The Underlying Lawsuit

Prior to the lawsuit

On May 30, 2012, Emergency Manager Louis Schimmel, the Mayor for Pontiac and the Deputy Oakland County Executive met with a Towers representative to discuss the current condition of the Phoenix Center, its maintenance needs and its future.  Mr. Schimmel mentioned that the Phoenix Center was a financial drain on the City.  The owners of the Towers said they would be willing to assume responsibility for all maintenance, repair, security and operational obligations of the Center, an idea Mr. Schimmel said he was willing to consider.

By July 5, Mr. Schimmel, through an Emergency Manager Directive, announced a plan to demolish the Phoenix Center in its entirety, notwithstanding his discussions with the Towers, for them to assume responsibility.  At that time, he did not disclose how the financially strapped city would pay for the multi-million dollar demolition.

Within a week, Mr. Schimmel presented demolition plans and a resolution to the Oakland County Planning and Building Committee, as the City was only leasing the facility from the County.  The County’s Finance Committee and Board of Commissioners quickly approved the plans and resolution, which were made under the assumption that Mr. Schimmel had the authority as Emergency Manager to make such decisions under the recently suspended Public Act 4.  He did not.  Nor did he have authority under the reinstated Public Act 72, which gave him even less power.

Before Public Act 4 was suspended, Oakland County sent a letter to Mr. Schimmel notifying him that his role and authority, if the Act was suspended, would likely be reduced in regards to the demolition decision.  An increased role would be given to members of the Pontiac City Council, many of whom appeared to oppose the demolition.

The Proposed Demolition

The Phoenix Center abuts the exterior walls of the Ottawa Towers.

In the Scope of Services outlined in the job description for demolition contractors, there was no requirement for the Ottawa Tower’s owners to consent to work on the project that would physically damage their buildings.  Not one dime was budgeted to repair the Towers after the demolition. No plans were made for the Towers’ tenants to park. In addition, no actions were to be taken to preserve or protect their Towers, their tenants or parking areas.

Once word of the demolition was made public through the media, attorneys for Ottawa Towers immediately filed a lawsuit and requested an injunction to stop the demolition, which would create the following issues:

Structural

  • Create a 260-foot wide hole in the façade of one of the Towers, four levels high
  • Leave doorways and stairwells exposed with large openings in sides of Towers
  • Create a hazard where the doorways open into the Phoenix Center Plaza and at the doors and stairwells leading to the parking deck’s internal levels
  • Create a cliff-like drop-off to ground level outside several entrances
  • Not provide adequate parking for total building capacity, or any parking during demolition
  • Potentially cause structural instability and disturb supporting foundations
  • Cause issues with the attached drainage systems

Economic and Legal

  • Severely or completely diminish the value and interests of the Ottawa Towers and their owners
  • Without sufficient parking, one of the Towers may have to be torn down
  • Discourage potential, even current, tenants from leasing space in the buildings. This affects local income and property taxes, as well as patronage to nearby retail and dining establishments
  • Violate the Tower owner’s basic property rights

The Lawsuit

The owners of the Ottawa Towers originally filed a lawsuit against Emergency Manager Schimmel, the City of Pontiac, Oakland County and the Oakland County Building Authority in Federal Court.  Contrary to statements made by the EFM, the Federal judge did not rule upon the owner’s claims and did not deny their request for injunction.  Instead, for procedural reasons, the Towers voluntarily dismissed the federal case.

In November 2012, the Towers re-filed their lawsuit in Oakland County Circuit Court.  The case was assigned to the Honorable Michael Warren, who enjoined Oakland County and the City of Pontiac from proceeding with the demolition and from interfering with the Towers’ use of the Phoenix Center.  Judge Warren held that “the actions of all public officials must abide by the rule of law,” and that the Towers had “made a strong showing of due process violations.”

This is the first reported case in which an Emergency Manager in Michigan has been prevented from taking a desired action.   The Court ruled that even emergency managers must abide by the United States and Michigan Constitutions.

The owners of the Towers are seeking a permanent injunction upon conclusion of the case.  In the alternative, they seek substantial damages against the City and County if the Phoenix Center is demolished.

Opinions and Orders

The Downtown Pontiac Business Association met on May 15, 2013 and issued a resolution opposing the demolition of the Phoenix Center and urging negotiation to resolve the legal issues:
Pontiac Downtown Business Association
Whereas, the members of the Pontiac Downtown Business Association have never been given the opportunity to express their opinion on the question of whether the Phoenix Center should be demolished;
And whereas, the Pontiac Downtown Business Association Bylaws empower the members to democratically decide solutions to problems or situations affecting their businesses;
And whereas, the patrons and businesses who have relied on parking on City of Pontiac Lot #9, can no longer rely on this large parking lot, because the City has put it up for Auction;
And whereas, there has been no budget adopted by the City of Pontiac or Oakland County or other funding entity that would provide for the implementation of a plan to address replacing the parking lost by the demolition of the Phoenix Center;
And whereas, there been no public discussion about the potential loss of Pontiac Income Tax Revenue, if the Ottawa Towers lost parking for future tenants who could potentially staff thousands of employees;
Therefore, the Pontiac Downtown Business Association goes on record in opposition to the demolition of the Pontiac Phoenix Center. Furthermore, it urges the City of Pontiac and the County of Oakland to negotiate to resolve the legal issues involved in a law suit over the demolition, with recognition of the property rights of all affected citizens and businesses, and with a long term plan for the parking needs of Downtown Pontiac.
_______________________________________________________
Secretary of the PONTIAC DOWNTOWN BUSINESS ASSOCIATION, Resolution Adopted May 15, 2013


On May 9, 2013, Judge Warren denied a motion for reconsideration by the City of Pontiac and Oakland County.
The City of Pontiac and Oakland County (defendants) asked Judge Warren to reconsider his decision to enjoin demolition of the Phoenix Center.  Such motions should only be granted if the Court’s ruling rested on a “palpable error,” such that the court was misled.
The Court rejected the defendants assertion that the previous ruling was in error, and further noted that documents that they had failed to disclose information.  The documents, which were obtained during discovery, included an earlier draft of the Desman report which was edited to remove statements showing that the Phoenix Center structure was in “fair to good” condition.
The Court clarified that the defendants may not take any action to close or demolish the Phoenix Center or diminish its availability or condition for use, including but not limited to parking by Plaintiffs or their tenants.

On June 28, 2013 Judge Michael Warren of the Oakland County Circuit Court issued an order granting the Plaintiff’s motion to hold the City defendants in civil contempt in regards to the City of Pontiac’s recent closure of the Phoenix Center.  He has awarded damages and attorney fees that will be established through a second motion.

In his opinion, Judge Warren notes that he’s ruled on this issue multiple times and that there was no emergency that justified the City’s actions.  He finds that the City’s actions “clearly violated the order of this Court.”  He refers to the City’s after-the-fact motion to modify the preliminary injunction as “too little, too late.”

The ruling demonstrates Judge Warren’s intolerance for defendants’ disregard of his orders and finds that Plaintiffs and their tenants suffered actual damages as a result of the City’s actions.

Processed-130331_Ottawa-Final_6-28-2013

Relevant Documents

Court Filing

Court Injunction