The Smithville Aldermen Monday afternoon, acting on the advice of counsel, voted to settle a lawsuit for $130,000 brought last year by two former city employees, who lost their jobs after being charged with theft for allegedly taking scrap brass from the water treatment plant and selling it to a recycling center.
46 year old Kenny Waymon Dyal, Sr. and 43 year old Christopher Derrick Ferrell, filed the lawsuit in DeKalb County Circuit Court on February 17th, 2011 against the City of Smithville, asking for a jury trial. They wanted their old jobs back, compensatory damages for wages and benefits lost during the period of their unemployment, punitive damages for intentional, malicious, and reckless conduct of the city, for attorney fees and costs, and any other relief to which they may be properly and justly entitled. In the event they could not be given back their jobs, Dyal and Ferrell asked for lost differential wages and benefits to the date of their expected retirement.
Dyal was the supervisor of the Smithville Water Treatment Plant and Ferrell was a city maintenance employee and water meter reader.
During the brief meeting Monday, Dan Rader, the attorney appointed by the Tennessee Municipal League (TML), the city's insurance carrier, recommended that the aldermen approve an offer to settle the lawsuit for $130,000 which includes $100,000 in city funds, $30,000 from TML funds, and up to $2,500 for mediator, discretionary, and court costs, if TML does not pay those costs. "This lawsuit was filed quite some time ago and it has been pending by Kenny Dyal and Christopher Ferrell," said Rader. " We've been defending that and we had a mediation. Prior to that we had an attorney/client meeting and I won't reiterate or recount what the attorney/client advice was, but we have attempted to negotiate a settlement of this lawsuit. The plaintiffs started at $700,000 as their demand. The city made offers subject to this board's eventual approval. The city's final offer was a total of $130,000 which was going to be paid $100,000 from city funds and $30,000 from TML funds who is your insurance carrier. There are some issues with respect to whether or not they (TML) cover the claim. They (TML) have taken the position that they don't cover any of the types of claims brought, except that they do provide you a legal defense. So they were contributing based on a cost basis. In any event, the plaintiff's lowest demand at the mediation was $150,000 and the mediation ended and the case was not settled. Since that time, on Friday afternoon, the plaintiff's lawyer called me and said that they would take $130,000 plus some costs, which include the court costs. They have asked for us to pay all of the mediator's costs. Both of those are fairly standard. The only one that is not entirely standard is discretionary costs which are less than $1,000 but he didn't have a firm total for me. I have attempted to call TML to see if they would pay that on your behalf but the adjustor handling the claim is out unfortunately. He will be back later this week and I'll ask him if he will pay those costs on your behalf. But the question before the board tonight is whether or not to approve the settlement of the city's portion of $100,000 for a total settlement of $130,000. I'd ask you to approve up to $2,500 in costs, if necessary if TML doesn't pay it. The $100,000 plus potentially up to $2,500 would come from city funds," said Rader.
Mayor Taft Hendrixson asked city attorney Vester Parsley what he thought of Rader's recommendation
Parsley responded, "I think it is wise for us to go forward".
Mayor Hendrixson then asked alderman Gayla Hendrix, who was present at the mediation, what she thought.
Alderman Hendrix replied " I agree with Mr. Parsley, I think this is a good settlement and we should probably go forward with it"
Alderman Danny Washer made a motion to "accept our lawyer's recommendation". Alderman Hendrix offered a second to the motion and Aldermen Steve White and Cecil Burger joined Washer and Hendrix in granting approval. Alderman Shawn Jacobs was absent.
In January, 2011 Dyal and Ferrell, each charged with theft of property, appeared in DeKalb County General Sessions Court where, under a settlement, they agreed to make restitution in the amount of $1,348 jointly and severally. After they paid their half of the restitution, $674 the case against them was dismissed and their records were to be expunged.
Dyal and Ferrell alleged in their lawsuit that they were discharged by the city to keep them from talking to state auditors about alleged misconduct of city Secretary-Treasurer Hunter Hendrixson and Public Works Director Kevin Robinson and that they were denied due process by not being afforded an opportunity to state their case in front of a board consisting of the mayor, department commissioner, and the secretary-treasurer.
According to the lawsuit, "In or around the summer of 2010, the City of Smithville entered into a contract with W&O Construction to replace water pipes at the water treatment plant. The contract between the City of Smithville and W&O Construction indicates it is the responsibility of W&O Construction to remove all of the scrap metal from the construction."
"When W&O Construction first began the construction process, another employee along with his son removed scrap pipe from the construction site and sold it to a scrap metal shop. To date, no charges have been filed against this employee nor have any disciplinary actions been taken by the City of Smithville."
"Having witnessed this, Dyal asked Hendrixson for permission to take other scrap metal off to be sold. Hendrixson gave his permission," according to the lawsuit.
"Dyal also spoke with Rick at W&O Construction to see if he could have his permission to remove the scrap metal. Rick told Dyal that the scrap "didn't mean anything to W&O and that he could take it."
"On October 21st, November 3rd, and November 4th, Dyal and Ferrell removed the scrap metal and sold it to a scrap metal business."
"On November 4th, even though both the City of Smithville and a representative from W&O Construction gave permission for Dyal and Ferrell to remove scrap metal, a complaint was filed with the Smithville Police Department and Dyal and Ferrell were arrested for theft of property."
"Without conducting proper dismissal proceedings as outlined in the City of Smithville Municipal Code, Dyal and Ferrell's employment was terminated on November 4th. This occurred just six days prior to the audit."
Further, Dyal and Ferrell allege that the "City of Smithville violated the City of Smithville Municipal Code by terminating their employment without a suspension period, by not providing a hearing within three working days of the suspension, and by not affording them an opportunity to state their case in front of a board consisting of the mayor, department commissioner, and the secretary-treasurer."
The lawsuit claimed that "The City of Smithville's conduct toward Dyal and Ferrell was committed in an intentional or reckless manner thereby causing them to suffer severe emotional distress."