Detroit — A federal judge ruled Friday the city’s 36th District Court will be protected against any judgments awarded in lawsuits against the troubled court while Detroit’s bankruptcy proceedings continue.
U.S. Bankruptcy Judge Steven Rhodes made his ruling following an hour-long motion hearing with city, state and union attorneys on a request to extend a stay of collection activity to the city’s troubled court while Detroit moves forward in its bankruptcy hearings.
The ruling protects the court, which has been saddled with a huge financial deficit, from garnishment from monetary awards, judgments and other collection actions.
Rhodes said he acted to ensure the court, whose coffers are handled partly by the city, could maintain services.
“The court has already established that the city is not in a position to provide its citizens with adequate or a minimum level of services,” Rhodes said in issuing his four-point ruling on why the stay should be extended to 36th District Court.
“If bank accounts of the ... court are garnished to pay judgments or awards, those funds would not be available to be paid to the city and the city would be forced to make decisions (on) what services would be reduced,” the ruling said.
Rhodes said not issuing a stay could “further diminish” the city’s ability to fund the court.
He added that nearly all other creditors are being asked to endure some difficulties as a result of the bankruptcy stay.
Detroit spent $35 million in the 2012 fiscal year to fund the court’s operations, according to court records.
City attorney Heather Lennox called for the stay’s extension.
“We’re asking your honor to extend the stay so that the operations of the court won’t be disrupted,” said Lennox.
The monetary judgments at the center of the argument involve four former court employees, who have been awarded a $5.5 million back pay judgment.
Union attorney Tracy Clark, who represents AFCSME Locals 3308 and 917, argued that the court does not come under the same bankruptcy protection since it is funded by the city but not operated by the city.
She said “there is no way around” the problem.
Clark has said in her filing in the case that the city is “statutorily” obligated to provide sufficient funding to maintain its function.
Clark argued in court that granting a stay would just “be delaying the inevitable.”
She said the former court employees have been waiting years to be paid.
“Some of them have been waiting almost nine years to be made whole,” argued Clark. “And now they are being told they have to wait again.”