An East Spencer citizens group dropped all legal claims Monday against Aldermen John Noble, Deloris High and Ronald Hash.

The move paves the way for the current East Spencer Board of Aldermen to join the citizens’ civil suit against former town officials and the companies and individuals they did business with.

After a one-hour hearing in Rowan County Civil Superior Court Monday, East Spencer Mayor Erma Jefferies called a special meeting of the town board for 6:30 p.m. Wednesday.

Jefferies said she expected to ask the board whether it wanted to join Citizens on the Move in East Spencer in its suit against a field of defendants now reduced to 13 individuals and companies.

When the suit was brought last October, just weeks before the November election, it named then Mayor Kenneth Fox and all the aldermen (both individually and in their official capacities) as some of the defendants.

In November, voters elected Jefferies as mayor and three new aldermen to join Noble, High and Hash, who had not been up for re-election.

Jefferies and two of the newly elected aldermen, John L. Rustin and Titus King, had been active members of Citizens on the Move in East Spencer (COMES) before the suit was filed. It set up an awkward situation between the new board members and those left over from the previous administration, because they were defendants in the civil suit.

Attorney Michael King, representing COMES, asked for a voluntary dismissal Monday in the group’s action against the three aldermen, both as individuals and in their official capacities as aldermen.

Superior Court Judge Larry G. Ford also granted King’s request to dismiss the N.C. League of Municipalities as a defendant.

“The N.C. League of Municipalities has no authority over the town of East Spencer, whatsoever,” Ford agreed.

The judge also dismissed the claims against Fox, former aldermen Jerry Miller and Chris Sharpe and former town attorney Eric Ellison, as related to their official capacities for the town. But Fox, Miller, Sharpe and Ellison remain defendants as individuals.

List of defendants

The defendant list now includes Business Partners USA, the Winston-Salem firm hired by the former board to manage town operations; Resource Management Services, an arm of Business Partners; Rick Slade, head of Business Partners; Patrick Slade, head of Resource Management Services; Fox, the former mayor; Kim Fox, the mayor’s wife and a former employee of Business Partners; Chris Sharpe, former alderman and finance officer; Peggy Sharpe, Chris Sharpe’s wife; C&P Services, a business said to belong to the Sharpes; Miller; Gwen Crump, former town clerk; Tonia Miller, employee of Business Partners; and Ellison, former attorney for both the town and Business Partners.

William West, a Winston-Salem attorney, appeared in court Monday to represent Business Partners, Resource Management Services and the Slades.

Freddie Lane, hired as East Spencer town attorney before the November election, had filed answers to the COMES suit on behalf of Fox and the aldermen. He also had asked in earlier filings that the claims against the town board members in their official capacities be dismissed because COMES had failed to name the town of East Spencer as a necessary defendant.

A lawsuit filed against a public officer in his or her official capacity “operates against the public entity itself, as the public entity is ultimately financially responsible for the compensable conduct of its officers,” Lane had argued.

Attorney drops Fox

Lane told the court Monday that he would withdraw the request to add East Spencer as a defendant. He added that he also would have to withdraw as attorney for Fox because of his role as the town’s attorney.

Attorney Meleisa Rush-Lane appeared on behalf of Kim Fox and asked Ford to remove her client as a defendant. She contended that COMES had no standing to sue Kim Fox based only on the fact that she’s married to Fox and was a former employee of Business Partners.

Ford spent much of the hearing trying to get the case, in his words, “postured properly.” He’ll have to rule later on several motions, but he denied West’s motions to dismiss based on his argument that COMES was procedurally incorrect by having individual taxpayers file the suit.

The more correct party would have been the town’s bringing the suit, West contended, if the town officials believed a breach of contract occurred.

Otherwise, the courts would be flooded with individual taxpayer suits against local governments whenever the taxpayers believed they did not receive adequate service, West said.

West argued that a Court of Appeals decision in a case involving Gov. Mike Easley’s statewide television advertisements as attorney general backed his position.

Direct affect

King countered that the case West referred to affected N.C. citizens at large, while the actions by Business Partners directly affected the pocketbooks of his clients.

“There was no other way to get to this point than to do what the plaintiffs did,” King said.

The company’s mishandling of water meter readings and failure to pick up trash or keep adequate financial records directly injured his clients, King said.

Had the citizens been given the public records they requested at one point but were denied, a lot of the mismanagement could have been stopped, King said. Taxpayer money was being stolen, he added.

The Local Government Commission even tried to obtain the same financial documents without success, King said.

King argued that state statutes give his clients the right to sue and collect attorneys fees when they are denied access to public records.

West said the records statute should not apply in the breach of contract allegation against his clients.

In a general overview of the case, King said COMES had asked for a temporary restraining order and preliminary injunction as a way to step the town from doing business with Business Partners USA.

Some results

The suit was successful in that, after it was filed, the town ended its relationship with the private firm, King said, adding that it allowed his clients to achieve about half of what they sought in their prayer for relief. The Local Government Commission’s intervention also helped, King said.

“Where are we then? Ford asked. “What’s left?”

King said the town had the legal authority to enter a contract with Business Partners USA, but he alleged that Business Partners breached that contract by secreting monies, violating state statutes, misusing Powell Bill funds, putting the town in debt and failing to keep sufficient records.

When Business Partners took over the town’s operations, the town was solvent, King said. When the company left, it was broke, he added.

King said his clients still allege that Sharpe and Fox gained monetarily from the town’s relationship with Business Partners. In answers filed with the court, Fox has denied any wrongdoing.

Contact Mark Wineka at 704-797-4263, or mwineka@salisburypost.com .