City staggers under legal fees from defending lawsuit

By Linda Trest, Staff Writer
Posted 11/6/19

The city of Gerald has accumulated a huge financial obligation to the firm representing its interest, Cunningham, Vogel and Rost, of St. Louis.

Much of the debt was accrued in a legal fight with …

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City staggers under legal fees from defending lawsuit

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The city of Gerald has accumulated a huge financial obligation to the firm representing its interest, Cunningham, Vogel and Rost, of St. Louis.

Much of the debt was accrued in a legal fight with Bull Moose Tube Co. (BMT).

City Clerk Jane Hungler has estimated an outstanding balance with the legal firm of $400,000. That includes total legal services, not just representation during the BMT lawsuit.

Ed Adams, who is president of the Board of Alderman, feels that is not a solid number. “It hasn’t been finalized,” Adams reported. “The city has bills, but it’s meeting its obligations,” he added.

Rumors that the city may be forced into bankruptcy are flat out false, according to Adams.

Last week, The Republican requested copies of all legal invoices since September of 2017 through a Freedom of Information Act request. In addition it was requested that information be given as to how hours were billed. These were provided with redacted invoices.

After October 2018, references to work done on the BMT lawsuit were not shown. Past due balances and total balances were also redacted. As of that date, the city was in arrears $179,924.65.

In a letter signed by Hungler, The Republican was told “To the extent that your records request seeks documents or materials that do not exist or contains requests for information or data, rather than a request for a specific and reasonable identified record of the City, such is not included in the response. Your records request also seeks records that are closed pursuant to 610.021(1).”

Hungler says the copies of the invoices sent to The Republican were prepared by the attorney. She says that for some time she has been paying only legal fees pertaining to regular city attorney or general legal work, plus a specified amount to go towards the past due amount.

Even sorting through the charges accrued as a result of the BMT action is not simple.

The city of Gerald owns the property and building that BMT occupies. A lease was signed in the 1960s allowing BMT to occupy the location for an annual payment of $4,600.

BMT is now owned by Caparo Bull Moose, Inc.

Swaraj Paul owns Caparo Group and was ranked the 11th wealthiest man in Britain in 2018 by the United Kingdom’s Business-Live. He has a net worth of 2 billion pounds according to alchetron.com.

In the late summer of 2017, the city decided to negotiate a more favorable rate with BMT. They hoped that the large corporation might purchase the building and land. Currently, no tax is collected on the property since it is owned by the city.

According to two city officials familiar with the talks, negotiations were moving forward, when suddenly BMT filed suit against the city in February 2018.

They were asking a judge for a declaratory judgement against the city.

A declaratory judgement is one that declares the rights of the parties or expresses the opinion of the court on the question of law, without ordering anything to be done.

The city filed a countersuit.

Kurt Voss, an attorney from Washington, was part of the legal team representing BMT. He declined any official comment, but did say the case was complex.

From what can be gathered from the redacted legal invoices, the city was billed around $42,865 for the original negotiation of a new lease.

Apart from the actual lawsuit, the attorney(s) also billed $500 to represent the city in a mediation process ordered by the judge.

A Uniform Commercial Code (UCC) filing with the Secretary of State added an additional $14,000 or so to the bill.

“A UCC filing is a legal notice a lender files with the secretary of state when they have a security interest against one of your assets,” according to www.nav.com.

In September, retired Franklin County Presiding Judge Gael Wood granted BMT’s motion and denied the city’s. The judge’s statement was brief, only a few sentences. No case law was cited.

The city has until Nov. 11 to appeal. City officials are weighing their options.

In part, Adams says, this is what is holding up a final due amount from the attorneys. An appeal will cost more money and more time. Yet, Adams feels there is a good chance the city could win the appeal.

In any case, this process has not been one any of the elected officials have taken lightly. Adams confesses losing much sleep over the process.

Two other former officials have talked about how the weight of such momentous decisions weighed on them.

The city officials are taking their time and weighing all their options before deciding on how to proceed.

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