Did City Council breach its fiduciary duty by agreeing to sell DIA in Grand Bargain?

[majohnson]

City Council members are elected by Detroit voters. It is the interests of Detroit citizens that Council must take care to protect. I don't need to second guess the outcome on my first cut of analysis. Here, the procedure was flawed in a fundamental way, valuation. The valuation need not be perfect. Perhaps initially only valuing 6000/60000 of the art pieces.

Had the court empowered someone to represent Detroit in the proceedings with fiduciary duties only to Detroit, receiver, that person would have breached by failing to conducting a valuation.

Hermod:
1. I believe the DIA has regional appeal as a cultural attraction.
To more directly answer your question, that it remain is an ideal outcome.
2. I believe the DIA has a positive effect on businesses and landlords in that area. The regional DIA tax and philanthropy do or could make the DIA cost-free to the City of Detroit.
3. The Grand Bargain transfer of the DIA to a charitable trust is different from allowing a regional authority to operate the DIA. Also 'giving away' assets to a friendly third person during a bankruptcy while retaining access seems fraudulent.

BKGuy: The context is three part
a, The overall conversation was about how the circumstances of an attorney's hiring controls whether he is to represent a single employee's interests, a layer of management, a division of the corporation, or the corporation as a whole and how it differs/conflicts.
b, The limited circumstances when an attorney has a literal fiduciary duty.
c, That due to the circumstances of hire, [[not hired as Detroit's lawyer) and appointment by the state and perhaps by the statutes, Orr's duties are very likely to the state as a whole.

[BankruptcyGuy]

BKGuy: The context is three part
a, The overall conversation was about how the circumstances of an attorney's hiring controls whether he is to represent a single employee's interests, a layer of management, a division of the corporation, or the corporation as a whole and how it differs/conflicts.
b, The limited circumstances when an attorney has a literal fiduciary duty.
c, That due to the circumstances of hire, [[not hired as Detroit's lawyer) and appointment by the state and perhaps by the statutes, Orr's duties are very likely to the state as a whole.

A. That, as you probably found out, is a very interesting question. Did you discuss the Kwame/Legal Department situation? That's almost the best example anyone could think of. The Legal Department, reporting to the Mayor, represents the City, not the Mayor, and violated their responsibilities by hiding info from the Council.
C. That discussion would be worth its own thread, certainly. But when the question comes to Orr, remember that while he is a lawyer, he is not operating as a lawyer. Attorneys in those circumstances are not bound by the Model Rules of Professional Conduct. [[You could take the question one step further--are attorneys hired by Orr duty bound to the state, the City, the EM or some combination? What if there are conflicts between the three? Interesting discussion, to say the least.)

[Wesley Mouch]

BG, isn't the whole idea here that an EM has a [[fiduciary?) responsibility here not to a single party, but to the functioning the City so its citizens have safety and stability? The goal for Orr isn't to protect or get more cash for the City [[or anyone else) but to make sure that the City is able to continue being a City -- something that was threatened.

I would suggest that territorial thinking isn't helpful. In fact that's what bankruptcy is trying to overcome. Thus, our representative in bankruptcy mainly has a duty to make sure our city government can continue to exist -- not that its assets are protected to the greatest degree.

The idea that the city is a warehouse of value of its citizens seems like an idea that should be tossed out. A city should not store wealth, but should only exist to serve its citizens.

[majohnson]

A. That, as you probably found out, is a very interesting question. Did you discuss the Kwame/Legal Department situation? That's almost the best example anyone could think of. The Legal Department, reporting to the Mayor, represents the City, not the Mayor, and violated their responsibilities by hiding info from the Council.
C. That discussion would be worth its own thread, certainly. But when the question comes to Orr, remember that while he is a lawyer, he is not operating as a lawyer. Attorneys in those circumstances are not bound by the Model Rules of Professional Conduct. [[You could take the question one step further--are attorneys hired by Orr duty bound to the state, the City, the EM or some combination? What if there are conflicts between the three? Interesting discussion, to say the least.)

Your c response, says don't forget he is not operating as a lawyer. Look to your quote of my statement. My statement in C says that Orr was "not hired as Detroit's lawyer".

Getting to your question-the attorneys hried by Orr.
Ostensibly, Jones Day was hired before Orr started by Bing. Bing can't attach power to an attorney sufficient to represent the state. So without knowing the terms of the contract, the firm could only have been hired to represent people or entities at the city level on down, unless hired with Detroit taxpayer dollars to represent a third party.
It is possible that Jones Day's terms of bankruptcy work are different from the terms of its City of Detroit restructuring, so perhaps it represent the state in the bankruptcy and the city in the restructuring work. But I believe Rhodes would have appointed sua sponte an attorney to represent the City in the bankruptcy if that were the case. The main litigant can't be without a representative, be it an existing CoD employee or new counsel.

[Dumpling]

The DIA collection, while beautiful, and we will miss it if it all moves to the Getty in
Los Angeles, is not at all a necessary component of Detroit so as to assure five minute
police, fire and bureaucracy response in Detroit. What would be more helpful to Detroit
than having the DIA would be a financial cushion so that it can maintain an A level
credit rating so borrowing would be at low interest levels. If I am not mistaken again
Detroit City's bank is now JP Morgan Chase [[it used to be Comerica back in Archer's day). When Bing was elected mayor the largest contingent of his special advisors was from the downtown Detroit firm Miller Canfield which specializes in bankruptcy, so if anything "the
fix was in" starting from then.

[Dumpling]

In the Syncora win scenario, after the sad closing of the DIA, true art lovers that haven't
followed the DIA collection to Los Angeles can go to that new art warehouse in Highland
Park mentioned on a recent thread here. This new collection would thrive if tricounty
voters approve a comparable millage for it as there now is for the DIA.

[ABetterDetroit]

What would the cost be financially and in city services to the citizens of Detroit if the bankruptcy proceedings where dragged out in court for 3-6 years vs. making the grand bargain and settling it in 18-24 months? I would think that is the biggest question that all involved on the city's side of this deal are contemplating. Financial institutions have no problem waiting 5 years for a better number. The citizens of Detroit need a solvent city sooner not later. Later could be just to damn late.

[BankruptcyGuy]

Your c response, says don't forget he is not operating as a lawyer. Look to your quote of my statement. My statement in C says that Orr was "not hired as Detroit's lawyer".

Getting to your question-the attorneys hried by Orr.
Ostensibly, Jones Day was hired before Orr started by Bing. Bing can't attach power to an attorney sufficient to represent the state. So without knowing the terms of the contract, the firm could only have been hired to represent people or entities at the city level on down, unless hired with Detroit taxpayer dollars to represent a third party.
It is possible that Jones Day's terms of bankruptcy work are different from the terms of its City of Detroit restructuring, so perhaps it represent the state in the bankruptcy and the city in the restructuring work. But I believe Rhodes would have appointed sua sponte an attorney to represent the City in the bankruptcy if that were the case. The main litigant can't be without a representative, be it an existing CoD employee or new counsel.

The City is a subdivision of the state. All power to the City is given by the state. I'm not sure that, by definition, the State and its subdivision can have competing legal interests. There certainly can been competing interests between City residents and residents of the State as a whole, but that's not the same thing.