Kelly Hyman Disappoints Judge

Kelly Hyman Disappoints Judge

Why Judge is “Dismayed” and “Disappointed” Over $1M Fight Between Father, Daughter

Originally published in the Daily Business Review on November 20,2014

by Adolfo Pesquera 

A family feud between former Miami Beach Mayor Alex Daoud and his prominent attorney daughter over a residential property near the Miami Beach Golf Club resulted in a split-the-baby ruling that expressed the court’s disappointment with the “behaviors of these parties.” Miami-Dade Circuit Judge John Thornton said the court felt “general dismay and disappointment” with the acts of Kelly Hyman and her father.

The judge noted this was a business dispute between “a sophisticated father and daughter, both of whom have law degrees … fighting over what amounts to expectation inheritance rights.”
Hyman’s attorney, Bernardo Burstein of Burstein & Associates in North Miami Beach, said, “This is a father who tried to strip his daughter of an asset. That’s the context in which this case has to be understood.”
Hyman sued in 2012 after her father removed her as director of the company that owned his house, Burstein explained.

Hyman is an attorney at Searcy Denney Scarola Barnhart & Shipley in West Palm Beach and the wife of U.S. Bankruptcy Chief Judge Paul Hyman in the Southern District.

Daoud got into municipal politics in the late 1970s, hobnobbed with celebrities and became a fixture on the South Beach scene during the cocaine cowboys era. He was Miami Beach mayor from 1985 to 1991 and served 18 months in federal prison for bribery and tax evasion.

Hyman maintained she was 100 percent owner of Bouganvilla Investments Inc., which owns her father’s $1 million residence. She wanted the court to agree to that allegation, or at least determine the ownership structure.
Daoud, 71 and living on Social Security, claimed he asked his daughter to be a director of Bouganvilla only because he feared the adverse publicity he anticipated if his name was attached to the property, particularly in light of the release of his book, “Sins of South Miami,” Thornton noted in the order.

The judge found Daoud’s claims credible. He also found Miami Beach attorney Jerrold Engelman’s testimony was most credible. Engelman said he was retained by Daoud and at Daoud’s direction sought and obtained Hyman’s permission to name her as incorporator and director. But no stock was issued.

Hyman contradicted that testimony, stating she conceived of the idea, prepared the documents and hired Engelman later. Thornton said she wasn’t “credible” on those claims. But Thornton also had trouble with some of Daoud’s claims; in part, he doubted Daoud’s claim that Bouganvilla was transferred into an irrevocable trust, since there was insufficient evidence a transfer ever happened.

The sole asset of Bouganvilla is the property on Michigan Avenue. Daoud’s attorney, Alex Brito of Zarco Einhorn Salkowski & Brito in Miami, said the property has sentimental value to Daoud because it is on the street where he grew up as a boy.
Hyman’s ownership claim was further weakened by evidence that she was the guarantor on the mortgage that her father obtained from a bank where he had a relationship but she did not, Thornton noted.
“Clearly, Ms. Hyman’s guarantee and credit were needed in order to finance the purchase. Her later offer to assist her father in the refinancing of the loan further reveals her lack of ownership. If she had indeed been an owner of Bouganvilla, there would have been no necessity to offer such assistance,” Thornton said.

Thornton agreed with Hyman’s claim that she understood she would get a half ownership upon her father’s death, and that father and daughter thought the property was transferred to an irrevocable trust. But, he added, the transfer was never consummated.

“The court believes the father made promises to the daughter, the daughter made promises to the father, and the father and daughter failed each other repeatedly,” Thornton concluded.
The dysfunction led to acts that “smacked of bad faith behavior” by each, he said. Daoud, for instance, did not have authority to remove Hyman from the Bouganvilla corporate structure. And Hyman should not have issued shares to herself a year after she filed the lawsuit.

Brito said Daoud trusted his daughter and named her the corporate president, adding: “She never paid a single dollar. Alex has made every single payment since day one.”
Despite that, she came to court, sat on the witness stand, “hand to God,” Brito said, and claimed she was the 100 percent owner. Hyman also filed an eviction claim and was intent on selling the property and pocketing the money, Brito added.
Brito said it was his opinion that Hyman’s motivation was always about the money. If it were only a personality conflict, then why would she have also sued her brother to take his potential interest. Hyman ultimately dismissed her claim against her younger brother, he said.

Another factor that figured into Hyman’s motivations was her husband, Brito said. The chief judge was frequently present at court and at times argued points of law, something that Brito said he objected to and Judge Thornton instructed the chief judge not to do on at least one occasion, Brito said.
“At mediations, from what we’ve been advised, Judge Hyman was driving the discussion in terms of the settlement,” Brito added.

Paul Hyman denied arguing any legal points in court or controlling the mediation. He said he spoke up in court only when Brito canceled a deposition of Paul Hyman at the last minute.
Brito “is insinuating I committed an ethical violation, which is an absolute lie,” he said. “I am a husband who supports his wife who has been abused by her father.”

Comparing his wife and her father, Paul Hyman said, “Klley Human is one of the most honest and truthful people have ever known, and Alex Daoud is a convicted felon who betrayed the public’s trust.”
Thornton ordered the cancellation of the 100 shares Kelly Hyman issued to herself in 2013. He ordered a 50-50 split in the property between Hyman and Daoud’s trust.

Daoud would also be able to live on the property until his death, provided he collect rent from a secondary unit, maintain the property and keep up with the mortgage and taxes. Brito explained that Daoud lives in the primary residence and a second unit is being remodeled.

Burstein denied that Hyman intended to evict her father and pocket the proceeds of a sale. And while he disagreed with Thornton’s ruling, Burstein claimed the outcome was favorable to Hyman. The lawsuit was filed as a last resort because Daoud removed Hyman from the state corporate records, he said.
“He was also contending that she owned nothing. The corporate documents reflect she was the sole owner, and the judge found she owns 50 percent of the company. I should also note that part of the evidence was Mr. Daoud filed sworn affidavits in 2006 in a family court case involving an effort by him to reduce his child support, in which he did not disclose any interest in this company,” Burstein said.