Court of Appeals Affirms State’s Judgment for Breach of Contract and Conversion Against City Emergency Manager

In this opinion, released for publication yesterday, the Court of Appeals affirmed a trial court judgment in favor of the State of Michigan’s Emergency Financial Assistance Loan Board against the city emergency financial manager of Highland Park.  The state sued the emergency manager alleging breach of contract, common-law conversion, statutory conversion and breach of fiduciary duty.

An impaneled jury determined the defendant made unauthorized payments to himself totaling $264,000.  The trial court entered an amended judgment in favor of the state and against defendant in the amount of $332,837.11, which included $264,000.00, attorney fees and costs.

The defendant argued that his contract and appointment had been modified by an oral agreement with former Governor Jennifer Granholm, which entitled him to compensation after his first year of service. As the Court of Appeals correctly points out, the appointment and compensation of an emergency financial manager is governed by statute and the governor’s role is to determine only whether, in the first instance, such an emergency exists and whether an emergency financial manager should be appointed.  The former governor had no authority to determine the compensation of the emergency financial manager, much less whether any contract could be orally modified after the appointment took place.

Further, citing the case I argued and won in the Michigan Supreme Court, Odom v. Wayne County, 482 Mich. 459 (2008), inter alia, the Court of Appeals also held that the defendant’s causes of action brought in an original action and by way of a counter-complaint in the state’s action were properly dismissed because the defendant had failed to plead in avoidance of governmental immunity from suit.  The Court of Appeals reasoned that the Emergency Financial Assistance Loan Board’s function was governmental in nature and to sue it a plaintiff had to prove and plead one of the narrow statutory exceptions found in the Governmental Tort Liability Act, MCL 691.1401 et seq., applied.

The opinion is important as it discusses the scope and nature of the authority and powers of an emergency financial manager and the authority of the Emergency Financial Assistance Loan Board.  It is also important due to the recent appointment of an Emergency Financial Manager for the City of Detroit.

Read the opinion here:  Michigan v. Blackwell

About cjtucker06

Owner of law firm since July 2014; Handles all types of appellate matters and assists other lawyers with complex litigation and insurance coverage issues; Admitted to the Supreme Court of the United States, the Sixth Circuit Court of Appeals and the State Bar of Michigan; Expertise in prosecuting and defending appeals with several significant successes in the Sixth Circuit Court of Appeals, the Michigan Supreme Court and the Michigan Court of Appeals; Author of briefs amicus curiae in the Michigan Supreme Court for the Michigan Defense Trial Counsel and the Insurance Institute of Michigan; Represents Insurance Companies, Major International Business, Governmental Entities, Law Enforcement Officers and County Sheriffs. Board of Directors, Michigan Defense Trial Counsel Amicus Committee Co-Chair, Michigan Defense Trial Counsel Military - Retired Major in the Judge Advocate General (JAG) Corps of the United States Army, Brigade Judge Advocate and Staff JAG officer for the Maneuver Training Center, Camp Grayling, Michigan; Recipient of the Army's Meritorious Service Medal (the highest medal of honor available to Soldiers serving in non-combat roles); 2012 Graduate of the Judge Advocate Officer Advanced Course, at The Judge Advocate Legal Center and School, Charlottesville, Virginia. United States Navy Reserves, Combat Warfare Qualification, January 1989 to July 2003 Former law clerk to Justice Stephen J. Markman, Michigan Supreme Court, Research Attorney, Michigan Court of Appeals. Insurance Coverage Associate Plunkett Cooney; Environmental Law Attorney at Squire Sanders, now Squire Patton Boggs; Master's Degree in Environmental Law; Environmental Law Scholar, ALI/ABA Washington, D.C., Juris Doctorate, Vermont Law School, Environmental Editor, Vermont Law Review; Treasurer and Finalist, Moot Court Advisory Board.
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