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VOL. 125 | NO. 103 | Thursday, May 27, 2010

Wharton Administration Probes Linebarger Arrangement

By Andy Meek

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Memphis Mayor A C Wharton Jr.’s administration is taking a hard look at the city’s controversial arrangement with a Texas law firm that prods tardy city taxpayers to pay up.

The city’s relationship with Linebarger, Goggan, Blair & Sampson LLP, which began with a no-bid contract from former Mayor Willie Herenton in 2004, has already generated two lawsuits this year. The suits claim taxpayers are getting fleeced by the firm’s alleged habit of billing exorbitant fees for its work.

Memphis City Council members and others have argued for years the arrangement was bad for the city and unfair to taxpayers, but City Hall resisted calls to hand over the reins for the back-tax collection effort to anyone else.

That is until now.

In a sign that change may not be far off, City Attorney Herman Morris told The Daily News this week the Linebarger contract has been under the microscope almost from day one of Wharton’s time in office.

The city is looking at scrapping the contract, amending it or bringing the Shelby County Trustee’s office into the picture.

“It’s one of the things that we – we, meaning the administration – came in reviewing,” Morris said.

Several times since 2004, three county trustees – including current trustee Regina Morrison Newman – approached the city mayor about doing the job for the city.

Their argument was simple: City taxpayers pay taxes to the city and county, which means the trustee already collects taxes from the same people Linebarger goes after. So it would theoretically require less effort from the trustee.

Shelby County collects its current and back taxes in-house. The city trustee’s office collects current city taxes.

Taxpayers pay delinquent tabs to the city, which cuts Linebarger a check for their efforts in prodding taxpayers to pay up.

Newman offered to collect current taxes for the city. She told The Daily News the city recently asked her to consider that, plus back taxes, too – which essentially would hand her Linebarger’s job.

“The administration has an idea of what it thinks is right and fair,” Morris said. “I think the administration first wanted to assess and evaluate the relationship. And yes, doing away with (Linebarger) was always an option on the table.

" Just as there was an option on the table to continue and modify (the arrangement).”

The firm argued to Memphis City Council members last year the city would unnecessarily spend money rebuilding a program it already handled.

Meanwhile, two Memphis attorneys filed suit last month against Linebarger in U.S. District Court for the Western District of Tennessee.

In March, two other local attorneys filed a class-action suit against the city in Shelby County Chancery Court over Linebarger’s alleged practices.

The suits claim Linebarger is piling fees, penalties and other costs onto tardy taxpayers, even though they say state law limits taxpayers to only being charged, at most, a 10 percent attorney fee.

Linebarger fired back in federal court last week by filing a motion to dismiss the most recent suit.

The firm countered that an order was entered in Shelby County Chancery Court in 2004 allowing the levy of extra fees on top of what it collects from delinquent taxpayers.

“The structure of the agreement allowed the city to place a reasonable charge on the specific taxpayers whose delinquency made the collection efforts necessary,” the firm’s motion to dismiss reads.

RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 0 133 1,342
MORTGAGES 0 131 1,047
FORECLOSURE NOTICES 20 39 190
BUILDING PERMITS 0 305 3,056
BANKRUPTCIES 17 135 753
BUSINESS LICENSES 0 53 329
UTILITY CONNECTIONS 0 0 0
MARRIAGE LICENSES 0 0 0