“Dewey Beach News” Email Update

by Dave on August 16, 2010

From the “Dewey Beach News” email service:

JUDICIAL DEVELOPMENTS TAKE CENTER STAGE IN DEWEY

Dewey Beach is finding more of its future placed in the hands of attorneys and judges, at a cost the town most probably cannot afford to pay.

Dewey Beach Enterprises (DBE), owner of Ruddertowne, emerged victorious from a dispute spanning nearly three years as a unanimous decision of the Delaware Supreme Court issued on July 30 stated unequivocally that its plans to build at Ruddertowne complied with the Dewey Beach Zoning Code.

That same day DBE won another resounding victory as Federal District Court Chief Judge Sleet ruled in its favor on a motion to dismiss filed by defendants Dewey Beach and individuals including former Mayor Dell Tush, Commissioners Hanewinckel and Hanson, and Planning and Zoning Commission member David King.

This ruling was a blow to the defendants, who argued that their positions as public officials would shield and immunize them from personal liability for their actions. The federal court found instead that if DBE proves its allegations made in the complaint, the town and the individual defendants personally could be held liable for their misconduct. The individual defendants are appealing that decision to the Third Circuit Court of Appeals.

In another case, the town filed motions to prevent DBE from taking sworn deposition testimony from various witnesses later this month. The Chancery Court will hear oral argument Thursday, August 19 in Dover.

Thursday August 12, DBE filed suit against Dewey Beach to set aside the recently enacted Ordinance 682, which some claim strengthens the town’s commitment to a 35-foot height limit. DBE claims Ordinance 682’s placement of zoning decisions into the hands of the general electorate and its change in voting requirements violates Delaware State law and the Dewey Beach Town Charter.

Citizens to Preserve Dewey (CPD) is trying to negate the impact and meaning of the court decisions behind a cloud of smoke and mirrors. CPD feigns ignorance of the interplay between the improper conduct of town officials that resulted in DBE’s successes and the insurance travesty and budgetary debacle facing the town.

CPD and its supporters choose to ignore the impact of future judgments in DBE’s favor and immediate dangers facing the town – including bankruptcy, and a future property tax or other extraordinary means to regain solvency. In presenting its misleading quotes and misinformation, CPD also completely ignores its own record of distortions and failures.

Many wonder how it can be that this war is still waging. Once again, we will try to provide you with the information CPD and many members of the local press fail to present – so you can decide.

WHAT DOES ALL OF THIS MEAN TO DEWEY BEACH & PROPERTY OWNERS?

1 – After three years of expensive litigation, the recent Supreme Court decision lets Ruddertowne’s owner Dewey Beach Enterprises (DBE) begin the first phase of the Ruddertowne expansion project without providing any town amenities that were part of its original plan.

2 – The federal suit is still pending and if DBE again succeeds, there is a decent chance they may be able to build whatever they want while the town and individual defendants face incalculable exposure for judgments, legal fees and expenses.

3 – As the town’s legal fees continue to escalate at an astronomical rate, town council controls the destiny of the town on whether to work towards a settlement, or roll the dice with the courts.

4 – Each time town officials enact an ordinance that specifically targets DBE and prevents it from exercising its legal rights as a property owner, it appears DBE will protect itself by filing a lawsuit against the town and its officials.

5 – There is a real possibility that insurance and legal problems could force Dewey Beach into bankruptcy. The recent rulings by Delaware Supreme Court and the US Federal District Court should serve as a wake-up call.

6 – If DBE will still negotiate, it would be wise for town council to do all it can to make the best business decision for the town of Dewey Beach and pursue a settlement that will eliminate the lawsuits that keep coming at this town. DBE has invested millions in Ruddertowne and has legal rights under the town’s ordinances, comprehensive plan and charter. DBE also has business decisions to make. We hope cooler heads will prevail before the town again gambles on courts that may issue more decisions the town does not care to live with.

7 – DBE offered many amenities the people of Dewey asked for, including a Bay Boardwalk, visitor center, police substation, convention center, public parking and restrooms and much more. Height is a sensitive issue that has been beaten to death. The future of Dewey Beach has a 35-foot limit. Property owners and all current commissioners are clearly committed to 35-feet. However, town council should consider something different for this unique property within the zone created to be the most intensely developed in Dewey Beach – because without settlement, height will likely be a decision made by the courts.

The Supreme Court Decision – Fact vs. Fiction

On December 24, 2007, the former Dewey Beach town solicitor wrote a letter to DBE asserting that its proposed Ruddertowne plans did not comply with the zoning code because they violated minimum lot size requirements for residential buildings. On July 7, 2008, the Board of Adjustment upheld the denial of the building permit for that reason. On July 30, 2009, the Superior Court affirmed that decision, prompting CPD to write categorically, “We expect DBE to appeal this decision but feel confident we will prevail.”

CPD’s confidence was misplaced. Exactly one year later, the Supreme Court of Delaware, the state’s highest court, unanimously reversed that decision. The Supreme Court held that the mixed use project proposed by DBE for the Ruddertowne property is NOT subject to lot size requirements for residential buildings and sent the matter back to the Superior Court for further action in accordance with its decision.

DBE’s victory was no surprise to the overwhelming majority of people who attended oral argument on June 2. Responding to arguments made by attorney Max Walton for the town’s Board of Adjustment, Justice Berger pointed out that the town’s position meant that a mixed use project would have to comply with every requirement for both residential and commercial uses.

“Just wait. I want to be clear on this,” Justice Berger insisted when Walton tried to change the topic, requiring him to return to the issue. Walton offered a series of reasons why residential requirements should be applied. Astonished, Justice Berger ended the matter by asking Walton how, under the town’s interpretation, mixed use would ever kick in. Visibly shaken, Walton had no answer.

CPD spins the Supreme Court

This case is over. DBE won – but CPD apparently will not accept the fact that DBE won the case. It insists that the Supreme Court “issued a radical opinion” because DBE “exploited a loophole.” In its August 3 blast, CPD says, “The Supreme Court ruled that the Dewey Beach zoning code was not specific regarding density in a mixed use application and reversed the Superior Court’s opinion.”

The Supreme Court justices did not have to crawl through some loophole to reach their decision and there was nothing radical about it. They simply read the Zoning Code and applied a legal tenet so basic that every first year law student knows it by rote.

As Justice Berger wrote for the Court: “Thus, there is no reason to read a mixed use restriction into a provision that, on its face applies to residential structures. Finally, to the extent that there is any doubt as to the correct interpretation, that doubt must be resolved in favor of the landowner.”

In light of the foregoing facts, CPD’s assertions more closely resemble the ranting of a child having a temper tantrum than rational adult commentary.

Now that the phase I Ruddertowne project will proceed, we ask our town officials: How much money has been wasted on this three-year legal expedition?

Lies, Truths and Consequences

CPD wildly fluctuates between efforts to terrorize its readers with exaggerations and outright lies, and efforts to calm and assuage the fears of their readers with equally inaccurate happy talk.

Inviting panic, CPD wrote on August 3 that, “The result of [the Delaware Supreme Court] ruling is that it allows for unlimited density if a developer chooses a mixed use, i.e. commercial and residential, in a commercial zone.”

Wrong again, CPD. As Justice Berger noted for the Supreme Court, “Mixed use structures are required to satisfy several provisions relating to proportionate size and parking, but there is no express requirement that they comply with residential lot size restrictions.” Anyone familiar with the zoning code knows its requirements prohibit “unlimited density.”

CPD also tries to strike fear in the hearts of Dewey Beach citizens with its ongoing statements that DBE intends to construct a 68-foot hotel. DBE offered a compromise 48-foot structure in October 2007 and the town has refused to consider the proposal. Since November 2007, only one entity has been espousing 68 feet – and that entity is CPD.

On the opposite side of the pendulum, CPD tries to lull its audience into a false sense of security, stating on August 3 that, “While some revenues are down this year, the town is still financially secure. In addition, the town’s insurer is standing squarely behind the town, providing coverage on all four lawsuits.” It repeated its false assurances on August 13, writing that the “town budget is solidly in the black and the town’s insurer is standing behind the town in our defense.”

In the interest of happiness and civility, we would like to agree with CPD, but then we would both be wrong.

The fact is that the town’s financial picture is not good for many reasons – including that business license and accommodations tax revenues are not meeting budgetary goals.

More importantly, while Dewey has been under majority control of town commissioners aligned with CPD over the past three years, legal fees have skyrocketed and total Dewey Beach public officials liability insurance costs have tripled.

Though Darwin appears to be providing defense coverage at this time based on policies in effect before July 1, 2010, it absolutely refused to continue to provide insurance beyond that date; and nine of 10 carriers refused even to give a quote for public officials liability coverage because Dewey Beach officials present a lousy insurance risk.

CPD would have you believe this is solely a result of lawsuits filed by DBE, but it is not. Consider the Eric Campbell case and the manner in which Gordon Elliott was treated. Consider the sequential threats made by commissioners for several years to bring lawsuits against their fellow commissioners.

Though no one seems to know how much insurance coverage remains to cover the town’s legal expenses, many believe the limits of policy coverage are near.

More importantly, defense costs reimbursed by the insurer are subject to the insurance policy’s exclusions and the insurer’s reservations of rights. If a court finds that the town’s public officials engaged in dishonest, fraudulent criminal or malicious conduct, or other unreasonable or illegal acts, the insurer can demand the town reimburse it for the defense costs it paid.

If an adverse judgment is rendered when the town has no insurance, it is very probable that the town will have to enact a property tax or take some other extraordinary fiscal action to avoid bankruptcy.

We have questions:

What cases is the town currently paying the defense costs for – because either it exceeded the limits of coverage or the insurer denied coverage?

How much has the insurer expended in defense of the DBE lawsuits that the insurer advanced while under a reservation of rights?

Is it true that town officials have discussed the possibility of bankruptcy to permit the town to continue to litigate instead of negotiate?

Is it truly worth jeopardizing the town to continue illegally targeting the Ruddertowne property?

Dewey Beach is not allowed to target any individual property or property owner when enacting or applying its ordinances and DBE has shown that whenever the town or town officials illegally target it, DBE will do whatever is required to protect itself and its property rights. When does the insanity stop?

DEWEY BEACH TOWN COUNCIL
SPECIAL CALLED MEETING
EXECUTIVE SESSION ONLY

5:00 p.m., Monday August 16
Best Western Gold Leaf
1400 Coastal Highway

The Dewey Beach commissioners are meeting in executive session Monday regarding litigation. Though the executive session is closed to the public, the public has the right to be present when the meeting opens and the commissioners vote to go into executive session. Likewise, the public has the right to be present when the commissioners adjourn the meeting. Any vote taken by the commissioners must be made in public.

We find it logical to assume the meeting involves the Ruddertowne project, and encourage all who want this matter brought to a prompt and reasonable resolution to let the commissioners know you believe it is time to negotiate in good faith and bring the insanity to an end.

You may email the commissioners at the following addresses:

Mayor Rick Solloway: solloway@aol.com
Cmmsr Marc Appelbaum: map12@verizon.net
Cmmsr Diane Hanson: dianehanson@townofdeweybeach.com
Cmmsr Zeke Przygocki: zekec5@yahoo.com
Cmmsr Marty Seitz: mgseitz36@yahoo.com
WHAT IS DEWEY BEACH NEWS?

Dewey Beach News is a confederation of year-round neighbors, friends and business associates who love Dewey Beach. Its Steering Committee includes Bob Barry, Pete Lucas, Maggie Mesinger, Joe Nelson, Rick “Sharky” Schindledecker and Alice Walsh. Journalist, freelance writer and media consultant Georgia Leonhart reports, writes and disseminates Dewey Beach News email communications.

Contrary to CPD’s many statements, we do not work for and we are not controlled by DBE.

We who support Dewey Beach News do not agree on every issue, but we are in complete agreement that Dewey Beach needs alternative voices and channels of information. Dewey Beach is about its people. We know that no person or group has a monopoly on loving Dewey Beach. We know the town has successfully met many challenges over the decades; and we believe Dewey will do so again.
If you are interested in supporting Dewey Beach News, want to be added to our email list, or wish to communicate regarding any other matter, please contact us by email addressed to Dewey-Beach-News@comcast.net.

Viva transparency!

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