r o r -ist act on U.S. soil that claimed lives: Not e x a c t l y the basis for a gar-den-vari-

ety negligence claim. It became a cause, and a career case, for Richard Schuler’s small West Palm Beach-based law firm of six lawyers and two dozen sup-port staffers.

Mere weeks after the 9/11 terrorist attacks on New York and the Pentagon, a series of letters containing a lethal strain of the anthrax bacteria was mailed to several targets in Congress and the news media.

Five people died — including Robert Stevens, 63, a photo edi-tor for the Sun, a supermarket tabloid based in Boca Raton; 17 became seriously ill; and anoth-er 31 tested positive for anthrax exposure.

Schuler spent the next nine years building a mammoth investigative file consisting of millions of documents while sparring with the enormous breadth of federal government

FInALIST

FInALIST

Attorney secured $12.6M judgment for teen amputee, mother

Veteran medical malpractice and personal injury practitio-ner Crane Johnstone secured a $12.6 million judgment for a quadrilateral teenage amputee and her mother after proving the University of Miami medical school had inoculated the girl with an expired vaccine when she was 2.

Johnstone, who tried the case with the help of Charles Patrick and firm founder Sheldon Schlesinger, is still try-ing to collect the full judgment on behalf of Shaniah Rolle of Miramar.

Born with intestinal tract complications, doctors removed Shaniah’s spleen and several

other or-gans two days after she was b o r n , l e a v i n g her more suscep-tible to b a c t e -rial infec-tion. In

October 1998, shortly after Shaniah turned 2, she was tak-en to the UM Medical School pe-diatric care practice for a rou-tine checkup. During that visit, she was given a vaccine for people without spleens to help fight immune system disorders.

In June 1999, Shaniah was rushed to Jackson Memorial Hospital after developing a viru-lent pneumococcal infection —

even though she had been spe-cifically inoculated for pneumo-coccus just eight months earlier.

The infection caused serious blood clots in her extremities. The limbs became gangrenous, forcing doctors to amputate both legs and arms above the joint in two surgeries a week apart.

Subsequent investigation revealed the vaccine, which has a normal shelf life of two years, had been expired for five months at the time it was ad-ministered.

“Because they gave her the expired vaccine, she picked up the very bug the inocula-tion was supposed to prevent,” Johnstone said. “That’s the crux of the case.”

Originally filed in 2001 against several institutions and

more than a dozen individual defendants, the suit finally reached a Miami-Dade Circuit jury in December 2011. Fifty-three witnesses were called during the five-week trial. The jury deliberated three days. The verdict sparked more litigation.

Over time and several pre-trial rulings, the case narrowed to the UM School of Medicine and several doctors. Dr. Jeffrey Brosco was the only doctor declared liable at trial; the oth-ers were cleared. During trial, lawyers for UM Medical and Brosco argued Shaniah’s moth-er, Queen Seriah Azulla Dabrio, also was responsible for failing to properly administer penicil-lin to help battle the infection. Jurors ultimately accepted this argument because they as-signed 40 percent of the liability

to the mother for her daughter’s injuries, Johnstone said.

In post-trial motions, Johnstone’s team argued UM failed to prove any of these al-legations. In July, Miami-Dade Circuit Judge William Thomas, sided with the plaintiffs. The original $7.6 million award es-calated to $12.6 million.

The odyssey continues. UM Medical and Brosco have post-ed an appellate bond. Briefs are due shortly in the Third District Court of Appeal.

Shaniah, now 16, attends Miramar High, where her attor-neys say she leads a vibrant life, including a spot on the cheer-leading squad, thanks in part to state-of-the-art prosthetic limbs.

“She’s a miraculous kid,” Johnstone said.

Crane JohnstoneSchlesinger law Offices

Crane Johnstone

Richard Schuler

Attorney earns settlement after fighting government tactics

Richard SchulerSchuler, Halvorson & Weisser

PROduCT LIABILITy

schlesinger team won hefty award for smoker’s family

A smoker since age 14, Johnnie Calloway suffered a heart attack in 1991 and was diagnosed with bladder can-cer a few months later. After his death in 1992 at age 59, his wife, Marvine, sued R.J. Reynolds Tobacco Co., Philip Morris USA, Lorillard Tobacco Co. and Liggett Group LLC for negligence, concealing the dan-gers of smoking and products liability.

A team of four attorneys from the Schlesinger Law Offices in Fort Lauderdale convinced a Broward jury that Calloway

was addicted to smoking and his smoking led to the bladder cancer that ultimately caused his death. While most people associate smoking disease with lung cancer, medical specialists testifying at the trial outlined ev-idence that bladder cancer also can result from smoking.

“The unique aspect of this case is the fact that we brought it to trial against all four major tobacco companies,” lead attor-ney Jonathan Gdanski said. “In the history of American tobacco litigation, there has never been a judgment entered against all

four tobacco companies in one case until we did it here.”

Gdanski handled the case leading up to trial including almost all discovery, deposi-tions of both plaintiffs and defense experts, and pretrial motions. The Schlesinger legal team included Steve Hammer, who was co-lead trial lawyer; Crane Johnstone, who cross-examined the three defense medical witnesses; and Scott Schlesinger, who cross-exam-ined Phillips Morris’ witness and handled the rebuttal clos-ing. “Overall, it was a joint effort

by each member of the team,” Gdanski added.

Noting “tobacco cases can be very difficult,” Gdanski said, “Jurors tend to blame smok-ers for their injuries and usu-ally do not want to put money in the pockets of family mem-bers when the smoker died from a tobacco-related disease. Overcoming that initial obsta-cle is present in every tobacco case.”

The jury in May divided com-parative liability by assigning 25 percent to Philip Morris, 27 per-cent to Reynolds, 18 percent to Lorillard, 9.5 percent to Liggett and 20.5 percent to Calloway. Normally, the portion assigned to the plaintiff is subtracted from the total award. However, the jury also concluded the to-bacco companies concealed or omitted material information about the health effects and ad-dictiveness of cigarettes, which canceled the liability assigned to Calloway.

That preserved the full award for Calloway’s survivors. His widow and daughter, Starr Williams, were awarded $20.5 million in compensatory dam-ages and $54.9 million in puni-tive damages. The defendants are appealing the verdict.

“Marvine Calloway and Starr Williams are very grate-ful for what the jury did,” said Hammer. “This was never really about the money for them. They realized the tobacco companies killed their husband and father, and justice was done.”

Jonathan Gdanski, Steve Hammer, Crane Johnstone, Scott SchlesingerSchlesinger law Offices

CAnDACe WeSt

Crane Johnstone, Steven Hammer, Jonathan Gdanski and Scott Schlesinger won on bladder cancer claim.

SEE PAgE AA18

DAILY BUSINESS REVIEW MONDAY, DECEMBER 10, 2012 dailybusinessreview.com AA17

An investigation into the cause of a fa-tal 2009 helicopter crash in Brazil found a key coupling called a “corncob” had failed, resulting in engine failure.

By focusing on that issue, plaintiffs at-torney Ricardo M. Martinez-Cid, a part-ner at Podhurst Orseck in Miami, was able to achieve a series of settlements with Rolls-Royce Corp. totaling $12 mil-lion.

“We had very good proof that this corncob had been misaligned, suffered metal fatigue and failed in flight, leading to the crash,” said Martinez, noting Rolls-Royce designed and built the engine and produced the maintenance manual. “We contended that the misalignment was due to the original Rolls-Royce design of the unit itself.”

On Jan. 5, 2009, Brazilian executive Gilberto Ramalho was in his helicopter with his wife Mariza Klinke Dos Santos

Ramalho; daugh-ter, Roberta de Almeida Ramalho; her friend Bruna Manzato Antibero; pilot Mauro Honoria da Silva; and co-pilot Chao Chien Feng Jr.

As the Agusta A109C helicopter

was hovering to land at Ramalho’s resi-dence in Sao Paulo, the engine failed at an altitude of 60 feet, and the helicopter plummeted onto a concrete driveway, catching fire on impact. Ramalho died in the crash, and the other five were in-jured.

The helicopter had been maintained by Cav-Air, a helicopter maintenance company based in Fort Lauderdale, be-fore its move to Brazil. Martinez-Cid filed a negligence suit against Rolls-Royce and Cav-Air, but the maintenance company went out of business and Rolls-Royce be-came the only defendant.

“Rolls-Royce took the position that the case should be tried in Brazil,” Martinez-Cid said. “However, we argued that all of the information on the cause of the crash was here, including the design of the engine, the work done at Cav-Air and the maintenance manual used by Rolls-Royce do Brasil to install the coupling.”

Broward Circuit Judge John Murphy III ruled in favor of the plaintiffs to keep the case in Florida. The case was pend-ing in the Fourth District of Appeal when Rolls-Royce opted to settle. The last of the individual settlements was finalized Aug. 23.

Martinez-Cid said one reason the case settled was because he had good evidence on the liability issue, and Rolls-Royce knew the plaintiffs were prepared to pursue the case in Brazil if necessary.

Pointing to the significance of the case, he said, “At a time when international litigation is becoming more difficult to bring in the U.S., this is an example of the way our system can handle cases ef-ficiently and resolve them in a way that benefits both parties.”

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Ricardo M. Martinez-CidPodhurst Orseck

Podhurst attorney helped secure $12M settlement with helicopter engine maker Rolls-Royce

power and secrecy.Within weeks of the deaths, scientists

knew that the so-called Ames strain of anthrax that was found in Stevens’ spi-nal fluid could be traced to a likely U.S. government source. But for more than a year, U.S. officials, including then-Presi-dent George W. Bush and Vice President Dick Cheney, insisted the anthrax letters were the handiwork of terrorists.

“The government was lying from the outset, and they knew it,” Schuler said.

Early on, his team took the position that the anthrax that killed Stevens would likely trace back to federal sourc-es and that the government failed to properly secure the lethal bacteria and properly screen those with access to it.

It was an extremely complicated piece of litigation — a state claim tried largely in federal court. At the same time, the government was running a parallel criminal investigation later heralded as the largest in modern history with more than 10,000 witness interviews, 80 searches and 5,730 environmental samples from 60 sites.

The government repeatedly delayed, seeking protection with claims of sov-ereign immunity, national security, war powers and discretionary function ex-emptions to prevent disclosure of key documents in discovery. One key pretrial issue traveled from the federal district court in West Palm Beach to the U.S. Court of Appeals for the Eleventh Circuit in Atlanta to the Florida Supreme Court in Tallahassee before landing back in Palm Beach County.

In July 2008, as the FBI was poised to charge him with the anthrax attacks, Dr. Bruce Ivins, a microbiologist at the U.S. Army Medical Research Institute at Fort Detrick, Maryland, committed sui-cide. He had a long history of treatment for schizophrenia, paranoiac tendencies and minor violence, some of which he acknowledged at various times in his quarter-century career with the Army.

The FBI and prosecutors’ theory: Prior to 9/11, Ivins’ program was on the verge of closing. More than a quarter-century of work was about to end. The government believed he mailed the let-ters in hopes of scaring enough people to persuade Congress to continue the program.

A 2011 independent investigation or-dered by the chief federal district judge in Washington ultimately concluded Ivins never should have qualified for high-security clearance at a lab handling dangerous toxins such as anthrax. Some of his violent thoughts and acts were documented as far back as the 1970s, long before he was hired at the Army lab.

Those findings helped cement Schuler’s case. “It all came true.’’

An out-of-court settlement for $2.5 million ended the case. Of the five vic-tims who died from the anthrax attacks, only Stevens’ heirs made it as far in the courts, and they are the only ones to re-ceive a settlement to date.

Ricardo Martinez-Cid

FROM PAgE AA17

Personal injury: Only one pact in five deaths

Attorney persuaded Panhandle jury to award $27 million to smoker

Coral Gables attorney Richard Diaz stepped hundreds of miles outside his comfort zone in a jury trial against R.J. Reynolds Tobacco Co. held in the Panhandle community of Marianna. But despite the challenges, Diaz and his legal team achieved a $27 million jury award for longtime smoker Emmon Smith, an 80-year-old retired minister who died af-ter trial.

“Trying the case in rural Jackson County was a high-stakes gamble since it’s a tobacco-growing community where many people smoke or chew tobacco,” said Diaz, of the Law Offices of Richard J. Diaz. “But honesty, integrity and a per-son’s word are part of the local culture, and the defendant had broken that bond of trust.”

Diaz’s trial experience and instinct paid off as the jury in the courtroom of Jackson Circuit Judge John L. Fishel II found Smith was addicted to RJR cigarettes, which he started smoking as a teenager, and caused his lung cancer. RJR was found negligent for selling a dangerous prod-

uct and conceal-ing what it knew about the health effects. The defen-dant is appealing the March verdict.

A federal criminal defense attorney, Diaz was asked to try Smith’s case by Miami attorney

Stuart Ratzan, who was handling a num-ber of Engle progeny suits flowing from a decertified class action with shared find-ings preserved by the Florida Supreme Court. Diaz became the lead trial counsel for Smith, taking 52 depositions and trav-eling around the country for four years preparing for trial.

Witnesses included historian Robert Proctor, author of the anti-tobacco book Golden Holocaust, and Frederick Raffa, a Florida State University economist who discussed Reynolds’ net worth. At one point, Reynolds offered a continuance to move the trial to Miami, but Diaz pressed on with the case in the Panhandle venue.

While Diaz led the trial team, he re-lied heavily on a team of other attorneys, paralegals and litigation support staff.

Attorney J.B. Harris of Coral Gables, who sat second chair, was involved with the case for several years, taking more than 50 depositions and preparing trial witnesses.

Attorney Robert D. Trammell of Tallahassee, who sat third chair, assisted Diaz with jury selection and helped de-velop questions during trial.

Donald P. Fitzgerald III of Crabtree & Associates in Key Biscayne responded to trial motions and helped preserve the re-cord for appeal.

“Rick is a great attorney with a lot of energy who is quick on his feet and has a full command,” he said. Fitzgerald’s col-league, attorney John Crabtree worked remotely with the team in handling mo-tions.

The trial support team included Miami-area solo practitioner Carlos Santisteban Jr., who helped coordinate exhibits and prepare witnesses, and Daryl Bloomberg, an associate with the Ratzan Law Firm in Miami, who helped prepare witnesses and exhibits.

“Reverend Smith was well known in Marianna and had served the community for many years,” said Diaz. “I am glad we were able to resolve this case before he passed away.”

Richard Diazlaw Offices of richard J. Diaz

Richard Diaz

property. Merco’s appraiser assessed the property at $34 million, citing prior entitlements the company obtained from the city for the condo project. But the Pathman attorneys showed the entitle-ments had expired and cited their own appraiser’s assessment of $10 million.

Several legal tactics delayed the case further, Moore said.

“Any time we were close to being heard at trial, there would be a motion

to amend, a motion for new counsel,” he said.

Merco also got the venue changed from Palm Beach Circuit Court to Miami-Dade Circuit Court by arguing Miami-Dade would be more convenient for the Merco principals. Space Coast did not object to the change.

With the Jan. 17 start of the trial loom-ing, Merco and Space Coast began settle-ment talks. On the trial’s opening day, the

parties announced a settlement. Merco paid $5 million that day and agreed to pay another $10 million plus interest four months later.

“The big thing on that was the persis-tence of our client and ourselves,” Moore said. “We weren’t going to settle for cents on the dollar. We were going to proceed with the judgment.”

FROM PAgE AA19

real esTaTe: Settlement reached on first day of trial

AA18 dailybusinessreview.com MONDAY, DECEMBER 10, 2012 DAILY BUSINESS REVIEW

REAL ESTATE

Persistient trio reached private school zoning deal with Palmetto bay

Throughout their careers, veteran land use attorneys Eileen Ball Mehta, Stanley Price and Eric Singer have found that residents of some communities often pay lip service to the idea of having qual-ity schools near their homes.

Parents want their children to have access to the best possible education as long as it does not interfere with the sanctity of their neighborhoods, the at-torneys say. The sentiment is commonly referred to as NIMBYism, short for not in my backyard.

“We all want the best-educated sur-geon when we go to the hospital,” Mehta said. “We want these students to be well-educated ... [but] the communities do everything possible to discourage these uses that play an important role.”

That issue was at the forefront of a six-year legal battle the attorneys waged with the village of Palmetto Bay on be-half of Palmer Trinity Private School. The Episcopalian school was originally built on land donated by Miami’s Matheson family.

Palmer Trinity, which has operated for more than five decades, purchased a 32.5-acre mango grove adjacent to its existing school with plans to expand. The school designed a site plan consolidating its existing 22.5 acres into the newly ac-quired parcel.

Palmetto Bay’s Village Council shot down Palmer Trinity’s rezoning request in 2008 and wouldn’t consider a site plan approval.

“We had a strong group of opponents who organized and became a force in the

village,” Price said. “Some were members of the council.”

The attorneys filed a petition for writ of certiorari, first in Miami-Dade Circuit Court and later in the Third District Court of Appeal. The Third DCA panel reversed the village’s denial of the rezoning, de-scribing it as a “miscarriage of justice” and remanding the case to the village.

Palmer Trinity then revised its rezon-ing application, reducing the number of students to 1,150. The Village Council in 2010 approved the rezoning but imposed more than 80 conditions on the site plan approval, including a prohibition on ad-ditional zoning applications from the school for 30 years and a maximum of 900 students.

“I have been told the expansion of the

Turkey Point nuclear plant was approved with fewer conditions than the approval of Palmer Trinity,” Mehta said.

Again, the attorneys filed a petition for writ of certiorari with the circuit court. The court in February 2011 quashed the conditions and remanded the case to the village.

The Village Council in July 2011 elimi-nated the demand for a 30-year hold on zoning applications but further reduced the maximum number students to 600. The attorneys went back to circuit court with a motion to enforce the 900-student mandate. The court granted the motion last December.

The village then sought a review of the circuit court order in the Third District. A panel in July ordered the municipal-ity to comply with its previous order and chastised it for failing to abide by what the court said is for all practical purposes a settled matter. It also granted Palmer Trinity’s motion for attorney fees, but an appeal from the village on that order is pending.

“It was very, very difficult to over-come this perception that schools are the equivalent of a nuclear waste facility,” Price said.

Yet the battle is not completely over. The school has a pending action against the village for violations of basic proce-dural due process rights, namely for ex parte communication within the vil-lage that the school believes violated the Florida and U.S. constitutions.

Price said he hopes upcoming settle-ment talks with the village will result in a much quicker resolution than the zoning dispute.

“I’d like to think reasonable people will resolve the issues remaining,” he said. “We’re going in with a clear mind.”

Eileen Ball Mehta, Stanley Price and Eric SingerBilzin Sumberg Baena Price & Axelrod

J. AlBert DiAz

Eric Singer, standing left, Stanley B. Price, and Eileen Ball Mehta, with Bilzin Sumberg.

Over the last few years, the Meruelo family’s Merco Group has emerged from various South Florida fore-closure cas-es relatively u n s c a t h e d . Lenders usually let Merco walk away if the com-pany agreed to turn over the distressed prop-erties.

In one case, however, lender Space Coast Credit Union of Melbourne re-fused to back down from the development firm. After a four-year legal battle involv-

ing multiple judges and venues, Space Coast in January obtained a $15 mil-lion deficiency settlement with Merco.

Pathman Lewis attorneys David Jove, John Moore and Wayne Pathman represented Space Coast, which inher-ited the case after taking over the orig-inal lender, Eastern Financial Florida Credit Union, in June 2009.

Eastern Financial in April 2008 obtained a $37.3 million foreclosure judgment against Merco over a con-struction loan secured by the unde-veloped site of the scuttled Palladio Terrace condominium project in West Palm Beach.

From the outset, Space Coast ex-ecutives were resolute in their desire to collect as much money owed to the institution as possible, according to Moore. Merco fought back nearly ev-ery step of the way, responding to the deficiency action with numerous coun-terclaims.

“Normally lenders would say ‘Fine; this is all I’m ever going to get,’ ” Moore said. “That happened a lot with Merco cases. In this situation, the client sup-ported our position that there were as-sets to be recovered.”

Merco’s representatives argued that a pre-existing agreement had been made with Eastern that prevented the lender from pursuing a deficiency, ac-cording to Moore. During a lengthy discovery period, Merco was unable to provide any proof of such an agree-ment.

The sides also argued over ap-praisals of the 2211 N. Flagler Drive

David Jove, John Moore and Wayne PathmanPathman lewis

John Moore

David Jove

Wayne Pathman

Trio worked $15M deficiency settlement

North Bay Village attorneys Michael Furshman and Benjamin Solomon have developed a strong niche by going after lenders on behalf of condominium and homeowner associations.

Their firm, Association Law Group, has filed more than 1,100 liens and 130 fore-closures against banks and other financial institutions that balked at paying mainte-nance fees to associations after taking title to units through foreclosure. Association Law currently represents more than 500 associations in Florida.

In one recent case, the attorneys rep-resented Horizons West Property Owners Association in obtaining a foreclosure judgment against JPMorgan Chase. JPMorgan paid Horizons West $10,361 on Aug. 28 to satisfy the judgment and avoid losing ownership of the unit in a foreclosure auction.

“Whoever would have thought that con-do associations would be foreclosing on banks?” Solomon asked. “Unfortunately, that’s where we are in this market.”

The Horizons West-JPMorgan settle-ment was four years in the making.

The bank filed to foreclose against the unit’s previous owner in 2008. JPMorgan obtained a foreclosure judgment two years later and took title to the unit through a foreclosure auction.

After becoming the unit owner, JPMorgan did not make a single payment to the as-sociation for mainte-nance fees, according to Solomon. For a struggling associa-tion, such fees are the “only bloodline” to

cover the costs of basic necessities for a condo community,

“We’ve seen in a widespread way that lenders duck that legal obligation while marketing the unit quietly through” their real estate owned department, Solomon said. “Their preference is to settle up with the homeowners associations when they have a sale to a third party. The problem is a lot of times it takes the bank six to eight months to market a unit after taking title.”

In the Horizons West case, the attorneys took the unusual approach of filing a lien

against JPMorgan in March 2011 and a foreclosure action two months later. With little history of associations slapping lend-ers with such actions, the attorneys had to customize a special lender lien form and foreclosure complaint for Horizons West.

These measures have become “a grow-ing trend,” Solomon said. “Some areas are ambiguous, but this is a black and white issue. You’re the owner of the unit; you have to pay maintenance fees.”

After litigating the case for more than a year, a Miami-Dade circuit judge granted summary judgment to the association. JPMorgan also was on the hook for fees and costs.

“The only reason it took so long to have the final judgment is because unfortunate-ly the foreclosure process is inherently slow,” Solomon said.

Had JPMorgan failed to made good on paying the judgment before the scheduled auction date, Horizons West likely would have ended up taking title to the unit, he said.

“We are pleased with the outcome,” Solomon said. “It would have been some-what of a windfall if they missed the sale date, but our goal was to get the clients paid what they were owed. ... The under-lying message is that associations need to continue to be on their toes.”

Michael Furshman and Benjamin SolomonAssociation law Group

Attorneys for associations challenge lenders on unpaid maintenance fees

Michael Fushman

Benjamin Solomon

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SEE PAgE AA18

DAILY BUSINESS REVIEW MONDAY, DECEMBER 10, 2012 dailybusinessreview.com AA19

AA20 dailybusinessreview.com MONDAY, DECEMBER 10, 2012 DAILY BUSINESS REVIEW