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VOL. 124 | NO. 237 | Thursday, December 3, 2009

One Claim Dismissed For Lee, Others Linger

By Andy Meek

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A judge has dismissed claims filed this summer by a private citizen against the former president and CEO of Memphis Light, Gas and Water Division and two of his attorneys.

That ruling sets the stage for one more unusual turn of events in what’s been a sometimes bitter court fight over a legal settlement the city of Memphis paid this summer to former MLGW head Joseph Lee.

Shelby County Chancellor Arnold Goldin’s dismissal Tuesday of Al Thomas, a Memphis lawyer and taxpayer whose suit claimed the $426,422 settlement with Lee was illegal, still leaves one remaining plaintiff against Lee. That plaintiff is the city of Memphis, which has been granted permission to enter the case to try to get its money back from the former utility chief.

And that’s just one of several things that make the case unusual. It was the city legal division, for example, that paid the settlement money the city now wants to recover.

That settlement was paid to close the book on a lawsuit Lee filed last year against the city. Per the City Charter, the city attorney and mayor are authorized to settle lawsuits filed against the city.

Since paying Lee, the city has changed mayors and hitched its wagon to Ronald Krelstein, the attorney who represented Thomas in the taxpayer suit against Lee. The city hired Krelstein as a special counsel to get its money back.

‘Unusual’ case

In another twist, the city also is Lee’s employer. Lee currently is deputy director of the city Parks Division.

The case is convoluted enough that a few times during this week’s hearing, Goldin shook his head, exhaled and at one point noted his belief that “this case is unusual.”

Earlier hearings in the beginning stages of the dispute were more contentious than those of late. Before Tuesday’s hearing and at one point while court was not in session, the opposing lawyers made small talk in the empty courtroom, at one point discussing topics as mundane as shoe sizes.

Lee was indicted in 2007 on federal corruption charges that prosecutors later dropped. But even though he did not go through a trial, Lee still incurred several hundred thousand dollars’ worth of legal fees.

Once the charges were dropped, he asked his old employer – MLGW – to pay his attorneys. The utility company’s board supported paying the money but needed approval from the Memphis City Council.

The City Council said no.

Lee then took the city to court. He sued it for more than $7 million in damages.

With approval from former Memphis Mayor Willie Herenton, former City Attorney Elbert Jefferson proposed settling Lee’s lawsuit for $426,422.

That’s been the source of one of the central disagreements in the case. Krelstein says the settlement was a back-door way of paying criminal defense fees for Lee, which Krelstein said is illegal in Tennessee.

“It’s just life. And I feel sorry for Mr. Lee, but it’s not the public’s responsibility to bail him out,” Krelstein said in court Tuesday.

The opposing position is the money was paid to settle a lawsuit, a power that’s spelled out in the City Charter.

“The city has settled thousands of cases on a year-to-year basis,” Lee told Goldin, adding, “Your Honor, I’m trying to move forward, see the bright sun and a new day.”

One thing at a time

After taking a recess of several minutes to sort things out for himself, Goldin returned to the courtroom Tuesday with a decision. The original claims filed by the private taxpayer were out, and now the ball is in the city’s court.

“I’m going to dismiss Mr. Thomas’ claims against the individual defendants, but this is in no way a ruling on the rights the city of Memphis may have,” Goldin said.

Herman Morris, appointed last month by Memphis Mayor AC Wharton Jr. as the new city attorney, was still considering Tuesday how he wanted to handle the case. That includes whether he’ll allow Krelstein to file a complaint against Lee on behalf of the city.

It is not surprising that Morris wanted to get brought up to speed first, because Krelstein was hired as the city’s special counsel before Morris took his new job. And many facts of the case have unfolded as a direct result of the lawsuit spanning three city mayoral administrations in quick succession, beginning with Herenton’s departure in late July, then-City Council Chairman Myron Lowery’s interim service as mayor, and now Wharton.

Herenton’s approval of the settlement to Lee is the reason Krelstein filed the original lawsuit.

Lowery instructed the deputy city attorney he hired, Veronica Coleman-Davis, to work with Krelstein on recovering the city’s money. Lowery and Coleman-Davis are gone now, Lowery having lost the Oct. 15 special mayoral election to Wharton and returned to the council, and Coleman-Davis having returned to private life.

RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 23 23 1,365
MORTGAGES 21 21 1,068
FORECLOSURE NOTICES 6 6 196
BUILDING PERMITS 117 117 3,173
BANKRUPTCIES 42 42 795
BUSINESS LICENSES 2 2 331
UTILITY CONNECTIONS 0 0 0
MARRIAGE LICENSES 0 0 0