US District Court Seek Further Information on 326 Land Company Litigation
The United States District Court is seeking further information regarding the City of Traverse City settlement of a lawsuit with 326 Land Company. In January 2022, 326 Land filed a lawsuit challenging the issuance of a Stop Work Order which suspended construction of a residential condominium building following the State Circuit Court’s decision regarding measurement of building height as it relates to the City Charter requirement of a vote.
Extensive discovery was completed in order to understand whether 326 Land had progressed far enough with its project to have vested rights in completing the project. Through the discovery process, information was revealed regarding 326 Land’s project that was not known to the City at the time of the Stop Work Order and therefore, the City has made the determination to allow 326 Land to continue with the project.
“Based on the complexity of this matter, we anticipated that Judge Maloney would seek further information regarding the vested rights issue. We are confident that when the court reviews deposition transcripts and documents obtained in the discovery process, it will be determined that the City has made the best decision to settle. We look forward to working through that process,” says City Attorney Lauren Trible-Laucht.
A change to the law normally applies to a pending development, unless that development has progressed far enough in actual construction that the developer gains a “vested” constitutional right under due process to complete the project. In response to a ruling that rooftop utilities on a new building must be under 60 feet, a Stop Work Order was issued. This was based on the information known to the City at the time, suggesting that 326 Land had not yet substantially progressed in construction to gain vested rights. 326 Land challenged the Stop Work Order on constitutional and other grounds, and also challenged the validity of the “Proposition 3” charter amendment that requires any construction of a building taller than 60’ had to be approved by a majority of the City electorate.
“The City settling with 326 Land Company does not set an adverse precedent on Proposal 3, it is related to the vested rights in this specific development only; in other words, how far along 326 Land Company was with its project. After a risk benefit analysis, it was clear that it was in the City’s best interest to protect the City taxpayers from monetary damages,” says Peter Worden, the Outside Special Counsel representing the City on this litigation. He noted that as part of the City’s settlement with 326 Land, 326 agreed to drop all claims of money damages as well as its challenge to Proposition 3.
Mr. Worden also states that he respectfully disagrees with the judge’s stated concerns over whether the proposed settlement was sufficiently arms-length. “I think it is only understandable that the judge would like additional information before approving the settlement,” Mr. Worden continued. “He wants assurances that this was at arm’s length and that it is properly reflective of the facts. That’s his job as a United States District Court Judge. We shouldn’t have any problem with him asking for information. At the same time, those of us who participated in this litigation process know that it was adversarial. A settlement was reached only after both sides engaged in a careful risk-benefit analysis. At the end of the day, I have every confidence we will be able to provide him with the necessary assurances.”