A written promise to pay does not meet Utah state code standards for security to put a judgment on hold during an appeal, according to a Utah District Court judge.
Tooele City officials had hoped a resolution passed last month by the city council would be sufficient security to gain a stay for the $20.7 million they were ordered to pay to Tooele Associates while the city pursues an appeal.
Instead Tooele City will need to pay $1.5 million, plus interest, in the form of a bond or cash as security in order to put the judgment on hold, according to 3rd District Court Judge Randall Skanchy.
“This court determines that Tooele’s City’s promise to pay as set forth in Tooele City Resolution 2013-35 is not adequate security,” wrote Skanchy in a memorandum decision on Jan. 10 in response to Tooele Associates’ objection to the adequacy of the resolution.
‘Security’ as used in Utah court rules ought to have a monetary value equivalent to the judgment at issue, according to Skanchy.
Tooele City is prepared to give the court $1.5 million in security and proceed with the appeal, according to Tooele City Mayor Pat Dunlavy.
“We have $1.5 million to give the court if we need to,” he said. “This will not stop us. We will proceed with the appeal because it is in the best interest of the citizens of Tooele.”
The security guarantees that if the appeal is eventually denied, there will be money to pay the judgment.
A new state law, passed by the 2013 state legislature, requires municipalities to post a bond for the amount of a judgment in excess of $5 million before a court issues a stay of the judgment.
Skanchy disagreed with Tooele City’s claim that as a municipality it cannot pledge collateral and that the legislature therefore must have meant for security to mean something other than a bond or pledge of collateral when it revised the law and court rules in 2013.
“The Court is not persuaded by this argument as the plain language of both the rule and the statute provide that a municipality is not exempt ‘from the requirement of posting bond, obligation, or other security when appealing a judgment’ in excess of $5 million,” wrote Skanchy.
However, the judge reasoned that because Utah code allows a municipality to pay a judgment in 10 equal annual installments, if it cannot immediately pay the judgment, that security equivalent to one-tenth of $15.7 million, plus interest, would meet the requirements of state statutes and court rules.
“It appears that Tooele City is once again acting in bad faith,” said Bruce Baird, Tooele Associates’ attorney. “They are wasting time and money going through motions to avoid paying the judgment.”
The judgment dates back to a lawsuit filed in 2002 by Tooele Associates claiming that Tooele City violated the Overlake development agreement by delaying permits, withholding approval of improvements, and enforcing codes and ordinances in the subdivision that were not applied to other developers.
Tooele City filed a countersuit in 2004 claiming that Tooele Associates had violated the development agreement .
In 2009 a jury found Tooele City was guilty of breaching agreements with Tooele Associates and awarded the developer $22.5 million in damages. That amount was reduced to $20.7 million because Tooele Associates was ordered to pay the city $1.8 million for its own failure to honor agreements.
Skanchy, who presided over the jury trial, denied a motion from Tooele City to invalidate the jury verdict and a request for a new trial. In November 2013 Skanchy entered a judgment against the city for $20.7 million plus post-judgment interest.