Court Upholds Settlement in Saugatuck Dunes Lawsuit, Substantive Settlement Terms Not Adopted

After receiving a large number of written comments from third parties concerning the proposed settlement of the federal court litigation in Singapore Dunes LLC v. Township of Saugatuck, Chief Judge Maloney issued an opinion on June 11, 2012, granting the parties' Joint Motion for Entry of Consent Judgment. 

As described by the court, "the second proposed consent decree is itself a relatively simple document."  Op. at 8.  The consent decree provides that the plaintiff's property "shall be subject to the regulations of the zoning districts in which they were placed before the adoption of the R-4 zoning" that was at issue in the lawsuit.  Id.  The consent decree also includes other provisions relating to access to the plaintiff's property from public streets and requires that the township shall not treat the plaintiff's property differently than similarly situated properties without a rational basis for doing so.  Id. at 8–9.

The most interesting portion of the decision relates to the accompanying Settlement Agreement that was not attached to or incorporated into the consent judgment.  As the court explained in its Opinion:

Some objectors argue that the parties' Settlement Agreement, created separately from the proposed consent decree takes away the Township's discretion regarding the proposed development . . . Essentially, these objections claim that the parties structured their agreements to hide objectionable provisions from the Court's review.  They note that while the consent decree contains only minimally objectionable terms, the provisions in the settlement agreement (which the parties did not submit to the court) exceed the Township's authority in various ways . . . That is, the objectors are concerned that the settlement agreement uses this court to substantively modify the division of powers among the local governmental entities—the very concern that led this court to reject the parties' first proposed decree.

Id. at 11–12. 

The court concluded that the settlement agreement does not and cannot substantively modify the powers of local governmental entities with regard to the potential use of the plaintiff's property.  "A settlement agreement is simply a private contract; the parties to it cannot use that contract to do anything that they could not otherwise do . . . A decision approving the consent decree would not put the court's imprimatur on the Settlement Agreement as well . . . ."

The federal court avoided any decision about the legality of the substantive provision of the parties' settlement agreement on the basis that a review of the settlement agreement would be outside the federal court's limited subject matter jurisdiction.  "[L]egal disputes about the settlement agreement (or actions taken pursuant to it) will be addressed in the normal way—presumably in Michigan's own court system, absent a particular basis for federal jurisdiction . . . the court expresses no opinion on the agreement's terms by its decision today."  Id. at 13.

In short, it appears that the legal fight over potential development of the dunes has merely been postponed to a different day in a different venue.  Stay tuned . . . .