Davenport settles in open records violation case

Davenport city attorney Tom Warner reads items in court on Feb. 4, 2015 during his testimony in an open records lawsuit brought against the city.

Jeff Cook, QUAD-CITY TIMES file photo

The city of Davenport may have settled for more than $129,000 in an open records violation case, but an accounting of the city's defense shows that has hurt taxpayers' wallets more.

Davenport reached a settlement with Dr. Allen Diercks and Patricia Lane for $129,055.59 after the Iowa Court of Appeals ruled last year that the city had violated Iowa Records law in not providing two requested public documents related to the attempted purchase of the Isle of Capri Casino in 2013. But according to court documents, the financial blow will be more than $200,000 higher than that based on the cost the city expended to fight the case.

The city retained the outside counsel of Lane & Waterman LLP to fight the case and were billed by five attorneys representing it according to invoices submitted to the court.

This also was noted in Seventh Judicial District Judge Mark Lawson's conclusion when he ruled that the plaintiffs were entitled to $112,000 in attorney fees plus costs related to the violations.

"The attorney fees awarded must be viewed in the context of the proposed $150 million purchase of a casino by city taxpayers, and by the fact the City itself spent over $200,000 in attorney fees resisting the plaintiffs’ claims," Lawson wrote in his ruling. "Sometimes – as in this case – the price of open government is not cheap."

The makings of the case began in 2013 after Diercks and Lane requested all financial documents related to the potential purchase of the casino.

Davenport began investigating the purchase in the fall of 2012 which prompted then-Mayor Bill Gluba to sign an agreement with the casino to examine its books in October of that year. A contract was executed with Deloitte & Touche to conduct a due diligence investigation in December 2012.

While the city was initially successful in Scott County District Court, the plaintiffs brought their case before the Iowa Court of Appeals.

The Court of Appeals analyzed Davenport's obligations to produce four documents in particular: a Deloitte & Touche due diligence work product, a February 2013 invoice, the Deloitte Scope of Services document and a Jan. 9, 2013 legal memorandum from the city's legal consultant John Hintze.

The court found that Davenport should have produced the $207,900 invoice from Deloitte & Touche and the legal memorandum from Hintze.

With both documents, they were either held by City Attorney Tom Warner or others who were not employed by the city.

The city argued it did not refuse to provide the invoice because Warner had deleted the email it was in. The city also unsuccessfully argued that the invoice provided no insight into its decision-making.

"Further, we are not persuaded the city 'substantially complied' with the request or the invoice provided 'no insight' into the City’s decision-making activities," the court documents state. "The plaintiffs sought 'all invoices' from Deloitte. The invoice provided before the task was complete disclosed the amounts the city was spending incrementally at taxpayer expense and the City’s willingness to continue said expense."

For the other two documents, the court ruled that then-City Administrator Craig Malin and City Clerk Jackie Holecek had complied with the law and had not withheld them.

The city's costly legal battle could have been avoided not only in providing the documents, but settling with the plaintiffs prior to the trial, according to documents.

On Jan. 26, 2015, attorneys Mike Meloy and John Flynn made a settlement offer of $95,000, which was rejected. No counteroffer to the plaintiffs was made.

Up until the attorney fee hearing in September, invoices show that the city was billed for 528.7 trial hours costing $131,310.50.

An additional 128.9 hours were billed based upon the appeal at a cost of $28,409.50.

While Davenport's defense was costly, the $129,000-plus settlement amount is inclusive of $112,000 in attorney fees that were awarded by the court. Davenport will pay out $65,000 to Meloy, $39,000 to Flynn and $4,000 each to Harold DeLange II and James Tappa, who represented Meloy and Flynn during the fee hearing.

The attorney fees awarded were less than the amount that could have been awarded because the court ruled in favor of the plaintiffs regarding two of the four documents.

Had all of the Chapter 22 claims been successful, Meloy and Flynn could have been reimbursed a total of $123,425.

The court also ruled that appellate fees were incorrectly calculated. The fees were calculated at a rate of $250 per hour instead of $300 per hour, but the court chose not to amend the total reasonable attorney fee amount.

“This is a victory for the public and reaffirms that citizens do have the statutory right to timely receive public documents," Meloy said Tuesday. "These records are owned by the public, not Davenport.”

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