Hilton walked away from the deal.
Miriam Hayenga's $4.35 million vanished into thin air.
Eventually, Hayenga did get a zoning change. It took nearly two years of hustling, about $30,000 in fees, and a pitched battle with her business' neighbors — and she still got much less than what they'd originally promised her. But finally, she was allotted 78 units.
During the battle, Hayenga's main source of income, the Waterin' Hole, was hit hard. No one wanted to book a party at a place that might be closed in a year. And to say that the neighbors didn't like the new plans is an understatement.
"I had someone try to run me over in the parking lot," Hayenga says. "People were pissed."
Hayenga kept her cool. Her partner, Mary Slaughter, marvels that even when the neighbors lined up with pitchforks to oppose the plan, Hayenga arranged for shuttles to get them to City Hall for meetings.
The end was bittersweet, at best. Hilton was long gone. By 2002, no one was offering cash for the property.
So Hayenga went into business as a developer. The best deal she could find required her to work with a builder to market condominiums, sell them, and finally get her money when the project sold.
The last unit sold in 2005 — five years after the Hilton deal collapsed.
And that might well have been the end, Hayenga says, if not for Paul Gilbert.
Gilbert is a partner at Scottsdale-based Beus Gilbert. Widely recognized as the dean of Valley zoning attorneys, he's also a political player, with access that most lawyers can only dream of. A graduate of Brigham Young University who counts the Mormon Church as a client, Gilbert co-chaired Mitt Romney's presidential bid in Arizona.
The fundraisers he held for Romney were hardly an oddity for his palatial Paradise Valley home. Politicians in nearly every municipality in the county know they can count on Gilbert and his connections for campaign support.
Gilbert isn't a guy who intimidates; people give him what they want not because they're afraid, but because they like him. He's not a litigator — indeed, people who've worked with him say they can't imagine him writing a brief, much less arguing it in court. But he excels at the inside game.
Hayenga first consulted with Gilbert in 2000, when she realized that she would need a major zoning amendment to build anything. It didn't occur to her at the time that she might have a lawsuit over the units' disappearance.
But Gilbert, she says, was convinced of it.
Gilbert and his firm believed that Bob Gosnell had screwed her. "They kept saying, 'We'll try to help you,'" Hayenga recalls. "'That guy who sold you the property, he did you wrong. Go after him.'"
(Gilbert was out of town and couldn't be reached for comment. L. Richard Williams, a lawyer at his firm, says the story seems unlikely, pointing out that Gilbert is not a litigator.)
And while Hayenga had thought that maybe she should be reimbursed for her expenses rezoning the property, Gilbert explained that her claim was much bigger.
She'd lost out on the Hilton deal because of his misrepresentation, right? $4.35 million, down the drain! Then, add the time and money she spent trying to develop the property, and the fact that she still ended up with 40-some units less than Gosnell had promised . . . She'd suffered some real damages. He thought she could get $1.5 million in damages, easily.
Despite what his firm asserts today, it's clear Gilbert wasn't just blustering. That's because he agreed to take the case on contingency — meaning his firm wouldn't charge Hayenga attorney fees, in exchange for a share of any payday at the end. Hayenga would have to cover only the costs of litigation: expert witnesses, court fees, and the like. (That bill ended up totaling more than $50,000.)
No one could blame Hayenga for agreeing. "When you tell the top zoning attorneys in the city that you have a problem, and they say they'll handle it for you, you trust them," Hayenga says.
Surely, she had nothing to lose.
In retrospect, trusting Paul Gilbert may have been Miriam Hayenga's biggest mistake. She says she wondered, from the beginning, whether Gosnell was really to blame — after all, the city had also assured her that there were 120 units left for development, only to change its tune later.
David Leonard, an attorney based in both Tucson and Los Angeles, is representing Hayenga in a possible case against Gilbert's firm. (It's no coincidence that Leonard is in Tucson. Hayenga says none of the lawyers she consulted in town was willing to take on the powerful Beus Gilbert.)
Leonard blames Gilbert for his handling of the case. Even if he was convinced that Gosnell was at fault, Leonard says, he should have still included the city of Phoenix in the suit.