County starts to squeeze FCCF over suit

Published 12:00 am Tuesday, October 29, 2002

Responding to a complaint by the Freeborn County Committee for Fairness, the county filed a motion asking the Steele County District Court to require the FCCF to place a $5.2 million surety bond Monday.

County Administra-tor Ron Gabrielsen explained that the $5.2 million is equivalent to the damage the FCCF litigation would inflict on taxpayers. If the motion is approved and the FCCF fails to post the bond, the case would be dismissed.

The FCCF alleges the county board’s decision to issue $25.7 million bonds for the courthouse project on Aug. 27 violated the state’s Open Meeting Law and is invalid. The litigation, served on Oct. 11, made the bonds unmarketable and the county was obliged to postpone the sale originally scheduled on Oct. 14.

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The county calculates it would lose at least $1.2 million for the interest payment alone due to an upward trend in the bond market interest rate. It also contends that the additional construction costs at the rate of 3.5 percent a year would accrue because of the delay.

A Minnesota statute grants courts the authority to direct the posting of a surety bond when a plaintiff brings an action questioning the validity of any decision taken by a public body, if the court determines the damage to the public or taxpayers may result from the action.

The Minnesota Supreme Court found that the purpose of the statute is to &uot;discourage vexatious lawsuits by irresponsible litigants.&uot;

The statute says, &uot;If such surety bond is not filed within a reasonable time allowed therefore by the court, the action shall be dismissed with prejudice. If such party, or parties, file a bond as herein required and prevail in the action, any premium paid on the bond shall repaid by or taxed against the public body.&uot;

The county hired Minneapolis-based attorney Jay T. Squire to handle the case.

Squire defended a similar case in Meeker County where litigation by a citizen group halted a bond sale for constructing school facilities planned by the joint powers of three local school districts in 1994.

The plaintiffs challenged the legitimacy of the joint-powers agreement. The litigation halted the sale of $10 million in general obligation bonds and put the endowment of a $6 million grant from the state in jeopardy.

The court granted the motion by the school districts asking the plaintiffs for a $12-million surety bond. The litigants did not pose the bond as required by the court and the case was dismissed.

The order said, &uot;A bond is required in this case to prevent loss due to delays caused by the litigation … It is unlikely that this case, without a surety bond, would be advanced through the calendar as expeditiously as plaintiffs argue.&uot;

The county filed the motion to the Steele County District Court, rather than the Freeborn County Court, to avoid conflicts with interests of judges in the local court. The Owatonna court assigned Judge Casey Christian to the case.

A hearing is scheduled for 3 p.m. on Thursday. The county is asking for the $5.2-million bond to be in place by Nov. 4.