Wednesday, June 29, 2022

How a lawsuit over $2,000 worth of land may cost Boiling Spring Lakes taxpayers over $600,000

Last week, Brunswick County Superior Judge Tripp Watson found the Wilkie case amounts to $2,070.35 in damages. Two cases that arose from the same lake-raising event were litigated by all parties for at least $627,187.40. Boiling Spring Lakes already paid about half that amount defending itself in both cases, but now, it's faced with forking over the Wilkies' attorneys fees: over $300,000. The costly Wilkie case could serve as a cautionary tale for local governments.

Boiling Spring Lakes has paid out plenty in recent years to defend itself on a 2013 lake-raising decision. Though costs already paid out are nearing $400,000, overall, the city’s financial position has not been compromised, according to its manager. (Port City Daily photo/Johanna Ferebee)

BOILING SPRING LAKES — A trip to the North Carolina Supreme Court and back was only worth $2,070.35 for a Boiling Spring Lakes couple that sued the city. Attorneys for the couple and city, on the other hand, billed a total of 200 times that amount.

Related: Legal spending by Boiling Spring Lakes nears $400,000, expected to end this summer

Though the state’s highest court and Court of Appeals vindicated Edward and Debra Wilkie’s inverse condemnation case against the city, the amount awarded to them by Brunswick Superior Court Judge Tripp Watson’s final judgment last week is dwarfed by the amount their attorneys are asking for — $318,308.50.

That’s more than ten times the amount that Boiling Spring Lakes declined to pay in earlier settlement offers; now the town may be on the hook for a major payout.

How’d it get this far?

The $2,070.35 final judgment covers a just compensation for the Wilkies’ diminution in value of their lakefront property including interest, court filings show. By raising the level of Spring Lake, the courts found Boiling Spring Lakes violated the Wilkies’ constitutionally-protected property rights by not compensating the couple for the taking. The raised lake levels, which were lowered a year later, damaged about 1,200 sq. ft. of the couples’ property. (Catch up on more details about the case).

In March 2018, the North Carolina Supreme Court ruled in favor of the Wilkies, which overturned the Court of Appeals 2016 ruling and reaffirmed Brunswick County trial court’s 2015 decision.

Three months after the Wilkies first filed their complaint against the city in 2014, Boiling Spring Lakes made an offer to settle: $4,000. The Wilkies’ counsel countered, demanding $32,500. One year later, the Wilkies asked to settle for $30,000. Boiling Spring Lakes countered, again offering $4,000, filings show.

With the matter of compensating the Wilkies out of the way, Judge Watson is only tasked with determining the amount of attorneys fees Boiling Spring Lakes’ owes the Wilkies’ counsel.

On March 11, the same day the courts issued its final judgment, Boiling Spring Lakes filed a response to the Wilkies’ request for attorneys fees.

“At several points throughout the case, the city tried to settle the matter with the Wilkies but were met with unreasonable demands each time,” the filing states. “Since the beginning, it has never been about the damages, it has always been about the attorney fees for Plaintiffs’ counsel.”

In total, all parties accrued — including a second pair of plaintiffs — at least $699,257.75 in legal costs throughout the five-year-long cases. Taxpayers in Boiling Spring Lakes already footed at least $378,878.90 of that cost for the town’s legal representation.

The figure includes a $70,000 settlement payment in a separate but related case, paid in July 2018 to the city’s own finance director, Karen Thompson. Thompson and her husband sued the city for the same thing, claiming their property was damaged by the rising lake levels. It’s unclear exactly how much financial damage the event caused the couple. An affidavit submitted by Craig Turner, a soil scientist with Land Management Group, concludes the lot was in the same condition after the lake level change as it was before.

That matter — the Thompson case — was stayed pending the outcome of the Wilkie case, which was moving through the state’s higher courts. Boiling Spring Lakes’ lead attorney, James Cauley, defended the city in both matters.

His firm, Cauley Pridgen PA, billed Boiling Spring Lakes at least $308,878.90 between both cases.

Fleecing the city?

Boiling Spring Lakes’ filing admits the Wilkies are entitled to attorneys fees — but asks the court to only award “reasonable” costs. The response, prepared by the city’s lead attorney Cauley, levels harsh allegations at Wilkies’ attorney, Kurt Fryar, accusing him of exploiting the situation and his own clients for personal profit.

Cauley’s response alleges that Fryar was inexperienced and incompetent, calling his billing policy “absurd” and claiming he inflated his fees for his legal service to the Wilkies. According to Cauley, since Boiling Spring Lakes’ risk was greater than the Wilkies’, and the city was forced to defend itself.

“It is [Boiling Spring Lakes’] counsel’s belief that [the Wilkies’] counsel exploited that situation in order to drive up his own fees at the expense of his clients,” the response states.

For example, Cauley notes that Edward Wilkie only backed off demands for the city to pay for $700 to remove dead trees on the damaged property after the city’s counsel showed him an imaged lifted off Google. The image, taken before the lake raising, showed the trees were already dead. Wilkie also demanded to be compensated for landscaping damages– damages Wilkie himself created by digging up his own property with a backhoe, the filing alleges.

At one hearing, Fryar submitted evidence a printout of rainfall data to show what Boiling Spring Lakes was like during the dates in question. The filing alleges data Fryar presented showed rainfall amounts in Virginia.

Fyrar billed the Wilkies 722.4 hours for the case. At a rate of $300 an hour, he claims he is owed $233,897.57, his affidavit shows. Fox Rothschild LLP, another firm representing the Wilkies, is owed $102,727.32 for 339.2 hours of work, billed between a dozen legal assistants.

Cauley alleges Fryar’s bill rate of $300 an hour isn’t commensurate with Fryar’s experience and is therefore unreasonable. Cauley’s own bill rate during the case was $275 an hour, according to his affidavit. Between both cases, Cauley’s firm billed the city more than the amount Fryar logged on the Wilkie case.

An example of one of the many instances cited in Boiling Spring Lakes' response to the Wilkies' motion for attorneys fees, which describe an inappropriate pattern of legal billing and behavior. In this instance, it is not uncommon for clients to be unaware of terms being negotiated between attorneys. (Port City Daily photo/Johanna Ferebee)
An example of one of the many instances cited in Boiling Spring Lakes’ response to the Wilkies’ motion for attorneys fees, which describe an inappropriate pattern of legal billing and behavior. In this instance, it is not uncommon for clients to be unaware of terms being negotiated between attorneys. (Port City Daily photo/Johanna Ferebee)

However, Alexander Dale, an attorney for Ward & Smith P.A., stated in an affidavit Fryar’s legal costs make sense. Dale’s affidavit states the time consumed was reasonable and Fryar’s rate is on par with other attorneys that practice in the region.

The lesson

When it comes to litigation, local governments typically opt for settlements from the start in order to steer clear of a trial. A joint investigation by nine North Carolina newsrooms published last week shows why.

The Sunshine Week Partners’ findings show municipalities often settle cases, sometimes for large amounts, just to avoid the courtroom. Settlements allow local governments to do three things: absolve themselves of civil liability, protect the taxpayers from bearing the financial brunt of a punitive judgement, and reduce the chance of negative publicity that comes with a trial in open court.

In Boiling Spring Lakes’ case, settling, in retrospect, would have made sense. Paying the Wilkies the $32,500 they first demanded would have saved the city from paying both its own attorney and the Wilkies’ — to the tune of nearly $600,000.

For a city with an annual operating budget of just $400,000, that’s quite a considerable sum.


Send tips and comments to Johanna Ferebee at johanna@localvoicemedia.com

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