Complete story behind the clerk-treasurer lawsuit

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Carmel Mayor Jim Brainard’s recent legal action against Clerk-Treasurer Diana Cordray was an ordeal filled with questions. People wanted to know, “What exactly are they fighting about?” “Who’s legally right in this case?” and “Why can these two just talk it out?”

The lawsuit was ultimately dropped, but it’s still important to look at what happened and why?

It all started when Cordray’s office had some concerns about a purchase order for snow removal from sidewalks and, presumably, a parking garage.

Brainard wanted Cordray to approve two purchase orders: one for $56,816 to plow city sidewalks in the Carmel Arts & Design District, one for $17,754 to clear snow from the parking garage attached to The Center for the Performing Arts. Brainard later said he wouldn’t pursue clearing the parking garage.

Cordray

Clerk-Treasurer Diana Cordray

Cordray’s staff inquired about whether it was legally permissible to use funds from the state’s Motor Vehicle Fund to pay for this expense. As a result, Cordray’s staff had not yet approved the purchase order and sent it back.

This led to legal action. Click here to read the lawsuit.

Brainard then released the following statement:

City of Carmel Files Verified Petition for Action of Mandamus Requesting
Clerk Treasurer to Fulfill her Duties

CARMEL, IN – The City of Carmel has filed a lawsuit against Carmel Clerk Treasurer, Diana Cordray, requesting that she perform certain duties resulting from her public office. The City has filed the Action of Mandamus as the result of the Clerk Treasurer’s office refusing to process a Purchase Order from the Street Department for the removal of snow from city sidewalks from the Motor Vehicle Highway Fund (MVH Fund).
Friday morning, Hamilton County Superior Court 1 Judge Steven Nation accepted the City of Carmel’s Action of Mandamus against Carmel Clerk Treasurer Diana Cordray. An Emergency Hearing on the Action has been set for Wednesday, December 3rd at 9 a.m. in Hamilton County Superior Court 1.
It is the responsibility of the Clerk Treasurer’s office to ensure funds are available in a particular line item and, if those funds are available, to approve the Purchase Order and place the corresponding contract for those services on the Board of Public Works agenda for contract approval. Without approval of the Purchase Order, the snow removal contract cannot be added to the Board of Public Works agenda for approval.
The City has asked the court to grant this Action of Mandamus due to the season and the likelihood of snow storms predicted for central Indiana as a matter of public health and safety for the City of Carmel. The City believes it is imperative to have the snow removal contracts in place before the arrival of heavy snow.
The City Street Department followed this same procedure in 2013 and the Purchase Order was processed by the Clerk Treasurer’s office without any problem. However, when the same procedure was followed this year, the Clerk Treasurer’s Office refused to process the Purchase Order citing improper use of MVH funds.
After the Purchase Order was rejected, the City requested clarification from the Indiana State Board of Accounts, which responded in part that “[I]t’s our audit position that monies accounted for in the MVH Fund be used for the purposes outlined in IC 8-14-1-5. This would include, as per AG opinion #64, 1965, removal of snow from sidewalks [.]”

The Clerk-Treasurer’s Office provided e-mails to Current to outline her position. Cordray claims she never “refused” to approve the order, but her staff had serious concerns, amplified by responses from the auditing body of the Indiana State Board of Accounts. Cordray was actually out of town when this all happened. She said she had not even received the lawsuit before the new release was sent out to the media.

Cordray’s office had questions about whether it was OK to use this fund to pay a private contractor for snow removal from sidewalks or parking structures. As a result, Sandy Johnson, asset manager for Cordray, returned the purchase orders back to the street department.

Brainard said he thinks parking garages are a “gray area,” but he’s already conceded that fact and he’s just asking for money for sidewalks.

Brainard

Brainard

An e-mail included the lawsuit shows Todd Caldwell, director of audit services for the Indian Indiana State Board of Accounts says MVH funds can be used for, “removal of snow from sidewalks but would not include snow removal from a parking structure.”

“I took the parking structures out and she still refuses to do it,” Brainard said at the time. “But the court opinion says the Motor Vehicle Highway funds can be used for right-of-ways. Sidewalks are the right-of-ways. Says right in that statute, you can use it to plow the vehicular portion of the street as well as taking care of right of ways.”

According to the lawsuit, Vive Exterior Design previously bid $74,570 for sidewalk snow removal in August 2013. That money was paid for out of the MVH and there was no problem at that time, Brainard said. An invoice dated Nov. 13, 2014, shows Vive Exterior Design agreeing to a similar contract for $56,816. This time, Cordray had an issue.

The city’s lawsuit includes affidavits from several city officials, which say they explained what the funds would be used for and that it was always approved in the past, including last year.

“These actions by the Clerk-Treasurer’s Office came as a complete surprise to me, as these types of purchase orders and expenditures from the MVH fund had been honored by her office for many years without comment or question,” said Steve Engelking, director of administration in an affidavit.

Cordray said she never denied the purchase order, but simply sent it back to be reworked.

Mike Shaver, a consultant for Cordray, provided e-mails to say that the clerk-treasurer’s staff met with Dave Huffman, director of the street department.

He provided e-mails for proof:

—–Original Message—–
From: Johnson, Sandy M <SMJohnson@carmel.in.gov>
To: wabsci <wabsci@aol.com>
Sent: Sat, Nov 22, 2014 3:19 pm

Cindy and I met with Dave Huffman and Amy Lunn on Thursday november 20 at 8am. We told Dave we would pay all claims, but we needed written opinions that it was ok to use mvh funds. Our meeting was at street department.

——-

Shaver said he thought a lawsuit was completely unnecessary and politically motivated.

Looking through the e-mails that were provided by Shaver and the e-mails in Brainard’s lawsuit, it was difficult to find a source of disagreement. Numerous times people reiterate that you can’t use the MVH money on a parking garage but you can use them for sidewalks. But Shaver noted that it wasn’t the emergency and issue of public safety that the mayor claimed it was. He pointed to an invoice which he interpreted as showing there still was leftover money available to clear these sidewalks.

By this time, the Indianapolis Star published an article that characterized this as a “miscommunication” between the two parties. It appeared that both sides read the article and everything was fixed, but it wasn’t that simple. I talked to Shaver before that article ran and I stood in Cordray’s office after it ran and you could tell they were still figuring out what to do. Cordray was having a long conversation with her attorney and you could feel the stress in the office.

Passing by, Shaver was admiring seven plaques on Cordray’s wall for “Certificate of Achievement for Excellence in Financial Reporting.”

One staff member, frustrated at the criticism of the clerk-treasurer, said, “If you talk to Ron Carter, he’d say you might as well throw those out.” That’s a reference to the city councilor’s recent critical comments when he called Cordray “incompetent.”

Later that day, I talked to Shaver and asked him, “Why doesn’t she just approve the purchase order then?” Especially since the mayor said that he wouldn’t use it for parking garages. From my understanding, Shaver said Cordray just wanted a definitive answer on the use of MVH funds. There still were concerns that the “co-mingling of funds” would make it impossible to tell if MVH funds were spent on sidewalks or a parking garage. In addition, Shaver said there were some questions about whether MVH funds could be used for all sidewalks or just those that are adjacent to a highway, which would exclude The Palladium. ‘

On top of everything else, it appears there was an interest to clear Cordray’s name and Shaver said the facts would come out in court.

Cordray was careful with her words at the time because she just spoke to her attorney. She alerted me that, “There might be news soon” and she would call me back. Shortly after, she forwarded me this e-mail thread:

—–

From: Engelking, Steve C
Sent: Monday, November 24, 2014 3:45 PM
To: Cordray, Diana L
Subject: Purchase Order #31892 Snow Removal Downtown Sidewalks & Palladium
Importance: High

I understand from a Star Reported that you have stated that the Subject Purchase Order will be accepted by your office.  Is this a true statement?  Please advise.  Thanks.

From: Cordray, Diana L
Sent: Tuesday, November 25, 2014 8:52 AM
To: Engelking, Steve C
Subject: RE: Purchase Order #31892 Snow Removal Downtown Sidewalks & Palladium

We have the purchase order #3l892. We have had it since Cindy and Sandy talked with Huffman on Thursday.

From: Engelking, Steve C
Sent: Tuesday, November 25, 2014 11:42 AM
To: Cordray, Diana L
Subject: RE: Purchase Order #31892 Snow Removal Downtown Sidewalks & Palladium
Importance: High

Thank you.

Please clarify that you have accepted the purchase order and that the contract may be signed.

If so, I will immediately ask legal to dismiss the lawsuit.

From: Cordray, Diana L
Sent: Tuesday, November 25, 2014 12:47 PM
To: Engelking, Steve C
Subject: RE: Purchase Order #31892 Snow Removal Downtown Sidewalks & Palladium

The PO has been entered in our accounting system.

From: “Ulbricht, Ashley M”
Date: November 25, 2014 at 1:14:08 PM EST
To:bhouse@housereynoldsfaust.com
Cc: “Haney, Douglas C” ,  “Brainard, James C”
Subject: City of Carmel v. Diana Cordray

Mr. House,

We have confirmed that your client has now accepted the purchase order.  As a result, we will dismiss the lawsuit this afternoon.

Ashley

—————

After the lawsuit was dropped, Cordray didn’t want to say anything more about the situation but that she was happy it was over and eager to move on and “get back to helping serve the people of Carmel.” She did say that, “We feel our office has been vindicated,”

Brainard released the following statement:

Update on legal action against Clerk-Treasurer

CARMEL, IN – Mayor Jim Brainard has issued the following statement in regards to a lawsuit filed Friday, November 20, by the City of Carmel against Clerk-Treasurer Diana Cordray regarding a purchase order for snow removal.

“Shortly before 1 p.m. today, my Director of Administration Steve Engelking was provided written confirmation by Clerk-Treasurer Diana Cordray that a Purchase Order needed to contract for snow removal in the City of Carmel has been accepted and entered into the Clerk-Treasurer’s accounting system. Although it took legal action on my part, the City of Carmel can now sign the contract for snow removal in the Arts & Design District and at The Palladium, ensuring safety for pedestrians in the event of snow,” said Mayor Brainard. “I have directed our legal department to dismiss the lawsuit filed last Friday.”

Some have questioned whether city money should be spent to remove snow from sidewalks of private businesses. For example, businesses in the Carmel Arts & Design District have received letters in the past alerting them that it’s the business owner’s responsibility to shovel the sidewalk. But often these walkways are plowed by smaller motorized plows and contracted workers with shovels.

City Councilor Rick Sharp, who is considering a run for mayor, said he doesn’t think it’s a public safety issue like the mayor’s new release suggests. He said there’s no threat of a giant snow storm coming and if there was there are street department employees that can help clear walkways. Furthermore, he said business owners can help pitch in.

Sharp

Sharp

“We’re one of the only communities that uses city funds to clear private sidewalks in a business district,” Sharp said. “That’s neither here nor there, but it’s interesting.”

But Brainard said that fact doesn’t matter. It was approved by the council and it’s a legal use of funds, he said.

“Ordinance requires it (businesses shoveling sidewalks) but we want to make sure it is done consistently because it’s a redevelopment area,” he said. “I’ve proposed it in my budget and it’s been approved each year. As CEO of the city, that’s one of the things I get to decide as long as the money is available. Her job isn’t to say yes or no to that. Her job is to make sure the money is available.”

Sharp said he thinks it’s unnecessary to jump to a lawsuit when other means could have been used to resolve this issue.

“I think it’s completely politically motivated,” he said. “It’s obvious that the Clerk-Treasurer’s Office was working cooperatively. I’ve seen the e-mails to prove this. I think this is nothing more than an attempt to sabotage the reputation of the Clerk-Treasurer.”

Sharps said this lawsuit frustrates Carmel citizens.

“This is exactly the kind of petty little politics where one trumps up a supposed emergency to score points on another in politics,” he said. “It makes everyone kind of turn away and kind of distance themselves from the process because they see it as nothing more than a game of one-upmanship.”


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