Miami Twp. could become the first township in Ohio history to declare bankruptcy.
“The Township will be financially ruined for generations by the (court’s) opinion that upholds and places squarely on its 31,000 residents the largest civil rights verdict in Ohio, which was rendered not against the township but against a single detective for his actions thirty years ago,” attorneys for Miami Twp. said in a mid-May court filing.
“The Township’s ability to provide statutorily-required maintenance, management of public infrastructure and funds, and other life safety functions will be severely compromised,” township attorneys wrote. “It is not a choice for the Township to provide these services but a requirement of state law.”
Credit: JIM NOELKER
Credit: JIM NOELKER
The judgement
Dean Gillespie, of Fairborn, spent more than 20 years behind bars for sexual assaults he didn’t commit following an investigation by former Miami Twp. detective Matthew Moore. In 2008, he sought and received a new trial claiming evidence — including the identification of an alternative suspect and police reports possibly eliminating him as a suspect — were never turned over to his attorneys.
State and federal courts, along with the Ohio Supreme Court, released Gillespie, exonerated him and admitted he had been “wrongly imprisoned.”
A federal court in 2022 awarded Gillespie a $45 million wrongful conviction verdict, the largest in state history.
Miami Twp. Trustee Terry Posey Jr. and Miami Twp. Administrator Chris Snyder declined to comment for this report, citing the ongoing litigation. Gillispie’s attorneys did not return calls seeking comment.
‘Loss and pain’
Early last month, a three-judge panel from the U.S. Sixth Circuit Court of Appeals ruled that the township must pay the damages awarded to Gillispie in his 2022 trial, which centered on misconduct by Moore during the investigation.
The township claimed the majority of the evidence does not support the $45 million damages award because there is “little specific evidence of past, present, or future physical pain or suffering, and no specific evidence that Gillispie is reasonably likely to suffer any loss of enjoyment in the future.”
The judges, in the May ruling, refused to reduce the judgement, dismissing township claims that Gillispie hadn’t proven his suffering.
“There is a critical flaw in this argument,” Judge Eric L. Clay wrote for himself, Senior Judge Julia Smith Gibbons and Judge Richard Allen Griffin. “What Miami Township does not address, and which formed the core of the district court’s determination, is the fact that Gillispie was forced to spend years of his life unfairly locked in a maximum-security prison, labeled a violent felon, and deprived of the opportunity to live a normal life.
“The district court’s decision cites pages worth of testimony and evidence at trial describing the kind of loss and pain endured by Gillispie because of his wrongful imprisonment.”
‘No way for the township to pay’
Miami Twp. attorneys further argued the township simply can’t afford the verdict.
They say the township’s unrestricted revenue comes primarily from its residents’ property taxes and is “nowhere close” to being able to generate $45 million.
Additionally, the township does not have insurance that would cover the payment.
“The Township’s available insurance coverage is likely less than $2 million, given the primary insurer went insolvent before this claim arose,” Miami Twp.’s attorney’s said. “Quite simply, there is no way for the Township to pay the indemnification order given the Ohio statutory and constitutional constraints under which the Township operates.”
Township money is statutorily restricted or committed to cover necessary services for its residents, except for an unassigned general fund of approximately $1.2 million per year, which goes to staff salaries and the parks.
Incurring debt to pay off the judgement using existing township revenues is not an option, the township’s attorneys said, as judgement bonds under Ohio law may only have a maximum maturity of 25 years.
“Twenty-five years is insufficient time for the Township to repay a $45 million bond, given that its unassigned revenues are only approximately $1 million each year,” the attorneys said. “The Township does not have the revenue generating capacity to fund a bond, pay its carrying costs, or ever pay it back. No lender will ever service such a bond under these circumstances.”
New taxes, bankruptcy?
Being required to pay a $45 million judgment without sufficient insurance coverage could put a township under serious financial strain, said Anne Beauch, spokeswoman for the Ohio Township Association.
“Townships operate with strict financial constraints, and the majority of revenue comes from property taxes, often tied to specific levies,” Beauch said.
Under Ohio law, the township could issue securities to pay a final judgment within certain limitations, Ohio Township Association told this news outlet.
Township levies designated for essential services like police and fire cannot be redirected to cover unrelated legal obligations. As a result, a new tax approved by voters may be the only viable option — but how likely are residents to support a tax increase that offers them no actual benefit, simply to correct a decades-old mistake that they had no part in?
Additionally, townships could request a payment plan to spread out the financial burden, rather than paying the judgment in one lump sum, Beauch said.
But even if the township stopped paying staff salaries and funding parks and used its $1 million in unencumbered general fund revenue to make payments that way, it would take more than 46 years to pay off the settlement.
That means Gillespie would need to live well past 100 years old to receive the full amount he’s owed.
And that doesn’t include interest or attorney’s fees, both of which Gillispie has indicated he would be seeking. Interest alone could be over $1 million a year.
If a township is unable to issue securities, secure a payment plan, or lacks sufficient general fund dollars, bankruptcy could become a real risk, Beauch said.
That process is subject to strict regulations, Beauch said. While federal law permits a township to declare bankruptcy, Ohio law requires prior approval from the Ohio Tax Commissioner, she said.
No township in Ohio has ever declared bankruptcy. Beauch expressed uncertainty about how things might go in such a case.
“We believe that if someone were to file bankruptcy, other entities and resources — such as the Auditor of State or possibly the Attorney General’s office — would come forth to help a township through the process,” she said.
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