Reception area of the new Shutts & Bowen office at 200 S. Biscayne Blvd., Miami. (AM Holt)
Florida-based Am Law 200 firm Shutts & Bowen and Miami partner Kevin Cowan settled an antitrust lawsuit in a case that also raised allegations of wrongdoing against Hinshaw & Culbertson Coral Gables partner Steven Carlyle Cronig.
“It’s over,” Cronig said Thursday about the antitrust suit. “We won.”
But now Cronig and his client, Watson Brickell Development LLC, are seeking to turn the tables on the plaintiffs’ lawyer, Las Vegas-based litigator Adam J. Breeden, with an effort to recoup about $400,000 in attorney fees under a federal rule of civil procedure that prohibits frivolous or unsubstantiated arguments.
Cronig said the litigation cost him and Watson Brickell about $500,000 in attorney fees. They settled with the plaintiffs for $100,000, but plan to pursue Breeden for the balance.
“We settled with just the plaintiffs, not their lawyers,” he said. “We’re still going after him. We hope to get the other $400,000 out of him shortly.”
Watson Investigations’ attorney, Ronald Lee Kammer, said the company sought the sanction “based on the absence of facts to justify the action” against the company and Cronig.
“We had always maintained that no cause of action ever existed,” he said.
Breeden argued otherwise, describing the case as “rock solid.”
But a federal judge dismissed SLS’ claims for lack of standing and cautioned the surviving accuser against filing an unfocused “shotgun pleading” with no clear assertions.
“After a year and a half of litigation, the court abruptly dismissed the case for failure to state a claim,” Breeden said in a statement. “I have no legal explanation for how or why the case was dismissed, and have never seen anything like it in my career.”
U.S. District Judge Darrin P. Gayles entered an order May 17 dismissing the case with prejudice on stipulations by plaintiffs SLS Properties Three LLC and JAWHBS LLC with Cronig, Cowan and Shutts & Bowen.
The decision capped litigation that started with a complaint in November 2015 and spawned 394 docket entries.
“Following a federal court’s dismissal last month of virtually all of the plaintiff’s claims against Shutts & Bowen LLP and its partner, Kevin Cowan, the parties agreed to a stipulation of dismissal of all remaining issues, with no payments for the settlement,” the firm wrote in a statement issued Wednesday.
Shutts & Bowen, Cronig and Cowan faced accusations of colluding with clients to rig bids for land—adjacent to Miami’s nearly $1.1 billion Brickell City Centre project—being sold in bankruptcy.
The plaintiffs were JAWHBS and affiliated Las Vegas-based lender SLS. SLS was a creditor in the bankruptcy case. Plaintiffs claimed the attorneys helped stifle competition in the sale to acquire the prime real estate well below market value.
The suit stemmed from Shutts & Bowen’s work for real estate investor Jorge Arevalo.
Arevalo attempted to purchase the parcels but was beaten to the deal in July 2013 by Cronig’s client, Watson Investigations. His deal crumbled amid allegations of improper behind-the-scenes dealings involving Arevalo and would-be buyers Albert Delaney and Omar Botero. Bankruptcy Judge Laurel Isicoff rejected the group’s offer after claims that Arevalo promised not to drive up the sale price with a rival bid, if the other prospective buyers allowed him to join their venture in exchange for a $1.2 million payout.
The property eventually sold to Watson Investigations for $21.5 million.
Arevalo had approached the company and Cronig to raise $22 million to purchase the land, but his would-be partner submitted its own winning bid.
“The Cronig Group used the knowledge, information and results of the Arevalo Group’s prior bid-rigging scheme to its advantage by refusing to fund the Arevalo Group and instead under-bidded it for $21.5 million,” U.S. District Judge Darrin P. Gayles wrote in an order issued Aug. 4.
“The case appeared to be the clearest case of bid rigging imaginable,” said Breeden, of Breeden & Associates in Nevada. “The defendants literally had writings between themselves confirming their intent for one developer to pay the other ‘in consequence of their forbearance from making an offer or bid to own the subject property’ and they openly discussed their desire to avoid ‘a bidding war where the only sure result will be that everyone raises the price of the property.’ “
Breeden and Jerrold Alan Wish of The Wish Law Firm in Gainesville represented plaintiffs SLS and JAWHBS.
Kendall Coffey, Kevin Kaplan and David Zack of Coffey Burlington in Miami defended Cowan and Shutts & Bowen.
Cronig’s attorney, Charles M. Tatelbaum of Tripp Scott in Fort Lauderdale, declined to comment.