Asbestos 101: A Review

Okay, class, when your client complains about the quality of your work, should you sue for an extra $13 million? Anyone? You, in the back?

A few months ago members of the Dade County Attorney's Office were given a tour of several large hangars at Miami International Airport. Their guide, Buddy Klein, is a veteran contractor whose firm is a well-respected asbestos-removal company that does millions of dollars' worth of work each year from Miami to Atlanta. What Klein showed the attorneys disturbed them. It was an inside look at the work conducted by a company called MCO Environmental.

In 1992 MCO was the low bidder on a series of projects to remove asbestos from three airport buildings, which are now at the center of one of the largest lawsuits ever filed against Metro-Dade. Julio and Cruz Otazo, owners of MCO, claim the county owes them more than $13 million for the projects.

The Otazos have worked hard over the past year to elicit payment. First they alleged racism, complaining publicly that county bureaucrats were withholding their money because of anti-Hispanic sentiments. In May they sued. And now the Otazos have hired lobbyist Miguel DeGrandy, a former state legislator, to try to negotiate a settlement.

"There is no way [Julio Otazo] is going to get a nickel from a jury," predicts Klein. The founder of DPC General Contractors, a competitor of MCO Environmental, Klein has taken it upon himself to offer the county his advice and expertise. "The only hope he has to get any money is through a settlement," Klein says. "That's what he's been counting on since he filed his claim."

The work of Cruz and Julio Otazo was documented in the March 31, 1994, New Times story "Asbestos 101," which detailed how Julio Otazo, a tenured professor in Florida International University's construction management department, and his wife Cruz "Cuqui" Otazo, one of the founders of the Coalition of Hispanic American Women and a member of the board of directors of the Hispanic-American Builders Association, started MCO Environmental in the late 1980s and quickly built a business that relied heavily on work from Dade County.

The article questioned many of the Otazos' business practices, raised doubts about the legitimacy of their demands for additional money from the county, and brought to light the widespread lack of supervision of contractors at Miami International Airport.

During one project in which a small amount of asbestos was to be removed from one of the Burger King restaurants at the airport, for instance, the Otazos billed Dade more than $71,000, asserting that the high cost was justified because, they estimated, the job would take twelve days to complete, spread out over four weekends. In records they submitted to county officials before they began work, the Otazos broke down all the expected costs: equipment and truck rentals for twelve days, as well as twelve days' worth of labor crews and supervisor time A priced anywhere from $30 an hour for a regular worker to $112 an hour to have one of the Otazos visit the site each day.

In fact, county records show, the job took only a single night to complete. And a supervisor on the project told New Times last year that when Julio Otazo submitted his estimate for twelve days' worth of work, Otazo was well aware the task required far less time. "We knew all along there was no way in hell it was going to take four weekends, three days per weekend, to get the job done," said former MCO project manager Tom Sellers. "We knew we could finish it in the first weekend."

The Otazos' lawsuit involves a project to remove asbestos from three old Eastern Airlines buildings, including two large hangars. Their low bid won them the Eastern contracts in 1992, when they claimed the task would cost two million dollars. But by early 1994, almost a year after MCO collected its fee and finished the work, the Otazos demanded an additional $13 million, saying the work had taken longer than expected and involved removing more asbestos than the county had estimated.

New Times's review last year of MCO's claims regarding the Eastern buildings found them to be as suspect as the company's earlier Burger King bill, but on a far grander scale. In demanding reimbursement for labor costs, for instance, the Otazos claim that at least 60 people were working at one site at times. But in reviewing county records A which are required by law to document the number of workers being used in a hazardous-materials area A New Times could find no data to support the claim. Generally, the records indicate, MCO's crews were half that size.

Besides the seeming discrepancies in manpower and equipment charges, which amount to hundreds of thousands of dollars, MCO is demanding millions more under general headings such as "lost profit." The Otazos argue in their lawsuit that because the Eastern project ran longer than expected, they were unable to bid on other jobs; they say the profits they would have earned from other jobs in 1992 alone would have been at least $4.1 million. Yet they have refused to support this claim in writing or substantiate how the figure was computed.

This past September, Metro-Dade countersued MCO Environmental, arguing that the firm unnecessarily damaged the Eastern buildings in the course of removing the asbestos. According to Deborah Mastin, one of three assistant county attorneys who have been working on the case, Metro has received reports from various engineering firms placing the amount of damage at nearly two million dollars.

DPC owner Buddy Klein says Metro's attorneys should take an even closer look at the buildings: Much of the fireproofing MCO put up to replace the asbestos is falling off, he contends; in some sections there is no fireproofing whatsoever. "Why wasn't this work condemned by county inspectors long ago?" the contractor asks.

MCO attorney David Swimmer says he has no idea what Klein is talking about, and asserts that as a competitor of MCO, Klein clearly has an ax to grind. Swimmer also denies the county's claim that MCO damaged the Eastern buildings while removing the asbestos.

Since January Swimmer and the county attorney's office have been trading requests for information. Last month the county received ten cartons filled with records from MCO A more than 10,000 documents in all A which officials are in the process of copying and sending to the accounting firm of Deloitte & Touche for analysis. Once that process is complete, perhaps by early summer, the county could begin deposing the Otazos.

In a deposition, the Otazos would be questioned under oath about the alleged inconsistencies in their claim. That, of course, would not be necessary if lobbyist DeGrandy manages to negotiate a settlement in the matter.

Deborah Mastin says she won't even discuss a possible settlement until she has had a chance to review all the documents. But DeGrandy's presence has some officials of the Dade County Aviation Department privately worried that the county manager and the Metro Commission might settle with the Otazos before the truth can be discovered. DeGrandy, who served in the state legislature from 1989 to 1994 and is currently an attorney in the law firm of Greenberg Traurig, was recently successful in persuading commissioners to award the exclusive right to develop Homestead Air Force Base to a group of politically powerful local businessmen. DeGrandy was unavailable for comment last week. His assistant says he was in town but was on vacation and could not be reached.

Mastin says if the case does go to a jury trial, it may take years to resolve. The more she learns about MCO's billing practices in other county projects, she adds, the greater the likelihood Metro's countersuit could grow. "I haven't expanded the suit at this time," she says, "although I certainly haven't ruled that out." In the meantime, despite MCO's pending $13 million suit, commissioners last summer voted to allow the firm to continue bidding on projects at Miami International Airport.

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