Res No 140-13-13958ka
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RESOLUTION NO. 140-13-13958
d..
A Resolution authorizing the City Attorney to file a voluntary dismissal of
the law firms of Bryant Miller Olive, P.A., and Adorno & Yoss, LLP from
the case of City of South Miami v. Luis R. Figueredo, et al. (Case No.: 10-
46712 CA 10).
WHEREAS, the City borrowed money ( "the Borrowing ") through the issuance of tax
exempt bonds by the Florida Municipal Loan Counsel ( "FMLC "); and
WHEREAS, the Borrowing was required by the federal tax code to be used for limited
purposes in order to maintain the tax exempt status of the bonds; and
WHEREAS, the City did not use the funds as required to maintain the tax exempt status
of the bonds resulting in a substantial financial liability to the City; and
WHEREAS, the Securities and Exchange Commission ( "SEC ") commenced an
investigation into the matter; and
WHEREAS, the City's outside counsel, Warren R. Trazenfeld, P.A., filed suit against
the City's prior city attorney, Luis Figueredo, as well as the law firms of Bryant Miller Olive,
P.A., ( "BMO ") and Ardono & Yoss, LLP, ( "A &Y ") claiming that they owed a duty to the City
and breached that duty causing harm to the City by allowing the City to enter into the
transactions which resulted in liability to the City. BMO and A &Y were hired by FMLC as the
FMLC's bond counsel and were not hired by the City to act as the City's bond counsel. The
complaint alleged that BMO as well as A &Y issued opinion letters that, according to the
complaint, implied that BMO and A &Y had examined all relevant documents and rendered the
opinion that the financing, refinancing or reimbursement to the City from Loan proceeds would
not, by itself, cause interest on the Bonds to be included in gross income [to bond holders] for the
purposes of federal income taxation... "; and
WHEREAS, BMO's letter stated that: "In rendering such opinion we have assumed
compliance by the Borrower with certain provisions of the Loan Agreement and have relied upon
opinions of counsel to the Borrower [Luis Figueredo] to the effect that such Loan Agreement
constitutes a legal, valid and binding obligation of the Borrower. We have not in any manner
passed on the validity or enforceability of the Loan Agreement."
WHEREAS, A &Y's opinion letter stated that: `As to the questions of fact material to
our opinion, we have relied upon representations of the City contained in the Ordinance and in
the Loan Agreement, dated as of April 7, 2009 (the "Loan Agreement "), between the City and
SunTrust Bank, and in the certified proceedings and other certifications of public officials
furnished to us without undertaking to verify such representations by independent investigation."
The letter further states that: "The opinion set forth in the preceding paragraph assumes
continuing compliance by the City with certain requirements of the Code that must be met after
the date of the issuance of -the Note in order for interest on the Note to be excluded from gross
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Res. No. 140 -13 -13958
income for federal income tax purposes. The failure to meet these requirements may cause
interest on the Note to be included in gross income for federal income tax purposes retroactively
to the date of issuance -of the Note. The City has covenanted in the Loan Agreement to take the
actions necessary to comply with such requirements."
WHEREAS, the City consented to the entry of a cease and desist order issued by the
SEC concerning the issuance of tax -free bonds; and
WHEREAS, the order contained findings of fact, including a finding that the City failed
to inform the FMLC of material change in the way that the borrowed funds were being used that
materially affected the tax exempt status of the bonds; and
WHEREAS,
it will
be extremely
difficult and expensive
for the City to prove any
liability on the part of
Bryant
Miller Olive,
P.A. and Ardono & Yoss,
LLP,
NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND CITY
COMMISSION OF THE CITY OF SOUTH MIAMI, FLORIDA:
Section 1. The City Attorney is hereby authorized to file a voluntary dismissal of the law
firms of Bryant Miller Olive, P.A. and Adorno & Yoss, LLP in the case of City of South Miami
V. Luis R. Figueredo, et al. (Case No.: 10 -46712 CA 10),
Section 2. Severability. If any section clause, sentence, or phrase of this resolution is for
any reason held invalid or unconstitutional by a court of competent jurisdiction, the holding shall
not affect the validity of the remaining portions of this resolution.
Section 3. Effective Date. This resolution shall become effective immediately upon
adoption by vote of the City Commission,
PASSED AND ADOPTED this2nd day of July
ATTEST:
C1.lM�6
2013,
COMMISSION VOTE:
Mayor Stoddard:
Vice Mayor Liebman:
Commissioner Newman:
Commissioner Harris:
Commissioner Welsh:
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4 -0
absent
Yea
Yea
Yea
Yea