DETROIT -

Local 4's Rod Meloni is blogging from inside Detroit's bankruptcy trial.

9:48 a.m.

A very late start in the morning for the City of Detroit Bankruptcy motions hearings. Long lines at the security booths on another immigration and naturalization Thursday left the judge on the bench and a virtually empty courtroom. The first case was supposed to be AFSCME Activist Robert Davis’ case against the city attempting to unseat City Council President Saunteel Jenkins. There is much about this cases I will get to in a minute… it is headline material.

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In order to get things out in order the Judge first heard the case of a motion looking to remove the automatic stay in a property title issue. Attorney Michael Greiner of Warren wanted Judge Rhodes to allow the removal of the automatic stay because he sued the city to try and get clear title of a property for one of his clients. The City said it did not understand why it is involved because Greiner had not done the proper title work to establish ownership. Greiner said the city had placed liens on the property at various points and therefore it was a party to be sued in establishing the land’s title. Greiner also told the judge there is conflicting ownership. That is when Judge Rhodes jumped in and effectively all over Greiner. He asked Greiner "Should the City be involved?" He wanted both parties to explain the city’s involvement. The City said it had none. Greiner said he was not sure. Rhodes denied the motion in tough terms. He said “The motion should be denied. "It also borders on the frivolous if not entirely frivolous." "The City shouldn’t spend another minute on this unless it can be shown it has any interest."

10:25 a.m.

Now comes the bare knuckle part of the morning: Robert Davis’ desire to sue every move made in Detroit City Hall may begin to diminish. It was a motion hearing by Robert Davis, represented by Michael Andrew Paterson before Judge Rhodes this morning. The motion sought to unseat Saunteel Jenkins as City Council President in the aftermath of the Charles Pugh incident. You might recall when Pugh disappeared from office for several months last summer he asked emergency manager Kevyn Orr for a medical leave. Orr said unless Pugh could establish a true medical emergency or issue he would not allow a medical leave. Furthermore Orr told Pugh if he did not show up for work he would dock his pay and remove his powers of the Presidency. Pugh did not show up for work, and eventually the city council elected Saunteel Jenkins to take over the gavel instead. Pugh later resigned. Davis believes the city council, in the election of Jenkins, failed to follow the city charter.

When Judge Rhodes asked Paterson what it was Davis was after in the case, Paterson said, "The plaintiff's action questions the authority of the office holder." "It seeks no damages, it is largely an issue of following the charter in selection of council president."

That means that in this case anyway, Davis was not seeking an financial damages. Paterson went on “The city charter is new, transitional in some areas. It requires the old charter to be enforced to a point and the new charter to another.” Davis’ belief is the old charter was not applied in this case. Judge Rhodes, clearly concerned about Robert Davis’ continued cases against the city and their potential to impede progress, asked Paterson "Who else's office do you intend to challenge?" Paterson shot back immediately "not the emergency manager." That is an important point because previously Paterson came before Rhodes seeking action against the city and Rhodes made it abundantly clear he would not allow Davis to attempt to remove Orr from office.

The Judge Pressed Paterson to list other filings Davis plans. Paterson hedged for a minute and then admitted "the chief of police among other appointments." Rhodes was in disbelief at the notion they would try and unseat the chief of police. He said, "It is unfathomable to me with the problems this city has you want to file an action against." "You’re going to try and unseat the chief of police." Paterson quickly shot back without hesitation, "Not me, my client does." Judge Rhodes asked, "Why?". Patterson said, "He doesn’t believe they followed the law."

At this point the judge wanted to hear from the City of Detroit’s Lawyers. Miller Canfield attorney Stephen LaPlante said the city is growing weary of Davis has. He quoted Davis from a Lansing radio station appearance recently saying “Mike Duggan will not be sworn in as Mayor of Detroit” as an example of Davis’ work saying it will “jeopardize the city” if allowed to continue. Judge Rhodes told LaPlante he could “maintain this court as the gatekeeper” regarding Davis. The Judge also asked LaPlante if he was aware the city has the option of asking for “stay violation damages against Davis and Citizens United”. LaPlante said he was. This is a clear shot across Davis’ bow, telling him the lawsuits are not helping and Rhodes could shut them down. Rhodes asked Paterson “given the circuit court’s order, what is left to do?” Patterson said “appeal.” The circuit court had turned down Davis’ request to unseat Jenkins and Paterson wanted to bring it to an appeals court. Strangely enough, through all of this gyration, the city agreed to allow Davis and Paterson to appeal. Judge Rhodes said “the court will enter this order with two cautions to you: 1.) the court does deny a request for a blanket order for future actions that may be filed without permission” essentially telling Paterson and Davis their days of suing every move the city makes will not be tolerated and in fact he will insist on seeing every suit to consider whether it can move forward and Rhodes said “2.) “I will caution you and your client you risk sanctions for violating the stay.” Rhodes reiterated to Paterson “your client risks it.”

With that the session ended and the court is now in recess until 11am.

11:42 a.m.

We are now back in session and a long line of lawyers has just made “appearances”, essentially introducing themselves to Judge Rhodes and telling who they represent. This hearing is a request to keep a financing deal with investment bank Barclay’s with the city secret. This is a dicey area in that government is supposed to operate in the sunshine.

What Barclay's is saying in its deeply arcane and esoteric filing is that it wants to be able to sell parts of its $350 million dollar loan to the city it will use to restructure.

Barclay's is attempting to keep secret its interest rate for the loan claiming the information is proprietary. On the stand right now is James Saak Vitne. He said this deal the city struck with Barclays in October is unique, a first ever attempt at this kind of financing. He said, "This is really, effectively a  hybrid". "It is a combination of municipal credit and post-petition financing not typical for a municipal facility." Barclay’s pointed out it is making this loan and already has a deal in place with the city and has been paid 50% of its fee to make the deal happen. In order for Barclay’s to make a profit it is asking the judge to keep the interest rate it has with the city in its deal quiet. This way it does not give the customers it brings into a "syndication deal" a leg up and it also keeps the interest rate lower for the city. Saak Vitne compared the deal to trying to buy a car. You don't go into the showroom and tell the salesperson you are willing to pay $15,000 for it but let’s start negotiating @ $10,000. He said that is the same position Barclay’s and the city is in and does not want that to happen.

There is a very long line of attorneys looking to do the cross examination of Saak Vitne who are going to try and rip apart Barclay’s assertions and the deal itself. Judge Rhodes has asked, in the interest of time, to have one single lawyer do the cross examination. It did not look as if there were many taker on that offer, we are awaiting the decision when the judge returns to the bench in a minute.

On the cross examination now is AFSCME attorney Jack Sherwood. He began by asking Saak Vitne if he knew about a couple of Chapter 11 cases cited on direct [Patriot Colt and Res Cap {that financed the GM restructuring}]that their financing details were partially disclosed. Saak Vitne said he was unaware.

Sherwood: In this case Barclay’s is not willing to disclose?

Saak Vitne: Yes.

Sherwood: Is there one fee, and one fee and one fee only and you have received 50% of it from the city?

Saak Vitne: That is correct.

Sherwood: What fee is that called?"

Saak Vitne: A commitment fee. We chose not to subdivide it into five fees but kept it as one.

Sherwood: In addition to the commitment fee is Barclay’s entitled to reimbursement from out of pocket fees and expenses from the city?"