High Court Says Council Has Liability Developer May Get Millions For Rights Violation

The city of Spokane lost its bid to persuade the state Supreme Court to reconsider a ruling that could cost the city millions of dollars.

The case marks the first time elected officials are being held individually liable for constitutional violations.

That significantly expands the area of financial vulnerability for a city such as Spokane, which accepts responsibility for its elected officials in a process known as indemnification.

The Supreme Court ruling came in a lawsuit filed against the city by the developer of a large proposed apartment complex known as Mission Springs.

Developer Richard Lugli argued, and the Supreme Court agreed, that the City Council and its individual members violated his constitutional rights by refusing to issue a building permit for the project.

The court said it was unconstitutional for the City Council to deny the building permits after earlier approving the planned-unit development.

The court noted that the City Council disregarded advice from its own attorney, who said that denying the permit was a constitutional violation.

After the Supreme Court ruled 6-2 in April, the city immediately asked the justices to reconsider the legal issues involved.

But on Friday, the court turned down the city’s request.

City Attorney Jim Sloane said Tuesday he doesn’t believe the case will be appealed to the U.S. Supreme Court.

He confirmed that he and other city lawyers are discussing an out-of-court settlement with the developer, but wouldn’t offer specifics.

It is believed that the developer has expressed a willingness to settle the suit for less than $1 million.

“I can’t really comment on the negotiations other than to say they’re ongoing,” Sloane said.

Without a settlement, the suit will go back to Superior Court Judge Michael Donahue, whose earlier ruling in the case was reversed by the Supreme Court.

A jury trial in Superior Court is tentatively scheduled for April.

Back in Superior Court, the developer would pursue damages for losses he incurred because the city violated his civil rights.

Attorney Frank Conklin, who represented Lugli, has served the city with a claim contending the developer is entitled to $2 million for increased building costs and $1.2 million for lost income for each year the project was delayed.

The permit was denied on June 22, 1995. The city reversed itself in November 1995 and issued the permit.

Conklin said it is his position that the legal blockades to the project weren’t cleared until Friday’s final ruling by the Supreme Court.

That means, Conklin said, that the developer will be seeking damages for three years, or an estimated $9.6 million.

The Mission Springs development, which originally called for 790 units built in four phases, died after the federal Department of Housing and Urban Development pulled its loan guarantee.

Now, Lugli and a new California developer are revitalizing plans to go ahead with another project, named Canyon Bluffs. The initial phase calls for 200 apartments.

PROJECT STATUS The Mission Springs development, which originally called for 790 units built in four phases, died after the federal Department of Housing and Urban Development pulled its loan guarantee.