City considers appeal in contractors case

Factors in seeking reversal of Fort Smith sports complex verdict are outlined

FORT SMITH -- The attorney who represented the city's losing effort in a breach-of-contract trial last month involving the River Valley Sports Complex has told city directors that getting a reversal on appeal would be difficult.

City directors agreed during a study session last week to vote Tuesday on whether to appeal the Sept. 11 Sebastian County Circuit Court jury's verdict that the city breached contracts with four contractors and that River Valley Sports Complex Inc. developers did not break an agreement with the city.

If they decide to appeal, attorney Michael Jones of Mountainburg, who represented the city in the case, said the city directors might expect a ruling by next summer. The deadline for filing a notice of appeal is Oct. 27, Jones said.

The verdicts mean that the city must pay more than $200,000 owed to the contractors that the sports complex developers, former state Sen. Jake Files and partner Lee Webb, hired to do work on the complex before the city terminated its agreement with Files and Webb for failure to meet deadlines for finishing the project.

City directors seemed inclined to appeal the verdicts. They said they thought the city was wronged by Files and Webb, who didn't pay their contractors and left the city to pay the debt.

City directors said they paid Files and Webb $1.08 million so the developers could pay the contractors, and they want to know where that money went.

The contractors in the sports complex project were taken advantage of, as was Fort Smith, Jones said.

In 2014, Files and Webb approached the city seeking to build a tournament-quality complex of eight ball fields, plus amenities, to draw in teams from around the region as an economic boost to the area.

The Fort Chaffee Redevelopment Authority donated 63 acres to the city for the project, and the city agreed to give Files and Webb up to $1.6 million. The developers were to finish the project -- estimated to cost as much as $5.5 million -- with donations of work, material and labor.

But Files and Webb consistently missed deadlines, which city directors continued to extend until the end of 2016, when the developers said they wanted to withdraw from the project.

In February 2017, city directors voted to terminate the agreement and demanded that Files and Webb return the $26,945.91 in state General Improvement Fund grant money they received from the city for infrastructure work at the sports complex.

Files had suggested that city officials apply for the grant money, which he authorized to be released to the Western Arkansas Planning and Development District for distribution to the city for the sports complex project.

But Files falsified bids for the project so one of his employees would win the bid. He had the employee forward the money to him, which he used to pay employees of his construction company and deposited a cashier's check into his bank account.

Files pleaded guilty in U.S. District Court to charges of wire fraud and money laundering in connection with taking the grant money, and began serving an 18-month federal prison sentence Aug. 2.

The four contractors -- B&A Electric Inc., Megehee Fence Contracting LLC., Grimes Dozer Service Inc. and James Griffith -- sued Fort Smith for the more than $200,000 that the sports complex owed them for work they completed. City officials responded that the contractors' agreements were with Files and Webb and not the city, and that the contractors should seek payment from the developers.

The city then sued the sports complex for the return of the General Improvement Fund money and any other expenses the city had incurred as a result of the project.

Jones told city directors last week that an appeal would go before the Arkansas Court of Appeals, and that appeals courts typically don't like to overturn judges or jury verdicts.

But there are some rulings that hold promise for the city, he said. One was Circuit Judge Stephen Tabor's ruling on an instruction on implied authority, through which jurors could rule that the River Valley Sports Complex acted as an agent of the city.

As an agent of the city, jurors held Fort Smith responsible for the sports complex's debt to the contractors.

Jones said the city was not an agent because no city official directed Files and Webb to hire the contractors to do work on the complex.

An appeal also could be expensive, Jones said, costing the city as much as $10,000. If the city lost the appeal, Fort Smith could have to pay attorney fees for the two other sides that could add $20,000 to the bill.

Attorneys for the four contractors and for Webb, as representative of the sports complex, filed motions in circuit court, seeking fees and costs of litigating the case through the trial stage.

According to court records, the sports complex's attorney, Joe Byars of Fort Smith, asked Tabor to award him $16,962.50 for attorney fees and $132.70 for costs for a total of $17,095.20.

Attorney Derick Allison of Greenwood, who represented the four contractors, asked for $18,395 in attorney fees and $300.25 in costs for a total of $18,695.25.

State Desk on 10/14/2018

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