For two years, a small storage room in the Transportation Center parking garage downtown has served as graveyard for two dozen passé parking meters, the last physical reminder of the city’s Aparc debacle. The ghosts of the failed parking system still haunt the city’s law department. After months of litigation, city attorneys have nearly finished exorcising Juneau’s parking demons.
In the final days of the summer five years ago, the city entered a contract with Aparc Systems Inc., a Vancouver-based firm that was supposed to “provide a modern, parking solution for the CBJ’s downtown parking situation,” according to court documents. Three years and $400,000 later, the city’s parking situation was worse than ever. The Aparc pay stations were supposed to provide real-time updates to parking enforcement officers. The company promised a one-year return on investment; instead it delivered constant glitches and headaches for city officials. The 24 so-called high-tech pay stations were little more than swanky scrap metal.
By mid December of 2013, the city had removed the useless parking meters and filed a complaint with the state’s Superior Court. City attorneys say Aparc breached its contract and committed unfair trade practices. They asked for $1.2 million in damages — three times the installation cost, which City Attorney Amy Mead said is normal under the Alaska Unfair Trade Practices Act.
Shady business and shell games
In May of this year, the city’s legal battle with Aparc had seemingly reached its end. Aparc’s attorney had withdrawn about five months before, and the company didn’t replace him nor did it oppose the CBJ’s motion for summary judgment, which became ripe on May 20, according to Assistant City Attorney Chris Orman, who has worked on the suit against Aparc since day one.
On June 2, a judge granted the city the full $1.2 million it had requested. Mead announced the news at a city Assembly meeting four days later, but the “exciting” news came with an important caveat. Aparc had recently gone belly up. “It’s highly unlikely we’ll ever see a dime, but the end it’s nice to be vindicated,” Mead told the Empire after the meeting.
Unbeknownst to the city when the $1.2 million judgment was awared, Aparc had filed for bankruptcy “literally on the day that the motion for summary judgment was filed, which showed that Aparc could be potentially using bankruptcy as a shield,” Orman said.
Typically when parties file for bankruptcy, they give notice to the judges handling any other ongoing cases, Mead said. Not only had Aparc filed for bankruptcy more than a year and a half after the CBJ had filed its lawsuit, but it had skipped the step of giving notice. Having filed for bankruptcy, Aparc was able to have a stay placed on all other pending litigation, which vacated the $1.2 million dollar judgment awarded to the CBJ. The city subsequently moved to repeal the stay.
The seemingly shady behavior of Aparc was far from over, however. Though Aparc’s parent company was based in Canada, the city had been dealing with its U.S. counterparts based out Nevada. But It was hard to know exactly who the city was dealing with. In his motion to remove the stay imposed on the previously awarded judgment, Orman found himself dealing with both Aparc and another related company called Makai Parking Management based out of Hawaii. Aparc had also since changed its name to Parktoria Technologies LLC, which muddied the situation on the city’s end.
“There are many entities involving all of the same key players, and it seems that assets were funneled from one entity to another,” Mead said, explaining how the city’s original suit had turned into a nightmarish “shell game.” Only in this game, it wasn’t clear if there was a reward hidden under any of the shells.
“Just to show you how strange this was, Aparc was a Nevada corporation, but they filed for bankruptcy in Delaware,” Orman said, describing further how strange the Aparc saga had become. “It may be that it totally is a shell game, and it may be legally sound,” Orman said. “But just because it’s legal doesn’t make it any less suspect.”
Until victory, always
Despite the “suspect” activities of Aparc et al., the city didn’t give up in its fight for vindication.
“It was a lot of hoops to jump through, and we don’t know if there’s any money, but we felt it was really important to take that through to the end and get that judgment. Even if we don’t get a dollar it was the right thing to do,” Mead said.
On Nov. 5, Orman attended a hearing via phone to remove the stay so that the $1.2 million judgment could be reinstated.
Orman argued that Aparc had “used bankruptcy as a strategy and tactic to prolong the Alaska District Court litigation, to sidestep a judgment, and to increase the CBJ’s attorney time where Aparc has represented in a Chapter 7 bankruptcy it lack sufficient funding to pay the CBJ any of the possible judgment it could obtain.”
He used legal precedent established in another bankruptcy case to deconstruct the stay imposed on the city’s judgment, and he won. The bankruptcy judge ordered that Orman work with the case’s trustee — a third party tasked with assessing whether Aparc has any money with which to pay its debts — to reach an agreement regarding how the parties will proceed.
“The stay is going to be lifted; the judge has just asked the parties how we want to do it,” Orman said. There are two basic options now, according to Mead and Orman. The stay can either be retroactively lifted, making the $1.2 million judgment valid again, or the judge who issued the original judgment can issue a new judgment of the same amount. Orman said he spoke with the trustees attorney on Friday, and the two are hopeful to have an agreement worked out by the end of the coming week.
It is unclear whether the trustee will find that Aparc has any money to repay the city. He, too, may have to play the company’s shell game. Regardless, city officials are relieved to be one step closer to closing this bizarre chapter in CBJ history.
“It’s great to be on the record that they did us wrong,” said City Manager Kim Kiefer. “Will we ever get any money? I’m doubtful, but it’s really great to have this ruling in court.”
Money or no money, the city’s law department counts this as a victory, too.