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Posted on Fri, Mar 30, 2012 : 10:38 a.m.

Ann Arbor wins appeals court ruling in $30M lawsuit over old YMCA site downtown

By Ryan J. Stanton

The 6th Circuit U.S. Court of Appeals on Friday ruled in favor of the city of Ann Arbor in a federal lawsuit brought by the developer of the William Street Station project.

The court affirmed the decision of a federal district court judge who dismissed the case in May 2010. The case concerned the former YMCA site downtown.

City Attorney Stephen Postema called the decision a decisive blow to the developer's attempt to obtain an extraordinarily large damage claim against the city.


The old YMCA site was the subject of a lawsuit dismissed today.

File photo

"This is a major victory for the city of Ann Arbor," Postema said in a statement. "The court found that there was no factual or legal merit in this case, which nevertheless sought $30 million from the city. The court clearly saw through plaintiff's various legal contortions."

The developer, HDC LLC, sought damages of $30 million, claiming the city blocked it from building on the site because the project would have included 100 units of low-income housing, in addition to a hotel and transit center. HDC claimed the city's decision to pull the plug on the project in 2007 was intentional discrimination against the type of people who would live there.

"The Ann Arbor City Council did absolutely nothing wrong," Postema maintained. "They properly exercised their careful oversight on a development project.”

HDC was working with the city to develop the city property at the corner of South Fifth Avenue and East William Street after the city solicited proposals in 2004.

In June 2005, HDC's proposal was chosen by the city over five other applicants. The Ann Arbor City Council passed a resolution accepting HDC's proposal and agreed to a purchase price of $3.5 million for the property, but later in 2007 the City Council denied the developer's request to modify a demolition permit deadline. The city attorney's office then sent notice terminating the option agreement.

HDC filed its appeal with the 6th Circuit Court of Appeals in September 2010. Oral arguments in the case were heard in January of this year, with Postema arguing the city's position to the panel of three judges in Cincinnati.

"The facts alleged in the complaint do not plausibly support a finding that Ann Arbor 'designed' the option agreement to fail by intentionally including a condition it knew or should have known the developers could not meet," the appeals court stated in its opinion. "Plaintiffs in this case are a sophisticated land development firm and associated companies which agreed to the demolition permit condition during the negotiation of the option agreement."

The court further held that the complaint "provides no facts supporting the inference that Ann Arbor did not want the development to take place and instead sought to derail it because it would house handicapped individuals."


Stephen Postema

It called that claim "particularly implausible in light of the fact that when the option agreement was negotiated, the parties had previously negotiated an option contract that had since expired and, nonetheless, decided to enter into the option agreement containing the demolition permit requirement."

"The developers' vague and conclusory allegations that Ann Arbor acted with 'a discriminatory intent, purpose, and motivation' to prevent handicapped people from living on the property do not transform the developers' otherwise insufficient pleadings into allegations that plausibly support an inference of discriminatory animus," the ruling states.

Postema said the court's opinion completely vindicates the city. He noted the court took an extra step and recommended the case for full text publication, which means it will be binding precedent in the 6th Circuit on the issue of what needs to be pled in this type of discrimination case to survive dismissal of a case on the pleadings.

An attorney for HDC could not be reached for comment.

The property that was the subject of the lawsuit remains a surface parking lot. The City Council last year directed the Downtown Development Authority to go through a master planning process to figure out a better use for not only that site, but other city properties downtown.

Ryan J. Stanton covers government and politics for Reach him at or 734-623-2529. You also can follow him on Twitter or subscribe to's email newsletters.



Sat, Mar 31, 2012 : 12:22 p.m.

How much total money has the city wasted on this site? I wish the would research how much the CIty paid for building, how much did it cost to maintain the Y, how much to demolish it, how much to house the former occupants of the Y, how much to construct the lot and how much did it cost to defend the lawsuit. Wonder if it would have been just cheaper to have allowed the AATA to purchase the building back in the day.

Irwin Daniels

Sat, Mar 31, 2012 : 11:41 a.m.

I wonder how much of this "money" will end up in the famous ART bucket???


Sat, Mar 31, 2012 : 2:28 p.m.

none. The art fund is taken at 1% of capital improvements.

sam time

Fri, Mar 30, 2012 : 11:19 p.m.

Thanks to the City attorneys office for taking really good care of the City in these cases. As a tax-paying resident, I really appreciate this.


Fri, Mar 30, 2012 : 10:38 p.m.

Oh yeah, that's right. I seem to recall a building that once stood across the street from the library. I used to swim there when i was a toddler.


Fri, Mar 30, 2012 : 9:01 p.m.

Some additional background:


Fri, Mar 30, 2012 : 9:08 p.m.

Also: timeline_rise_and_fall_of_will.html


Fri, Mar 30, 2012 : 9:04 p.m.

Missing part of link: hotel_project_on_ol.html


Fri, Mar 30, 2012 : 7:25 p.m.

Who is HDC? MLive lists them as 'Building Construction Consultants". Who are they?

Vivienne Armentrout

Fri, Mar 30, 2012 : 7:51 p.m.

Here is how they described themselves in their original lawsuit pleading: "Plaintiff HDC is a Michigan limited liability company with its principal place of business at 35 Research Drive, Suite 300, Ann Arbor, Michigan. Michael H. Jacobson is the Chief Executive Officer of HDC." The full name is HDC LLC.


Fri, Mar 30, 2012 : 3:44 p.m.

Kudos to Mr. Postema. Citizens of a2 thank you, your colleagues, and the Court of Appeals. Glad to see a failed agreement on the developer's part deemed to be such. One can only guess as to why HDC LLC fabricated their nonsensical claim. HDC LLC let their agreement with the city expire. Then, they went after the city's deep pockets, hoping for out-of-court settlement or judicial award. In the end they received what they deserved: Nothing, except a kick out the door of the court. Tell that to your LLC investors. HDC LLC failed plan + failed investment + failed development + failed legal maneuvering = expensive and wasteful use of LLC resources. "An attorney for HDC could not be reached for comment." In this case, the sound of silence is so very sweet!

Vivienne Armentrout

Fri, Mar 30, 2012 : 3:28 p.m.

I agree with Mr. Postema that the premise of the lawsuit was flawed and that it deserved to be defeated. It's too bad that we had to pay for this long legal battle. There were some odd things about the history of the project, though. I did some fairly heavy lifting on a report that linked this history with the history of the conference center proposal.

Craig Lounsbury

Fri, Mar 30, 2012 : 5:21 p.m.

"It's too bad that we had to pay for this long legal battle." How much do we have to pay? I often wonder these things. We pay a yearly salary to the guy (Postema). When something like this comes up how much falls outside his normal paid job description ?

David Cahill

Fri, Mar 30, 2012 : 3:09 p.m.

Good job, Postema!