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Item A AUG-30-01 13,41 FROM,MONROE COUNTY ATTY OFFICE 10,3052823516 PAGE 1/1 BOARD OF COUNTY COMMISSIONERS AGENDA IT!M SUMMARY Meeting Date: September 5, 2001 Division: County Attorney Bulk Item: Yes 0 No [I AGENDA ITEM WORDING: Attorney-client closed session with County Administrator Jim Roberts, land Use Counsel Karen Cabanas and Hugh Morgan. The purpose of this meeting is to discuss the case of Shadek v. Monroe County. ITEM BACKGROUND: PREVIOUS RELEVANT BOCC ACTION: See above. CONTRACT I AGREEMENT CHANGES: STAFF RECOMMENDAnONS: Approval TOTAL COST: COST TO COUNTY: BUDGETED: Yes L.; No G APPROVED BY: County Attorney. OMB/PurchClsing 0 Risk Management n DIVISION DIRECTOR APPROVAL: ORICK DOCUMENTAnON: Included 0 To Follow 0 Not Required C AGENDA ITEM It A Hugh J, Morgan James 1. Hendrick Robert Cintron Derek V, Howard LAW OFFICES MORGAN & HENDRICK 317 Whitehead Street Key West, Florida 33040 Telephone: (305) 296-5676 W, Curry Harris (1907-1988) Hilary U, Albury (1920-1999) November 29,2004 Mr. Danny Kolhage Clerk of the Court P. O. Box 1026 Key West, FL 33041 IN RE: Monroe County BOCC Transcript Shadek vs. Monroe County Dear Mr. Kolhage: Enclosed please find a transcript from the executive session ofthe BOCC which was held on September 5, 2001. That session was held to discuss matters in the above-referenced litigation. Under the Government in the Sunshine Act, transcripts of an executive session are to be sealed by the Clerk until such time as the litigation has concluded. Accordingly, the transcript can be unsealed and placed in the public records. Please file accordingly. Please contact me if you should have any questions regarding this matter. ~~ Teresa Ross Litigation Paralegal tr Enclosure P,O, Box 1117, KEVWEST, FL 33041 * TELEPHONE 305 296-5676 * FACSIMILE 305 296-4331 E-MAIL ADDRESS:JHENDRICK@MORGANANDHENDRICK.COM ',. 1 tl!'t.-, ~ / 2 , ~ 3 4 5 6 7 ..'.. '""" () .........., l ) MONROE COUNTY BOARD OF COUNTY COMMISSIONERS CLOSED ATTORNEY-CLIENT SESSION ORIGINAL COMMISSIONERS: 8 MAYOR GEORGE NEUGENT COMMISSIONER NORA A. WILLIAMS COMMISSIONER DIXIE M. SPEHAR COMMISSIONER MURRAY E. NELSON COMMISSIONER CHARLES McCOY 9 ALSO PRESENT: 10 11 KAREN CABANAS, ESQUIRE HUGH J. MORGAN, ESQUIRE JAMES L. ROBERTS, COUNTY ADMINISTRATOR 12 13 14 TRANSCRIPT OF PROCEEDINGS 15 16 PROCEEDINGS before the Monroe County Board 17 of County Commissioners, at 1200 Truman Avenue, Key 18 West, Monroe County, Florida, on the 5th day of 19 September 2001, commencing at approximately 4:08 20 p.m., as reported by Susan L. McTaggart, Court 21 Reporter and Notary Public, State of Florida at 22 Large. 23 24 25 All Keys Reporting (305) 289-1201 ! Fax (305) 289-1642 14 15 16 17 18 19 20 21 22 23 24 25 2 1 PRO C E E DIN G S 2 MAYOR NEUGENT: We'll call this meeting to order, 3 and I'll immediately turn it over to Ms. Cabanas. 4 MS. CABANAS: Well, thank you. 5 MR. ROBERTS: Let's just be sure, in the past 6 we've done some formalities just to announce that this 7 is an appropriately advertised executive session of 8 the County Commission for the purpose of receiving 9 legal information and recommendations concerning the 10 Shadek case, and in attendance we have the County 11 Commission, the County Administrator, and two County 12 Attorneys who are representing us on the Shadek case, 13 Mr. Morgan and Ms. Cabanas. MR. MORGAN: Very well done. MAYOR NEUGENT: Duly noted. MS. CABANAS: Now, I assume everyone is familiar with the Shadek ruling that we have. Does anyone need any background on that? COMMISSIONER McCOY: I would suggest you recite it, maybe in just two minutes or so. MS. CABANAS: Okay. It's an inverse condemnation case which stems from the major development moratorium from the 1980s when the North Key Largo species first got listed. The County enacted a major development moratorium. Any property over five acres was on a All Keys Reporting (305) 289-1201/ Fax (305) 289-1642 12 13 14 15 16 17 18 19 20 21 22 23 24 25 3 1 complete freeze, less some very limited exceptions. 2 That was to give the County time to get with Fish & 3 Wildlife and draft a habitat conservation plan. 4 That, between the time the moratoria were in 5 effect and the end of what is the takings period for 6 this case all of the property was essentially bought 7 up by either the state or the federal government; 8 therefore, the HCP never got adopted because at that 9 point there was no need for one. 10 So this property was known as Ocean Forest. It 11 was originally about 560 acres in two parcels. One side was bought by the federal government, one side was bought by the state. We got the portion that was bought by the federal government. That portion of the property was thrown out for statute of limitations because they had bought that earlier than the state parcel. So we are down to 140 acres. And Judge Garcia, after about a five-day trial that we had, ruled in the plaintiffs' favor, agreed with basically their entire theory of the case that they had, in fact, been denied any use whatsoever of the property for about an eight-year period. Based on the ruling that we have now, the unimpaired value of the property is roughly $6 million and the impaired value is 141,000, meaning that All Keys Reporting (305) 289-1201 / Fax (305) 289-1642 18 19 20 21 22 23 24 25 4 1 without the moratorium it would have been worth six 2 million, under the moratorium he believes it was worth 3 141,000. 4 MR. MORGAN: And we did bifurcate it. 5 MS. CABANAS: We did bifurcate. And inverse 6 condemnation cases are one of the few where you can do 7 what's called bifurcate and have a separate trial on 8 liability and then if you are found liable you go into 9 to the second phase and have, we are entitled to a 10 jury trial on damages. So we have had the liability 11 phase of the trial. We were found liable for the 12 eight-year temporary taking period, and now we are 13 proceeding with the damages phase. 14 And as part of that the judge ordered, as 15 standard is to do, ordered mediation between the 16 parties, and mediation is presently scheduled for the 17 20th of this month. And what we're here today for is to see if the County is at all willing to come up with some type of acceptable settlement number based on the ruling we have now and our chances on appeal. Of course there's, we feel that there's some very good issues to appeal, but of course there's never any guarantee that that's going to be successful. But we do have some good issues. This is pretty cutting-edge law, though, and the All Keys Reporting (305) 289-1201/ Fax (305) 289-1642 18 19 20 21 22 23 24 25 5 1 courts are allover the place on these cases. The 2 Supreme Court did take up another inverse condemnation 3 case this term that should be coming up by the end of 4 the year that is an actual moratorium case, and 5 whether or not that'll be favorable to us is yet to be 6 seen. 7 But we're here today to, one, get you to 8 designate a County representative to be present at the 9 mediation who has full settlement authority up to 10 whatever, if any, settlement number you're willing to 11 agree to. 12 MR. MORGAN: I think you need to tell them about 13 why we think Judge Garcia erred and what our issues on 14 appeal would be to give them an idea of the strength 15 of the case so they can factor that into the number. 16 MS. CABANAS: Okay. 17 MR. ROBERTS: Let's also identify, my understanding in talking with Jim Hendrick 1S that we do not have an opportunity to appeal until after the second part of the bifurcated case takes place. MS. CABANAS: Correct. MR. MORGAN: Right. MR. ROBERTS: So that we are going to go through this mediation and trial if it's not settled before we get to the issues Karen's about to discuss, which All Keys Reporting (305) 289-1201 / Fax (305) 289-1642 21 22 23 24 25 6 1 is 2 MS. CABANAS: Yes. 3 MR. ROBERTS: -- the errors we believe Judge 4 Garcia made. 5 MS. CABANAS: The main issues on appeal would be, 6 for one, it's a doctrine referred to as ripeness, 7 which means whether or not your case is ripe for 8 judicial review. And there are two parts to that, one 9 being, it's out of a U.S. Supreme Court case, the 10 first prong of that is that you have to have received 11 a final decision from the local government as to what 12 development would have been allowed on the property, 13 and we don't believe that they, in fact, obtained a 14 final judgment. For one, every denial that they 15 received was at staff level. They never went to the 16 Planning Commission, they never went to the County 17 Commission on any issue, and there is some law, not 18 directly on point, but it's out there, that only the 19 County Commission is authorized to make a final 20 decision on behalf of the County. I mean, you can't just go in to staff and get an opinion and that be binding on you and then go to court. You have to go through your administrative remedies. And that's the second part of ripeness, lS exhaustion of your administrative remedies. And as All Keys Reporting (305) 289-1201/ Fax (305) 289-1642 18 19 20 21 22 23 24 25 7 1 you probably know, we have in the code two of those 2 administrative remedies, beneficial use and vested 3 rights. Beneficial use that was in effect at that 4 time was thrown out by the Third District as an 5 unacceptable remedy. So we're left with the vested 6 rights. 7 They did file, back in about 1982 they filed a 8 vested rights application with the state under area of 9 critical state concern legislation. It's the same 10 statute, in fact, that the Ambrose case has gone 11 under, which Judge Paine found did entitle you to 12 vested rights solely based on the platting of your 13 lot. Now, in this case they did have a platted lot, 14 but Judge Garcia found that it would have been futile 15 for them to go through the vested rights procedures 16 because they did not have a valid claim, he thought. 17 But our position is we think the law supports that regardless of whether -- and there was a staff, there was a memorandum from an Assistant County Attorney at the time opining that she didn't believe that they had a valid claim for vested rights, but under the law that decision should have been made by the County Commission. You know, you get opinions from staff recommendations but you're not bound to those. It's the Commission's call whether or not All Keys Reporting (305) 289-1201 / Fax (305) 289-1642 20 21 22 23 24 25 8 1 that's a valid claim for vested rights. So he thought 2 that it was futile for them to proceed with that, but 3 we don't believe that that's the case so we think that 4 their case was unripe for judicial review. And that's 5 one of our lssues. 6 MR. MORGAN: This lS going to be really a 7 cutting-edge type of decision, because if they're 8 right it means that a person can go to the staff, get 9 turned down by the staff at the planning level, and if 10 they get turned down there appeal without coming 11 before the County Commission whether you decide 12 whether or not you want to grant something. 13 And we presented the evidence of the Big Pine Key 14 situation with the church there. The moratorium was 15 on for Big Pine Key. They appeared before the County 16 Commission, and you gave them some relief. But In 17 this case they never appeared before the County 18 Commission, so you had no opportunity to give them 19 some relief. And Tradewinds. MS. CABANAS: Yeah. Both the Big Pine church and Tradewinds went to the Commission under the moratorium, because they were subject to it, and the Commission adopted a specific exemption for churches and for shopping centers and they were able to build. COMMISSIONER NELSON: Was there ever an attempt All Keys Reporting (305) 289-1201/ Fax (305) 289-1642 18 19 20 21 22 23 24 25 9 1 by the applicant to go to the County Commission that 2 was turned down in any way? 3 MS. CABANAS: No. Their vested rights 4 application was the only thing that they filed, and 5 they twice asked that it be postponed and on the third 6 time they asked that it be indefinitely postponed and 7 they never pursued it. 8 COMMISSIONER NELSON: So that was their request? 9 MS. CABANAS: Yes. 10 MR. MORGAN: I think it was like a setup, doing 11 it that way and getting turned down and saYlng okay, 12 with this turned down let's go sue. 13 COMMISSIONER McCOY: Two questions. One, there's 14 still that void of administrative remedy that's never 15 been exhausted. That is sufficient cause right there 16 to stop it right there because it never even reached 17 us? MR. MORGAN: Right. MS. CABANAS: Right. COMMISSIONER McCOY: It should not be at this level anyway? The second one, are there any other parties to this suit beside us? MS. CABANAS: No. It is -- COMMISSIONER McCOY: Does the state refuse, has All Keys Reporting (305) 289-1201/ Fax (305) 289-1642 18 19 20 21 22 23 24 25 10 1 the state asked to be a party? 2 MS. CABANAS: No. Because their allegation is 3 that the only regulation that prevented them from 4 building was the County's moratorium. 5 COMMISSIONER McCOY: Of course maybe it's kind of 6 silly to say, but the County's moratorium was 7 predicated on the state's mandates. 8 MS. CABANAS: Right. 9 COMMISSIONER McCOY: So they are not an innocent 10 party to this whole thing, and it looks like they 11 should at least be invited to be a party to the suit. 12 COMMISSIONER WILLIAMS: Wouldn't you just like to 13 spend their money? My question -- 14 MR. MORGAN: They got us into this, and where are 15 they when it comes time to pay the bill? 16 COMMISSIONER WILLIAMS: I do know courts, one of 17 the things in my brief experience with courts is that they don't like to trod upon the authority of other branches of government. This would ln essence, were they to uphold the judge's finding, be the loss of a tremendous amount of power for the county commissions, correct? MR. MORGAN: Yeah. It's a separation of powers problem, because only the County Commission can make the law. The planning level cannot make law. Law is All Keys Reporting (305) 289-1201/ Fax (305) 289-1642 20 21 22 23 24 25 11 1 only what the County Commission says that it is. 2 COMMISSIONER WILLIAMS: So my point here is sort 3 of the fact that the problem you're pointing out is in 4 essence one that I've rarely heard of a higher court 5 willing to do. When I think of the amicus curiae we 6 would generate from every county and municipal 7 commission in the land should this look like it's 8 about to be overturned and any staff decision become 9 law or legally questionable, that's about as close to 10 a really, really good type case as you can hope for. 11 Now, the issue becomes, since there seems a 12 likelihood that we would win on that alone, what does 13 winning mean? Does winning mean remanding back and 14 they look at that anew, is it over and we win, and 15 what are the, you know, options from there? That's 16 the first of my questions. I've got a couple. 17 MS. CABANAS: On the ripeness issue it is 18 possible that they could remand because it's a factual 19 case-by-case analysis. So it's conceivable that the court could say, well, you know, we need some more factual findings regarding what exactly was their claim to vested rights, although this is all within the record. Regardless of whether it's in the record they couldn't make a factual determination on that. They'd have to send it back. But they could simply All Keys Reporting (305) 289-1201 / Fax (305) 289-1642 12 1 say you didn't exhaust, it's unripe, dismissed. 2 COMMISSIONER WILLIAMS: So the possibilities, 3 then, are that they will either squash our authority, 4 which is extremely unlikely, or that they will simply 5 overturn this decision and protect us, or that they 6 will choose one portion of it and remand it for 7 reconsideration; is that correct? 8 MS. CABANAS: Yes. 9 MR. MORGAN: And remember, this is a moratorium 10 situation, not a non-moratorium situation. So their 11 argument is that it would have been futile because of 12 the moratorium. 13 MS. CABANAS: Yeah. There is a futility 14 exception to the exhaustion of administrative 15 remedies, but there is no futility exception to the 16 final decision requirement. 17 MR. MORGAN: That's what we thought was so wrong 18 about the order. Because the order, if you read the 19 order, it's a very, very strong property rights order, 20 almost accepting everything that planning, you know, 21 puts forward. 22 COMMISSIONER WILLIAMS: Right. Which I really 23 think is another side that is deeply vulnerable at a 24 higher court level. 25 The second question: Talk to me a little bit All Keys Reporting (305) 289-1201/ Fax (305) 289-1642 23 24 25 13 1 about worst case scenario. 2 MR. MORGAN: Hrnrn-hrnrn. 3 COMMISSIONER WILLIAMS: You've talked about the 4 value and you've talked about the six million and the 5 impacted value, so to speak. 6 MS. CABANAS: Right. 7 COMMISSIONER WILLIAMS: We're talking about an 8 eight-year period. And pardon me for not knowing more 9 about this, you all. But the vulnerability of the 10 County, obviously always one of the big pushes towards 11 settlement is if you think you could do worse in 12 court. Frankly, given the judge's determinations and 13 the manner in which they were expressed, I'm not sure 14 we could possibly do worse. 15 MR. MORGAN: In terms of dollars it could be 16 worse, and that's what you need to consider. 17 MAYOR NEUGENT: And if you go before a jury trial 18 you always run the risk of doing worse; is that a fair 19 statement? 20 MR. MORGAN: Absolutely. 21 COMMISSIONER WILLIAMS: The appeal would be that, 22 or you're talking about -- MS. CABANAS: The appeal would be post-final judgment as to damages. COMMISSIONER WILLIAMS: Right. And the appeal All Keys Reporting (305) 289-1201/ Fax (305) 289-1642 18 19 20 21 22 23 24 25 14 1 would be a Jury trial? 2 MS. CABANAS: No, no. Just to the Third District 3 three-judge panel. 4 COMMISSIONER WILLIAMS: And that's kind of my 5 point here. I will tell you that I don't think that's 6 the worry, because I think there's a crucial weakness 7 in what he's done that any court would be very nervous 8 about advocating, i.e., taking on authority. What 9 happens in his court is going to happen, and his 10 direction will be firmly in the direction of the 11 plaintiffs. I think they will, it will be maximum 12 damages that will be awarded under him in all 13 likelihood, but I think there's close to a sure shot 14 of overturning. 15 MS. CABANAS: Yeah. He's not left a lot of 16 wiggle room, for instance, for a jury to corne in and 17 say, okay, yes, the plaintiffs won, but we give them one dollar. COMMISSIONER WILLIAMS: Right. MS. CABANAS: Because his order has already found the impaired and unimpaired value. So the only question, really, for us to litigate at damages lS, well, what is the proper test based on those values? And the courts are allover on that test. What they're proposing, what the plaintiffs' All Keys Reporting (305) 289-1201 / Fax (305) 289-1642 20 21 22 23 24 25 15 1 proposal is, and this is our worst case scenario, 2 based on what their position is, that you take the 3 difference in the impaired and unimpaired value, which 4 is the 5.8 million, and you apply a rate of return of 5 12 to 15 percent per year which compensates them for 6 their loss of investment on the economic use of their 7 property for each year. So with an annual rate of 15 8 percent, which is the maximum that they're asking for, 9 that's 14.2 million. 10 MAYOR NEUGENT: That'll bankrupt us. 11 MS. CABANAS: Excluding prejudgment interest and 12 attorneys' fees. 13 MAYOR NEUGENT: Karen, you said that there was a 14 case that is before the Supreme Court at this point in 15 time that may have some 16 MS. CABANAS: Yeah. They've taken up a 17 moratorium inverse condemnation case. 18 MAYOR NEUGENT: Now, that's, I see that as a good 19 thing and a bad thing. MS. CABANAS: It could be good, it could be bad. MAYOR NEUGENT: And certainly if the ruling was in favor of the plaintiff that would not be good for us and puts us probably in a worse situation. MR. MORGAN: But you meet again after that. MAYOR NEUGENT: Will that case come up before we All Keys Reporting (305) 289-1201/ Fax (305) 289-1642 16 1 arrive at a conclusion here? 2 MS. CABANAS: It should. It should be out around 3 the end of the year, from what I've heard. 4 MAYOR NEUGENT: Have these people given us any 5 indication that they may be willing to settle out of 6 court? And can or would we even do that? 7 MS. CABANAS: Well, they did prior to the 8 liability phase. You know, of course it's a court 9 ordered mediation, so, but I think they would be 10 corning to the table in good faith. You know, what 11 they're willing to take 12 MAYOR NEUGENT: So the judge's ruling would 13 stand. Would that open up -- 14 MS. CABANAS: Yeah. They certainly are at a 15 greater advantage at mediation having that ruling. 16 MAYOR NEUGENT: Does that put any present cases, 17 future cases -- 18 MS. CABANAS: No. None that we have going on 19 now. This was the oldest case that I have going on 20 with the land use. 21 MAYOR NEUGENT: Of which Jim has repeatedly said 22 that he was most concerned about. 23 MS. CABANAS: Yes. 24 MR. MORGAN: We did win half the case on the 25 statute of limitations. That may set the precedent All Keys Reporting (305) 289-1201/ Fax (305) 289-1642 20 21 22 23 24 25 17 1 for other cases that may, you know, pop up on the 2 statute of limitations. 3 MS. CABANAS: We won on all of the due process 4 claims in federal court, and then the federal court 5 kicked this back to state court on inverse 6 condemnation. That's why it's been sitting around for 7 so long. 8 COMMISSIONER NELSON: Karen, this lS the second 9 time that Judge Garcia has remanded us to mediation. 10 If we go forward with this, based on how many cases 11 are potentially out there, and step back and do a 12 settlement of this, doesn't that set a tremendous 13 precedent for other people to corne to the plate and 14 say we have the same circumstances? 15 MS. CABANAS: On this case, no. There's, there's 16 no one else out there that could even bring a case at 17 this point based on these moratoriums. Their statute 18 of limitations would be long expired. 19 And this was, the problem with this case and why it was such a bad case from the beginning is that this all happened in the mid-'80s and the U.S. Supreme Court didn't even recognize temporary takings until '85, so when we enacted it at the time nobody thought twice about it. You know, you would never corne In today and say, and do a blanket moratorium on All Keys Reporting (305) 289-1201/ Fax (305) 289-1642 18 1 properties over a certain size. 2 MR. MORGAN: We need to explain that -- this'll 3 really get your blood boiling -- the fact that they 4 sold the property for X number of dollars and now what 5 this is for is for the period of time over and above 6 what they've already sold the property for. 7 MS. CABANAS: Yeah. When they sold the property 8 to the state, in '89, '90 they sold it to the state, 9 they sold it based on an appraisal. They did it 10 pursuant to the statutes, which require two 11 appraisals, and because it was a state purchase for 12 conservation purposes it was appraised at market 13 value, disregarding the regulations. So when they 14 bought, when the state bought it they bought it for 15 5.9 million. 16 You know, we argued to Judge Garcia, well, 17 they've already been compensated. They've had what ln 18 effect is a post-deprivation remedy like you would 19 have in a due process hearing where yes, they were 20 denied use for that period, but because the state carne 21 along and purchased it for full value there's been no 22 taking. Now, he, of course, didn't go for that 23 argument. 24 But there is some, there's some case law out 25 there, not directly on point, there's an eminent All Keys Reporting (305) 289-1201 / Fax (305) 289-1642 19 1 domain case where some property owners voluntarily 2 sold to DOT, the project that was supposed to happen 3 never happened, they carne back to DOT and wanted more 4 money and wanted their land back, and the Florida 5 Supreme Court said no, once you sell your property to 6 the state you've given away all interest you have, 7 including the right to bring this claim. And I 8 thought that case was very on point, but Judge Garcia 9 did not. So that's our double-compensation argument, 10 which is another one of our major points. 11 MAYOR NEUGENT: Karen, would you try to glve us 12 some kind of idea what, if we go through this appeals 13 process what the cost will be? If we take it all the 14 way to the Supreme Court? 15 MS. CABANAS: Well, let's see. I'm not sure what 16 our, what our fees are up to this point. I know that 17 the other side's fees at this point are about 300,000. 18 And you're still looking at doing the jury trial on 19 damages and all appellate work. And so that could 20 potentially double, I would think. 21 MR. MORGAN: It's really insignificant compared 22 to the amount of money you're talking about. You 23 know, if you spend another 150,000 from now through 24 the Supreme Court you're looking at a verdict that 25 could be somewhere between five million and fourteen All Keys Reporting (305) 289-1201/ Fax (305) 289-1642 20 1 million. So it's really insignificant compared to 2 what you're, you know, trying to avoid. If they would 3 accept an amount of money that you'd be willing to 4 offer to them, then you, you know, mitigate your 5 exposure. 6 Commissioners, you know, COMMISSIONER NELSON: 7 this is just the tip of the iceberg. Lloyd Good has 8 already filed suit. I was told he was. 9 MS. CABANAS: He did. I don't think his case has 10 very much merit based on the court opinion that came 11 out on it about a year or two ago. They already said 12 that he had no investment-backed expectations when he 13 even bought the property, so I expect to be successful 14 on that case. 15 COMMISSIONER NELSON: But we will have to defend 16 it. 17 I think it's a far cry from this MS. CABANAS: 18 one. 19 Jim concurs with Karen. MAYOR NEUGENT: Yeah. 20 Or Karen concurs with Jim, whichever. 21 MR. MORGAN: It's a shame when you have to, if 22 this case wasn't, if there wasn't so much money 23 involved in this case you'd want these issues heard 24 and disposed of. 25 COMMISSIONER WILLIAMS: Yeah. I mean, this 1S so All Keys Reporting (305) 289-1201/ Fax (305) 289-1642 21 1 clearly something that should not be allowed to stand. 2 MR. ROBERTS: I agree with you. But I guess the 3 question for these two folks is to give us some type 4 of indication on how you feel our chances on appeal 5 are. Because obviously we're ordered into mediation, 6 and how we approach that mediation may be predicated 7 upon that answer. 8 MR. MORGAN: Right. And you should know, too, 9 that, I mean, all cases nowadays go to mediation. 10 It's nothing unusual for us to be sent to mediation. 11 COMMISSIONER McCOY: There's a second part to 12 this, too. Should we not prevail there has to be some 13 consideration that the state will intervene in one 14 manner or another, whether through the legislative 15 process or we just sue the state. But there should be 16 some, some recourse in that direction. 17 This is an area of critical state concern. This 18 lS mandated. This has been forced upon us. We have 19 done what the state has asked us to do. We did it. 20 The courts have found that we were remiss in doing it. 21 And if we were remiss in doing it, they were remlSS in 22 asking us to do it. That's the down side if we fail 23 to prevail. If we go all the way to the Supreme Court 24 and they have a ruling that's comparable to this, it 25 might settle the matter right there. All Keys Reporting (305) 289-1201/ Fax (305) 289-1642 22 1 So I'm not sure what we're going to do in 2 mediation unless, other than because we've been told 3 by the court to do it, so I guess we have to go 4 through the process of a mediation. 5 I'm with Sonny there. COMMISSIONER WILLIAMS: 6 Your point is that this is kind of a process that we 7 all enter into in good faith, but in all likelihood we 8 really do have to settle this elsewhere. Some of the 9 reasons you brought up, there may not be things 10 specifically out there like this but there are many 11 things out there like this. Whether they have grounds 12 or not, somebody getting millions of dollars when they 13 shouldn't makes it a happier thing for other people to 14 sue. 15 So what you need from us is a number, and you 16 need a representative. Are you looking for a staff 17 representative or a Commission representative? 18 MS. CABANAS: It doesn't matter. Whatever the 19 Commission would like to do. 20 COMMISSIONER WILLIAMS: What would you recommend 21 as a figure? 22 MS. CABANAS: Well, your worst case you're 23 looking at, with their 15 percent rate you've got 14.2 24 million. With prejudgment interest 25 What? Would that double that? All Keys Reporting (305) 289-1201 / Fax (305) 289-1642 23 1 MR. MORGAN: You're talking about 10 percent a 2 year up to this year and then 11 percent starting in 3 January. That's, on 14 million it's 1.4 million a 4 year, for how many years? 5 COMMISSIONER WILLIAMS: And, you all, if you're 6 looking for us to throw out a number for you, let me 7 suggest that we not. You are our attorneys in this. 8 You are aware of what is to come and what is past in a 9 way that we cannot be. Tell us what you are thinking. 10 Is there a reasonable thing for us to put on the 11 table, given the circumstances and given the fact that 12 there are reasons to see this go its way and to the 13 upper court if we need to? 14 MR. MORGAN: What have they indicated to you that 15 they would not take? If we know the figure that they 16 wouldn't take, then you will know that that'll give 17 you a good guideline as to whether you should even 18 try. 19 MS. CABANAS: Well, prior to trial we filed an 20 offer of judgment which is more to, for the purpose of 21 if we were successful on liability that would entitle 22 us to attorneys' fees. So as an offer of judgment we 23 offered them about 140,000, which they, of course, 24 rejected. I believe we had some brief discussions 25 with their attorney and he was discussing that, well, All Keys Reporting (305) 289-1201/ Fax (305) 289-1642 24 1 you know, of course our offer wasn't really a 2 reasonable offer to them because they were looking at 3 at least a million or two that they would have been 4 willing to take at that time. 5 MAYOR NEUGENT: Well, obviously if they sold the 6 property for $6 million back then I guess these folks 7 have some pretty deep pockets. 8 MS. CABANAS: Yeah. Between the two properties 9 that they sold and what the expenses they listed were, 10 they had already netted about seven million on the 11 whole thing. 12 COMMISSIONER WILLIAMS: So they mentioned one or 13 two. Have they incurred expenses since then that they 14 would like returned to them? 15 MS. CABANAS: About 300,000, their fees have been 16 up to this point. 17 COMMISSIONER NELSON: What would it cost -- the 18 Mayor asked before about how much would it cost to go 19 through the appeal, through its entirety and 20 attorneys' fees for us, what dollar amount. Would 21 that be something similar to 300,000? 22 MS. CABANAS: If we exhausted all of our appeals, 23 probably somewhere around there. But assuming we 24 exhaust all our appeals and we're unsuccessful and 25 they are completely successful, with prejudgment All Keys Reporting (305) 289-1201/ Fax (305) 289-1642 25 1 interest and their fees there is a potential judgment 2 of anywhere from 14 to 28, 29 million. 3 I understand that. COMMISSIONER NELSON: But in 4 the same token, we could also enjoin the state in 5 that. The other ramification here is that if, in 6 fact, we do settle with them without any costs it 7 opens the door for other people to walk through. And 8 that's what my concern is more than anything else, is 9 that crack in the door. For me, and I don't know, the 10 other Commissioners may have a totally different take 11 on this, but with my background on something like 12 this, it's an easy call for me. You know, we have to 13 go to the mat with them. I mean 14 MAYOR NEUGENT: Well, my interpretation of what 15 Karen said was that although there may be some cases 16 out there, we don't recognize any that would get by 17 the statute of limitations in some case and -- 18 MS. CABANAS: He's granted us rehearing on the 19 statute of limitations. What his order found was, 20 they were arguing both a categorical and an as-applied 21 takings claim, and he found us liable for both. And 22 from what I've talked to Jim about, looking at the 23 cases, you can't find both. You have to find one or 24 the other. And by finding their categorical claim, 25 that's a separate limitations period. Because you're All Keys Reporting (305) 289-1201/ Fax (305) 289-1642 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 I 26 attacking the regulation on its face, your limitations period begins to run on the date of enactment. So on the categorical claim their limitations period should have expired. And he's going to rehear that in November. But even if he were to grant that, that's only to the categorical claim. We still have an as-applied claim, which is the same damages. COMMISSIONER WILLIAMS: Well, I certainly recognize what Murray is saying. I certainly feel a lot of that. I think the good faith point of court mediation, that going in there without being willing to do anything to mediate is frowned upon very heavily, and I think it would come back to bite us badly, at least at this level in court. We have a figure that we believe they were willing to consider settling before they incurred the $300,000. Now, if we were to commit funds today they would almost assuredly be, I would guess, infrastructure funds. MAYOR NEUGENT: I mean, being creative here, I was thinking that maybe we could give them No Name Key and maybe they'd settle for that. COMMISSIONER WILLIAMS: He's teasing, for the record. MR. ROBERTS: Keep in mind, this will become a All Keys Reporting (305) 289-1201/ Fax (305) 289-1642 27 1 public document. 2 COMMISSIONER WILLIAMS: Which lS why I added that 3 he was teasing. 4 COMMISSIONER SPEHAR: So are you leaning towards 5 two million? 6 COMMISSIONER WILLIAMS: I'm actually movlng 7 towards two million, maybe even two and a squiggle, 8 like 2.2, 2.25, because of that additional expense. 9 There's a lot that bothers me about settling 10 things. There's a lot to feel good about with getting 11 this puppy behind us. Would two million be a number 12 you were comfortable with? Would you be more 13 comfortable were we to be higher or lower than that? 14 Will you answer at least that question on the 15 financing front? 16 MR. MORGAN: I'd be comfortable going In with 2.2 17 at this point. If they're, if they look like they're 18 corning down to a number that would fall within the 19 range -- there's nothing final about mediation. 20 MS. CABANAS: Yes. The mediation order would 21 still have to corne to you for final approval. 22 MR. MORGAN: So if they get down to, if we think 23 it's reachable by the help of the state we can say to 24 them at that point we can settle in principle for that 25 figure but we would need to go find, you know, the All Keys Reporting (305) 289-1201/ Fax (305) 289-1642 21 22 23 24 25 28 1 additional funds and have a contribution from the 2 state. 3 MAYOR NEUGENT: Hugh, should we not be sitting 4 and talking with whoever makes calls like this with 5 the state? Have we done that at this point in time? 6 MR. MORGAN: No. We haven't involved the state 7 at all. 8 COMMISSIONER NELSON: Hugh, if you walk in there, 9 basically in a mediation, and it comes down to going 10 across the table and saying, well, what will you 11 settle for and you come up and you say 2.2 million and 12 they take it, I'll feel real uncomfortable with the 13 precedent that's going to set because, you know, as 14 Ms. Williams mentioned a few minutes ago, whether or 15 not they would be successful in court, it's going to 16 bring up wiggle worms for future suits. 17 MR. MORGAN: Well, you're going to have more 18 wiggle worms if you end up with a $30 million verdict. 19 MAYOR NEUGENT: Absolutely. And the other thing 20 that I will tell you right now -- COMMISSIONER SPEHAR: Do you have to have a maximum that we would say that we would not go over this point? COMMISSIONER McCOY: First of all, if the courts sustained some kind of a number like that we couldn't All Keys Reporting (305) 289-1201 ! Fax (305) 289-1642 18 19 20 21 22 23 24 25 29 1 do it, anyway. We'd have to go to the state. 2 MR. MORGAN: Right. 3 COMMISSIONER McCOY: And then we'd say the state 4 is obligated for the whole thing. So we'd go for the 5 whole thing. So if we lose big time, we haven't lost. 6 MR. MORGAN: It's possible. It's a little 7 reminiscent -- you weren't Commissioners when this 8 happened, but when that one area of critical state 9 concern first came into being I was a lobbyist for the 10 County, and we went to the state for a number of years 11 for money to help us with areas of critical state 12 concern. In the first year we successfully lobbied 13 $10 million. And, of course, that helped us out. 14 COMMISSIONER McCOY: But that was 25 years ago. 15 MR. MORGAN: But-- 16 MAYOR NEUGENT: We're sitting around the table 17 with some, with all lay people other than you and Karen, making some pretty glib decisions here when I've got to think that there are some state attorneys or some people that could be giving us a little more guidance. I'm telling you as a business person, if I'm going into mediation with a judge's ruling saying, with the potential of getting 14 to 30 million dollars out of you, $2 million isn't going to sway me or get All Keys Reporting (305) 289-1201/ Fax (305) 289-1642 30 1 me to the table. I would, it's strictly a supposition 2 on my part, but I'm not even starting to listen to you 3 until someone says five million bucks. 4 MR. MORGAN: Possibly. But we won't know that, I 5 think, until we start negotiating. But if they lose 6 on appeal, they've lost a tremendous amount. 7 MAYOR NEUGENT: Well, certainly. And it all 8 comes, we're talking about rolling those same dice 9 that these guys would be rolling. But, I mean, 10 they've already got a judge's ruling in their favor, 11 which would make me feel pretty good. I don't 12 disagree. 13 And to go in with $2 million, offering 2, $2.5 14 million is something that I think that we should 15 consider, but I certainly also think that we might as 16 soon as possible start discussing things with some 17 state folks here. 18 MR. MORGAN: Do you want your lobbyist to do 19 this, or do you want us to do it? 20 MAYOR NEUGENT: You know, I'm not, I don't want 21 to act unilaterally here. I'm asking the Commission 22 to join in here. But I -- 23 COMMISSIONER McCOY: Okay. If you want me to 24 join in, I think we should just go to the secretary of 25 the DCA. All Keys Reporting (305) 289-1201/ Fax (305) 289-1642 31 1 COMMISSIONER WILLIAMS: He does most of the land 2 stuff. 3 COMMISSIONER McCOY: This is a land stuff? 4 COMMISSIONER WILLIAMS: Not land use, but state 5 land. They bought the land. 6 COMMISSIONER NELSON: You know, this is a 7 make-or-break situation. If we lose the appeal and 8 they come back with a $14 million judgment against us 9 it's going to involve the state, anyway, and enjoin 10 the state in that suit, and also the payment. On the 11 other hand, if we pay them $2.2 million, which is what 12 the number is on the table now, that issue's over and 13 it just begins the process of everybody else, so. 14 MAYOR NEUGENT: Well, I still think that there's 15 some obligation on the state. I mean, if we're saying 16 this right now, then we ought to be saying it whether 17 it's $2 million or $30 million, that the state has 18 some involvement here. 19 COMMISSIONER WILLIAMS: I'm sure we do nothing 20 without having a meeting in Tallahassee with our 21 attorneys and the state lands trust. 22 MR. MORGAN: I wouldn't do that before mediation, 23 until we get their figure down. If they get word that 24 we're going to the state, the figure's going up. So 25 any ideas about the state should remain totally here. All Keys Reporting (305) 289-1201/ Fax (305) 289-1642 18 19 20 21 22 23 24 25 32 1 Don't discuss it with anyone, even your dog. Because 2 if they get wind of this, you know, their figure is 3 going to increase. 4 I think our next step 1S to take our 2.2, if 5 that's what you authorize, into mediation. We're 6 going to start low, way below that figure. They're 7 going to start high. We need to find out by the 8 process of getting closer and closer together where 9 they are. If it looks like they're not going to corne 10 off the 14 million or 10 million, then we shouldn't 11 show our hand on 2.2. 12 So I think we need to get through mediation right 13 now before we do anything and just see, try to get an 14 idea of where they are. Probably one of you or more 15 than one of you could be at the mediation so that you 16 can get the flavor of what's going on. 17 MAYOR NEUGENT: Can you define, describe, the flavor of mediation? MR. MORGAN: A mediation is, you'll have a mediator who has no -- a mediation, of course, is not binding. MS. CABANAS: And we have Dave Kirwan, by the way. MR. MORGAN: Okay. Dave Kirwan would be the mediator. All Keys Reporting (305) 289-1201/ Fax (305) 289-1642 33 1 And what the mediator tries to do -- it's nothing 2 more than a settlement conference. The advantage that 3 a mediator has over an arbitrator or a judge is an 4 arbitrator or a judge cannot talk to the parties 5 outside of the presence of the other parties, where a 6 mediator can because a mediator has no binding 7 authority on anybody. A mediator cannot order anybody 8 to do anything. 9 So the mediator will sit down with everyone, each 10 side will tell their story, how much they think 11 they're entitled to or how much they're willing to pay 12 from the outset or why they think they have a good 13 case. Then what he'll do is break up with each side, 14 take them into a separate room and discuss the pros 15 and cons of their case with them and do it with the 16 other side, try to get a figure out of one side, get a 17 figure out of the other, and the mediator tries their 18 best to bring the two parties together. 19 COMMISSIONER WILLIAMS: There is one thing that's 20 also crossing my mind. There's somebody I'm thinking 21 of, you all, that does land negotiation pretty 22 constantly and is very cornmon-sensible but this isn't 23 his job, and that's Mark. Mark Rush. He's very, very 24 good. I don't know that he would be willing to do it. 25 It is not the job of the land authority. I will All Keys Reporting (305) 289-1201/ Fax (305) 289-1642 17 18 19 20 21 22 23 24 25 34 1 assume the land authority had nothing to do with this 2 when this began? 3 MS. CABANAS: No. They were a gleam in the eye. 4 MAYOR NEUGENT: Karen, were there not -- I read 5 the case, didn't have anything, forgot we were doing 6 this and didn't even debrief myself on it but were 7 there not Planning Commissioners and County 8 Commissioners mentioned in the case? 9 MS. CABANAS: I don't believe there were any 10 County Commissioners mentioned at all. The only -- 11 they had staff dealings with -- 12 MAYOR NEUGENT: The County Attorney? 13 MS. CABANAS: They did meet with the County 14 Attorney at the time, who, from what their witnesses 15 said, told them that there was nothing they could do 16 with the property at the time. Which just further bolsters our case of, well, the County Attorney is not the County. The Commission is the only body that has authority to act on behalf of the County. There was the Assistant County Attorney memo In the file about their vested rights chances. But no, they never, they never went before any board on any application for anything. MAYOR NEUGENT: Well, you have said some things that make me feel a little better than I did after All Keys Reporting (305) 289-1201/ Fax (305) 289-1642 14 15 16 17 18 19 20 21 22 23 24 25 35 1 reading the case, because there was this real empty 2 feeling in my stomach after -- 3 MS. CABANAS: Mine, too. 4 MAYOR NEUGENT: -- reading it. And so, you know, 5 I have some concerns over the potential, you know, 6 financial implications that are involved in it and 7 I -- 8 COMMISSIONER McCOY: Part of the consideration of 9 these things is what can the entity that's being sued 10 reasonably absorb? And the County Commission, I 11 think, could go into a mediation with a figure of $2 12 million as being a reasonable number that the County 13 can say we can afford to pay this and we can't afford to pay anything more. If you go into that thing and, understanding the size of this county and the budgets we have and what we have available to expend, we can easily go in there and it shows the reasonable good faith that's going to be necessary and the further litigation that goes on beyond this, that'll take us to the end of the year when the Supreme Court will have a ruling on this thing, and if it's comparable, that's fine. Even then, we still stand, if it's an exorbitant amount of money we just go to the state. We don't pay it. We can't pay it. We're an area of critical state All Keys Reporting (305) 289-12011 Fax (305) 289-1642 21 22 23 24 25 36 1 concern. This is an obligation of the state. Period. 2 They have the deep pockets. The County does not have 3 the deep pockets. 4 And that would be my recommendation, because it's 5 coming on to five o'clock and I'd like to get these 6 things 7 MR. ROBERTS: And I would also suggest in that 8 regard, and I've been to mediations with Hugh and I 9 know he's pretty tough in mediation, handles it pretty 10 well, but if we're going to talk at the $2 million 11 level I'd like to see if there's some possibility of 12 structuring the payments in such a way that it would 13 impact over a period of time on the County budget, 14 whatever the source of funding. And maybe they won't 15 accept that, but we will at least include that. 16 MR. MORGAN: Hmm-hmm. 17 COMMISSIONER McCOY: If they accept the two 18 million they'll accept it on a payment scale. I don't 19 think that's going to be the make or break. I think 20 that we should stand there at that number and say we'll go in there, this is sufficient for the size of the county, repeat myself, but it'll show sufficient faith in going into mediation. Beyond that point I think that we should let the dice roll and whatever happens will be determined, who All Keys Reporting (305) 289-1201/ Fax (305) 289-1642 13 14 15 16 17 18 19 20 21 22 23 24 25 37 1 pays for it, whether the state pays for it, which I 2 think is ultimately the person that has that 3 obligation, and if not at least it's something that 4 you say, well, maybe we could structure this thing to 5 pay $500,000 a year over a four-year period or 6 whatever. 7 But are you making a recommendation that the, that our representative at this thing be Hugh Morgan? MR. ROBERTS: No. I think that -- MR. MORGAN: No. I'd be the attorney there for the County, but we need a representative of the 8 9 10 11 12 County. The rules require that you have a representative from the party there. MAYOR NEUGENT: Hugh, you're saYlng that this is nonbinding. What does nonbinding mean? That you go in there, you negotiate something, you come out and you come back to the Commission? MR. MORGAN: Well, it means that the mediator cannot bind you, which means he can't order you to take a settlement. COMMISSIONER McCOY: The judge can? MR. MORGAN: No. The judge can't order you to take a settlement. MAYOR NEUGENT: But let's say we walk out and we say, okay, we're going to pay you $2 million. Does it All Keys Reporting (305) 289-1201/ Fax (305) 289-1642 18 19 20 21 22 23 24 25 38 1 then corne back to the County Commission to approve us 2 really paying the $2 million? 3 MS. CABANAS: I don't believe it would have to 4 corne back to you, because you've already approved it 5 here. 6 COMMISSIONER NELSON: Does that $2 million 7 include attorneys' fees? 8 MR. MORGAN: It includes everything. 9 MR. ROBERTS: Keep in mind something, okay? What 10 you're doing, just because I've been involved in some 11 mediations, is you're giving whoever your 12 representative lS the authority to settle this thing. 13 MR. MORGAN: Up to that figure. 14 MR. ROBERTS: Up to that figure. And it may 15 ultimately have to corne back to you in a public 16 meeting to vote the dollars. 17 MR. MORGAN: Right. MR. ROBERTS: But if you walk into that public meeting and don't vote the dollars, you've got one rather upset judge. MAYOR NEUGENT: Okay. So essentially it lS binding. MR. MORGAN: That's right. The mediator can't bind you, but if you reach an agreement that day, if you reach an agreement and sign an agreement, that All Keys Reporting (305) 289-1201/ Fax (305) 289-1642 19 20 21 22 23 24 25 39 1 agreement is enforceable. Even if you didn't vote it 2 at a County Commission, they could take it to the 3 judge and he can enter an order ordering you to pay 4 it. 5 MAYOR NEUGENT: Okay. 6 MR. MORGAN: But yes. The agreement itself, if 7 you reach one, is enforceable. 8 COMMISSIONER NELSON: As long as you go In there, 9 though, with the thought that it's not going to be a 10 one-time payment this year out of this infrastructure, 11 that it will be spread out over three or four years so 12 it won't impact us so much this year. Because I'm 13 going to tell you right now, $2 million out of our 14 infrastructure in this next budget cycle is going to 15 create a lot of problems. 16 MS. CABANAS: No. I think they would understand 17 that it can't come right out of the infrastructure. 18 MAYOR NEUGENT: I would suggest that it ought to be out to 2004, from the standpoint that's when the jail's paid off and we do have some infrastructure money that's not pledged at that point. COMMISSIONER WILLIAMS: Well, we would probably be doing some dancing either way. COMMISSIONER McCOY: It sounds like we're just about there, except we haven't established who's going All Keys Reporting (305) 289-1201/ Fax (305) 289-1642 13 14 15 16 17 18 19 20 21 22 23 24 25 40 1 to act as our representative. 2 MAYOR NEUGENT: Well, first of all let's do the 3 dollar amount that we agree upon, because there were 4 two or three numbers talked about, 2 million, 2.2, and 5 2.5, that I recall. 6 MR. MORGAN: If it was 2.2 we can come back to 7 you, we could say to them, you know, I think I can get 8 authority for 2.2. 9 MS. CABANAS: Yeah. If we get something that's 10 close, slightly over, then it would, we could bring it 11 to you for -- 12 MR. ROBERTS: Keep in mind, the mediator may say at the end of this, you're at two and a half million dollars, will you take this back to the County Commission to see if they will approve two and a half million. So you may see a different number than what you are approving here today. It will not be a committed number. It will be up to you. MR. MORGAN: What we could say to them is that we could recommend -- COMMISSIONER McCOY: Your credit card 1S limited to $2 million. MR. MORGAN: It's a debit card. COMMISSIONER SPEHAR: I think we should send Mr. Roberts. All Keys Reporting (305) 289-1201 ! Fax (305) 289-1642 10 11 12 13 14 15 16 17 18 19 41 1 COMMISSIONER WILLIAMS: Second. 2 MR. ROBERTS: What was the date? 3 MS. CABANAS: The 20th. 4 MR. ROBERTS: Of this month? 5 MAYOR NEUGENT: I would like to personally 6 request to the Commission that since this is my watch, 7 albeit all of our watch, but me being as Mayor, I'd 8 like to be there. 9 COMMISSIONER SPEHAR: You can't do that. That's a Commission meeting. MR. ROBERTS: Right. A Commission meeting In Marathon. MR. MORGAN: We can reschedule it. MS. CABANAS: We can try to reschedule it. MR. ROBERTS: If the Commission will promise not to speak past noon on the 20th we could probably COMMISSIONER McCOY: I'd vote for that. COMMISSIONER WILLIAMS: Done by noon. COMMISSIONER SPEHAR: That means no add-ons. No 20 add-ons on Wednesday, which carries over to Thursday. 21 (The proceedings were concluded at approximately 22 5:04 p.m.) 23 24 25 All Keys Reporting (305) 289-1201/ Fax (305) 289-1642 10/10/01 20:14 FAX 20 21 22 23 24 25 1 ~~R~~fl~a~E 2 STATE OF FLORIDA 3 COUNTY OF MONROE 4 I, Susan L. McTaggart, Court Reporter and 5 Notary Public, State of Florida at Large, do hereby 6 certify that I was authorized to and did report by 7 etenotype the proceedings in the above-entitled B matter, and that the transcript is a true record of 9 said proceedings. 10 Dated this 9th day of October 2001. 11 ~Ol 42 12 ~l44N1 ::t. l1Y)c. rr;~ Susan L. McTaggart, C Reporter 13 14 15 W~~lii:', SIIIaIl L McTaggon i.l I' MY COMMISSION # cC7mlO ~s . :u. ~ AuaUI' '0. 2002 .q,.' IOIaOTHlU1l!OYFAIlIIISIJWQ./HC 16 17 16 19 All Keye Reporting (305)289-1201 / Fax (305)289-1642