Developer could be held in contempt over court deadline

Times-Herald Newspapers

DEARBORN — City attorneys are expected to file a motion this week to hold Burton-Katzman Development Co. Inc. executives in contempt of court for missing a court-ordered groundbreaking date on several new west end buildings.

Wayne County Circuit Judge Michael Sapala in December ordered the company to break ground on the buildings by no later than Saturday, but as of press time Friday Burton-Katzman had not filed any of the requisite paperwork with city building authorities to begin work.

Corporation Counsel Debra Walling said a Burton-Katzman attorney called Wednesday to request an extension on the starting date — something she said was out of the question.

“There hasn’t been any indication that I’m aware of that they’ve submitted plans, attempted to pull any permits,” she said. “My recommendation, had they even asked in time to go to the (City) Council, would have been, ‘Let’s see some substantive effort here first.’”

The issue stems from the city’s ongoing lawsuit against Burton-Katzman, company subsidiaries and several key employees. Filed in January 2009, the suit contends that the company breached a development contract by failing to build two midrise buildings and six condominium units in the West Village Commons development in the city’s west downtown business district.

Company principals Peter Burton and Robert Katzman, as well as executive-level employees Charles DiMaggio, Daniel Share, Steven Bentley and Lawrence Goss, all could face jail time and fines if they are unable to convince Sapala at a show-cause hearing that they are not in violation of the judge’s order or were unable to comply with it.

Both penalties could continue indefinitely until some remedy is made by Burton-Katzman, though company attorneys have argued in court that the projects are not economically viable in the currently depressed real estate market.

But the pleas fall on deaf ears for the city, which has had to cover more than $2.5 million in debt service on two parking decks it built to support the presumed increased parking demand for the West Village Commons. The tax revenue from the completed buildings – as well as increased usage fees – initially were supposed to cover those costs.

“In this case, (Sapala) is very much aware of the great financial hardship their failure to complete this project has put on the city’s taxpayers,” Walling said. “We’ll be pressing that point once again.”

And despite the arguments by Burton-Katzman attorneys, the men in charge of the company could be compelled to complete the project anyway. In his December ruling, Sapala also allowed the city to amend its initial complaint to include the trusts of each individual defendant.

The decision “pierced the corporate veil,” Walling said, and has let city attorneys target the personal assets of Burton-Katzman management in addition to company funds.