Detroit's Challenge to Consent Agreement Dismissed by Judge

Ingham County Circuit Court Judge William Collette dismissed a legal challenge to the consent agreement brought by city of Detroit Corporation Counsel Krystal Crittendon.
by | June 13, 2012

By Paul Egan and Matt Helms, Detroit Free Press

Ingham County Circuit Court Judge William Collette today dismissed a legal challenge to the consent agreement brought by city of Detroit Corporation Counsel Krystal Crittendon.

Collette accepted arguments from attorneys for the state and Mayor Dave Bing that under the new city charter it is still up to the mayor or the City Council to bring a Detroit lawsuit -- not Crittendon, the city's top lawyer.

"This lawsuit will not go forward," Collette said at a hearing in Mason. "This is such an obvious issue. I saw it from the very first moment."

Michael Hodge, a Miller Canfield attorney representing Detroit Mayor Dave Bing, asked Collette to immediately dismiss the lawsuit or Detroit could face payless paydays as soon as Friday.

"There is at this point in time a fiscal emergency in the city," Hodge said.

Though Crittendon relies on language in one part of the recently revised city charter to justify her actions, another part of the charter says she is to pursue legal actions "when directed to do so by the mayor," Hodge told Collette.

Crittendon was not in court and Assistant Corporation Counsel James Noseda represented the corporation counsel. He told the judge Crittendon has a duty to enforce the city charter and seek an opinion on whether the April consent agreement between the city and the state was legal.

Collette asked Noseda if the language in the charter that says the corporation counsel is to act at the direction of the mayor is meaningless.

Crittendon sued June 1, alleging the consent deal was void because the state of Michigan owes the city money.

The state disputes those claims.

Mayor Dave Bing and members of his staff were visibly pleased with the ruling, which came down just before they headed to a special closed session at 10:30 this morning with the City Council. Later a press conference, Bing said the judge's dismissal of the legal challenge will allow the city to move forward.

Immediately after the ruling, City Council President Charles Pugh said Crittendon should not appeal the decision, which he said was always about getting a judge to determine the validity of Crittendon's concerns that the consent agreement violated state law and the city charter.

"The judge said he didn't agree, so it's over," Pugh said. "We move forward."

Pugh said the council likely would meet Thursday in a special session to approve its selections for the city-state financial advisory board and the joint pick by Snyder and Bing, former state Treasurer Bob Bowman.

"We're going to confirm our people this week, and move forward on the fiscal stability of the city of Detroit," Pugh said. "That's all we wanted."

Council President Pro Tem Gary Brown said he wasn't surprised by the ruling, which came a day after Bing brought in outside lawyers to challenge Crittendon and after two major bond ratings agencies again downgraded Detroit amid concerns the city would not make debt payments.

"I think what she did what she believed was right, and she believed she did what she had to do under the authority of the new charter," Brown said of Crittendon.

Gov. Rick Snyder is "gratified" by the ruling, spokeswoman Sara Wurfel said. "It allows the state to continue working collaboratively with the city of Detroit and making sure that we are moving forward," Wurfel said.

"Moving forward is exactly what the citizens of Detroit need and deserve."

State Treasurer Andy Dillon said he was "very pleased with the court's ruling, which allows the state to continue working collaboratively with the city of Detroit on implementation of the financial stability agreement. "We continue to be focused on working with the mayor and CFO Jack Martin to help stabilize the city's finances and ensure citizens are receiving the services they deserve and expect," Dillon said in a statement. "Continued delays in moving this process forward only promise make eventual solutions more difficult."

'Your office had plenty of opportunity to intervene'

Before dismissing the lawsuit on the spot, Collette aggressively questioned Noseda, the assistant corporation counsel.

"This agreement was negotiated over a substantial period of time," the judge said. "I've never been a big fan of this stuff (but) your office had plenty of opportunity to intervene or take some action ... long before this agreement was ever signed."

Earlier, Collette ruled the negotiations that led to the consent agreement violated the Michigan Open Meetings Act. But he was overruled by the Michigan Court of Appeals.

Several Detroiters who attended the hearing said they were disappointed but not surprised.

"I'm disappointed because the rule of law is still not being interpreted equally for a minority city," said Valerie Glenn of the group Free Detroit, No Consent Agreement.

"We're going to have to take this to the federal level."

Though Bing supports the agreement and the Detroit City Council approved the deal in a 5-4 vote, a majority of council members were unwilling to try to restrain Crittendon.

Bing, however, became increasingly outspoken in his criticism of the corporation counsel and this week retained outside legal help to fight her action, saying she had exceeded her authority because she didn't have the power to file the lawsuit without his authorization and she is putting the consent deal and the city's financial future at risk.

The state Treasury Department has taken a hard line in insisting the lawsuit be withdrawn. It says it will soon begin withholding revenue sharing payments to Detroit to cover payments on a recent bond issue that was supposed to be renegotiated as part of the consent agreement.

'I'm relieved that we're not in default'

Councilman James Tate said he and other council members who supported the consent agreement took criticism from people who believed it was illegal, so today's ruling defused many of those concerns.

"I'm relieved that we're not in default, and that it won't be used as a reason for withholding of those bond dollars," Tate said. "It truly gives us an opportunity to lift a cloud from over our heads, over every decision that we're making."

Tate and Councilman Ken Cockrel Jr. said they wouldn't support Crittendon appealing the decision. Cockrel said he disagreed with her opinion but defended Crittendon for pursuing what she thought was right.

"I don't think that she went rogue," Cockrel said. "I think she was standing on a legal principle and doing her job. However, I think her analysis was flawed in a couple of key areas."

Among them, Cockrel said, was that Crittendon's office had not investigated other previous contracts between Detroit and the state that could have been, under her analysis, void because of debts the state allegedly owes the city. That could have put her on shaky ground in court had the case not been dismissed.

The first meeting of the financial advisory board is set for Friday at a conference room at Cobo Center, and Cockrel said he wants the city's two members of the nine-member board seated in time for that meeting.

The board has the significant task of figuring out ways to resolve Detroit's enormous debts -- at least $12 billion in long-term retiree obligations in addition to the city's chronic annual deficits. It's another huge challenge for the city, which starting July 1 will operate under a $1.12 billion budget that is $246 million lower than the year before after Bing and the council agreed to drastic cuts.

The council today scheduled a special session for 11 a.m. Thursday to consider its two appointments to the financial board and approval of the joint Bing-Snyder pick. Under the consent agreement, Snyder appoints three people to the board; Bing and the council select two each; Treasurer Andy Dillon gets one, and Snyder and Bing name one member jointly who must also win the council's approval.

(c)2012 the Detroit Free Press


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