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Miriam Hayenga, Phoenix Developer, Suing Prominent Zoning Attorney Paul Gilbert Over What She Says Is Botched Legal Work

See also: Miriam Hayenga Proves You Can Fight City Hall, After All
See also: Don't Even Think About Fighting City Hall Unless You're a Good Old Boy


A few years ago, we told you about Miriam Hayenga and her quest for justice over what she says was bungled legal work from prominent zoning attorney Paul Gilbert.

Sarah Fenske (former New Times columnist who is now the editor at our sister paper the L.A. Weekly) ended her 2009 column with the words 'Stay tuned...'

Nearly three years later, Hayenga, an unlikely developer, is pushing forward with a lawsuit against Gilbert, her former attorney. Depositions are under way in the case that has cost Hayenga millions of dollars -- both out of pocket and in lost potential profits -- and countless hours over nearly a decade.

Gilbert did not return our calls seeking comment.

Hayenga's story is as simple as it is complicated.

It boils down to this: The city gave her bad information about her development rights, and she lost out on an opportunity for a $4.35 million sale. She hired an attorney -- Paul Gilbert, regarded as the top zoning lawyer in the state -- who advised her to go after the man who sold her the land, blaming solely him for his client's inability to now develop it.

Although that was Gilbert's claim, the truth was in easily accessible city records -- documents that Phoenix planning officials and this premier attorney are accused of not bothering to carefully review, if they reviewed them at all.

Hayenga lost her lawsuit against Bob Gosnell, the man who sold her the land, in part because city officials testified under oath that, indeed, it was their screw up. And the real trouncing came when she was ordered to pay more than $300,000 worth of Gosnell's attorney's fees.

Why? Because even after Hayenga's legal team knew -- or should have known -- that it was the city that messed up, they pressed forward with their lawsuit against Gosnell.

Years ticked by, and the focus on going after Gosnell cost her an opportunity to fully go after the city for damages. She had a case, but was faced with a real possibility of it getting tossed out because she didn't file it sooner.

The city argued that an attorney of Gilbert's caliber would have known that she had a case against the city, but said they never filed it. Thus, the statute of limitation had run its course.

She dropped Gilbert and hired another attorney to sue the city. They eventually settled for $2.5 million. She hired yet another attorney to go after Gilbert for steering to make him pay for what she contends is botched legal work and steering her case so poorly.

 

As Fenske explained in her 2009 articles, Hayenga bought six acres of land in 1997 with a tennis club and the Waterin' Hole restaurant from Bob Gosnell, the master builder of the Pointe communities at South Mountain and Tapatio Cliffs.

Although she tried to breathe life into the property, business wasn't good. And it was just getting worse. She decided to go to Plan B, and started talking to developers.

Based on information she received from Phoenix planning officials -- who assured her several times that she could build up to 120 units on the property -- she worked out a deal with the Hilton to sell the land for $4.35 million.

Three years later, when she was ready to seal the deal, city officials told Hayenga a very different story.

It was around February 2000, when they informed her that she couldn't put 120 units on that property -- in fact, assistant city planner Steven Muenker told her there were almost no units available for that swath of land.

City officials traced the problem back to a cap of 2,147 residential units placed on the Pointe Tapatio back in 1979. And, by the time that Hayenga arrived at City Hall with her plans, most of those units had been used up.

 

A city screwup gave units that could have been used for Hayenga's proposed project to a different developer -- a developer who initially should have given notice to the community that his deal was pilling more residential units (apartments) in the area.

When city planners discovered that he never properly gave required notice, they seem to have remedied the problem by taking what should have been available for Hayenga to develop and tacking it on to his project.

The hotel chain walked away, and her $4.35 million disappeared with them.

(Hayenga eventually negotiated a zoning change with neighbors and city officials, but it took her two years, about $30,000 in fees, and resulted in a mere 78-unit allowance.)

 

Hayenga first consulted with Gilbert in 2000, and she says he convinced her that she had a case -- oddly enough, against her old friend and mentor, Bob Gosnell, not the city.

He took the case on contingency, agreeing only to charge her if they won their case. She still ponied up about $50,000 for court fees, expert witnesses.

Because there was a paper trail, albeit an obfuscated one, of what happened -- documents showing the property being saddled with a cap on how many units could be built, city records of how many units had already been allocated and, later, testimony from city officials themselves admitting they made errors -- Haygenga lost her lawsuit against Gosnell Builders Corporation.

Badly.

During the trial, Gosnell testified that after Hayenga sued him, he'd gone down to look at city files and see what had happened -- and in just 45 minutes, he discovered that the units had gone to a neighboring developer.

Why hadn't Gilbert's firm done the same?

It set the stage for Gosnell to go after Hayenga for attorney fees.

She was ordered to pay more than $600,000 in Gosnell's lawyers fees and court costs. It was negotiated down to about $300,000. It was another devastating financial hit.

Gosnell, in a motion filed with the court in 2007, sought sanctions against Gilbert for being "victimized" for 4 1/2 years by "an ill-conceived lawsuit, which ... was not properly investigated before its filing, and once proved frivolous ... was continued."

After all, Gosnell contended, Hayenga and her attorney claimed that Gosnell committed fraud by concealing from her that there was a cap on how many units could be built.

But, one of their own legal exhibits clearly showed there was a "unit limitation of 2,147 units."

They also claimed that it was Gosnell who gave away Hayenga's units even after a city planner testified under oath during a deposition in 2005 that "no units were ever transferred away" because they were never specifically assigned to her property.

It was also later discovered that it was the city that arbitrarily had given those remaining units to another developer.

Gosnell said that despite evidence to the contrary, Gilbert pursued the "meritless complaint through a motion to dismiss, two motions for summary judgement, and finally at a trial."

In the end, Hayenga found a new lawyer to sue the City of Phoenix, but officials ended up settling with her for $2.5 million for their negligence in the whole process.

David Leonard, an attorney based in both Tucson and Los Angeles, is representing Hayenga in a malpractice lawsuit against Paul Gilbert and his firm, Beus Gilbert.

Leonard, one of not many attorneys willing to take on the powerhouse law firm, now has Gilbert in the hot seat.

Leonard told New Times in 2009 that one of Gilbert's mistakes was not listing the city in the initial lawsuit.

As we reported at the time, lawyers call it the "empty chair" theory.

"You don't leave an empty chair for the defendants to point to and say, 'That guy did it,'" Leonard explained at the time. "It's the same principle in play if someone rear-ends you. You don't just sue the driver who hit you; you also sue the one who sideswiped them seconds before. Facts can grow more complicated as a case drags on, and a good lawyer will cover every possible base on the front end. Otherwise, a defendant can wiggle off the hook by blaming someone who's not a party to the claim.

But despite the city's culpability, Leonard says, Gilbert wasn't interested in suing it.

Leonard believes Gilbert had good reason not to go there -- and it had nothing to do with the merits of the case. "He had a conflict of interest," Leonard said in 2009. "Do you think he's going to bite the hand that feeds him? No way can he sue the city. That would mess up the rest of his practice."

Leonard tells New Times that depositions are ongoing and the case is expected to go to trial on December 3.


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