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

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

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."

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