That "fiduciary responsibility" question & why Palm Drive needs to fire its lawyers!
Conrad, you ask one of the most important outstanding questions in our community's collective search for answers into why our hospital closed--and why this Board rejected the doctor led foundation plan to keep it open.
If any member of the Board reads this and can provide the answer to it as a reply, or anyone reading it knows a Board member and can ask them to answer this question and reply for them, please do so:
Have Palm Drive's Board members been told, as I have reported from a second hand source, that they have no legal choice but to NOT allow a Foundation group re-opening the hospital to use future tax revenues to keep an emergency room open? Has this lie which we see told by bankruptcy attorney Michael Sweet in a video of the April 23 meeting, become the received legal advice of this Board?
The Board members may have been told that this is "privileged information" and that they cannot disclose it.
This is untrue. Michael Sweet, our taxpayer-financed $520 attorney from Fox Rothschild (which also represents Wells Fargo Bank) is bound by attorney client privileges, and cannot reveal this information. But the Board, which was elected to serve the voters, can disclose what they want to the public. Indeed, in my view, given the urgency public interest of having n emergency room, and the apparent false information they were provided in public, they have an obligation to disclose it.
If any Board members reading this agree, and wish to comment, you would be doing a service to us all to do so on this thread as a reply to this post. The longer it takes for you, our Palm Drive Board members to reveal the truth behind why you decided to reject the doctor led foundation plan to keep the emergency room and hospital open, the more the sense will grow, among your neighbors, that you are doubling down on misleading advice, and acting secretly, against the interests of our community.
Attorney Michael Sweet's legal advice, instrumental in getting the Board to reject Dr. Gude's plan on April 23, is a deliberate distortion of what Chapter 9 bankruptcy law clearly states. The fiduciary responsibility of this elected Board is to operate a hospital with an emergency room. That is primary. The legal advice, given By Mr. Sweet, of Fox Rotschild (a law firm that also represents bond trustee Wells Fargo Bank) was that they could not approve the doctor led plan because they had a fiduciary responsibility not to "raid the kitties" and not to "squander" tax revenues due this coming year to support the operations of the hospital and emergency room.
Here, again, is Mr. Sweet's public LEGAL advice on this matter to the Board:
"Those funds just aren't available to startup this new process. What falls on the shoulders…of the board, is your role as a fiduciary, and the knowledge that right now that money is available is the concern that the money could end up being squandered or spent on something that the return isn't clear and could leave us in a very complicated situation down the road if money was available today to pay the creditors and fund the plan and exit the bankruptcy, and that money is spent in a way that the court might conclude was done imprudently… I think that the board puts itself at risk as a fiduciary for doing that; it could create complications for us in the bankruptcy case going forward.”
The law clearly states the OPPOSITE of this; that a Section 9 bankruptcy court has no power whatsoever to determine how a municipal entity uses its tax revenues for its operations. Indeed, federal bankruptcy law was WRITTEN to PREVENT creditors from shutting down vital government operations, like emergency rooms!
As I suggested at the most recent public meeting of the Board last Thursday, the Palm Drive District Board needs to fire Fox Rothschild, Wells Fargo's law firm, and hire one that honestly represents the taxpayers and citizens of our community.
We need a bankruptcy lawyer like the one Palm Drive hired in 2007, whose mission is to work through bankruptcy while re-opening the hospital.
Not a lawyer hell bent on running through a shutdown playbook, while rejecting a doctor led Foundation plan that would keep the emergency room open, alleging it is economically "unviable" because it uses the hospital's tax revenue to operate. Instead of, as Mr. Sweet so deceptively advised, keeping the hospital closed while using our future parcel tax revenues to pay off the creditors, the largest of them the bondholders Wells Fargo represents.
Palm Drive Board members: the people of your community need you to do the right thing. Fire these conflict of interest encumbered attorneys.
And use our tax dollars to find someone to represent the people of Sebastopol.
Quote:
Posted in reply to the post by theindependenteye:
I greatly appreciate Jonathan Greenberg’s investigation and Gus's commentary.
There’s one element alluded to in his analysis on which I haven’t seen any commentary. As I read it, the lawyer’s advice to the Board suggested that they might have a “fiduciary responsibility” in the matter if they didn’t act on his advice.
What does that mean? It’s my understanding that while board members are normally shielded from personal liability for debts of the corporation, they might be personally subject to lawsuit on the grounds of malfeasance or willful neglect of their responsibilities — this is why there’s a huge market for “board liability” insurance. If I were one of those board members, I could readily imagine that, if I risked a decision that went against my legal advisors and approved a plan that resulted in a loss to the bondholders, could not the bondholders sue me personally for “neglecting my fiduciary responsibility”? The threat would surely be there, and I think it’s implicit in that lawyer’s words. How’d I like to be subject to being bled dry by the legal eagles of Wells Fargo Bank?
I don’t know if this was a factor in the Board’s punchdrunk stumble on this issue — destroy the village to save it — but it seems a possibility. Hope I’m wrong, as that would make any voluntary reversal of their decision even more difficult.
Is there any movement toward legal action against the Board for the Brown Act violation? And are we inextricably trapped into paying a parcel tax to keep Wells Fargo Bank in operation? Might the bank at least open a drive-up window for ER services?
Cheers—
Conrad