Following hearing, MLLA issues letter to Town confirming it will not sit down at mediation
It only took presiding Judge Roger D. Randall 15 minutes on the afternoon of March 23 to grant a petition previously submitted by Mammoth Lakes Land Acquisition (MLLA) to issue a writ of mandate that requires the Town of Mammoth Lakes to pay the entire $42 million judgment by the end of this fiscal year. Hours later, MLLA had issued a letter to the Town stating that it would not participate in mediation. The letter also lays out the payment plan MLLA would like to see enforced. Click here to read the letter.
The Town now owes more than $42 million in judgment awards from what has been known as the Hot Creek litigation.
Earlier this month the Judge granted the Town and its legal counsel additional time to file any last pleas, motions and responses, but as of Friday afternoon, time ran out, and now the burden of payment rests squarely on the Town.
Prior to making his ruling, Judge Randall said he had reviewed all the material submitted by the Town and responses by the plaintiff, and asked for final comments from both parties.
Best Best & Krieger attorney John Higginbotham, representing the Town, said he didn’t have much to add. “The debt is owed,” he acknowledged. He went on to argue, however, that as per a recent California statue, precipitated by the recent City of Vallejo bankruptcy case, the Town should have 60 days of pre-Chapter 9 process time, or mediation. “We’re not suggesting that MLLA isn’t entitled to the writ, or that you shouldn’t grant it.”
Attorney John Pierce, representing MLLA, responded that without the writ, it would not be possible to properly enforce the judgment. “The Town would continue attempts at mediation, as if it were immune, which would be a waste of time.” According to the letter issued by MLLA this afternoon, it will not take part in mediation.
Both the Town and MLLA have repeatedly made attempts at coming to a settlement to no avail. Town leaders, such as Council member John Eastman, have said in previous interviews that the distance between the two parties remained great.
“The Town should be permitted to take advantage of a 10-year payment plan,” Pierce added. “It’s not a bad thing; on the contrary it’s an extraordinary remedy.”
Section 970.6 of California Code makes such a payment plan available if the governing body of the local public entity has adopted an ordinance or resolution finding that an unreasonable hardship will result unless the judgment is paid in installments. Judge Randall said he would make an additional finding of hardship, given the Town’s economic situation.
Higginbotham responded that, contrary to Pierce’s assertion that 970.6 benefits the creditor, the code in fact is written for the benefit of the public entity. “It’s our call, the Town’s decision [whether to invoke 970.6],” he said. Higginbotham added his take that it’s not even the Court’s place to order the Town to exercise that option, and indicated that there should be a proper hearing should the Town decide to invoke 970.6.
To be eligible for bankruptcy, the Town would first have to prove that it is insolvent.
Should the Town file for relief under the U.S. Chapter 9 Municipal Bankruptcy statute, its debt would be neither discharged, nor necessarily reduced in any way. In short, according to U.S. statute, Chapter 9 provides for “reorganization of municipalities, which includes cities and towns, as well as villages, counties, taxing districts, municipal utilities and school districts,” and restructuring debt, not erasing it.
In the more than 60 years since Congress established a federal mechanism for the resolution of municipal debts, there have been fewer than 500 municipal bankruptcy petitions filed.
Town Manager Dave Wilbrecht was present during the proceeding, but made no comment afterward.