City North - Lawsuit, Turken V. Gordon

Lawsuit, Turken V. Gordon

To develop CityNorth, the Thomas J. Klutznick Company. entered into a sales tax incentive agreement with the City of Phoenix where the Klutznick company will keep 50% of all sales tax dollars collected at CityNorth, up to $97.4 million or for 11.3 years. This sales tax incentive puts CityNorth at the center of a lawsuit brought on by the Goldwater Institute, which is seeking to challenge corporate subsidies in Arizona. In exchange for $97.4 million Klutznick will allow Phoenix to lease 3,180 parking spaces, 200 of which will be reserved for city bus carpoolers. The lease will last 45 years.

On April 2, 2008, Maricopa County Superior Court Judge Robert Miles ruled in favor of the City of Phoenix and Thomas J. Klutznick Company, developer of the CityNorth project. Judge Miles denied the Goldwater Institute’s claim that the City’s agreement with CityNorth violated the Arizona Constitution. He ruled that the economic activity generated by CityNorth is “undoubtedly” in the public interest. The Goldwater Institute has since replied by appealing the ruling.

The developer of CityNorth and the City of Phoenix filed claims in Maricopa County Superior Court on April 22, 2008, requesting that the court order the Goldwater Institute to pay legal fees incurred while fighting the lawsuit. The CityNorth filing argues that the Institute “compounded the length and complexity of the litigation with irrelevant ‘experts’ who hadn’t even read the agreement, and displayed a reckless disregard for the enormous fiscal and business interests with which it was interfering.” According to the City of Phoenix’s filing, “Not only did the Goldwater Institute proceed with this action knowing that it might be ordered to pay the city’s fees and costs, it litigated this case in a manner that increased its scope and expense far beyond that which was required to fully litigate the dispositive issues therin.”

The Goldwater Institute argues the attorney's fees request violates conditions agreed upon by all parties during the trial. Clint Bolick, chief litigator for the Goldwater Institute, states "Courts almost never have awarded attorney fees against firms seeking to vindicate public rights. The reasons were articulated by Arizona Supreme Court Justice Stanley Feldman in the very same case, Wistuber v. Paradise Valley Unified School District, that all the parties agree sets the legal parameters for the Gift Clause under which the CityNorth case is litigated."

Mr. Bolick asserted that constitutional cases, such as Turken v. Gordon, are rarely won at the lower court level, and expected a victory at the appeals court to be more likely.