If I Were a Betting Man, I’d Bet On Judge Michael Silverstein Throwing Out the New Receivership Law…

…or at least significant chunks of it. I opine this after reading John Hill‘s report in today’s Projo which highlighted a particular line of questioning asked during yesterday’s oral arguments on the constitutionality of the municipal receivership law, to the lawyer for Central Falls receiver Mark Pfeiffer…

[Judge Silverstein] pressed [lawyer Theodore Orson] on the lack of a specific term for the receiver several times. Orson said the receiver’s tenure was not indefinite because the law allowed him to be removed once the conditions that led to his appointment were resolved.
This questioning by Judge Silverstein is very likely related to a precedent established in Marran v. Baird, the 1994 West Warwick case where the RI Supreme Court ruled that the state was not prohibited by the home-rule provision of the state constitution from creating of a “budget commision” to oversee an individual municipality’s financial decision-making, as long as it was for the limted duration that was specified in the law at that time…
The plaintiffs also maintain that by enabling the commission to impose a budget upon the town of West Warwick, 45-9-3 bypasses West Warwick’s financial town meeting and, thus, impermissibly alters the town’s form of government. We disagree.
45-9-3 does not expressly alter the structure or form of West Warwick’s municipal government. Indeed, any effect it may have on a local government is contained, delineated, and temporary, lasting no longer than the end of the fiscal year
Obviously, the appointment of a commission that adopts and maintains a balanced budget for West Warwick has a temporary impact on West Warwick’s budgetary process. The commission’s role, however, lasts no longer than “the end of the fiscal year.” Accordingly, 45-9-3’s effect on the structure of West Warwick’s government is at most incidental and temporary. The provision does not, therefore, affect the form of government of any city or town and consequently does not violate article 13.
Personally, I don’t find the logic of it’s only a temporary change in form government, so it doesn’t count as a change in the form of government to make much sense. But from a legal perspective, what is most important to the present case is that the new receivership law, because of its open-endedness, may be found to violate the Constitutional provisions prohibiting state-imposed changes to municipal forms-of-government under the loose standards already established by the Rhode Island Supreme Court and without contradicting any existing precedents.

0 0 votes
Article Rating
Notify of
Newest Most Voted
Inline Feedbacks
View all comments
Warrington Faust
Warrington Faust
13 years ago

I am not up on the details, but RI has a sweetheart relationship with “receiverships” that does not seem to obtain in other states. I have asked RI insolvency lawyers about this and mostly obtained knowing smiles. It is obvious from a review of the auction sections of the papers. About 35-40% of business auctions are “by order of the receiver”.
“Receiverships” exist in Massachusetts, but are essentially unknown. I cannot recall seeing a receiver’s auction listed in a Massachusetts paper.
As I understand it, in most states a receivership is an “extraordinary remedy” chiefly used to avoid dissipation of assets during litigation. In RI, it seems to be used for an orderly sale of the assets for the benefit of creditors. There seems to be little judicial oversight.
Since Bankruptcy has significant judicial oversight, I imagine receivership is more cost effective.

10 years ago

Any snow accumulation will most likely take place at the higher elevations of the Appalachian mountains, according to officials because of the NWS. It’s not out inside the question, said Jessica Winton, a meteorologist for this National Weather Service. We might see a dusting or less, mainly in your high elevation. There won’t be much for any valley. Wednesday’s low was expected to stay 28 degrees and dropping quickly. Any rain that was through the area Wednesday should move out by daybreak which also has a little high pressure moving in for the possibility of slightly warmer temperatures by Friday. There is also a chance of more rain for Friday, which would continue into late Saturday night, Winton said.

Show your support for Anchor Rising with a 25-cent-per-day subscription.