Legal battle: Attorneys file briefs in lawsuit over $18 fee

Tuesday, September 18, 2018

The legal battle over the $18 annual fee being assessed to property owners in six counties in north Arkansas is continuing, with attorneys filing briefs last week in a Carroll County lawsuit seeking to have the fee declared an illegal exaction.

Attorneys Matt Bishop and Wendy Howerton filed the class-action lawsuit May 16 in Carroll County Circuit Court, on behalf of Paul Summers of Berryville. They have since filed similar complaints in Baxter, Boone, Marion, Newton and Searcy counties.

Defendants in the Carroll County lawsuit are the Ozark Mountain Solid Waste District and Carroll County tax collector Kay Phillips.

The $18 fee has been added to property tax assessments in the six counties in order to repay delinquent bonds issued by the Ozark Mountain Solid Waste District to purchase the now-defunct North Arkansas Board of Regional Sanitation Landfill in Baxter County and to reimburse the Arkansas Department of Environmental Quality for the costs of cleaning up and closing the landfill. Pulaski County Circuit Judge Tim Fox, presiding over a case in which Bank of the Ozarks (now Bank OZK) sued the solid waste district on behalf of the bondholders, ordered the solid waste district to impose the fee. Fox’s order followed the recommendation of Geoffrey Treece, a Little Rock attorney whom the judge appointed to serve as a receiver for the solid waste district.

At an Aug. 28 hearing in Berryville, Carroll County

Circuit Judge Scott Jackson asked attorneys on both sides to respond in writing to a series of questions. First, Jackson asked if the case before him is the same case as the Pulaski County case that resulted in Fox’s order. He also asked what will happen if the six current cases yield different rulings. Jackson’s third question was: Who represented the taxpayers in the Pulaski County case? Jackson also asked attorneys on both sides if they had any objection to the fact that he is presiding over the Carroll County case despite being a property owner affected by the $18 fee. All of the attorneys at the Aug. 28 hearing indicated they had no objection to Jackson presiding over the case.

In their response to Jackson’s first question, Bishop and Howerton point out that the parties in the Carroll County case are different than those in the Pulaski County case. They note that the Pulaski County case essentially was in regard to an alleged breach of contract while the local case involves several legal questions not related to contract law.

“The taxpayers of Carroll County are challenging the statutory of the (solid waste district) to impose a charge upon them which is for the purpose of paying creditors, as the receiver’s counsel admitted,” the plaintiff’s attorneys write.

A brief written by Mary-Tipton Thalheimer, an attorney representing Treece, did not address the first question.

In response to Jackson’s question regarding who represented the taxpayers in the Pulaski County case, Bishop and Howerton contend that the taxpayers were not represented.

“The taxpayers and Carroll County Tax Collector were not served with process in the Pulaski County case nor made parties to that litigation,” Bishop and Howerton write. “The Carroll County taxpayers and Carroll County Tax Collector were not represented at all in the Pulaski County case, though the Receiver had the highest fiduciary duty to all claimants interested in the estate of the Ozark Mountain Solid Waste District.”

Thalheimer argues that the taxpayers were represented by the solid waste district board — composed of elected officials from cities and counties served by the district.

“As elected officials, the Board of Directors for the District represented the interests of the Taxpayers in the receivership case,” Thalheimer writes. “The District did not object to the Receiver’s report and recommendations, which the Pulaski County Circuit Court ultimately approved … and did not move to have the Order set aside and did not attempt to appeal the Order.”

In regard to the possibility that the six lawsuits may result in conflicting orders, the attorneys offered conflicting arguments.

“If different courts reach different conclusions, then a party can appeal those rulings,” Bishop and Howerton write. “Each party will have the opportunity to appeal any order with which it disagrees and point the Appellate court to a split in the decisions among the circuit courts if it desires. Arkansas appellate courts have long been willing to combine separate cases on appeal to deal with common questions of law and/or fact. … Further, despite their similarities, each of the $18 tax cases may present different facts or procedure warranting a completely valid yet distinct opinion. This is always the case in a scenario when different courts hear the same cases, which is why the appellate courts exist. It is impossible to predict what arguments will be presented or a party may choose to forego in each matter. This Court does not have to burden itself with that consideration, as each party has an available remedy in each county should it feel that its rights have not been properly decided via the appellate courts.”

Bishop and Howerton also argue that the issue of venue is most important in considering this question, and that the Carroll County Circuit Court is the proper venue for Summers’ lawsuit.

Thalheimer argues instead that the first judgment entered in any of the cases should be binding on all six. She cites an article in the Arkansas Constitution, writing that “every inhabitant of the area affected by an alleged illegal exaction is a member of the class and is, therefore, regarded as a party to the illegal exaction lawsuit and is bound by the judgment.”

Thalheimer adds that “the avoidance of multiple suits with the potential for different and inconsistent results lies at the heart of any class action.”

Jackson said at the Aug. 28 hearing that he would attempt to rule on attorneys’ motions in a speedy fashion. No date has been scheduled for the next court hearing.

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