The lawsuits, as well as possibly illegal manipulations of local elections by a big-box retail chain that worked with the same attorney, raise new questions about the ability of Michigan’s nearly 2,000 local governments to follow the wishes of their citizens when managing their community’s growth.

The lawsuits are also renewing calls for new state laws to protect Michigan’s local governments from such cases, commonly known as “SLAPP suits”—“strategic lawsuits against public participation.”

The current Bear Creek lawsuit, litigated by Timothy Stoepker of the Detroit law firm Dickinson Wright PLLC and another attorney, requests more than $6 million in damages on behalf of Petoskey Investment Group, an affiliate of Strathmore Development Company of East Lansing. It marks the fourth time the township or its sewer authority have been sued by the developer since it overcame legal obstacles, including a citizen referendum, and built a big-box store east of Petoskey.

It also marks another occasion when Mr. Stoepker has been part of a land use controversy in northern Michigan.

A few years ago, Mr. Stoepker, acting on behalf of big-box retailer Meijer Inc., helped mount lawsuits against a number of trustees of Acme Township, 60 miles south of here, in Grand Traverse County. Those suits—some thrown out of court and some still on appeal—attacked the trustees as private citizens, not as public officials, for resisting a proposed development plan involving Meijer.

Then, this past winter, Mr. Stoepker’s name surfaced in Grand Traverse County again, this time in media reports linking him to a recall campaign in Acme that is attracting intense legal scrutiny. That recall had unsuccessfully targeted the same Acme trustees as Mr. Stoepker’s failed lawsuits for Meijer, which has acknowledged that it likely violated campaign finance laws during that election.

Mr. Stoepker’s expensive lawsuits in Acme and Bear Creek Township, the court decision overturning the Bear Creek referendum, and threats made by one of investment group’s lawyers against Bear Creek during a recent deposition underline the difficulty Michigan’s financially stretched local governments and their elected officials can face when acting on behalf of their citizens’ wishes.

Traverse City Attorney Grant Parsons, who defended one Acme Township official against Mr. Stoepker and Meijer, said that suing local governments over zoning decisions greatly concerns him.

“It’s a disturbing development,” Mr. Parsons said. “These (governments) have got to have some protection. Little townships are being forced into bad zoning by these suits, and I’m horrified by it.”

The controversy prompted a local state lawmaker, Republican Representative Kevin Elsenheimer of Bellaire, to begin crafting legislation that would protect local governments from SLAPP suits.

Long, Stormy History
The Petoskey Investment Group’s lawsuit against Bear Creek Township has links to a downstate developer, Scott A. Chappelle, the president of Strathmore. The other key player in the Bear Creek lawsuit is Kevin T. McGraw, a Strathmore principal who is Mr. Stoepker’s co-counsel.

Mr. Stoepker did not respond to requests for comment on this story. Mr. McGraw referred questions to Mr. Chappelle, who then asked that he receive the questions in writing. He did not respond to a list of 11 questions emailed to him.

Petoskey Investment Group’s Bear Creek proposal targeted roughly 70 acres of land just outside of Petoskey’s city limits for an apartment complex and big-box store.

But that put it on the front lines of an ongoing conflict in northern Michigan between developers and citizens weary of big-box developments reshaping their rural communities. Acrimony between the investment group and residents subsequently stalled the project for two years.

The conflict began when Petoskey Investment Group requested a “PUD II,” a zoning change, from the township board. The board, as was their legal right, rejected the request. Petoskey Investment Group then sued the township and convinced it to enter into a consent judgment in 2002 allowing 175,000 square feet of retail and commercial development, 223 apartments, and 36 duplexes on the site.

But township resident John Rohe organized neighbors to oppose the project; their citizen referendum beat back the proposal.

“To the great credit of this region, there are a number of folks willing to fearlessly consider the legacy by which we will someday be remembered,” Mr. Rohe told the Great Lakes Bulletin News Service in 2002.

But the company challenged the referendum’s results in court, and the Michigan State Court of Appeals ruled that the original consent judgment trumped the two-to-one vote of the citizens. In effect, the court ruled that developers could preempt public referendums by filing lawsuits that lead to consent judgments.

Adding It Up
During the litigation following the referendum, the township dropped its own zoning and reverted to county zoning, which pulled Emmet County into the proceedings. In fact, it was Emmet, and not Bear Creek, that made the final surrender that allowed a Lowe’s big-box store and apartment complex. But the county’s settlement did not exclude further litigation against Bear Creek, and the township has been defending itself against the developer ever since.

Bear Creek Township Supervisor Dennis Keiser declined to comment, citing current litigation.

Great Lakes Bulletin News Service filed a Freedom of Information Act request with the township to determine how much taxpayer money has spent so far on legal fees for the litigation. The township indicated that, beside the four suits, the Petoskey Investment Group has also filed approximately 10 tax appeals concerning the subject property.

The township said it has incurred “$174,361 in professional expenses” from 2002 to 2007, and the Springvale-Bear Creek Sewage Disposal Authority has incurred $213,810 in legal fees from “Petoskey Investment Group-related litigation.”

“Although those expenses are paid directly by the sewer authority, the funds for those payments originate from the township,” wrote Sally Boughan, the township’s FOIA coordinator.

Who’s To Blame?
The firm’s current lawsuit claims that the company lost huge amounts of money because of delays caused by the township.

“This project has pushed us to the point of insolvency, and right now we do not have the resources to meet a lot of our obligations in the ordinary course of business,” Mr. Chappelle claimed in an October 2007 sworn deposition. “…(I)t’s made it difficult for (our management company) to move other projects forward.”

Mr. McGraw contends that the township and its sewer authority caused his company’s financial woes. He filed more than 60 pages of documents in Emmet County Circuit Court claiming the township and sewer authority owe his company at least $6.4 million.

In his deposition, Mr. McGraw threatened another lawsuit when the township’s attorney, Paul Pedersen, asked him about negotiations to bring a national restaurant chain into their development.

“I want this on the record,” Mr. McGraw responded. “If you…in any way interfere with our contract up in Petoskey, I add that to my damages and it will be a separate lawsuit.”

“Are you making threats now?” attorney Pedersen said.

“No. I am making a promise,” Mr. McGraw responded. “I’ve got a tenant signed for a lease, and we’re trying to get it done to get him in there. And if you call him and you make the waters rough and he terminates that contract, I will be coming after somebody.”

Although company officials blame Bear Creek for their financial problems, some observers say that court records indicate that the downstate developers may have dramatically underestimated the true costs of developing a big-box project in northern Michigan, where residents—or their local government—often oppose them.

One person suggesting that is sewer authority attorney Stephen Tresider.

“My view of it is they failed to do sufficient due diligence before they took the plunge,” Mr. Tresider said, “and when they came north, they got surprised in terms of costs and obstacles.”

When asked during his recent deposition whether his firm ever performed a feasibility study for its proposal, Mr. Chappelle said: “I am not even sure it was even a written feasibility study. It could have been something I just went through and analyzed and not kept hard copies of. I would have to go back and look at the files.”

However, during a 2003 presentation in front of the Emmet County Board of Commissioners, Mr. McGraw said that the area had been intensely studied for feasibility.

“Petoskey Investment Group conducted a retail study and second review of that study, a fiscal impact study, a traffic study, zoning analysis, a utility analysis, petitions and survey of property owners,” Mr. McGraw was quoted as saying in minutes from the meeting.

A Call to Action
The Acme and Bear Creek lawsuits have increased calls for a state law protecting local governments against lawsuits by developers who don’t get what they want.

“There are a lot of states that have passed anti-SLAPP legislation,” said Mr. Parsons, the attorney for one Acme official. “It’s really time for Michigan.”

Rich Robinson, director of the Campaign Finance Network in Lansing, said that SLAPP suits threaten citizens’ ability to engage in the democratic process.

“They (the developers) know when it becomes an endurance contest they have the resources to outlast someone,” Mr. Robinson said.

The Traverse City Record-Eagle has reported on efforts by Representative Elsenheimer to craft such a law that would protect local governments.

"I'm concerned that part of the playbook is to use the suits to try and leverage against good planning and zoning, and to me that makes no sense and it should be unlawful," Representative Elsenheimer told the newspaper.

A spokesman for Mr. Elsenheimer said the representative is in the process of drafting the legislation.

Glenn Puit, a veteran investigative reporter who spent 11 years writing for the Las Vegas Review-Journal, is the Michigan Land Use Institute’s policy specialist for Emmet County. Reach him at glenn@mlui.org