Date: 08-11-2007

Case Style: Carl L. Masztal, et al. v. The City of Miami

Case Number: 3D06-1259

Judge: Ramirez

Court: Florida Court of Appeals, Third Appellate District on appeal from the Circuit Court of Miami-Dade County

Plaintiff's Attorney:

Michael Garcia Petit, Patrick A. Scott, and Richard L. Williams; Adorno & Yoss, Jack R. Reiter, and Natalie J. Carlos; Rubinstein & Associates, and Jeffrey Rubinstein; Gilbride, Heller & Brown, Lewis N. Brown, and Dyanne E. Feinberg, for appellants.

Defendant's Attorney:

Cole, Scott & Kissane, and Scott A. Cole and Thomas E. Scott, and Krista Fowler, for appellee.

Description:

Carl L. Masztal, et al., appeal a final order granting appellee City of Miami's motion to set aside or vacate a settlement and recover monies paid, and an adverse final judgment and amended final judgment. Because the settlement amount was patently unfair and compromised the claims of the underlying class, we must affirm all the orders under review.

The final order in this consolidated appeal vacated a $7 million settlement entered into in the underlying class action. The plaintiffs, Eva Nagymihaly, Jean Robert Prosper, Jocelyn Prosper, Kenneth Merker, Gordon Willitts, and Algie Didlaukis, alleged that the City did not have the authority to impose a special assessment to fund fire rescue services. They sought to declare the fire rescue assessment, Ordinance Number 11584, unconstitutional and a return of all funds the City collected. They also sought to declare section 170.201, Florida Statutes, unconstitutional, to the extent that it permitted municipalities to levy and collect special assessments to fund municipal services that included fire protection and emergency medical services.

The plaintiffs and Adorno & Yoss appealed the final order under rule 9.130(a)(3)(c)(ii), Florida Rules of Appellate Procedure, as a final order because the trial court disgorged Adorno & Yoss' fee. Plaintiffs Merker and the Prospers also separately appeal the final order.

The City also filed a motion for the entry of judgment, seeking to impose joint and several liability on each of the plaintiffs and Adorno & Yoss for the sum of $3.5 million. The plaintiffs and Adorno & Yoss argued that, because a notice of appeal had been filed as to the final order, rule 9.130(f), Florida Rules of Appellate Procedure, precluded the trial court from entering a final judgment. The trial court subsequently entered final judgment against the plaintiffs for the entire amount of the settlement proceeds apportioned to them. The trial court also declined to find joint and several liability. The City, plaintiffs, and the Intervenors all appeal the final judgment.

The City also filed a motion for clarification or amendment of the final judgment, seeking to recover prejudgment interest. The trial court entered an Amended Final Judgment, reserving jurisdiction to determine prejudgment interest, costs and attorneys' fees. The plaintiffs filed notices of appeal of the Amended Final Judgment as well. All appeals of the final order, final judgment, and amended final judgment were consolidated.

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In early 1998, a group of citizens joined together to contest the proposed fire rescue assessment. They formed a Florida nonprofit corporation called Tenants and Taxpayers United for Fairness, Inc. Peter Clancy was the President, and nine others made up the original Board of Directors, including Judy Clark and Eva Nagymihaly. The corporation solicited donations from the public to fund their impending litigation. The funds helped defray the cost of hiring the firm of Atlas Pearlman Tropp & Borkson, P.A.1

The Atlas Pearlman retainer agreement stated that the case would proceed as a class action. Atlas Pearlman subsequently filed a class action complaint and amended complaint. Clancy created an informational pamphlet to distribute to the public and help secure donations. The pamphlet explained that the "named plaintiffs really represent every other private owner in the City" and why "a class action lawsuit [was] filed." In his testimony, Clark admitted that the purpose of the lawsuit was to end the fire rescue fee and obtain a refund for all who had paid the assessment.

Atlas Pearlman continued representation until the firm merged its practice with the firm of Adorno & Yoss, LLP in 2002. Assistant City Attorney Charles C. Mays represented the City.

Six years elapsed between the inception of the class action suit and settlement during which time extensive litigation and negotiations took place. Both Atlas Pearlman and Adorno & Yoss pursued class certification. The court deferred class certification pending trial or cross-motions for summary judgment on the refund issue.

The original plaintiffs subsequently moved for summary judgment on the invalidity of Ordinance Number 11584 and the unconstitutionality of section 170.201. The trial court held the ordinance invalid to the extent that it authorized the City to impose a special assessment for emergency medical services, and it declared section 170.201 unconstitutional to the extent that it included the phrase "emergency medical services." It also struck that portion of the statute.

The original plaintiffs also moved for summary judgment on the City's affirmative defenses. The trial court struck the City's affirmative defense that the plaintiffs paid the assessment voluntarily and without legal compulsion. The court further struck the City's statute of limitations affirmative defense, finding that the plaintiffs' claims were not time-barred. The trial court set the trial of the refund issue for May 26, 2004. At this time, the class had not yet been certified. It is undisputed, and the trial court so found in its March 17, 2006 Order, that everyone treated the case as though the class had been certified.

* * *

Outcome: We thus conclude that the original plaintiffs and Adorno & Yoss breached their fiduciary duty to the class when they agreed to settle and thereby compromised the class claims. The trial court therefore correctly set aside the settlement. Affirmed.

Plaintiff's Experts: Unknown

Defendant's Experts: Unknown

Comments: None