The Scranton Parking Authority's forced default one year ago today spawned various intersecting legal disputes and created what one lawyer termed "a huge cascade of proceedings."
The SPA default sought by city council rendered the authority largely inactive because its assets and control have been taken over by a court-appointed receiver. SPA's former functions - operating five parking garages and the city's parking meters - are now in the hands of outside management.
Former SPA garage employees who lost their jobs and meter employees who were transferred to a new employer now operating the meters filed grievances that have been stalled for eight months in a disputed arbitration.
And lawsuits filed by two banks claiming SPA defaulted on loans remain pending in Lackawanna County Court.
Judge Peter O'Brien, a senior visiting judge from Monroe County, held a status conference Wednesday in Lackawanna County Court on the banks' lawsuits and the receiver's legal petition to shield the SPA estate from those lawsuits. This hearing aimed to determine how the cases should proceed.
"There's an awful lot of overlap in the cases. It's kind of an inextricably, intertwined ball," attorney Ian Hammel, who represents SPA bond trustee Wells Fargo, told the judge.
The judge set another hearing for Aug. 21 to hear arguments in the cases.
The sequence of events:
n June 1, 2012: SPA defaults on a $940,000 bond payment after council, which had been at war with SPA for some time, refused to bail out the agency and cover the debt - even though the city years earlier had guaranteed SPA debt.
n Aug. 14: In a "consent order," a county judge appoints Mike Washo as SPA receiver, giving the former Lackawanna County commissioner full control of authority operations including power to operate garages to ensure bondholders are repaid and decide which authority employees are needed to operate them.
n Sept. 11: Mr. Washo formally takes over SPA and brings in an outside firm, Central Parking to manage the garages. A few days later, SPA - no longer having revenue - furloughs its employees. Garage maintenance workers are replaced by Central, but meter employees are taken on by the city because the city owns the meters. A few days later, Teamsters Local 229 files grievances arguing the furloughs violate the employees' contracts and seeking back wages/benefits and restoration of the jobs.
n Sept. 13: Council scraps a parking-meter cooperation agreement between the city and SPA, under which SPA receives 10 percent of meter revenues. The mayor agrees and later signs the ordinance. The cooperation agreement underpins a 2011 loan to SPA from Landmark Community Bank.
n Oct. 17: SPA has no means to pay back loans from Landmark Community Bank and Pennstar Bank. SPA solicitor Joseph O'Brien says SPA's dismantling has raised legal questions about who is responsible to pay SPA debts incurred before the receivership takeover. He suggests the banks may have to sue to find out, because the receiver has no authority or obligation to pay SPA debts unless ordered to do so by a court.
n Dec. 18: Pennstar Bank sues SPA and the receiver over a loan default. SPA had received in 2009 an $800,000 commercial loan from Pennstar Bank and the outstanding principal is $565,322.
n Jan. 2: Six meter employees are transferred from the city to Central Parking; six garage maintenance workers remain out of their former jobs.
n Feb. 8: Landmark Community Bank sues Scranton, SPA and the receiver over a $2.6 million loan default.
Landmark loaned SPA $2.9 million in 2011, and that loan was secured by the now-scrapped cooperation agreement between SPA and the city.
n March 17: A county judge issues a preliminary injunction halting an arbitration hearing for 12 former SPA employees after the receiver objects to it.
n March 20: The arbitration case appears to be the first case to pit unionized employees and their labor contract against a court-ordered receiver responsible to creditors. The crux is whether furloughed SPA employees can pursue grievances through arbitration that potentially could affect the court-ordered receivership; or whether they must first seek permission from the court to pursue arbitration. A ruling in this case is pending.
n March 21: SPA bond trustee Wells Fargo and the receiver, Mr. Washo, file a joint petition seeking enforcement of the August 2012 consent order that created the receivership and dismissal of the banks' lawsuits.
n May 29: Judge O'Brien holds a status conference on the two banks' lawsuits and joint petition, and schedules a hearing for arguments in the cases to be heard Aug. 21.
Seven attorneys representing the various parties attended the May 29 hearing. Joseph O'Brien, representing SPA, told the judge there is no dispute that SPA owes three bonds with principals totaling $49 million, and owes the banks their loans, although SPA has no way to pay.
"We do acknowledge all three debts," Joseph O'Brien said.
Contact the writer: jlockwood@timesshamrock.com, @jlockwoodTT on Twitter