Lawsuit against city heads to court Friday

Defense seeking order for plaintiffs to post $700K surety bond


Clint Riese
News Editor

Round one of the lawsuit concerning the city’s municipal campus is set for this Friday, March 1, and this time, everyone involved will be ready.

The case got off to an inauspicious start last Friday at the Washington County Government Center in Stillwater, where the defendants planned to ask Tenth Judicial District Court Judge John C. Hoffman to require the plaintiffs to post a surety bond in the amount of $700,000.

After waiting 90 minutes to be heard, those assembled left in quick order: the plaintiffs’ paperwork was still processing in the court’s computer system and Judge Hoffman had yet to access it.

He ultimately left it up to the lawyers whether to proceed or reschedule, though he hinted it would be hard to act without studying both arguments.

“This is big-time litigation,” Judge Hoffman said. “…It’s just, to me, not right that one party now knows I don’t have what they gave me.”

The plaintiffs – Lakes Area Business Association, Cameron and Cassandra Piper, and William Anderson – filed their paperwork the previous evening, said their attorney, Fredric “Fritz” Knaak.

“I do feel it’s important the court review the documents we have presented. I don’t want to feel disadvantaged,” said Knaak, noting he regarded his argument as dispositive.

James Thompson, representing the City of Forest Lake and the Forest Lake Economic Development Authority, was amenable to Knaak and agreed to reschedule the hearing.

Thompson did inform Judge Hoffman that the EDA and City Council were set to vote on a contract for a construction manager this Monday and that some expenditures relating to the project were likely.

“Is it the end of the world?” Thompson asked. “No, but it will create some problems.”

The new motion hearing is set with Judge Hoffman at 2:30 p.m. Friday.

Defense’s Argument

The defense’s motion for last week’s hearing states that the bond is being sought as security for any potential loss or damage to the public agencies or taxpayers as a condition of proceeding in the case.

Between escalated construction costs and related expenses for aspects such as cost engineering and material delivery, the defense argues the lawsuit has the potential to cost taxpayers in excess of $700,000. The motion asked the court to order the bond to be posted in seven days or, if unpaid at that time, dismiss the case with prejudice.

“In summary, the pendency of this lawsuit is going to have a significant disruptive effect on the timetable for the project and could cause significant financial damages to the City and EDA,” Thompson wrote in support of the motion. “Because of the uncertainty created by the lawsuit, the city administrator has recommended to the City Council and EDA not to proceed with either site preparation or construction of the facility until a final outcome is reached in the case.”

The defense seeks the surety bond pursuant to state statutes 469.044 and 562.02, and cited several cases involving public bodies where surety bonds were affirmed by Minnesota courts.

Plaintiffs’ Argument

In the plaintiffs’ memorandum opposing the motion filed last week, Knaak argues that there is no legal basis for the surety bond, and that the defendants failed to establish potential damages beyond the realm of speculation.

“There is no present danger that any current opportunity will be lost if the project is delayed pending trial,” Knaak wrote. “The City of Forest Lake already has a City Hall. No developer has been selected. The Northland Mall isn’t going anywhere.”

Piper this week responded individually to the city’s motion.

“As is typical in this type of litigation, the city has chosen the low road of procedural maneuvering and blockades rather than allowing the courts to hear the case on its merits,” he wrote in an e-mail. “Sadly, it appears that the city would rather spend our tax dollars discouraging civic participation than allow us to vote on a project they assert we elected them to construct.”