Articles

• The City's case, from this side of the Looking Glass
• A more complete history of Steve Eugster's, Cherie Rodgers', and the City's challenges to the City's loan obligation
• Real and imagined fraud, and why the City's fraud claim against the Cowles was dismissed
• Value of Settlement Analysis

A more complete history of Steve Eugster's, Cherie Rodgers', and the City's challenges to the City's loan obligation

The City was not alone in raising legal arguments challenging the nature and enforceability of what was contended to be its $40 million-plus obligation to make loans for garage operations. Attorney Steve Eugster and CLEAN (Citizens for Leadership Ethics and Accountability Now!) had raised "private inurement," "unconstitutional gift" and other related challenges in 1997. Those challenges were rejected by the Washington Supreme Court later that year in CLEAN v. City of Spokane, 133 Wn.2d 455 (1997). The adverse decision in CLEAN in 1997 limited the challenges that could viably be made several years later.

Any new or different challenge to the loan obligation, if successful, would also have consequences for the foreseeable securities fraud claim. This is not to say that the City would not defend itself against an unconstitutional or unreasonable construction of the ordinance seeking to burden it alone with the financial failure of the garage. But it did mean that the City needed to recognize and be prepared for an increase in the magnitude of the fraud and misrepresentation claims if a challenge were successful.

New challenges to the City's loan obligation were made by Yale Lewis in 2000, when he appealed a writ of mandamus requiring City Attorney Jim Sloane and City Manager Pete Fortin to loan funds for garage operations. In River Park Square L.L.C. v. Miggins, 143 Wn.2d 68 (2001), the Washington Supreme Court did not address those arguments. City adversaries later argued that the Supreme Court implicitly rejected Lewis's challenges and essentially invited them to get the next writ against members of the City Council. But the City did not agree, and when the Cowles obtained a second writ of mandamus, the City continued to challenge the nature and enforceability of the ordinance.

Camas neglects to report that it was not only a City challenge. The City provided separate representation to Council members and each had the opportunity to defend the case in the manner he or she wished. Steve Eugster and Cherie Rodgers both decided to do so; each presented their own defense, using their own counsel, and each ultimately filed their own appeal. See Eugster v. City of Spokane, 118 Wn. App. 383 (2003). Eugster largely represented himself. Cherie Rodgers was represented by Marjorie Bronster.

Rodgers' and Eugster's challenges to the City's loan obligation fared no better than those of the City. But one argument, advanced by all, was accepted by the Court of Appeals. The City, Eugster and Rodgers all argued that the City's obligation was only to loan funds, on terms that were discretionary with the City and the PDA. Although the City's adversaries scoffed at that position, the appellate court agreed.

Acting on the Court's decision, the City offered multi-million dollar loans to the PDA in 2004, both of which the PDA rejected. In response to arguments later made by the City alone, the Spokane County Superior Court ultimately ruled that the City's adversaries were reading the City's ordinance too expansively and the City had fulfilled its obligation under the ordinance by making the 2004 loan offers, holding that "[t]he offer of the loans by the city to the PDA and the PDA's rejection, satisfies the holding of the Court of Appeals and the writ of mandamus."