Police targeted by sweepstakes industry suits
For law enforcement, video gambling is like a bad case of poison ivy that keeps cropping back up all over the place, and now, it’s going after them.
With lawsuit in the rearview, Canton plans to step up its game for public recreation
Canton leaders are already asking how they can do better making Camp Hope available to the public after a lawsuit threatened to seize the 100-acre forested tract and rustic camp quarters away from the town.
Lawsuit blames Cherokee for investment losses in children’s trust fund
The Eastern Band of Cherokee Indians has denied any wrongdoing in a lawsuit related to investment losses in a trust fund that safeguards casino earnings on behalf of Cherokee youth.
The tribe has, among other things, asked a judge to deny a class-action status in the lawsuit, which would allow any youth affected by the losses to be compensated by the tribe.
Some sushi with that pedicure? Suit pitted neighboring businesses over alleged ‘noxious’ fumes
A sushi restaurant in Waynesville lost a protracted legal battle last month after accusing a neighboring nail salon of driving away its diners.
Saki Sushi claimed fumes from Tweety Nails hurt its bottom-line. Litigation dating back two years culminated in a nearly two-week jury trial in March, ultimately exonerating the nail parlor as the sushi joint could not prove that the smell negatively impacted the restaurant — or even that the nail salon was the origin of the smell.
“It’s a relief. It’s indescribable,” said Steve Nguyen, husband of Tweety, who owns Tweety’s Nails.
The two businesses leased storefronts next door to each other in the K-Mart strip mall on Russ Avenue.
Janet Green, owner of Saki Sushi, which had been there first, claimed “noxious odors and chemicals” began emanating from the nail salon shortly after it opened in fall 2009.
The court-filed complaint by Saki Sushi claimed that the smell interfered with Green’s ability to enjoy the property, among other charges, and sued the salon for as much as $60,000. The restaurant also sued its’ landlord.
But, Nguyen said he believes the lawsuit was retaliation. He and his wife at one time expressed an interest in buying Saki Sushi from Green.
Nguyen said that there is no smell in the building now that Saki Sushi has moved to a location on Howell Street.
On at least a couple of occasions, Green called the police about the smell, and on more than several occasions, she asked employees from the nearby Radio Shack to come into her restaurant and tell her if they smelled anything.
During the trial, at least one witness stated that he noticed a strong acrylic-like odor while in the restaurant. Another witness said her coworker couldn’t eat at Saki Sushi with her because he was sensitive to the smell.
However, the witnesses did not know when the smell started and could not definitely connect the stench to Tweety’s Nails.
One witness testified that the odor was considerably less noticeable and possibly different from the fetor wafting from Saki Sushi. Although Green consulted others about the smell, including the Waynesville police, “Mrs. Green admitted that she never even complained to Tweety about the smell,” said Mark Melrose, attorney for Tweety’s Nails.
All sides attempted to settle the issue through mediation but gave up on resolving their differences early last year. The case finally landed in court last week.
After hearing the evidence presented in the case, Judge Mark E. Powell dismissed all of Saki Sushi’s claims, except for its nuisance claim against the nail salon. Within 20 minutes, the jury returned with its verdict, Melrose said. The jury found no validity to the claim and did not award Saki Sushi any damages.
When considering a nuisance claim, Melrose said a jury must also decide if the business benefits the community.
“Every little thing that bothers you is not a lawsuit,” Melrose said.
For example, it would be extremely difficult to claim legally that the paper mill in Canton is a nuisance because is a crucial part of the town’s economy.
“If you ask people in Canton, they say it smells like jobs,” Melrose said.
Although the case is finally settled, Tweety’s Nails plans to sue Saki Sushi for the more than two years worth of court and attorney fees.
Sagging roof trusses on Waynesville fire station prompt lawsuit
The town of Waynesville is suing a Hendersonville contractor for negligence in the construction of its new fire station on the outskirts of downtown.
In its complaint, the town alleges that Construction Logic’s work was defective and did not follow the planned specifications for the roof of the fire station.
“The suit is about fixing the roof and who is going to fix the roof,” said Town Manager Lee Galloway.
In early 2007, the town signed a $2.3 million contract with Construction Logic to build the Waynesville Fire Department’s headquarters.
“They were responsible for everything, the roof and the beams and the construction of the fire station,” Galloway said.
About a year after its completion when about 14 inches of snow fell in Waynesville, portions of the metal-paneled roof over the fire station’s equipment room began to sag.
Engineers found several flaws in the construction of the trusses, which hold the roof in place. More than 75 percent of the bolts connecting the trusses were loose, and a majority of the bolt holes at the top of each truss were reamed, according to court documents. All of the trusses were bent at least three-quarters of an inch; one was deflected as much as 2.75 inches, which could cause leaks or other structural problems.
The engineers who studied the roof declared that it is not a safety hazard. And, it has not leaked.
“But it needs to be remedied and fixed,” Galloway said. The cost of fixing such a critical part of the structure could reach up to $400,000, he said.
The town brought the defect to the Construction Logic’s attention in 2010, Galloway said.
“And, they have never fixed the roof,” he said. “They never indicated a willingness to fix the roof.”
Construction Logic failed to apply the proper standard of care to which all contractors must adhere, according to court documents.
The town has alleged charges of negligence, breach of contract and breach of warranties. Waynesville officials are seeking $30,000 in damages in addition to the cost of repairing the roof and bringing it into compliance with the original building plans.
The company, according to its website, has operations in Hendersonville and Asheville. Neither the company nor its lawyer Brad Stark of Asheville responded to several requests for comment.
Police beating in Bryson City leads to $22,500 settlement
A mentally ill man got a $22,500 settlement in a lawsuit against a Bryson City police officer who hit him multiple times with a baton and sprayed him with pepper spray.
The settlement came more than three years after the incident, which involved a 25-year-old with schizophrenia. The man sustained physical injuries and mental trauma after a Bryson City police officer hit the man repeatedly with a baton while serving involuntary commitment papers on him outside a downtown pizza restaurant.
The out-of-court settlement was reached through mediation in November.
The settlement is being paid by the town’s insurance company and not out of town coffers. In fact, the town didn’t even know it had been settled, said Bryson Town Manager Larry Callicutt.
Callicutt said he found out last week that the case had been settled by the insurance company back in November.
The suit by Jacob Grant claimed Bryson City Police Office Leon Allen sprayed him with pepper spray and hit him on the head, face, shoulders, stomach, back and legs, even after he was already on the ground. Grant’s family had petitioned for involuntary commitment because they feared Grant was not taking his medication.
When Allen tried to take Grant into custody, Grant asked to see the commitment papers, Allen couldn’t produce them, and a verbal argument ensued that allegedly escalated into Allen beating Grant. Ten witnesses stepped forward and filed police brutality complaints against Allen.
Allen, meanwhile, claimed Grant assaulted him. Grant was charged with assaulting an officer but those charges were dropped when Grant agreed to plead guilt to the lesser charge of obstruction of justice.
Allen was placed on leave while the department conducted an internal investigation, but was eventually reinstated on the force. He later left the Bryson police department and went to work in another county.
The settlement was signed on Bryson City’s behalf by Attorney Sean Perrin with Womble and Carlyle law firm out of Charlotte, who specializes in liability claims against police departments. The insurance company hired and paid for the attorney.
Grant was represented by Asheville attorney Andrew Banzhoff. The civil suit was filed almost two years after the incident, just shy of the statute of limitations cut-off.
Banzhoff said he could not discuss the settlement due to confidentiality provisions.
Lawsuit calls on mental health nonprofit to share the wealth
A lawsuit filed last week claims $17 million has been hijacked from public coffers over the past two decades by a mental health nonprofit.
A regional mental health agency filed the suit in hopes of recouping the lost money, as well as millions worth of property, that the nonprofit has amassed over the years.
The suit claims Evergreen Foundation strayed from its core mission of supporting mental health services in the region, and instead has been hoarding public money to build up its own war chest.
Smoky Mountain Center for Mental Health claims in the suit that millions in state mental health dollars were placed in trust with Evergreen Foundation, but Evergreen has violated that trust. Smoky Mountain Center oversees mental health services for a 15-county area and is based in Sylva.
Smoky Mountain Center for Mental Health established Evergreen as a support arm for the agency, but Evergreen has since severed its ties with Smoky Mountain Center and absconded with millions of dollars in cash and assets in the process, the suit claims.
Evergreen’s director, Tom McDevitt, previously served as the director of Smoky Mountain Center — in keeping with the historic practice of the sister organizations.
However, McDevitt resigned under pressure from Smoky Mountain Center four years ago amid allegations he used his position for personal financial gain. Even after he was no longer running the mental health agency, he managed to retain his position over the nonprofit Evergreen.
The relationship between the sister organizations became strained after McDevitt’s departure. McDevitt said he was not surprised by the suit, given that Smoky Mountain Center has been threatening one against Evergreen for two years. McDevitt also said that he is disappointed that both organizations will have to expend money on a lawsuit that could be used to help people with mental health issues and disabilities.
“Although Evergreen has tried to maintain a good working relationship with Smoky Mountain Center — and will continue to do so — SMC’s issue will now have to be resolved in court,” McDevitt said in a written statement.
The suit was filed by Attorney John Zaloom with Moore and Van Allen law firm in Raleigh. Evergreen has not yet filed a response.
Relationship gone awry
Evergreen once had a symbiotic relationship with Smoky Mountain Center. Evergreen was in fact created by Smoky Mountain Center, and for two decades Smoky Mountain Center ran the nonprofit.
Now, Smoky Mountain Center no longer has control over the nonprofit it birthed and has been unable to tap the $17 million in cash sitting in Evergreen’s bank account, according to the suit.
Evergreen amassed all that cash thanks to money funneled its way by none other than Smoky Mountain Center. Evergreen was initially set up by Smoky Mountain Center as a holding company for property — such as offices for mental health counselors, substance abuse treatment centers, group homes for developmentally disabled adults, and administrative office buildings for the agency.
State law prevented state agencies from buying and selling property, so Smoky Mountain Center used Evergreen as the holding company, which was the sole reason for creating the nonprofit in the first place.
In all, there are roughly 30 properties in Evergreen’s name that were bought and paid for by Smoky Mountain Center.
The lawsuit claims Evergreen unfairly profited off these properties — either in the form of rent or by later selling them — and failed to share those profits back with Smoky Mountain Center as its mission statement requires.
“The Foundation’s conduct has deprived SMC of the beneficial interest to which it is entitled in these properties,” the suit states.
The suit claims Evergreen was merely holding these properties “in trust” for Smoky Mountain Center, and the profits were not Evergreen’s to keep.
The suit claims Evergreen’s “breach and repudiation of the trust agreement” entitles Smoky Mountain Center to the $17 million in cash Evergreen has on its books.
At the very least, the suit says, the money given to Evergreen over the years by Smoky Mountain Center was not used for its intended purpose. The intended purpose was to support Smoky Mountain Center, and instead the money was used to enrich Evergreen, the suit claims, accusing Evergreen of “violation of the uniform trust act.”
Smoky Mountain Center has grown increasingly frustrated that it is expected to pay rent on buildings that it bought and paid for in the first place, allowing Evergreen to amass ever-more wealth.
In many cases, a contract between Smoky Mountain Center and Evergreen stipulates that a building should be provided for the “free and exclusive use” of Smoky Mountain Center, but regardless of the stipulation Evergreen has charged rent anyway.
The money to buy or build these offices to house mental health services originally came from state and federal funds. Nonetheless, Smoky Mountain Center has found itself paying rent to Evergreen — to the tune of $4.2 million over the years, according to the suit.
The lawsuit also alleges deceptive business practices and unjust enrichment by Evergreen. Specifically, Evergreen collected rent for years from a mental health counselors who occupied an office building in Waynesville.
The building, however, wasn’t owned by Evergreen. It is owned by Haywood County and leased to Smoky Mountain Center, yet Evergreen had claimed to be the landlord and was collecting rent from tenants, according to the suit.
The lawsuit alleges that Evergreen has been derelict in its mission of supporting mental health needs, and for “failing and refusing to use the trust assets for their intended purpose.”
From 2002 to 2008, it made only $33,000 in grants. Over the same period, its assets grew from $13.5 million to $20.7 million.
In the four years since McDevitt left Smoky Mountain Center, Evergreen has only provided financial assistance to the mental health agency one time, according to the suit. Evergreen in 2009 gave Smoky Mountain Center a $200,000 grant to help offset state budget cuts of $4.6 million.
But McDevitt claims Evergreen’s mission is not to provide financial assistance solely to Smoky Mountain Center, but rather to support the network of mental health providers in the region. Smoky Mountain Center once served as a service provider, but is now merely an administrative arm, McDevitt said.
“Evergreen has always existed for the benefit of the citizens of WNC with disabilities,” McDevitt said.
Evergreen has made a half dozen or so small grants for other mental projects over the past four years. Exactly how many and for how much is unclear as Evergreen has not provided that information to Smoky Mountain Center.
Evergreen’s unwillingness to share what grants it was making had been a source of contention with Smoky Mountain Center. The lawsuit asks the court to compel Evergreen to produce an accounting for the money coming in and going out, as well as its assets.
Smoky Mountain Mental Health appealed to Evergreen’s board of directors over the past two years to come to a better working relationship — one that would ultimately result in Smoky Mountain Mental Health being able to tap Evergreen’s wealth. But the two failed to come to a resolution, prompting the lawsuit.
At stake is the level of services available to hundreds of people in the seven western counties who suffer from mental illnesses. Smoky Mountain Mental Health has had to scale back mental health services in the face of state budget cuts.
The impact would have been lessened had Evergreen fulfilled its mission and provided financial support for Smoky Mountain Mental Health.
Evergreen’s board of directors has previously asserted that Smoky Mountain Center is trying raid its trust fund in what amounts to a money grab.
Haywood threatens lawsuits against lodging owners over room tax
Businesses skirting Haywood County’s room tax laws should pay up or they could soon find themselves slapped with a lawsuit.
The Haywood County Tourism Development Authority plans to sue six accommodation owners who have repeatedly and openly neglected to pay the county’s 4 percent tax on overnight lodging, announced Executive Director Lynn Collins at the tourism board’s meeting last week.
“That will set an example,” Collins said. “Let them know that we actually are serious about it.”
Some businesses owe more than three years worth of room taxes, Collins said, and some have openly stated their defiance of the law.
Collins added that she sees places that are not paying the lodging tax with vacancy signs welcoming people. They are clearly doing business but either haven’t been charging the tax in the first place or have been pocketing it instead of remitting it to the county.
The tax is supposed to be tacked on to a tourist’s bill when they stay in a hotel, bed and breakfast or vacation home rental. Lodging owners then remit the tax they collect to the county on a monthly basis.
The tourism agency has not yet chosen which six taxpayers, or rather non-taxpayers, it will sue. But, Collins said it will go after “the most blatantly delinquent” properties.
“(Taking legal action) is the only thing you can do now,” said Al Matthews, Canton town manager and a member of the tourism board.
However, the board will continue to look for ways, such as changing legislation that would give them the authority to impose further sanctions, to bring more people into compliance. Currently, the authority has few options for punishing delinquent lodgers beyond lawsuits and liens.
For years, the tourism authority board has struggled with ways to bring accommodation owners into compliance. Each meeting, the board is presented with an list of people who owe overdue taxes.
“Every month we look at these penalties, and it’s the same people time after time after time,” said Marion Hamel, a tourism board member from Maggie Valley.
The revenue from the room tax is used to promote tourism in Haywood County.
In September, the tourism agency collected more than $96,000 from its 4 percent occupancy taxes — about $8,000 more than its estimated revenue for that month.
The increase is a vast improvement compared to August, when the actual amount of taxes collected came in 20 percent under the TDA’s year-to-date projections. The agency estimates it will bring in a little more than $863,000 this fiscal year.
Haywood must pay up for firing courthouse contractor
Haywood County is on the hook for $700,000 after an arbitration panel found the county wrongfully fired the contractor overseeing renovations to the historic courthouse four years ago.
The contractor sued the county for $2.3 million after being fired from the job. The county claimed the contractor was “significantly behind schedule” and was “incapable” of finishing the job they were hired to do.
Meanwhile, KMD Construction claimed it was working off inaccurate blueprints. As a result, the project took a lot longer than expected, and was more expensive.
The county refused to pay for cost overruns, however. KMD says it was left holding the bag and wants the county to pay up. The suit cites wrongful termination by the county and negligence by the county’s architect.
A panel of three arbitrators versed in construction and contract law heard the case this summer, but just issued their decision last week to award KMD damages.
Steven Smith, the attorney for KMD, said the decision proves the contractor was in fact not doing faulty work, despite repeated public criticism by the county accusing KMD of shoddy work.
“I think this vindicates them. I think this exonerates KMD,” Smith said.
The firm won money for change orders the county had never paid for and the unpaid balance on their contract, money the county withheld for work that was in fact completed, plus interest.
The county isn’t pleased about paying up, but isn’t totally surprised either.
“We anticipated we were going to have to pay something,” said Commissioner Kirk Kirkpatrick.
The county had withheld more than $400,000 from what it owed the contractor, citing substandard performance and costs incurred by the county due to the rigmarole.
That money is still set aside, so coming up with the payment won’t be as bad as it sounds. That said, the county would have liked to come out a little better in the arbitration than it did.
“The award was probably more than what we anticipated, but it is obviously much less than what they ever offered to settle for,” Kirkpatrick said. The county attempted to negotiate a settlement but could not talk KMD below $2.3 million, Kirkpatrick said.
In addition to the monetary award, the arbitration panel found that KMD had been wrongfully fired by the county.
Smith said KMD was most excited about that.
“Anytime they did a public bid on a project they had to disclose they had been terminated from a public project and that is huge,” Smith said. “That is like a death sentence.”
Smith said the real issues with the job lay with the architect, which had faulty plans and provided inadequate design direction. But the architect, which apparently had the county’s ear, would blame the contractor.
“I think it is really unfortunate the county didn’t recognize from the outset this is the architect’s fault,” Smith said. “I think they were misled or at least the architects chose to eliminate certain details from the critical decision making process.”
Haywood County commissioners are now deciding whether to go after the architect of the job. They will weigh how much it would cost to sue the architect versus how much they could feasibly recover.
Legal fees have already proved a costly proposition.
The county spent more than $400,000 defending the lawsuit by the contractor.
Kirkpatrick said the county thought long and hard before firing KMD from the job, knowing that a lawsuit wouldn’t be out of the question.
By the same token, the county was paying rent to house its administrative offices elsewhere while work on the courthouse dragged on and on. And, the most important thing was that work would be done properly.
“It was a priority to make sure it was done in a manner the people of the county could be proud of,” Kirkpatrick said. “You certainly don’t want to screw up a building that had been there since the 1930s.”
Big money on the line as Swain and Graham square off in court
The fight between Swain and Graham counties is growing ever deeper in a dispute marked by lawsuits, counter suits and pleas to the General Assembly over who is entitled to a greater share of payments off the Fontana Dam.
The stakes are high — hundreds of thousands of dollars are on the table — for the two small, rural counties. The row centers over payment in lieu of taxes, or PILT, the money that counties get when federal land holdings erode the property tax base.
Swain and Graham have gotten PILT funds monthly from Tennessee Valley Authority since the Fontana Dam was erected in the early ‘40s.
The formula for calculating how much each county is entitled to was thrown into dispute last year, however. The N.C. Department of Revenue ruled that Graham should get a bigger share since more of the generators were housed on Graham County’s side.
The ruling in Graham’s favor will cost Swain more than $200,000 a year.
But that wasn’t quite enough. Graham also wanted six decades of back payments they felt they were owed — up to $15 million. So in January, they filed suit to get it.
Swain County, of course, disagrees. They’ve filed a countersuit, decrying Graham’s claims on a multitude of different grounds, hoping that one will stick. Too many years have passed, Swain argued, and if Graham wanted the money, well, they should have spoken up sooner.
But they didn’t stop there. Swain County has countersued claiming that if anyone was slighted their fair share from TVA and was entitled to a back payments, it should be Swain.
While the latest state formula for calculating PILT payments is based on TVA’s property holdings in each county, that’s not always been the case.
Until 2009, state law said that each county was supposed to get PILT money based on the percentage of lost tax revenue. Since Swain gave up more land when the lake was created — 16 percent of the county, as opposed to Graham’s 2.5 percent — it lost far more tax revenue, and thus should have been getting a greater share of TVA’s PILT money all those years.
“If the Department of Revenue had properly calculated the percentage of lost tax revenue to each county and distributed the PILT revenue accordingly, Swain County would have received substantially more PILT revenue than Graham County received,” said the countersuit.
Swain seeks new formula
Concerned, though, that the counterclaim wasn’t quite enough to solidify their position, Swain County commissioners got together to formulate other tactics.
To add firepower to their arsenal, Swain Commissioners are seeking special legislation from the General Assembly.
Swain wants to change the way PILT payments are calculated. Instead of awarding PILT money based on the value of TVA’s assets — such a which county the generators sit in — it should be based on the value of the land removed from the property tax roles by the lake as a whole.
While Graham’s got more of the hydropower equipment on its side of the county line, Swain has a good deal more land under water than Graham does. Swain stands to benefit substantially.
Swain’s proposed formula for calculating TVA payments is consistent with the PILT formula for national forest service land. Each county gets PILT money based on the acres of land that lie in the national forest and thus have been removed from the tax roles.
Swain also wants the property line between the two counties redrawn. The historical property line was the center of the river channel, but that’s not the boundary currently recognized currently by the state — instead the latest boundary line awards more land to Graham. Swain wants the historical boundary be reinstated, since the more land Swain can claim its lost when the lake was flooded, the more it could get in PILT payments.
Currently, Swain doesn’t have anyone to sponsor the legislation in either the Senate or House so face, and could be a tough sell.
In the House, Swain is represented by Rep. Phil Haire, D-Sylva. If Haire chose to take up the cause, he could likely face opposition from Rep. Roger West, R-Marble, who represents Graham.
In the Senate, Sen. Jim Davis, R-Franklin, may opt to steer clear, as he represents both counties.
None have yet weighed in, and Swain commissioners were reluctant to address the matter, saying they had a maneuver in the works it was best not to comment on.
Graham officials are similarly tight-lipped, though they declined to speak because the issue is pending litigation.
“We have approached people in the General Assembly, but we haven’t done anything one way or the other,” said Swain Commissioner David Monteith.
For Graham’s part, their attorney Charles Meeker, who is also the mayor of Raleigh, said the county has rejected all of Swain’s claims outright.
“We don’t believe that they are factually accurate,” said Meeker, and that, he said, was that.
The suits are scheduled to come before the Graham County Superior Court in early April, though Swain has applied for a change of venue. There is, as yet, no timeline for if or when the resolutions will see the General Assembly floor.