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Motion of the Council of Allegheny County directing Council's solicitor to file suit against the Allegheny County Airport Authority in order to determine the appropriate disposition of the proceeds from the sale of certain U.S. Airways stock by the Authority.
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WHEREAS, in July, 2003 the County and Airport Authority were awarded U.S. Airways stock with a then-current aggregate value of roughly $6 million (the “Stock”); and
WHEREAS, this stock represents a settlement of bankruptcy claims filed separately by the County and Airport Authority against U.S. Airways and presided over by a Federal Bankruptcy Court; and
WHEREAS, after the settlement was made and approved, the County and Airport Authority executed an escrow letter between them dated August 11, 2003 (hereafter the “Escrow Letter”, a copy of which is attached hereto) providing for the retention of the Stock in escrow pending the mutual agreement of the County and the Airport Authority regarding (a) appropriate disposition of the stock and (b) appropriate division of the proceeds of this disposition between the County and Authority; and
WHEREAS, the Escrow Letter provides, inter alia, that in the event the County and the Airport Authority are unable to agree as to an allocation of the Stock between them, “either party may petition the Court of Common Pleas of Allegheny County for a determination of the parties' respective rights” with respect thereto and “to effect distribution thereof”; and
WHEREAS, upon information and belief, the Authority converted and unilaterally sold, the Stock without the prior knowledge and consent of the County and without petitioning the Court of Common Pleas of Allegheny County; and
WHEREAS, upon information and belief, the stock had depreciated in value at the time of the sale such that the proceeds of the sale were $756,000; and
WHEREAS, upon information and belief, the County has not received any of the sale proceeds, which have been retained by the Authority and used to reduce the residual rent to be paid by the airlines at Greater Pittsburgh International Airport to the Authority; and
WHEREAS, selling the Stock for $756,000, while not an insignificant sum, may have not been prudent and reasonable in light of the $6 million market value at the time of the award, and in light of the other benefits ownership of a significant amount of Stock in the County's primary airline would otherwise have conferred; and
WHEREAS, Council is unaware of any mutual agreement between the County and the Airport Authority regarding appropriate disposition of this stock or appropriate division of the proceeds from the disposition of this stock between the County and the Authority subsequent to the execution of the escrow letter; and
WHEREAS, Article IV, Sections 2.a., b., c., and k. of the Home Rule Charter of Allegheny County obligate and empower Allegheny County Council to determine whether or not all of the proceeds of the stock sale should be forfeited to the authority and hence back to the airlines;
NOW THEREFORE, IT IS MOVED, that the solicitor for Allegheny County Council is hereby authorized and directed to pursue the recovery of all damages, including, if appropriate punitive damages, and any other sums due the County as a consequence of the actions taken by the Airport Authority with respect to the conversion and sale of the Stock in contravention of the Escrow Letter, including but not limited to those sounding in contract, tort and/or negligence, and to file suit on behalf of the Council and residents of the County in order to effectuate said recovery.