Miami-Dade judge sent Shelborne Hotel case to judge with similar conflict

By Francisco Alvarado, Florida Bulldog.org 

Miami-Dade Circuit judges Beatrice Butchko, left, and Jennifer Bailey

The Miami-Dade Circuit judge who chose to quit presiding over the high-profile Shelborne Hotel case due to an apparent conflict of interest, funneled the case directly to a second judge with a similar conflict in a way that avoided the case being randomly reassigned.

Typically, judges recuse themselves from cases in which they have a disqualifying conflict or the appearance of a conflict. But in the Shelborne case, Judge Jennifer Bailey chose another path after disclosing that she briefly had attended a meeting with Chief Judge Bertila Soto at which prominent Miami Beach developer Russell Galbut presented preliminary plans to build a new civil courthouse on nearby property partially owned by one of his companies. Two other of Galbut’s companies were defendants in the Shelborne case.

“If I am a plaintiff and I read in the newspaper in a month that Russell Galbut is going to build a new courthouse, I might not be incredibly comfortable with Judge Bailey hearing my case,” Bailey said in open court during a Dec. 14 hearing.

But five days later, using her authority as administrative judge of the civil division, Bailey transferred the case to her associate administrative judge, Beatrice Butchko, who also actively campaigned in 2014 to convince voters to approve a bond referendum to pay for a new $350 million courthouse to replace downtown’s landmark courthouse built in 1928. The referendum did not pass.

Within weeks, Butchko tossed out the entire case that Bailey had set for trial in early January.

“Cases are randomly reassigned upon recusal,” said court spokeswoman Eunice Sigler. “This was not a recusal. This was a transfer.”  Transfers fall under the jurisdiction of the administrative judge, per 11th Judicial Circuit administrative orders adopted in 1979 and 2016.

For more than two years, Bailey had presided over the lawsuit filed by 40 investors who purchased rooms at the historic art deco Shelborne South Beach against the property’s condo association, condo board members, and companies tied to developer Galbut. The plaintiffs, who sued in 2012, alleged the condo association illegally assessed them $30 million in unnecessary repairs and renovations at the Shelborne, damaged their rooms and have tried to force them into foreclosure so the Galbut entities can acquire their units at a huge discount.

Butchko, however, made quick work of the investors’ case after she took over. She dismissed key parts in early January, days before jury selection was to begin.  She tossed the rest the following week. She did so while brushing aside a plaintiffs’ request that she recuse herself from the case and for a change of venue.

‘Dirty work’

“Obviously we were going to ask Bailey to remove herself once we found out about her involvement with Galbut,” Gia Hutt, one of the 40 investors, told Florida Bulldog. “But before any of that happened, she handed off the dirty work to Butchko, who destroyed our case.”

Hutt said the investors’ plan an appeal, but none was filed as of Tuesday.

Miami-Dade court spokeswoman Sigler said Bailey and Butchko would not comment on their rulings. She explained, however, that Bailey assigned the case to Butchko, who are both in the complex business litigation section, because Butchko was the only judge available to handle what was expected to be a 7-week trial for the Shelborne case that was set to start Jan. 9.

“The parties expressed their satisfaction with the transfer at the time, in the interest of keeping their specially-set trial date,” Sigler added.

But the case never got to jury selection. On Jan. 20, Butchko issued a summary judgment in favor of the Shelborne Beach Hotel Condominium Association and its board, as well as Shelborne Property Associates and Shelborne Operating Associates, two companies partially owned by Galbut. Butchko ruled that the plaintiffs had not presented any material facts disputing the defendants’ assertions that the repairs were necessary to address life safety issues.

Alice K. Sum, an attorney at the Fowler White Burnett law firm who represented the condo association, refuted Hutt’s claims that Bailey and Butchko were both compromised because of their public advocacy for a new courthouse and Galbut’s offer to build one.

“On the first day we appeared before Butchko, she said she didn’t know who Russell Galbut is and that her involvement in anything related to a new courthouse dated back to the prior initiative that was voted down in 2014,” Sum explained. “There’s no doubt lawyers and judges would like a new courthouse. But to imply no judge can be impartial because of that is to taint public servants unnecessarily.”

Kevin Malek, lead attorney for Hutt and the other 39 investors, declined comment.

Motions denied

Hutt, however, said that before Bailey disclosed her meeting with Galbut and transferred the case to Butchko, she had denied motions by the defendants to dismiss 8 of the 12 counts in their lawsuit, including civil conspiracy, breach of fiduciary duty and other wrongdoing. According to a Dec. 29 motion filed by the defendants, Bailey’s rulings were contrary to state law that required her to disclose her conflict before making a decision.

On Jan. 6, 19 days after she took over the case, Butchko granted the defendants’ request to reverse Bailey’s denials and dismissed the eight counts, according to court documents. By doing so, Hutt contends, Butchko crippled their case.

“You have a judge who is on the case for less than a [month] and throws out most of our lawsuit,” she said. “She took our rights away to go before a jury.”

Condo association attorney Sum said Butchko had sufficient time to process evidence presented by the defense that the repairs and renovations were not only necessary, but mandated by the City of Miami Beach. She claimed the plaintiffs’ counsel offered nothing to refute that.

“Judge Butchko explained she has been brought in again and again to take over cases,” Sum said. “So she had a lot of experience getting up to speed on cases dumped on her last minute. Butchko is well regarded among her peers and lawyers as a hard worker.”

Lenny Walder, another the 40 investors, doesn’t buy it.

“The same element of ‘eureka’ and awareness Bailey had on the new courthouse issue should have applied to Butchko, since she too is a courthouse advocate,” Walder said. “What is good for the goose is good for the gander. Butchko should have recused herself.”

A curious search for justice amid Miami-Dade judges’ desire for new civil courthouse

By Francisco Alvarado, FloridaBulldog.org 

Miami-Dade Circuit judges Beatrice Butchko, left, and Jennifer Bailey

The effort to build a new civil court building to replace the historic, but crumbling, Dade County Courthouse in downtown Miami recently took a bizarre turn that prompted a local judge to remove herself from a high-profile case involving prominent developer Russell Galbut and another local landmark, the Shelborne Hotel in Miami Beach.

Miami-Dade Circuit Court Judge Jennifer Bailey took herself off the case on Dec. 19 after disclosing she briefly attended a meeting with Chief Judge Bertila Soto at which Galbut presented preliminary plans to build a new civil courthouse on nearby property that’s partially owned by one of his companies.

Bailey transferred the case to Miami-Dade Circuit Judge Beatrice Butchko, who like Bailey had actively campaigned to convince voters to approve a 2014 bond referendum to pay for a new $350 million courthouse.

Butchko quickly dismissed eight of 12 counts against the Shelborne Ocean Beach Hotel Condominium Association and five companies owned by Galbut, his brother Abraham and other relatives. The counts alleged civil conspiracy, breach of fiduciary duty and other wrongdoing.

“This is so shocking, you can’t believe it’s happening,” said David Kraus, a plaintiff in the Shelborne case.

Miami attorney Kevin Malek represents four-dozen Shelborne Hotel room owners who claim that Galbut’s companies and the condo association illegally tried to force them out. Malek told Florida Bulldog that his clients would appeal Butchko’s rulings, which he said severely weakened their case a week before the beginning of the Jan. 9 trial period. The trial on the remaining counts had not begun as of Thursday.

“This case is not over,” Malek said. “We will be back.”

A fair shake?

His clients, however, have little faith that they will get a fair shake as long as the case remains in Miami-Dade. Several of the unit owners, including Kraus, told Florida Bulldog they don’t believe any Miami-Dade judge can rule impartially on their case while Galbut is talking about building them a new home.

“Pretty much every judge wants a new courthouse,” said plaintiff Mark Shemel.

The Shelborne was converted into a condo hotel about a decade ago, allowing individual investors to buy rooms that are rented to tourists. In 2012, 40 of those investors sued alleging that the five Galbut entities – three of which own units in the hotel and two others that run the hotel’s operations – and the condo association broke Florida law by authorizing nearly $30 million in illegal assessments, or roughly $107,142 per room, for renovations at the Shelborne.

In court documents, the unit owners accuse Galbut of stacking the association’s board with flunkies and trying to force them out by foreclosing on their rooms because they refuse to pay the assessments. They also allege their rooms were demolished without their consent during the renovations, resulting in the City of Miami Beach revoking their certificates of occupancy until they fixed their units.

Their lawyer, Malek, sought unsuccessfully last week to remove Butchko from the case due to her advocacy for the 2014 bond referendum. She declined to recuse, while also rejecting a motion that sought to move the case outside of Miami-Dade County.

Nevertheless, Judge Butchko’s dismissal of the eight counts against the Galbut entities and the condo association was a jolt to plaintiffs in the long-running case.

“This lawsuit has been going on for years and Butchko dismissed our entire case within days,” said Kraus, who owns two rooms at the Shelborne. “How could she have reviewed so much evidence in such a short amount of time?”

Judges Bailey and Butchko declined comment through court spokeswoman Eunice Sigler, who said state law bars judges from publicly commenting on their rulings. Still, Sigler said Butchko had not been influenced by Galbut’s interest in developing a new courthouse.

“Judges rule based on the facts presented and applicable law,” Sigler said. “And their rulings can always be appealed to a higher court.”

‘A far-fetched theory’

Ron Lowy, Galbut’s personal attorney, said the 40 Shelborne owners are pursuing a “far-fetched” theory as to why Butchko dismissed the eight counts.

“I don’t believe any judge in Miami-Dade is going to give up their view of justice and doing what’s right simply because [Galbut] may in the future submit a formal proposal which may result in the construction of a new courthouse,” Lowy said. “The plaintiffs were simply unable to prove their case.”

Both Lowy and Sigler also noted that Miami-Dade County government, not the 11th judicial circuit, is the actual owner of the current courthouse and it is that body which would negotiate with Galbut for any deal for a new building.

Still, it was Bailey’s concern about a perception of possible impropriety and conflict of interest that caused her to remove herself from the Shelborne case, according to a transcript of the Dec. 14 hearing.

Bailey explained that two weeks before the court hearing, she was invited “out of the blue” to participate in a meeting with Galbut and Chief Judge Soto because she is the only local judge who is familiar with national courthouse standards and guidelines.

Three years ago, Soto, Bailey and Butchko were among a group of judges and high profile lawyers who led a public awareness campaign to tell voters that the downtown courthouse, built in 1926, had fallen into a state of disrepair and was no longer safe for the people who work there. Their goal: to convince Miami-Dade voters to approve a bond referendum to pay the nearly $400 million cost to build a new courthouse, plus repair the existing building, which was listed on the U.S. National Register of Historic Places in 1989. Voters, however, rejected the referendum.

“I was very involved in public appearances with all that,” Bailey said during the Dec. 14 hearing. “Suffice it to say I am very involved in the campaign to get a new courthouse for my judges and the people I work with.”

Bailey relayed that when she showed up for the meeting with Soto, Galbut was also there. She said the plans Gabut presented were very preliminary and that she did not believe his proposal would go anywhere. However, she soon realized that his plan is gaining steam and that she needed to address it with the lawyers involved in the Shelborne litigation.

A judicial ‘epiphany’

“I had the epiphany that it might be a potential issue in this case,” Bailey said according to the transcript. “If I am a plaintiff and I read in the newspaper in a month that Russell Galbut is going to build a new courthouse, I might not be incredibly comfortable with Judge Bailey hearing my case.”

Five days later, Bailey transferred the case to Butchko. However, the plaintiffs’ don’t believe they got a fair shot in court.

“I don’t think there is a conspiracy between Galbut and Butchko,” said owner Mark Shemel said. “But she is very sympathetic about getting a new courthouse. So it’s certainly possible she is sympathetic to the defendants.”

Shemel noted that Galbut has been involved in new courthouse talks for quite some time. He cited statements made by Greenberg Traurig attorney Ron Rosengarten, who represents two of the Galbut entities.

In a Jan. 3 motion, Rosengarten admitted that Galbut has been communicating with Soto, Miami-Dade Mayor Carlos Gimenez’s office, Clerk of Courts Harvey Ruvin, members of the Dade Heritage Trust and retired judge Scott Silverman for more than a year about getting involved in a possible deal to develop an “expanded courthouse project.”

Silverman, who declined comment, was the court appointed mediator in the Shelborne case. Galbut’s lawyer, Lowy, said his client only met once with Silverman and that the encounter took place after the mediation had ended with an impasse.

“That bothers me,” said plaintiff Shemel. “Silverman made the plaintiffs feel doomed. The whole thing stinks.”

New whistleblowers sue Plaza Health Network saying insiders milked nursing home chain

By Francisco Alvarado, FloridaBulldog.org 

Plaza Health Network's headquarters at 1800 NE 168th St., North Miami Beach.

Plaza Health Network’s headquarters at 1800 NE 168th St., North Miami Beach.

For the second time in four years, Miami Beach builder Russell Galbut and a nursing-home chain his family cofounded have been accused of illegal misconduct by a whistleblowing former executive.

This time the accuser is William Zubkoff, ex-CEO of Aventura-based Plaza Health Network. Zubkoff was a defendant in a 2012 whistleblower complaint against the non-profit company. Joyce Galbut, Zubkoff’s wife and Plaza’s former chief nursing officer, is also suing Russell Galbut and the non-profit.

In separate complaints filed in Miami-Dade Circuit Court, the couple accuse Galbut, Plaza and it’s current board chairman, attorney Ronald Lowy, of milking non-profit Plaza Health to benefit themselves at the expense of the their elderly residents.

“Russell Galbut has paid himself, his relatives and…(certain) employees and consultants well over $100M,” says Zubkoff’s suit. “During that same time period, not-for-profit facilities have been closed, nurses and other employees have been fired, staffing ratios have been reduced, and appropriate pay raises for nurses and other employees have not been implemented.”

Similarly, Joyce Galbut’s complaint accuses Galbut and Lowy of “improperly and illegally” diverting funds from Plaza Health while presiding over “dramatic cuts affecting the quality of nursing care and using not for profit finances for private interests.”

Zubkoff and Joyce Galbut claim they fought to put a stop to the abuses and even notified federal authorities about what was happening. They also say they rejected Galbut and Lowy’s offers of “multi-year, 6-figure consulting agreements” in exchange for their silence. Both said they were fired within weeks of rejecting those offers.

The twin lawsuits seek damages for lost wages and emotional distress suffered after because of prohibited retaliation under Florida’s Private Sector Whistleblower’s Act.

Russell Galbut

Russell Galbut

Responding for Russell Galbut and himself, Lowy said Zubkoff and his wife are making a last-ditch effort for monetary gain by filing frivolous lawsuits. “We will fight this abuse of the judicial process in the most vigorous way possible,” Lowy said in an email to FloridaBulldog. “We will do everything in our power, including filing counterclaims if necessary, to put a stop to this.”

Jon Herskowitz, an attorney for Zubkoff and Joyce Galbut, whose ex-husband is Russell Galbut’s cousin, said his clients have the evidence to back up their accusations. “They would not be coming forward with these allegations if there was not significant proof over the years of what we consider not only improper illegal actions but various objections and complaints raised by Joyce Galbut and William Zubkoff,” Herskowitz said.

Plaza Health was founded 66 years ago as Hebrew Homes for the Aged, a convalescent home for Jewish people and war veterans. Today, the network operates seven nursing homes in Miami-Dade and counts former state Rep. Elaine Bloom as its president and CEO.

Galbut family founded Plaza Health

Members of the Galbut family have been involved with Plaza since its inception in 1950. Russell Galbut, a power broker in Miami Beach whose building portfolio includes the Alexander Hotel, the Castle Beach Club, 100 Lincoln Road, and the Shelbourne Hotel, joined Plaza’s board of directors in 1995. A year later, he was named chairman, a post he held until 2014.

Plaza’s board, at the time led by Galbut, hired Joyce Galbut in 2005 and Zubkoff in 2008, according to their lawsuits.

Last June, Plaza agreed to pay the U.S. government $17 million to settle allegations made in a 2012 federal lawsuit by the non-profit’s ex-Chief Financial Officer Stephen Beaujon. The complaint was also against Zubkoff. Using Beaujon’s claims, the Department of Justice found that Plaza had violated the False Claims Act by improperly paying doctors for referrals of Medicare patients requiring skilled nursing care.

“From 2006 through 2013, [Plaza] allegedly operated a sophisticated kickback scheme in which they hired numerous physicians ostensibly as medical directors pursuant to contracts that specified numerous job duties and hourly requirements,” according to a June 16, 2015 federal press release. “The United States alleged that in reality these were ghost positions, and that most of the medical directors were required to perform few, if any, of their contracted job duties.”

In his March 8 lawsuit, Zubkoff alleged that was essentially Galbut’s flunky during his tenure, and that the developer “completely controlled” both the board and Plaza Health’s management for more than two decades. Galbut used that control to pick his relatives and friendly employees and consultants from his other companies to sit on the non-profit’s board, the complaint alleges.

Three of Plaza’s five current directors have ties to Galbut: Lowy has represented the developer on some transactions, Joan Brent is his cousin, and Ben Rozsansky, is a former vice president of Galbut’s real estate firm, Crescent Heights.

“These decisions have always been made in the best personal financial interest of Russell Galbut,” Zubkoff’s complaint states. “Mr. Zubkoff states that he objected to and attempted to stop the illegal personal for-profit actions.”

For instance, Zubkoff claims, Galbut and his slate on the board forced the shutting of a 104-bed Miami Beach nursing home at 320 Collins Ave. in 2013 and then sold the property for $13.6 million to a New York developer a year later. In February of last year, FloridaBulldog.org reported how the board had initially agreed to sell the site to a private partnership that included Galbut, but that his partnership had submitted a lower offer than the top bidder, JMH Development.

When JMH threatened to sue Plaza, the board reversed course and sold the property to the Brooklyn-based company. Company documents obtained by a reporter and confirmed by Lowy say Plaza paid back a $2.5-million unsecured mortgage that Galbut had provided the non-profit. An additional $1 million was used to pay for a security deposit on another nursing home facility at 42 Collins Ave. that Plaza rents from Crescent.

Lowy told FloridaBulldog.org that Zubkoff is making false and outrageous statements. “Mr. Galbut always acted as a volunteer member of the Board and left the management of the Plaza Health Network to William Zubkoff and his management team,” Lowy said. “All of the Plaza records and emails reviewed by the U.S. Government in their 2014 and 2015 investigation support the conclusion that William Zubkoff was the decision maker and person whom all employees went to for authorization and decisions.”

Newsletter

Notify me by email when new stories are published.

Bulldog Archives