Part IV of the August 28 Closed-Door meeting- Joslyn is not without fault here

CITY OF LAKE WORTH
CITY COMMISSION SPECIAL MEETING
CITY MANAGER'S OFFICE

August 28, 20125:00 p.m. - 6:47 p.m.

7 North Dixie Highway
Lake Work, Florida

Appearances:

Pam Triolo, Mayor
Scott Maxwell, Vice Mayor
Michael Bornstein, City Manager
Suzanne Mulvehill, Commissioner
Chris McVoy, Commissioner
Andy Amoroso, Commissioner
Glen Torcivia, Esq., Interim City Attorney
Brian Joslyn, Outside Counsel

[FORWARD TO PAGE 27, LINE 21]

MR. JOSLYN [CONTINUES]: We have -- I also have Carry Killbay (phonetic) at Killbay & Associates, a very prominent land planner to opine, if necessary, on the comprehensive planning and zoning issues, plus Larry Corio Gorman, and so we are pretty ready to go.
     I have the 12 volumes, 12 big 3-inch volumes of -- 4-inch maybe -- of documents in order, chronological order that we put together from all of the e-mails and stuff. The attorney on the other side is a competent fellow from Lake Mary.
     We believe that he's hired on a contingency, and that he's looking to ring the gong.
     He has no title expert listed, he has no land planning expert listed as an expert, and his economist, or whoever his financial analyst he hired to put his damages up, just got convicted today of bankruptcy fraud and is facing five years of prison, so he is scrambling now on finding another financing expert.
MR. MAXWELL:  Oops.
MR. JOSLYN:  Oh, that.
     So we have -- in the next month, we have some -- some depositions of some of their peripheral witnesses that may be needed, the Kimberly Horn Traffic Engineers, to talk about their getting stiffed.
     One more thing:  The original architects they used was The Architectural Group, Mark Brodnick.  He's the one who did all of the drawings for their initial submittal in response to the RFP.
     When he didn't get paid and they ran up a bill of about $50,000 with him over the two years into 2008, he quit working for them. So when they were required to bring their site plan in, they had to hire a different land planner.
     Mr. Brodnick wrote letters to Greater Bay saying, Since you haven't paid me, you would be violating my copyrights if you use my drawings.
     So the land planner they hired really couldn't use anything other than the footprint of his building, but the layouts are very close. The lady who was hired to do the site plan -- I can't remember her name.  She's a land planner from up in Jupiter.  She didn't get paid, and she sued and got a default judgment against them.
     So these guys left debt all over town.  In fact, they owned Mr. Renaldi money for staying in his hotel as well.
     There was one more thing I was going to say in that regard.  Oh, they made a -- during depositions of the City Commissioners, counsel for the plaintiff made a big to do about the letter from the attorney for Greater Bay when we were running up against the deadline for the pool work and the grant money.  And in that letter, this guy said, We'll stand behind the $200,000.  If the delays are such that you don't get the FRDAP grant, we'll pay the money.
     Well, so much for the veracity of that kind of a claim, when you are not even paying for your bed and breakfast that you're staying at, so we will have some fun with that as well.
     In the middle of this project, they had their project site guy, a fellow named Joseph Kelner (phonetic).  He was their on-site -- going to be their on-site manager, went through some sort of self-destruction with them over being paid for his phone bills and TDY and room and board and all that stuff, and wrote some e-mails where they're just off the charts about these guys being crooks and stuff like that.
     Bill Meade, the realtor who brought them into Lake Worth thought he was going to be a partner in the deal.  He got shafted. This fellow Mr. Toner -- and he has written e-mails to this effect.
     Mr. Toner has not been deposed yet because he is -- we can't find him.  I think we have him -- we have him served over in St. Pete.  I don't know whether he's going to show up for the deposition.  We will just have to see.
     But during this -- during this case, he wrote me an e-mail that he was all ready to Tee off against these guys and tell me all sorts of stuff.  All I had to do was pay him a half million dollars to cover all his expenses.  And we said, Sorry, that's not how we are going to go.  So the deposition could provide some features of interest.
     And then the two principals, Mr. Tim Right and Mr. Willard, are going to be deposed at the end -- the last two guys deposed after we have everybody else wrapped up.
     So last year in mediation we were told by plaintiff's counsel that, you know, really they'd go away for $3 million.  My thought at the time, we could maybe make the case go away for a million, but there was no way the City had the dough to put a million dollars on the table.
     We offered $300,000, and I suggested to plaintiff's counsel that they sue us in some form or another for negligence, so we could bring the City's insurance carrier into the deal and maybe provide some extra money that way.
     And he looked into it.  I sent him the policy and all of that, and he said he just -- he said you guys have bad insurance.  It's only a million bucks and the restrictions on what it's for gave him no ability to do that.  So the 300,000 is all we have made in terms of an offer.
MS. TRIOLO:  What is the City insurance policy, what would that -- how would that --
MR. JOSLYN:  A million bucks.
MS. TRIOLO:  No, I'm saying how would that kick in, what were they were looking for it to kick in?
MR. JOSLYN:  No, no.  I was suggesting to him that the way to put more money on the table, given the City's financial straits, was to allege some sort of negligence claim against the City, separate and apart from the breach of contract to sort of alter, re-alter the case in some way to allege some sort of negligence or intentional wrongdoing by a Commissioner, but he couldn't -- he said he couldn't make it work.
     So the City 's insurance, we made demand on them at the very beginning of this, and they said there is no claim under our policy and there isn't.  It's a breach of contract case.
     We jury simulated this case earlier this year.  Commissioner Maxwell came pretty close to having a heart attack that day, because I took the plaintiff's side and argued a bunch of things that aren't true.
     What I did I was I said -- because I don't know what's going to a trial, you don't know, you want to test a bunch of things.  So I wasn't so concerned about seeing that the City could win, because I'm pretty confident that if we are in trial, I'm going to argue the case, I think the City wins, especially given all the facts I have laid out to you.
     All we have that's bad is that you have a couple of Commissioners at meetings going, We got to get out of this deal. That's it.
     So anyway, what I did was I said, The City knew that they had title issues, and they didn't tell us until after it was over, until after we signed the agreement, and these title issues weren't solved.  All the City could provide was title insurance.  That confused the jurors, and they thought that wasn't a solution.
     I also argued that the City withheld from them zoning needed to be changed, and that there was a substantial likelihood of suits being filed over that.  To try to argue almost like an intentional breach of contract, kind of concealed fraud kind of a case.
     We had -- over the course of the day, we had four juries of 12 people hear this, and they were all videotaped, and the analysis provided then by the company that does this in bar chart form, and here's the kind of jurors you want to make sure you get, here are the jurors you want to try to avoid, here are things you need to stress during the trial, but we went overboard on Lake Worth -- I mean on behalf of Greater Bay, and made a better case than their attorneys are ever going to be able to do.
     And we got, what, I think it was 12 million the first time.  One jury -- by the afternoon, my associate had adjusted to my arguments, because she didn't have any idea what I was going to do, and we got them to down to a couple of million bucks, and that's making a case that they are not going to be able to make, okay.
     So my analysis of this is:  If you want them to go away without having to try it, the number's got to be a million bucks.  Now, that could be over time, if you're so inclined, but I don't know that a million is going to do it for these guys.  They're greedy, and we don't have the million to put on the table to even see.
     I would be worried about at this point coming to them with a million after being quiet for a year.  I mean it could be posed as, Hey, do you want to take one last stab to try to settle this before we go to war, and, you know, that's often what happens, Glen, you know that, that as you get closer to trial, everybody starts looking at ways to maximize their upside and minimize their down.
     But honestly, and I probably -- I hope I don't live to regret this, I don't know that you need to -- that you should put a million dollars on the table.
     I really think, looking at the law on this and the witnesses and what kind of case they are going to be able to make -- he wants it to be real simple, you know, Carry Jennings (phonetic), Joy Golding (phonetic) didn't like this project, they killed it.  They hired Stratacon to try to ease us out.  All of that is going to be easily demonstrated as being so what.
     You know, politicians -- for gosh sakes, I mean people have positions on issues.  That's why you elect them.  So I don't see that going very far.
     And we have -- depending on how much leeway the judge gives me, we have a lot of bad stuff that these guys -- they are just bad guys. For example, we can just flop the $200,000 letter in front of them, and then start picking at all the people they've stiffed to show that they got no veracity and had no veracity at the time.  That internal memo where they are talking about setting up for litigation with the City is pretty instructive.
     Now, there are notes that my partner and Larry Karnes took of our meetings after the City Manager met with Willard and blistered him about looking at backing out of the deal, because it became pretty apparent at that point that Willard really didn't have any intention of proceeding, and a lot of people had that feeling earlier on, but by the summer of '08, it was pretty apparent to everybody, even the people that supported them, that they really -- it didn't look like they were the real deal, so --
MS. TRIOLO:  What's status of the company now?
MR. JOSLYN:  The only asset it has is this lawsuit.  There is no attorneys fee provision.
MS. TRIOLO:  Commissioner McVoy?
Mr. McVOY:  You mentioned that -- I think your description was that these folks were not the real deal.  Certainly all indications, and the Mayor's question is in that same direction, is:  Does it not help our case that these folks look like a company that is not a company, they had not built anything, they have not --
MR. JOSLYN:  Sure.
Mr. McVOY:  They have had no experience building 20, $30 million buildings, much less $1 million buildings.
MR. JOSLYN:  Well, we have to watch out for that, because Greater Bay Construction Group LLC, the plaintiff in this lawsuit --
Mr. McVOY:  The quieter partner over on the West Coast --
MR. JOSLYN:  Correct.
Mr. McVOY:  -- is a legitimate --
MR. JOSLYN:  -- contractor who does big buildings.
Mr. McVOY:  Right.
MR. JOSLYN:  And they were going to be the GC on the job.  So Willard is a developer from New York.  He got introduced to Greater Bay through Bill Meade.  Three weeks or four weeks before they put the proposal on the table -- I mean, this is -- I think could be posed as a pretty fly-by-night kind of stab by these fellows.
     When I found out it was only -- within months, I mean two months tops that Willard met Mr. Steel (phonetic), the owner of Greater Bay, it became pretty clear, this was -- you know, these guys were taking a flyer.
     Had they gotten their financing and had they had construction plans and had they actually started, I have no doubt that Greater Bay Construction Company would have done a pretty good job. They have good reputation, but that isn't what happened and we are not here on that, so we don't to get to the issue of whether they could have put the building up.  They were never in a position to put the building up.
     Also, in mediation, it was very interesting, the plaintiff's lawyer said in our initial session that -- and it was Mr. Steel who showed up, the mellower fellow from Tampa that Mr. Willard made a bad witness, so he confessed to that.  He essentially said, Yeah, he isn't a very good witness, and I suspect that Willard will not be the person sitting by counsel's table, it will be the calm Mr. Steel, but we are going to videotape Mr. Willard's deposition and play as much of it as we think fits if he doesn't show up, and I'm hoping to push the buttons to see how excited he gets.  I have no idea. I have never met the man.
Mr. McVOY:  I have --
MS. TRIOLO:  Commissioner McVoy?
Mr. McVOY:  I have sat at length with Mr. Willard, purely by chance.  My wife and I happened to eating at Pollo Tropical up toward the Winn-Dixie one night, somewhere in this range, I couldn't tell you when, and I believe we were sitting, eating and he came in.  Somehow he knew who I was, presumably because of the We Love Lake Worth suit.  I never met him before.  I knew his name and that was it.  He sat down and asked to join us for dinner. I said sure.  You are welcome to do that.  He is a very smooth talker, very smooth.
MR. JOSLYN:  Sure.
Mr. McVOY:  He will tell you all sorts of wonderful things that he has done in his life.  I later on tried to check some of them out on the internet and hit dead ends on pretty much everything.
MR. JOSLYN:  That's the problem with the company.  See, he isn't listed --
Mr. McVOY:  There is no company.  He had stories about how he had rehabbed shipping containers for poor folks in wherever and a million things, but he's very -- he's entertaining, too.
MR. JOSLYN:  Of course, he's the frontman.
Mr. McVOY:  He was definitely the frontman, and he is not dumb by any means.  He is intelligent, but....
MR. JOSLYN:  I don't -- I assume that he is going to come on and look like George Clooney, okay.  I mean, that's how -- I can't prepare a case assuming the guy is going to act like a jerk or self-destruct, and that's not what's going to happen.
     We have a lot of documentary evidence to go through with this guy, and we'll just see what he has to say, but, you know, the thing about documents is they don't lie and they don't die, and they are all here.
     So I think that's where I am on this.  I don't know that I can in good faith recommend that you put more money on the table, because I don't think a million will do it, and I don't know how you would make that happen.
     And I don't know that I could recommend more than a million dollars under any set of circumstances at this point.
MR. JOSLYN:  Commissioner McVoy?
Mr. McVOY:  Help me understand why you would recommend any number greater than zero.  Why should -- for everything you have layed out suggests that these guys never really were going to do this.
MR. JOSLYN:  Right.
Mr. McVOY:  That it's a pretty plausible case that they got into the whole thing from the get go with the intent of getting some money out of the City and not much intent of actually building anything. You can make that case and the case gets stronger over time.
MR. JOSLYN:  Sure.
Mr. McVOY:  It might not be as strong initially, but it gets stronger over time.  Why on earth would we give them any money?
MR. JOSLYN:  I said last year that you ought to put $300,000 on the table, because you were going to spend at least that much money trying the case.
Mr. McVOY:  Okay.
MR. JOSLYN:  Pay me, pay him.  If I have a client who is going to pay me money and have no chance of getting it back, whether he wins or loses, and he can pay that to the other guy to settle, do it.
MR. McVOY:  Okay.
MR. JOSLYN:  That isn't go [sic] to do it, which is why I'm saying here now I don't know that I can really recommend putting more money on the table, but there is a risk.
     I mean, believe me, I really don't want to have my name on a Lexus search within a paragraph of a $30 million loss, but I don't see that as any kind of realistic outcome on this case.
Mr. McVOY:  And if they lose and we win, who covers the attorney fees?
MR. JOSLYN:  You pay them.
Mr. McVOY:  So we would not recover --
MR. JOSLYN:  You have no -- you have no down side for these guys.  Believe me, we discussed --
Mr. McVOY:  I think you told us before.
MR. JOSLYN:  There is no -- we have no ability to put pressure on these guys with any way with the claim.
MS. TRIOLO:  Vice Mayor?
MR. MAXWELL:  There are two parts of this that you have laid out today that by themselves I'm thinking, what's the big deal?  For example, you're talking about a memo that spoke to preparing for litigation.
MR. JOSLYN:  Right.
MR. MAXWELL:  Now, I'm not a lawyer, but I think we all might agree that as we get older and the more business interactions we have, work experiences in life we have, sometimes we think something is not going to go so well, so we start saying to our partners or our associates, Hey, let's make sure we start documenting things, so, you know, in case something -- that's what I'm suggesting here.  Is that what they were suggesting in this memo?
MR. JOSLYN:  I don't think there's any doubt about it, because you that have memo before the site plan.  There's a question, What are we going to provide them for a site plan, how are we going to set up for litigation, and within a month, they give you a bogus site plan prepared by a second land planner who couldn't use the first guy's, because of a copyright violation, because he wasn't paid, and then you have the lawyer's letter that does that -- essentially copies --
MS. TRIOLO:  Continue Vice Mayor.
MR. MAXWELL:  Maybe that clears up a little bit, because in my mind I'm thinking, Look -- and you just said it, you got two commissioners, maybe more who are publicly saying, Look, we don't like this deal, we don't like this project, we don't -- whatever, and they are thinking, Hey -- in their mind, from their perspective, maybe they think -- maybe they don't understand the processes, whatever, and they're thinking, Hey, wait a minute, we are going to get -- come up on the wrong end of the stick here.
MR. JOSLYN:  Oh, no --
MR. MAXWELL:  We better start covering ourselves, and make sure we got all our documentation together.
MR. JOSLYN:  They knew there was -- there are a lot of e-mails where they are discussing your politics.
MR. MAXWELL:  Okay.
MR. JOSLYN:  They followed your elections from the beginning, and they knew when Ms. Mulvehill -- Commissioner Mulvehill, got elected, that they were now instead of being three, two for them, it was going to be three, two against, they knew.
MR. MAXWELL:  All right.  So the timing of the coming out in litigation came before or after the shift in the majority?
MR. JOSLYN:  The letter came -- I don't remember when your election was.
MR. MAXWELL:  November of 2008.
MR. JOSLYN:  Right.  The letter was November 18th.
MR. MAXWELL:  Right after the election?
MR. JOSLYN:  Right after the election, yeah.
MR. MAXWELL:  I guess my next point is really relevant.  That is, people forms LLC all the time for specific projects.
MR. JOSLYN:  Yes.
MR. MAXWELL:  And you don't have an infusion of capital that you anticipated, however you may have experienced some expenses, well, it's wrong, I think it's morally wrong obviously, not to pay
people --
MR. JOSLYN:  Walk away.
MR. MAXWELL:  -- is that a material piece of this case, the fact that they stiffed --
MR. JOSLYN:  I think it is, because these guys are going to have to say we were ready, willing and able to perform, you know.
MS. TRIOLO:  When they performed in the pool --
MR. JOSLYN:  Yeah, but the pool -- you know, it's such a minimum amount of money in terms of -- you know, it was about -- 40,000 bucks more was needed after they finished the pool, so call it 10 percent.
MS. TRIOLO:  Okay.
MR. JOSLYN:  That's a significant amount of money in my mind.
     But just the lackadaisical all the way along, not having traffic engineers.  There is a number of e-mails Corio Gorman and these guys going, Hey, you need to hire a traffic engineer, you need to hire this person, and as a result of their not hiring a traffic engineer on the first go through with the comp plan, it was rejected, because they didn't have the traffic study they needed, so they hired Kimberly Horn.  They did the traffic study, and then Kimberly Horn got stiffed, so...
MS. TRIOLO:  City Manager?
MR. BORNSTEIN:  As far as -- just to follow up on what the Vice Mayor was asking.  The point that they couldn't pull the financing together, therefore, they couldn't make all these payments being the fault of the City, I mean, can't they --
MR. JOSLYN:  I don't think so.
MR. BORNSTEIN:  Because in some deals, you know, you pull together.  It's an isolated incident.
MR. JOSLYN:  Right.
MR. BORNSTEIN:  It's based on financing based on a contract to do certain work.  If for whatever reasons they can't start that train rolling, well, of course, they are not going to pay everything else.
MR. JOSLYN:  But, you normally -- if that's going to be your financing mechanism, you discuss it with your consultants first.
MR. BORNSTEIN:  I don't disagree.
MR. JOSLYN:  You don't miss telling them that until they start pressing you for payments.
     He refused to sign a contract with The Architectural Group.  Oh, yeah, we will get to it, we will get it.
MR. BORNSTEIN:  There was never any documentation to any of those suppliers of services that you're not getting money because the City is not paying us?
MR. JOSLYN:  Oh, that's what he says later, a couple of people have been told, If we win this lawsuit, you are going to get paid, but a number of them had had no contact.
     I mean, there are a lot curious things about this case on the other side.  No title expert when title was one of the issues raised in the default letter.  No comp plan or land use expert.  A fly-by-night kind of financial analysis without -- you know, in something like this, you would expect some sort of Ph.D., credentialed economist when you are trying to create stuff out of whole cloth, you know, or somebody with expertise in the field who could say what they did and how they were going to do this.  They don't have anybody like that listed.
     And like I say, this financial planner that they had used, it's kind of indicative of their whole approach here.  That he is doing it on the cheap.  One more thing I'll tell you -- I'm sorry, do you have a question?
MS. TRIOLO:  Commissioner Amoroso?
MR. AMOROSO:  Out of all the people that he owed money to, only one sued him?
MR. JOSLYN:  I think so.  Because everybody knew that they didn't have anything.  You know, there is no -- your contract is with the entity, or your arrangement is with the entity, not the individuals.  So you don't have anybody to go if the entity has nothing.
MS. TRIOLO:  City Attorney?
MR. TORCIVIA:  Just a couple of questions.
     From a litigation expense standpoint, what would you estimate the City will be spending through trial?
MR. JOSLYN:  I gave Elaine an analysis broken down by deposition and all of that stuff.  I said I thought on the high side, it's probably a couple of hundred thousand bucks.
MR. TORCIVIA:  That's what I thought, 2 to 250, in that range?
MR. JOSLYN:  I think so.  The heavy work, spending the months going through all these darn e-mails is done.  The organization of them is done.  I have got Willard's deposition file ready to go with all the documents copied.  We have done the jury simulation.
MR. TORCIVIA:  The jury simulation --
MR. JOSLYN:  I'm sorry, I felt so bad for you. I didn't have a chance to talk to you that day. I --
MR. TORCIVIA:  There is always a risk with a jury.
MR. JOSLYN:  There is.
MR. TORCIVIA:  There is no 100 percent winner.
     So what would be your estimate, what's the percentage chance that we could lose or range? You know, is it a 10 percent, a 50 percent, a 30 percent?

[TRANSCRIPTION ENDED AT PAGE 50, LINE 17]