Michigan football coach Rich Rodriguez is using his new Ann Arbor ties in an attempt to settle his lawsuit with West Virginia.

Through the Bank of Ann Arbor, a bank founded by University Athletic Director Bill Martin, Rodriguez filed a $1.5 million letter of credit yesterday with the federal court for the Northern District of West Virginia. The letter of credit says Rodriguez has the means to pay that amount if the court orders him to pay West Virginia University, where he was head football coach until last month.

The figure comes from the first amendment to Rodriguez’s contract with West Virginia, which said he must pay the university $1.5 million in “liquidated damages” if he terminated his contract with the university without breach between Aug. 31, 2007, and Aug. 31, 2008. Rodriguez later signed a second amendment on his contract, which raised the buyout payment to $4 million.

West Virginia is currently suing Rodriguez for $4 million, the amount stated in the second amendment, claiming he breached the contract by accepting the head football coach position at Michigan.

“Coach Rodriguez is a responsible person,” Rodriguez’s agent Mike Brown said in a statement released to ESPN. “This is a good faith effort to move the process and communication lines forward so all parties can concentrate on their future endeavors.”

The bank, of which Martin is also the chairman of the board, will be responsible for paying West Virginia the $1.5 million on or before April 27 if the court finds Rodriguez liable.

It’s unclear exactly who would be responsible for repaying the bank. When Michigan men’s basketball coach John Beilein left West Virginia for Michigan in April, he said in his introductory press conference that Michigan wasn’t responsible for paying his $2.5 million buyout.

Assistant Athletic Director Bruce Madej declined to comment on the credit offered by the Bank of Ann Arbor, saying, “I know that’s where Rich does his banking.”

According to the conflict of interest clause in the Bank of Ann Arbor Board of Directors Code of Ethics, “All directors should avoid situations that could result in a conflict of interest that concerns either the bank or its customers. Personal interests which might directly or indirectly affect the proper exercise of judgment on the part of the directors should be avoided.”

In his second resignation letter, dated Jan. 10 and obtained by the Charleston (W. Va.) Daily Mail, Rodriguez claimed West Virginia breached the second amendment of his contract by failing to honor “verbal agreements” made over a handshake between Rodriguez and West Virginia University President Mike Garrison before Rodriguez signed the second amendment of his contract in August.

Garrison became West Virginia’s president-elect on July 1. In the second letter, Rodriguez wrote that he was “uncomfortable” agreeing to a larger buyout, but Garrison told him it would “a personal favor for him and said [he] needed to do it to help Garrison’s start as the new President.”

According to Rodriguez, Garrison told him that the buyout would be reduced to $2 million or eliminated entirely if he chose to leave West Virginia.

“Mike Garrison stated that he did not believe in buyouts,” Rodriguez wrote. “I told him the four million dollar buyout was unfair and Garrison agreed.”

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