News

April 22, 2004

Chancellor William Chandler denied a request for a temporary injunction halting New Castle County government's use of outside law firms. He also declined to summarily dismiss the taxpayers' suit challenging the practice, indicting that he expects when it comes to trial to decide not only whether state and county laws are being violated but also to possibly rule on a constitutional question.

Ruling from the bench after a two-and a half hour hearing on Apr. 21, Chandler said his refusal to grant the injunction was the result of weighing likely harm to taxpayers from allowing the county to continue to spend money to pay outside law firms against "the injury likely to be done [by bringing] to a complete and grinding halt a [relatively large] number of lawsuits now pending."

An injunction, he explained, would require firms now employed to handle a variety of cases -- including the taxpayers' suit -- to turn them over to the county law office. Rather than risk the resultant chaos, "a more prudent course is to stay my hand today," he said. "If I were to grant the injunction, it would throw all those lawsuits into limbo."

There was no definitive information during the Court of Chancery hearing on how many suits are involved. In a pre-trial deposition, county attorney Timothy Mullaney referred to 10 cases. Plaintiffs

in the case filed copies of internal county memorandums referring to 15. Outside of the hearing, Mullaney said the law office staff, which he heads, is currently involved in 29 cases.

Contrary to some belief, the taxpayer suit, brought by Richard Korn, of Hockessin, and Jerry Martin, of Brandywine Hundred, is not limited to challenging county spending for outside legal representation in connection with the continuing investigation of the county administration by U.S. Attorney Colm Connolly. "This pertains to all cases where the county has spent taxpayer money to hire outside attorneys," Martin told Delaforum.

Going beyond his decision on the injunction to an unusual revelation about the direction his current thinking is taking on the merits of the suit's claims, Chandler expressed support for the taxpayers' contention that failure to secure County Council approval in advance in cases where legal fees were expected to exceed $50,000 in a given year or when in other cases those costs were approaching $50,000. A county ordinance requires such approval in connection with professional services secured by negotiated contract rather than competitive bidding.

Lawyer Collins Seitz, who is representing the county government, had argued that a provision in the ordinance requiring that the county's chief administrative officer be notified in writing about hiring law firms took precedence over another clause requiring Council approval, which Seitz claimed applied to other kinds of contracted professional services. Chandler said a more reasonable interpretation was that both provisions applied to contracting for legal services.

Seitz further argued that another part of the county code

Legal Fees

Following is a list of county-paid legal fees filed with Court of Chancery by plaintiffs in the taxpayers' suit:

Fiscal 2003:

Klett Rooney ...............................

Connolly Bove ............................

Saul Ewing ....................................

Young Conaway ..........................

Aqualaw P.l.c. ..............................

Cozen & O'Connor ......................

McCarter & English ....................

Richard Wier ................................

Janis, Schuelke & Wechsler ......

Oberly, Jennings & Rhodunda .

Potter Anderson & Corron .......

      Total ........................................

Fiscal 2004:

Klett Rooney ...............................

Connolly Bove ............................

Saul Ewing ....................................

Young Conaway ..........................

Aqualaw P.l.c. ..............................

Cozen & O'Connor ......................

McCarter & English ....................

Richard Wier ................................

Janis, Schuelke & Wechsler ......

Oberly, Jennings & Rhodunda .

Potter Anderson & Corron .......

Rosemary K. Killian .....................

Rosemary K. Killian .....................

John Malik ....................................

Baach, Robinson & Lewis .........

Welsh & Recler ............................

Howard Bruce Klein ....................

Charles Butler ...............................

Southerlan, Asbill & Brennan ....

Asbill, Moffitt & Boss ................

      Total .........................................

-

$250,871.83

$61,938.19

$64,972.46

$183,369.46

$7,322.00

$33,574.37

$33,311.64

$15,597.27

$34,901.45

$55,852.50

$151,430.56

$876,723.19

-

$250,871.83

$325,944.72

$48,578.97

$222,279.25

$27,077.55

$46,134.61

$2,406.36

$9,120.16

$60,909.61

$48,760.00

$50,604.83

$25,083.50

$4,772.50

$22,358.90

$8,495.85

$4,848.90

$12,330.53

$6,390.00

$162,977.47

$38,361.94

$1,378,307.50

which entitles an individual employee to be represented by an outside attorney of his or her choice at county expense requires Council approval only if the employee, in effect, demands a specific attorney be hired and not if the employee agrees with a selection made by the county attorney. "It is a stretch to say you can draw a line that fine," Chandler said.

At another point, Seitz seemed to say he felt the $50,000 notification provision was enacted "because Council wants to know if it (the cost of a contract) is going to reach that amount." Chandler called that "a startling admission" on Seitz's part. Seitz did not pursue the point.

The judge was more ambivalent about an argument by Richard Abbott, the taxpayers' lawyer, that shifting county money among various accounts and lines in the budget was illegal. Abbott's point was that only Council can make significant changes in an enacted budget, which is also an appropriations measure. At one point in the proceedings, Chandler asked Abbott if he was "really talking about an accounting issue and not a legal issue."

Taken to the extreme, Chandler said, Abbott's argument could allege that the entire county budget is invalid.

A key point in Abbott's presentation was that the county has "run out of money" to pay outside lawyers. The county budget for the current fiscal year, which ends on June 30, authorizes the law office to spend $661,413 for 'contractual services'. That is up from $430,937 in fiscal 2003. Abbott said the county has has spent "at least" $1,378,307 so far this year and $876,723 last year for outside legal services.

The difference, he said, was made up by transferring money -- illegally, he alleged -- from the county executive's contingency fund and from a budget sub-category titled 'contractual services, grants and fixed charges' in the 'general insurance' category. That latter category was boosted by unanimous

Thanks for Coming

Sussex Countian William Chandler, who heads Delaware's staid one-of-a-kind Court of Chancery, couldn't resist a bit of down-home bravado when it came to thanking the small troupe of participants and onlookers who traveled to Georgetown for the hearing.

"It's usually the other way around," he noted, with downstaters traveling to Wilmington for court appearances.

Accommodating his schedule was the official reason the venue was selected, but the affable jurist disclosed the 'real' reason: "It gives us a chance to show off our new courthouse."

approval at Council's Apr. 13 session of a measure appropriating an additional $600,000 for the sub-category. Seitz said that, as a result, there is sufficient money to cover expected billings between now and the end of the fiscal year. Council will approve a budget for fiscal 2005 during May.

Abbott said that by arbitrarily shifting money among accounts, the county administration was violating its "statutory fiduciary duties to the taxpayers of the county." At one point he referred the shifting as "a shell game."

Seeking Council approval for budget revisions would "bring decisions made in executive offices behind closed doors with a security guard out front" into public view, he said. Because the administration has not sought such approval since the taxpayers' suit was filed in January, "we can assume it does not intend to do so," he said.

Abbott want on to say that, by arguing against granting an

injunction, the county was, in effect, "asking this court to approve [of] its continuing to break the law."

Seitz argued that the budget changes were both proper and legal. He said specifically that the purpose of giving the county executive a discretionary fund was to provide money to do just that.

After ruling against an injunction, Chandler said he "skeptical" about a claim by Seitz that a law requiring Council approval for entering into contracts for professional services -- which is acknowledged to be a routine activity by the executive branch of governments -- is unconstitutional because it violates the accepted doctrine of separation of powers. Chandler said he seriously doubts that separation "extends below the state [government] level," but added that he is "willing to be educated on that point."

Earlier in the hearing, he rebuked Seitz for not have invited County Council to participate in the case in light of his having raised that point. Seitz agreed not to argue that point during the injunction hearing and to extend such an invitation before the case comes to trial.

Although most of the hearing was largely technical in nature, the opposing lawyers managed to get in a couple of digs at each other, albeit politely.

Seitz said that a major reason the county law office requires outside assistance is that developer Frank Acierno, who is one of Abbott's clients, has brought several suits against the county, some of which are pending. "Mr. Abbott is a very tenacious adversary. He knows where the courts are and so does Mr. Acerno," Seitz said.

When he came to rebuttal, Abbott said he would take that comment to be a complement and added, "With your firm having received $325,000 plus (in legal fees from the county) in this fiscal year, you have a particular interest in not having a preliminary injunction [granted]." Seitz is employed by Connolly, Bove, Lodge & Hutz.

Chandler concluded his post-hearing remarks by complementing both lawyers on their presentations, but took the occasion to chide County Council on the apparent vagueness of some of its ordinances. Recalling that Abbott had referred to one contract at issue which paid the firm of Potter Anderson & Corroon to provide an interpretation of one of the county codes and his own confusion about the wording of the $50,000 approval ordinance, Chandler said, "I can see why New Castle County has to hire outside counsel to interpret New Castle County ordinances."

2004. All rights reserved.

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