Claremore Daily Progress

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April 16, 2014

Commissioners hire outside counsel

Gordon/Williams to contest multi-million dollar civil judgment

CLAREMORE — The Rogers County Commissioners hired outside legal counsel Monday to contest the $28 million civil judgment paid to Material Service Corp.

Claremore attorneys, Thomas H. Williams and Jack E. Gordon Jr., plan to file a motion to vacate the judgment received by Material Service Corp. after the county lost a inverse condemnation case to the mining company in 2012.

Material Service Corp. filed the action against the county in 2000, claiming the county had improperly annexed 320 acres that prevented the company from mining the land. The lawsuit continued for more than 10 years.

Once, the county’s appeals were exhausted, it resulted in a debt of approximately $32 million.

The extended period of time, used to appeal the case, resulted in more than $20 million in post-judgment interest after a Mayes County jury awarded Material Service Corp. $12.5 million in 2009.

However, the debt services schedule for the bond shows the total cost of $52,997,862 to the county with the principal amount listed at $32,375,000 and interest at $20,622,862.

These figures are based on the bond maturity of 14.968 years and a net interest cost of 4.31 percent

 A voter-approved, one-third cent sales tax was initially used to pay the debt financed through the Rogers County Finance Authority.

The sales tax was later combined with one-eighth of a 1-cent from the August 2013 road tax vote to increase payments.

Assistant District Attorney David Iski said the case was “a very contentious matter” and that attorneys now have a new legal theory of recovery that can be available to the county.”

Gordon and Williams will perform the work for 25 percent of the amount the judgment is reduced, excluding court expenses, according to the contract.

The county will pay court costs as they accrue, beginning with an initial fee of $2,500.

Records show, if they fail to reduce the judgment, they will receive nothing.

Gordon and Williams are already suing the mining company on behalf of Jimmie Basler, a Rogers County citizen.

The civil case, filed in 2013, also names the commissioners as defendants, who are trustees of the Rogers County Finance Authority.

The trust authority manages the bonds, which were used to pay the multi-million debts.

In Basler’s court filing, he alleges that Material Services “secretly assigned the Begley Lease,” to APAC Central, Inc. and the royalties contemplated to be paid by the lease agreement would be considered “double payments” of money received through the 2004 judgment against Rogers County.

The Court of Civil Appeals determined that Material Services’ interest in the Begley lease property was void.

The court also ordered, “until the compensation shall be paid to the owner or into the court for the owner, the property shall not be disturbed or the proprietary rights of the owner divested,” according to court documents.

Basler claims that Material Services was paid a substantial sum for the “secret assignment” of the Begley Lease to APAC to mine the property.

He further asserts all funds and consideration, whether paid, or to be paid in the future by APAC to Material Services belong to the Board of County Commissioners for the benefit of the taxpayers.  He is requesting those funds be paid to Rogers County to be applied to the original judgment resulting from the 2004 case.

Additionally, Basler is requesting that the BOCC be entitled to receive the net proceeds of any judgment in the case after costs, finder’s fee and attorney fees.

Once the lawsuit is filed with the court, the Claremore Daily Progress will provide further details.

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