Attorneys file new documents in suit over $18 assessment

Friday, August 23, 2019

By Scott Loftis

Attorneys on both sides of a class-action lawsuit challenging the collection of an $18 assessment levied on property tax bills in Carroll County have filed court documents this month as the case moves toward a September trial date.

Fayetteville attorneys Matt Bishop and Wendy Howerton on Aug. 9 filed a response to a motion by Little Rock attorney Geoffrey Treece, who asked Carroll County Circuit Judge Scott Jackson to dismiss an amended complaint filed by Bishop and Howerton on behalf of plaintiff Paul Summers of Berryville.

Treece, who was appointed by a Pulaski County Circuit Judge to act as a receiver on behalf of the Ozark Mountain Solid Waste District, filed a reply to the plaintiff’s response on Friday, Aug. 16.

In their filing, Bishop and Howerton argue that Treece cites four reasons as a basis for his motion to dismiss — that the lawsuit is a collateral attack on the Pulaski County Circuit Court order that established the $18 fee, that Carroll County Circuit Court is an improper venue for the lawsuit, that the local court is an “inconvenient forum,” and that the Arkansas Department of Environmental Quality (ADEQ) should be a party to lawsuit.

In their response, Bishop and Howerton note that Jackson rejected a previous motion for dismissal based on the collateral attack, improper venue and inconvenient forum arguments after a February hearing in Berryville. They also note that ADEQ is aware of the lawsuit “but its counsel has clearly stated ADEQ does not wish to intervene.”

In his reply, Treece says his most recent motion for dismissal does not raise the issue of a collateral attack as a basis but instead argues that the local court cannot grant the relief sought by the plaintiff without simultaneously ordering Treece to violate the Pulaski County order. Treece also writes that his motion for dismissal does not raise the issue of improper venue or inconvenient forum. As to the issue of ADEQ being a necessary party to the lawsuit, Treece writes: “Whether a party is a necessary party is a legal question, not a question for the parties to decide amongst themselves.”

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

The $18 assessment is intended to repay bondholders who purchased $12,340,000 in bonds issued by the Ozark Mountain Solid Waste District in October 2005 to finance the purchase of the North Arkansas Board of Regional Sanitation (NABORS) Landfill in Baxter County. The assessment, which could continue for 30 years or more, also is intended to repay the Arkansas Department of Environmental Quality (ADEQ) for up to $16.5 million in costs related to closing and cleaning up the landfill.

The solid waste district, which was controlled by a 14-person board that included county judges and mayors from each of the counties and cities included in the district, defaulted on its bond payments in 2012 and closed the landfill that same year. ADEQ sued the solid waste district in 2013 in Baxter County Circuit Court and was granted an order of summary judgment to take possession of bank accounts and certificates of deposit held by the solid waste district. The order also said that ADEQ was entitled to pursue additional money related to the cleanup and closure of the landfill.

In January 2014, the solid waste district filed a voluntary petition for Chapter 9 bankruptcy. Bank of the Ozarks (now Bank OZK), acting as a trustee for the bondholders, filed a motion asking the court to dismiss the bankruptcy petition and U.S. Bankruptcy Judge Ben Barry granted the motion in an order issued Aug. 4, 2014. Bank of the Ozarks filed a complaint in Pulaski County Circuit Court in December 2014, seeking Treece’s appointment as a receiver for the solid waste district.

The court entered a consent order appointing Treece as the receiver in May 2015. Among his court-ordered duties were to evaluate the solid waste district’s operations and make recommendations to the court regarding alternatives for the solid waste district to generate additional income and revenue that could then be used to repay the bonds. Treece recommended the imposition of the $18 assessment, and Pulaski County Circuit Judge Tim Fox agreed.

The assessment was included on 2018 property tax bills in Carroll, Baxter, Boone, Marion, Newton and Searcy counties.

Bishop and Howerton filed the original Carroll County lawsuit on Summers’ behalf in May 2018, contending that the $18 assessment is in fact a tax and amounts to an illegal exaction. Bishop and Howerton later filed similar lawsuits in the other five counties affected by Fox’s order. The lawsuits seek to have the $18 assessments halted and for property owners who have already paid the assessment to be reimbursed.

A trial date is scheduled for Friday, Sept. 13, at the Carroll County Eastern District Courthouse in Berryville.

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