Letter to Tetreau

7.2 MB·

by  Town of Fairfield

ened ie

McCARTER
&ENGLISH

December 30, 2011

‘The Honorable Michael C. Teeay
First Selectman

‘Town of Fairfield

Sullivan Independance Hall

725 Old Post Road

Faivfeld, CT 06824

Re: Supplemental Raport lo Legal Analysis Dated September 30, 2011
Dear Wr, Tetreau:

In thls letter, we address quastlons posed to us by Board of Selectmen ("BOS")
conceming ‘whether the 2010 Binding Letter Agreement (Binding Letter
‘Agreement’ is binding on the Town given eur conclusions {convayed in our letter
dated September 30, 2011) regarding former First Selectman Ken Fiat's lack of
authority to enter into the Agreement without approval of the BOS, the Board of
Finance (BOF, and the Raprasentative Town Meeting ("RTM"). This leller is
prompted in part by newly disclosed infamation regarding representations lo the
State of Cannecliout Department of Transportetlon in 2010 regarding the Binding
Later Agreement.

ts

‘The relevant facts leading up to Mr. Flate's signing the Binding Letter Agreement
ara set forth in our September 30. 2011 letter.

We previously concluded that the Bindlng Letter Agreement was not submitted to
Town kadies, including the BOS. We based our conclusion on the tact that Mr.
Flatto represented several times in writing that the Binding Letter Agrsament was
never disciosed to Town badies (gaa September 30, 2011 Analysis. pp. 5-6)
Further, thera was no eecord in the minutes thatthe Binding Letter Agreement was
submitted to the Board of Selectmen on May 6, 2010, whsn the Closing Letter and
‘State-Town Agreement were presented for ratification. or to the BOF and RTM.

In late November 2011. counsel for the Connecticut Department of Transportation
{CONNBOT") provided the Town with a copy of a letter dated July 15, 2010. from
Atiorney Richard H. Sax! to Denise Racosevich. Esq., Counsel for GONNDOT,
Decamber 30, 2011
Page?

attached hereto as Exhibt 1. The fetter is a formal opinion by Attomey Sax. then
Town Attorney, affirming that the State of Connecticut and CONNDOT ara
“epaeifiealy ralying on this letter fromm me as confirmation that tha Binding Letter was
duly authorized ard executed and is binding on the Town of Fairfield" Notably, this
letter was not disclosed by either Attorney Saxl or Mr Flaite to our fim during the
period in which we conducted our original legal analysis. The July 15. 2010 fetter
indicates thet Ills copled ta the BOS, but we had nat leamed ofthis letar from any
of the mambars of the BOS at the time, including Mr. Jamas Walsh or Ms. Shem
Steeneck, nor was it mentioned in the several writen communicabions by Mr. Flaite
or in our conversation with Attorney Sad.

(On December 7. 2011, the Towa received adaltional correspondence relating tothe
Binding Letter Agreement, which spectfically addreesed the July 18, 2010 letter.
(See December 7, 2011 letter sttached herato as Exhibit 2). Auomey Sxl wrote 8
letter to the BOS dated December 7, 2011 in which he adcressed his July 18, 2010
lattar, and described concems that CONNDOT had in June and July 2010
cconceming the Binding Letter Ageaements enforceabiliy. in his December 7, 2011
letar to the BOS, Attorney Sarl explains that he sont two letters to Attomey
Rodeaevich. The first wae sent on Juna 10, 2010 and the second was sent on duly
46, 2010. (An unsigned copy of the June 10, 2010 letier is attached hereto a3
Exhibit 3). Following a request fram the Town on Dacember 7, 2011. Attorney Sox!
provided a copy of the June 10, 2040 letter. The June 1G, 2010 latter stated
Anarney Sax's opinion ‘and conclusion that the fowes First Selectman was
‘uthorzed to enter into the Binding Letter Agreement by virtue of the 2003 Bond
Resolution and the May , 2010 BOS resolution,

Attorney Saxl states in his December 7, 2011 comespondence tc the BOS that, “In
duly of 2010, Me. Rodosevich ravisited the issue and asked me ta amplify on the
[June 10] latter. Ms. Radosevich was pushing to get the latter signed, and we were
Both aware that tne Guerrera contiact had been awarded and was due to be signad
by the Tawn shortly. In fact the Guerrera contract was signed by the Town on 7-16
10"

‘Attomey Saxl further explains, "Feeling considerable pressure to put this issue to
rast yat again, | hastily reviewed, printed out, signed and faxed the 7-15-10 letter to
Denise, After i was sent, | gave i to Ken Flats for distribution. In retrospect | note
that my later contains an errar which may explain hy Itwas nat given to the BOS.”
Atiamey Sax! goes on to identify Hat the enor concemed a factual assertion that
‘Atlomey Rodosevich of ConnDOT asked him to include inthe leier. Hi states:

‘As to the comment about the RTM, | believe | had told Denise
Rodlosevich that Ken had discussed the project update with tha RTM
fon &-24-10, § signed what Denise hed asked me to sign, which
included he words, “including the specific interpretation of the
section 4.3 a8 set forth in the Binding Lettering [sic] during the
December 20, 2011
Page 3

question and answer period. { do not believe that was an accurate
statement. My recolecion wes thet Ken alluded to iin general terms
ony

In reviewing this a year and a half later, | acknowledge that | arrad in
my statemert in the 7-18-10 Ietior regarding the RTM. As | said, 1
‘was under considerable pressure to get things finalized before
awarding of the Guerrere contact on 7-18-10. | hastily signed aff on
the final varsion.

Latter Attorney Saxl fo BOS dated December 7, 2011, Ex. 2

(On Dacember 15, pursuant to the BOS's request to inquire further
vonceming Atomey ‘SaW’s statements, undersigned counsal contacted
Attorney Sax by telephone to confirm oenain facts relating to or set forth in
the July 18, 2010 and December 7, 2011, letiers. The following is 2
summary of several key facts discussed during thal conversation

1. Attorney Sax! explained that he authored two previous letters to
‘SONNDOT canceming his opinion that the Town was authorized
‘o enter into the Binding Letter Agreement. The frst of these
letters was writen to Acting CONNDOT Commissioner Jeffery
Parker on June 7 and the secand wae written on June 10, 2010.
Exe. 3&4, The July 15, 2010 leer was writen, upon the further
inglstance of Atorney Rodosevich, on the eve of the Town's
awarding a contract to Guemrera Construction,

2. Attorney Sex! verified thet ha did nat copy the BOS members,
specifically memeers Walsh and Steeneck on his July 15, 2010
letter to Attorney Racosevich. He indicated that he sant ths letter
{a former Firet Selactman Flatto who said he would distribute it
Atlorney Savi could not provide me with details as to exactly
‘when he leamed thet Selectmen Walsh and Steeneck never
raceived copies of the July 15 leer" Selectmen Steeneck and
Walsh were likewise not provided with coples of the June 7 and
10 letters,

3. asked Attorney Saxl whether and shen he and former First
Selectman Fletlo discussed the factual inaccuracies In the

* Undecsignea counset contacted Selectman Welsh and farmer Selactman Sloenck
te confi that fhe une 10 and July 15 lier ware prowded fo them before
December 2011. Bath indicated that they hed not “ealved ether ete priar 0
resgving copies in or about Decamae of his yea. ve note that both Attorney Sea!
and hr. Hat confimed frei Selacimen Waich and Steoneck were not provided wth
opine of ether letor.
December 30, 2011

Page 4

duly 15. 2040 later. Attomey Sax! indicated thet he had epoken
‘wih Mr. Flatio about the factual inaccuracies after the letter mas
sent to Attomey Rodosevich on July 15, 2010. including the
‘arraneous reference to the May 24 maeting. He told me that he
‘id rt share @ deaft of the July 15, 2016 letter with Mr Flatto
prior to signing and sending it to Attorney Redosavieh. attomey
Sax! said that Mr, Flatto explained on or within a few days
following July 15, 2010 that that the letter wes inaccurate in
referencing a discussion of “epacte imerpretation of section 4.3
aa stated in the Binding Letter during the question en answer
period’ at tha May 24 RTM meeting, Wile 2 member of the RTM
had inquired generally about parking revenues during the May 24
meeting, Mr. Flatto. told Wr. Saxl that the Binding Letter
‘Agreement and the formula by which parking revenues would be
shared between the Town and the state were not discussed.

| asked Attomey Sax! sihetner ha and First Selectman Flatto
discussed whether o7 not to alert Attorney Rodbsevich of the
factual inaccuracy. AS discussed above, Allorney Sand told me
that he had discussed the topic with First Selectman Flatto, but
that Atorney Sax! explained fis view thet ha beleved his overall
conclusion on enforceabilly was correct. so he did not $26 2
rieed at the time to notify Atforney Radosevieh of the error. He
‘confirmed teling Mr. Fatt, consistent with his Deoamber 7. 2011
letter. specifcelly that Attorney Rodosevich asked hins to include
the referance 10 the May 24, 2010 ATM meeting. He further
‘offered that former First Saleoman Flatto cid nct ask him to
‘correct th latter or sand a clarifcation

In ight ofthe absence of the June and July 2010 letters tom the
‘documents provided to our fim this summer, | asked Mi. Saxl to
idantty any other documentation, wetuding correspondence and
emails that would reflect discussions hetween the Town and
CONNDOT conceming the Binding Letier Agreement. Attorney
Saxl explained that he was aware of another letter that had been
sent by the Town to Acting CONNDOT Commissioner Jaffery
Parker spectically concerning the Binding Letter Agreement ia
the May to July 2010 timefiama, We requested Attamey Sax! to
review his fle for that later.”

(Undarsigned counsel alse conferred with Mr. Ftato on December 19, 2011
(Wr. Flatto confirmed that

7 an unsigned aopy of thal ata provded by Atlomay Sav! is alachad neteto as Extiot
December 80, 2014
Page §

41. Neither he nar Attornay Sax! provided BOS members Walsh and
Steeneck a copy of Attorney Saxl's July 15, 2010 letter to
Atomay Rodosevich. Mr. Flatto explained that bath he and
‘Attomey Saxl agreed that it should not be circusted in light of
factuel inaccuractes. Mi. Flatt recalls that Attorney Sax! toid him
to hold the letter According to Mr. Flatto. Altomey Sax! knew i
the July 18, 2010 leter wos distibuted it would ’raize questions’
He noted that the BOS did not, at that time, have the Binding
Letter Agreement. Mr. Fatto confirmed thet he oid not provide the
Binding Letter Agreement to any other meraber of the BOS or tc
any Town board until he provided a copy of the Binging Letter
Agreement to Sherri Staanack in or about May of 2011.*

2. Mir, Flatfo confined that he initiated a discussion with Attorney
Saxl conceming the factual inaccuracy, namely tha reference to
the May 24, 2010 RTM discussion. Mr. Flatto said that he was
“96% sure” that he leamed of the error after the latter was sant to
‘Aulamay Radosavioh, In our raviaw of the facts, we requested
from the Town and oblained some emaile from Mr, Flatto and
Atiamey Sax, Among these was an email to bah Attorneys Saxl
and Rodosevich dated July 14, 2010, the day before the letter
‘was sent," Mr, Flatto stated that he discussed the letter with
Attorney Saxl on or about July 18, 2010, and identifed that the
May 24, 2010 RTM reference was not accurate, According to Mi
Fietta, Atamey Savi explained that Atlomey Rodosevich had

¥ as, Steeneck enptained that she had not recelved a copy ofthe Binoing Letter Agreement
{tl some time in une or July 2011, when tas provi tothe clvant Fst Selecman,
Noa 3:43 pam on July 14. 2040, Flat wrote

“Dick, Henize, my goodness

This month od question about the val diy ofthe letter rete reimbursement af the snnua!
‘and fron parking reveruas has bean rasobad and is bayarid Fepicacn, Ths realy has
‘een put to hed and bw aovoen not eke furer unneeded ecions wh ch wil ha this
projet up. Fist of al what ha Attorney fora Mun cially has cetfee to the State DOT in
larting hat the eter i egal binding upan [ie] tow. that skauld 98 suffer (1 you.
‘Sacond ution a town legally adopted resolution passed by 200 the BOS in 2010 and bythe
RTW end GOF ine por yer specticely stated ‘the First Selectman is authorzod to ane!y
{ofan aceapt any avalable state oF federal gra ac forthe Snancing ofthe Project and
‘urther "to teke el necessary action an behalf cf ton to receive such grants including
cexocutng any necessary documents". tis gives me as First Selectman complete suthorty
te execule the eter regarding defining debt payrantsayainst parking vevenues as signed
‘nth the DOT. This was pat of he resolton the BOS reauthorized on tay 5, 2019. Why
fre we belaboring tis? rave a $20 millon dallar conetratton contact that the To
‘awatang ths week (party based an the fee that ve have a State Aid Agreement asad)
Ihwacld fhe ts ga ahead with the tomorrow Ker

Emel Ken Flato to Richard Saal and Denise Rodoeavich, July 14.2010, 243 p.m,

{Sea Eshibt 5 allached nereto,)
December 30, 2011
Pages

provided him specife language to include in the letter, induding
the reference fo te discussion at tha RTM meeting and the
phrase indicating tne ful BOS is earban copied. but that he had
been rushed 10 provide it to the State in light of the bidding
process, Notably, Mr, Flatto did not make reference to any
dleoussien at the May 24 RTM meeting inhi vuly 14, 2010 eral
to Atomeys Sax! and Redasevich.

3, | asked Mr. Flat whether he and Attomey Sexl discussed
notifying Attomey Rodasevich of the encore in the letter. Although
he quaified his response by stating that he could not smear tot
far. Flatta iniialy recaled asking Attorney Saxt to contact
Allomey Rodesevich about the error, and offered to contacl the
‘acting CONNDOT Commissioner to explain tha error. Mr. Flatto
ccanfirmed that he never contactad the Acting Commissioner or
anyone at CONNDOT concerning the error, Wr. Flato called me
afer ry telephone conversation with him, and left me a voice
message clasfying his reoallection that he did not instruct
‘Attomey Saxt fo contact Ms, Redosevien but expected that
‘Attorney Sex! would have done so.

4. Mr, Plato provided his views on the history of the MetroCenter
Project, ris inlerpretation of various documents and his views on
the bona fdas of tha deal. We previously included Mr. Flatte’s
writen explanations in aur original September 30. 2011 analysis,
We also include Mr. Flati's explanation to the BOS dated
December 7, 2011, While i ia not germane te our legal analysis,
‘we are inolucing ik as part of this supplemental analysis. (See
Exhibit @ attached hereto.)

sal Analy’

Under Connecticut law, agreements that are made by municipal officials without
proper authority are void. Cannecticut courts have hald that those who contract with
‘ municipalty “are charged with notica of the extent of .. the powers af municipal
Officers and agents with whom they contract [and] .. # follows that ifthe agent had
in fact na power to bind the muriclpally, there is na labiity on the express
contract... Keeney @t 148. See also Sheehan at 625 (Contracts beyond the
powers of a municipaity are void.")

Since the powers of a municipal corporation are wholly statutory, every person who
deals wih euch a boay is bound to know Whe extent of ts authority and the
limitations of is powers."y: Tumey , Tha Town of Bridgeport. 56 Conn, 412, 418
(1887) ("The rules of lave, declaring that an agent of a town must pursue his
aulhority stictly; that if he goes heyond his written authority his actis not valid; that
December 30, 2011
Page?

persans dealing with such agents muat look to the corporate act of the town at the
SoUre and lnit of the powars af the agent’)

Our Supreme Court has found that, nptwthstanding the rule providing that
agreements entered beyond the capacity of municipal officials are void, ratification
‘oan gosur whan a board fails "to object when the unauthorized actions are fully
disclosed te the hoard at a mesting of that board.‘ Keeney v. Town af Old Saybrook
237 Conn. 125 (1996) at 149, n. 19 cing Blakeslee v. Board of Water
Commissioners, 121 Conn. 163, 178-79 (1938) .. Gur Suprerne Court has aleo held
that where @ municipalty acoepts the bereft of a contract, may likewise be
‘estopped from claiming it was not executed according to law. See Pepe v. City ef
Naw Britain, 203 Conn, 281, 299 (1987) (cing cases)

‘The Town's obligations under the Binding Letter Agraament, i any. must be viewed
against a complex factual and legal backdrop. In our September 30, 2011 analysis,
ve concluded that the Binding Letter Agreement was nat appraved by either the
BOS or any other Town body. and wes fot mada known to the BOS at the May
2010, meeting or thereafter euficienly for the BOS's snaction to be deemed a
Tatiicatlen. Wa have leamed of no facts since then that would alter our conclusion.

Attomey Sax!s July 18, 2010 latter to CONNDOT states that BOS's May 5, 2010,
resolution would authorize the First Selectman to enter into the Binding Letter
Agreement since wag related to tne athor two 2010 agreements, and further states
that the Town “is appending’ the Binding Letier Agreament to the State Town
‘Agreement, presumably to underscore iis relatedness. But the Binding Letter
‘agreement was not appended to the Slate-Town Agreement whan was presented
to the BOS, BOF and RTM in or about Mey 2010. The letter further states that
fomer Fist Selectman Flaite “reviewed and discussed the terms of the State
Agreement ang all associated documents with the Town, including describing the
‘spaeffc interpretation of section 4.3 96 set forth in the Binding Letter dunng the
‘Question and answer period, al the Representative Town Mesting on May 24. 2010.

‘We now know that this is not true, and none of tie town boards saw the Binding
Latter Agreement. Apart ftom that, wa have not seen or heard evldanca that the
relevent boards were euficiantly informed of the effect of the Binding Latter
‘Agreement for them to have ratified it, The boards knew of the provisione of the
2008 Tri-Partite Agreement that allowed CONNDOT to pay the parking ot operating
and maintenance costs before turning over eny excass revenues to the Town.
“Thera ig no indication, however, that Ure Town boards learned that the State's debt
service on the $184 millon in bonds would be deemed operating and maintenance
costs, We tharefore da not believe that the Town ratified Mr. Sav'sinterprettion of
Mr, Flatio's authority to execute the Binding Letter Agreement, absent an expt
review offs terms

For these reasons, we do not helleve that 2 court would find that the Bining Letter
‘Agreement was raifad in 2010 by the BOS, BOF and RTM, since none of thesa
Bacamber 30, 2011
Page 8

boodias had full notice of former First Selactman Flatto’s signing the Binding Letter
‘Agreement or an eppartunty to ratty t by conductor inaction fallowing such notice.

Ip isa diferent question, however, whether the Tovm would be estopped from now
claiming thatthe Binding Latter Agreement is void Tha State exercised substantial
diigence in varying that the Town wes bound by that Agreement, by specifically
requesting and obtaining 2 formal opinion letter from the Town Attornsy assuring the
State that Mr, Flatio was indeed authotzad to enter into that agreement. In
response, Attomey Sal sent a laller dated July 18, 2010, ta Attomey Denise
Rodosevich, Counsel for CONNDOT. in which he ropresented that all proper
approvals had been obtained and that Mr. Flato was duly auitatized to enter ino
the Agreement. Attomay Sax concludes by saying that Mr. Flatto. “is fully
empowered by both the Town charter and the Soard of Selectmen votes of 2003
and May 5, 2016 to enter sna and execute the [Agreement] relating to interpretation
of section 43 of the Trbartie Agreement”

We do note that the Stale, a6 a contracting party which provided $18.4 milion in
financing, did eo expressly in veliance on Attorney Saxts letter, which including at
the Slate's specific insistence Atlornay Sax’s representation (now known to. be
incorrect) concerning the May 24, 2010 RTM meeting. We understand that, at this
time the Town has made expenditures against the $19.4 milion, and the Stale has
paid or isin the process af paying the Town this money of a reimbursement basis.
Further, the Project is substantially completed. The timing of Attomey Saxts latter,
its content and circumstances surrounding its drafting demonstrate that the State
‘would not have paid or abigaled iisef to pay the $19.4 millon to the Town without
‘Attorney Sav's letter. We also understand that the State has recently tentatively
‘committed to paying an additionat $2.3 milfon to the Town in furtherance of
‘completing tha ject. There is litle doubt that the State is providing this addtional
funding an the expectation that the Town will comply with the Binding Letter
Agreement, a¢ well as ina Closing Agreernent and State Town Agreement

‘The State's reliance on Attorney Sav!’s letter and on the conduct of the Town in
substantially completing the Project using State Funds. creates a compeling case in
favor of tha Stata were the Tonn to sue tha State for parking proceeds Under the
original revenue sharing formula. The State certainly regards tha Binding Letter
‘Agfeertent ag enforanable. A court of law could estop the Town from now claiming
that tha Binding Letter Agreement ig a nullity. The State may attempt to advance an
argument that estoppel ehould rander the Binding Letter Agreement enforceable
since the Town badias approved the new funding. claim by the Town at this time.
ta disavow the Binding Letler Agreement could jeopardize the recaipt of addtional
moneys from the Steta, including the balance of the S194 milion and the $2-3
milion in addtional money that hes been recently pledged by the State to the Town,
2 well 2s any future intergovernmental money fet the Town may need from tre
State,
Dacembar 30, 2011
Page §

Plaaee feel tree to contact me about ths letter and our analysis

exp ty yur,
Cy donk E Udbarstii fdt
Richard. Voc
EXHIBIT T