Somerset County judges unanimously granted a declaratory judgment on Feb. 17 in favor of the commissioners against the treasurer in a 22-page opinion and order.
The court, sitting en banc in this matter, or otherwise all the three judges of Somerset County Court of Common Pleas, collectively denied the treasurer’s counterclaim in declaratory judgment.
The legal action was based on a dispute between the county and the treasurer over the investment of county funds.
“We hate that this matter has to be litigated in the Courts,” said Commissioner Gerald Walker, “but we are pleased with the results.”
What is a declaratory decision?
A declaratory judgment is a special type of lawsuit that allows plaintiffs to seek a court order explaining the legal rights and duties of the parties to the suit.
The declaratory judgment is binding. In this case, the judges defined the legal relationship between the commissioners and the treasurer and their rights in this matter before the court. The judges offer an immediate means to resolve the uncertainty that arose between the commissioners and the treasurer about their legal obligations when it comes to investment of county funds.
The heart of the matter is who has the authority?
The biggest benefit of a declaratory judgment is that it helps prevent lawsuits that are unlikely to be successful. Declaratory judgments save both time and money that would otherwise be spent on costly litigation.
However, this does not mean that the parties, or a party, cannot decide to move ahead in the courts with a lawsuit.
How it began
The commissioners unanimously adopted resolutions on Sept. 13 and Oct. 11 to deposit county funds for investment with identified public institutions. Somerset County Treasurer Anthony “Tony” DeLuca declined to transfer the funds because he was not involved in the drafting of, did not consent to, and thus did not sign the resolutions.
On Oct. 18, DeLuca “unilaterally” or by himself, decided the commissioners should go through the treasurer’s office to view and to modify banking and account information. Essentially, he removed the online permissions of the commissioners’ fiscal department. The result was that that department could no longer view or otherwise access the county’s accounts with First National Bank.
The same day, the county filed a complaint for declaratory judgment against the treasurer.
On Oct. 31, the treasurer filed a counterclaim for a declaratory judgment against the commissioners.
Both parties then filed briefs in support of their positions on Dec. 30, and on Jan. 23 oral argument was held before the court, en banc. The judges took the matter under advisement.
“In October, the County, by and through the Board of Commissioners, was left with no choice but to sue the County Treasurer after he refused to place County funds for investment following due diligence and formal actions taken by the Board of Commissioners,” according to a Feb. 17 statement by the commissioners.
It was after the county filed a lawsuit, that DeLuca decided to remove the county fiscal department’s online banking permissions and blocked the Somerset County Commissioner” Office from viewing the county’s accounts with First National Bank.
“Although the Commissioners attempted to work through these issues with Mr. DeLuca in an amicable fashion, he was insistent that he possessed the ‘ultimate authority’ over County finances and that he perceived ‘one vote’ could negate any actions taken by a board of three Commissioners,” according to the statement.
Somerset County contends that the commissioners are the responsible managers and administrators of the county fiscal affairs, and thus, “has the sole authority to determine where, in what amounts, and with whom to invest, deposit, and maintain county funds, and that the Commissioners and their designees shall have unfettered access to view and monitor those accounts.” The opinion concurs.
The treasurer contends that “he has the final authority with respect to the investment of County funds, the selection of County depositories through official action, the transfer of County funds, the opening of County accounts, and the final authority to establish fiscal policies for the County relating to online banking and authorized permissions.” The opinion does not concur.
How the judges decided
“Not only does the Treasurer not have final authority with respect to the investment of county funds, he plays no role whatsoever in formulating the investment program. Accordingly, the Treasurer has no discretion to decline transactions approved by the County Commissioners to effectuate the Commissioners’ investment program,” the opinion concludes.
The judges engaged in statutory interpretation from the point of view of the intent of the General Assembly and the state’s county code.
Can the treasurer refuse to approve the transfer of funds for investments designated by the commissioner’s resolution?
According to the court’s decision, the answer is no.
“The treasurer has no authority to refuse to transfer funds for investments designated by the commissioners’ resolutions,” according to the opinion.
The commissioners have the power of managing and administrating the county’s fiscal affairs, among others, according to the county code. To do their job, the commissioners have the authority “to adopt resolutions and ordinances” that describe how the county will carry out and regulate the county affairs, the judges wrote.
Commissioners in sixth class counties, such as Somerset County, and not the county treasurer, decide how to invest county funds, based on the county code, the opinion reads. “Only the county commissioners have the authority to decide how to invest county funds.”
Additionally, the opinion points out that “there are no statutory provisions that carve out such a discretionary role for the Treasurer regarding the investment transactions that are at issue here.”
According to the opinion, “Because the Treasurer does not sit on the investment board, the Resolutions did not require his signature in order to be valid.”
How funds become available for investment come from county depositories that exceed what is necessary for the day-to-day expenses of the county and are not already allocated for spending elsewhere, according to the County Code. “…they may be removed from the depository at the direction of the Commissioners and invested according to the Commissioners’ investment program,” according to the opinion.
Although the county code mandates that the treasurer must be consulted by the commissioners in consideration of new or different depositories for county funds, it “does not give the treasurer a vote on the matter, and it most certainly does not grant the Treasurer the authority to override the unanimous vote of the county commissioners with regards to selecting depositories for county funds,” the judges wrote.
“Since a depository board where the treasurer has a vote does not exist (in sixth class counties), we interpret ‘by resolution’ to mean that after consulting with the treasurer the commissioners shall pass a resolution,” the opinion reads.
In the statement by the commissioners after the opinion was released, Commissioner Colleen Dawson said DeLuca was “attempting to usurp the powers of the Board of three County Commissioners as clearly established by the County Code and, instead, vest those powers into one person: himself. He left us with no choice but to bring the matter before the Court.”
The treasurer’s duties are ministerial
DeLuca contends that the county code empowers him with final signature authority on county financial transactions, “in essence granting the Treasurer the final check and balance for county financial transactions.”
He pointed in the brief in this matter to a state Supreme Court 1907 decision that “the treasurer is not only ‘excluded’ from fiscal affairs but actually has the final approval for all county financial transactions.”
The judges called that reasoning “flawed” and that a treasurer’s duties in the sixth class counties “are ministerial in nature.” Otherwise, although he is required to sign the checks he does not have any discretion to refuse his signature for transactions approved by the Commissioners.
“In regards to approved transactions by the County Commissioners, the Treasurer’s duty to sign checks is merely ministerial; he cannot refuse his signature except in the extremely narrow instance where he has express notice that a proposed transaction is illegal — which is not the case here,” the opinion concludes.
Does the treasurer have the authority to unilaterally remove online permission of the county fiscal department?
According to the court’s decision, the answer is no.
DeLuca claim that he may restrict the commissioners’ office from accessing the online banking information of the county. He stated in his court filings that the county code does not allow any county official outside the treasurer to view or make alterations to county bank accords and only requires the treasurer to make county banking information available to the commissioners if they request to inspect the records.
The judges said, the county code “clearly contemplates that the chief clerk of the commissioners may view county depository account information without informing the treasurer.”
The code also allows for the commissioners to approve methods of electronic funds transfer. The judges said that they saw “no rational basis” for DeLuca’s position that he may unilaterally restrict the commissioners’ office from accessing the county’s online bank account information.
“We hold the Treasurer did not have the authority to unilaterally restrict the Commissioners’ office from viewing and otherwise accessing online banking and account information of the county,” the opinion states.
According to Walker, “Hopefully, now, we can get back to the business of the County.”
DeLuca, who indicated this case may be continued through the courts, referred comments on the opinion and his future action in this matter to his solicitor David Leake, who was not available for comment at this time.
“During my tenure I have never experienced anything like this,” said Commissioner Pamela Tokar-Ickes. “I would never have expected to sue another County official. The Board of Commissioners will now move on from this unfortunate matter.”
This article originally appeared on The Daily American: Somerset County court finds for commissioners against treasurer