macdc Intercounty Drain Procedures Training

1. macdcIntercounty Drain Procedures Training Drainage Board Dispute Resolution Stacy Hissong Lizzie Mills Fahey Schultz Burzych Rhodes PLC February 15, 2017 macdc.us

2. Summary • Significant Level of Responsibility Across the Board • Fiduciary Role • Statutory Conflicts • Dispute Resolution macdc.us

3. Fiduciary Duty • At a minimum: • due care • loyalty • confidentiality • Board members owe this fiduciary duty to • the drainage board; • property owners; and • the public macdc.us

4. Fiduciary Duty – Due Care • Act in Good Faith • Legal duties • Honesty • Fiscal responsibility • Voting • Fairness and diligence • Avoiding conflicts of interest macdc.us

5. Fiduciary Duty – Loyalty • Act in the best interests of the intercounty drainage board • Unity after a decision is reached macdc.us

6. Fiduciary Duty – Confidentiality

7. Fiduciary Duty – Confidentiality • Protect confidential and sensitive drainage board information • Example: Attorney-client privilege belongs to the drainage board. • An individual board member must take care not to waive (or attempt to waive) this privilege. macdc.us

8. Consequences for Breaching Fiduciary Duties

9. Consequences for Breaching Fiduciary Duties • Civil liability (board and individual member) • Forced rescission of board actions • Resignation from office • Money damages • Criminal Liability (can be broad!) • FELONY (Neglect of duty; Failing to keep safe public money) • MISDEMEANOR (False Statements; Unauthorized expenses) macdc.us

10. Conflicts of Interest Under State Law “The office of county drain commissioner is especially susceptible to conflicts of interest . . . ” People v Barry, 53 Mich App 670, 682 (1974) macdc.us

11. Conflicts of Interest Under Sections 381-384 of the Drain Code • Type of Project • Basis for Disqualification • Notice of Disqualification • Appointment of a Special Commissioner • Effect of Disqualification.

12. Conflicts of Interest Under State Law • Section 601 of the Drain Code speaks to financial interest in contractor’s profit • Look for: • Arms-length transactions • Extent to which was solicited, and by whom • Timing of the arrangement (pre or post-bid?) • Consequences • Criminal misdemeanor • Removal from office – and ineligible to hold again macdc.us

13. Conflicts of Interest Under State Law Contracts of Public Servants with Public Entities (Act 317 of 1968): Speaks to contracts between the drainage board and the board member(s). • No Contracts • No Solicitation

14. Conflicts of Interest, continued • More state laws: • Standards of Conduct for Public Officers and Employees(Act 196 of 1973) • Michigan Incompatible Public Offices Act (Act 556 of 1978) • Don’t Forget About Other Sources of Law and Regulation • County policy, resolution or ordinance • Contract language • Drainage Board Standards of Conduct macdc.us

15. Conflicts of Interest and Board Disputes Remember: It is the perception of a conflict of interest that drives public concern and fuels board disputes. macdc.us

16. Dispute Resolution—Legal Action • Arbitration Board under Section 106 • Composed of drain commissioners from unaffected counties. • Chairperson convenes arbitration board at MDARD • Legal Action • Costs • Time • Resources • Finality macdc.us

17. Alternative Dispute Resolution Mediation: • Neutral third party • Process is less formal. • Confidentiality • Focus on communication • Voluntary and non-binding process Arbitration: • Most closely aligned with traditional litigation • Legal Counsel • Can be binding or non-binding • Extraordinarily limited review macdc.us

18. Questions? Lizzie Mills Fahey Schultz Burzych Rhodes PLC 4151 Okemos Road, Okemos, MI 48864 Email: hmills@fsbrlaw.com Tel: (517)381-0100 Website: www.fsbrlaw.com Stacy Hissong Fahey Schultz Burzych Rhodes PLC 4151 Okemos Road, Okemos, MI 48864 Email: shissong@fsbrlaw.com Tel: (517)381-0100 Website: www.fsbrlaw.com macdc.us