Fort Smith Board votes to appeal RVSC verdict

by Michael Tilley (mtilley@talkbusiness.net) 617 views 

The Fort Smith Board of Directors voted Tuesday (Oct. 16) to spend an estimated $20,000 more in legal fees to appeal a jury verdict against the city related to paying subcontractors who worked on the now abandoned River Valley Sports Complex.

Discussions with Fort Smith businessman Lee Webb and former State Senator Jake Files to build the RVSC began in 2012 but the city did not enter into a partnership until 2014. Acting on the recommendation of Fort Smith City Administrator Carl Geffken, the board of directors nixed the plan effective Jan. 31, 2017, after more than two years of delays on the project, which was expected to cost the city just $1.6 million for the construction of eight tournament-quality softball fields, two concession stands and associated parking.

Files and Webb had planned to use private construction and in-kind donations to finish out the project. They billed the city for completed work, utilizing $1.08 million of the $1.6 million commitment by the time the city ended the relationship. Files pleaded guilty to wire fraud, money laundering, and bank fraud and received an 18-month sentence in June.

On Sept. 12, 11 of 12 jurors ruled against the city of Fort Smith in a lawsuit involving the RVSC and adjudicated before Sebastian County Circuit Court Judge Stephen Tabor. Total jury awards were close to $200,000, to be paid to B&A Electric ($151,880), Megehee Fence Contracting ($14,926.08), Grimes Dozer Service ($12,977.50) and James Griffith ($20,337.50). On a fifth question, the jury ruled unanimously in favor of the RVSC, absolving Webb of financial obligations to the repayment of the four contractors. However, the jury did not find the city engaged in “unjust enrichment.”

The city had until Oct. 27 to file an appeal or make moves to abide by the ruling. Michael Jones, the attorney representing the city on the RVSC lawsuit, had said it could cost the city another $20,000 or more to appeal. He told the directors and city staff there are “viable issues” for appeal, but that appellate courts don’t like to overturn jury verdicts.

During an Oct. 9 study session, Jones told directors and city staff there are “viable issues” for appeal, but appellate courts don’t like to overturn jury verdicts. Jones also said he believes the jury followed Judge Tabor’s instructions to consider that the city gave Files and Webb an “implied authority” to reach contracts on behalf of the city. An appellate court may have a different view of the authority Files and Webb had to contract on behalf of the city, Jones suggested.

City Director Mike Lorenz, who made the motion to appeal the jury verdict, said not appealing will “open up the door to every unpaid subcontractor” involved in a city project. City Director Kevin Settle, who seconded Lorenz’s motion, alleged that the subcontractors worked with RVSC to sue the city instead. Settle suggested the city submit info to the “prosecuting attorney or the feds” to pursue criminal charges against Webb and Files related to “lies” and other issues with the project.

City Administrator Carl Geffken, who recommended the Board vote to appeal, said money for legal fees is paid from $520,000 remaining in a Parks Department fund set up for the project. Geffken said the city has already spent $25,000 in legal fees on the issue, and paying legal fees for the plaintiffs will add at least another $25,000.

The Board voted 6-0 in favor of appeal, with City Director Keith Lau abstaining. Lau said he has legal action pending against Files.

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