[Water Works Realty Corp. and Gary Melius vs Harrison J. Edwards, William F. Glacken, Renaire Frierson-Davis, Jorge Martinez, Donald K. Miller, William H. White, et. al., in the United States District Court - Case Nos. Civ. 08-04754 and Civ. 08-00449]
As Mayor of the Incorporated Village of Freeport, I am pleased to report to the taxpayers of Freeport Village that my administration has been able to settle the “Water Works” lawsuits that we inherited from the former Glacken administration. Those alleged federal “Racketeering and Corrupt Organization” claims were projected to cost us millions in lawyer’s fees and had the potential to bankrupt the Village if the individual defendants lost. I am especially gratified that we found a way to structure the settlement in a manner that will avoid bonding and/or raising taxes.
The disputes underlying the legal actions began in 1997, and the lawsuits were filed in 2005 – four years before I and Trustees Kennedy and Pineyro were elected. We have absolutely no personal interests in the lawsuits. Yet we were put in the position of having to settle a legal action where the alleged misconduct of some Freeport officials, if proven, would expose the Village to a jury verdict that could bankrupt us. It is the duty of the Mayor and the Village Board to protect the residents and taxpayers of Freeport. So, I and the members of my administration took action and voted in favor of settling the lawsuits.
We voted for the proposed settlement on and with the advice of counsel. The settlement was recommended by our risk manager and every attorney in the lawsuits except the firm representing the primary defendants (Glacken, Edwards, Frierson-Davis, Miller and White). Although the allegations, if proven, paint an egregious picture of wrongdoing by certain individual defendants, it would ultimately be our taxpayers who would have to pay for any misconduct.
We could accept the recommended settlement or face paying out millions of dollars in attorney’s fees and millions more in damages. That was a gamble we were not willing to take. Here is the math we were faced with in attorney’s fees alone, as well as expenses for the Village of Freeport and the eight individual defendants for whom we were statutorily obligated to provide attorneys:
$300,000 - Attorney’s fees paid through November 1, 2009.
$2,100,000 - Projected attorney’s fees through the end of trial.
$250,000 - Additional attorney’s fees for an appeal (win or lose).
$250,000 - Additional expenses if the matter was retried (appeal).
In reviewing the proof submitted to the Village, we were concerned that the Village of Freeport faced the possibility of a jury verdict awarding significant damages to the plaintiff. In the worst case scenario, the exposure would be astronomical. Conservatively, these are the damages that we could have faced:
At least $1,000,000 - Projected jury verdict, if the Village of Freeport or individual defendants were found liable under any of the various fraud and/or racketeering claims.
$800,000 to $1,000,000 - As an award of attorney’s fees for the plaintiffs’ lawyers if the Village of Freeport were to lose on any of the claims.
This could result in a special tax assessed to each Freeport homeowner and commercial building owner in an amount of up to $400.
The amount of the settlement our lawyers have negotiated is $3,500,000, payable over a period of six years at 6.5-percent interest on the unpaid balance, which is:
(1) $200,000 less than what we would have to pay in attorney’s fees if we lost after trial; or
(2) $600,000 more than the estimated amount we would have to pay in attorney’s fees alone if we had stayed in the action.
Compare this to the $4,000,000 in damages the Glacken administration agreed to pay, in a lump sum, to settle a lawsuit brought by a bicyclist who was hit by a Village department head in a 2006 auto accident. That case was just an example of the tough decisions that have been made to settle cases involving the Village of Freeport. This is no different.
The current lawsuits were voted on, and a settlement was approved by the Board of Trustees on November 5, 2009. Under the terms of the settlement, an initial payment of $250,000 was made to the plaintiffs. Further, the Stipulation was submitted to the court to be “so-ordered.” As soon as all of the post-settlement matters are completed, I intend to hold a public meeting to discuss the following:
(1) the Glacken administration’s handling of the lawsuit involving the Village department head and the bicyclist;
(2) the current Board of Trustees’ reversal of the Glacken administration’s decision to pay for former Mayor William Glacken’s defense in an alleged defamation lawsuit that had nothing to do with his duties as mayor;
(3) the Hardwick administration’s successful avoidance of having to issue bonds and/or raise taxes to pay for the Water Works settlement.