Maumelle OKs pursuing settlement

Maumelle’s City Council voted Monday to allow their mayor to pursue a $31,443.93 settlement with Team Summit over the latter’s use of city property along the Arkansas River.

The settlement figure includes $30,289.81 for the roughly 18-month period in which the event company leased Park on the River under contract but did not receive any invoices — which stretched from March 2019 to November 2020 — and $1,154.12 for its continued use of the property through March 2023. The proposal states the money would be due within 90 days of signing the settlement, said Andrew Thornton, city attorney. He presented the settlement figure during Monday’s City Council meeting, which was originally scheduled to take place last week but was rescheduled due to inclement weather.

Maumelle Mayor Caleb Norris sponsored the resolution. The council voted 5-2 in favor of the resolution, with Ward 1 council member Steve Mosley and Ward 4 council member Jess Holt voting against it. Chad Gardner wasn’t present for the meeting.

Maumelle failed to send invoices to Team Summit for roughly the last 18 months of its contract to use the property, 11903 Crystal Hill Road. Although that contract expired in 2020, the event company continued to use the space through March 2023, just before a new contract was signed that allows them to operate there through the end of September. Norris has blamed an outdated billing system, the coronavirus pandemic and forgetfulness for the lapse, though he has also said that at least some of what happened “falls on my shoulders.”

The City Council asked Thornton last November to obtain revenue figures from Team Summit for the time it wasn’t charged, and to use those figures to update recommendations to the city over how much officials should request in a new invoice to the company. Team Summit emailed the information the morning of Jan. 2, he said.

“I think any lawyer would tell you it’s sensible to consider negotiating before you decide to pursue civil litigation,” he said. “As I’m sure you all probably know, litigation is time consuming, expensive and uncertain. You can’t ever really guarantee what a judge or a jury will do with the case.”

Thornton calculated his recommendation for the period during which Team Summit was under contract using the formula in the contract the company signed in 2015. Under that contract, Team Summit agreed to pay the city $1,000 per month and 25% of the net revenue — which includes all expenses incurred, including the rent, “of all venue rental sold by [Team Summit] at the property.” The lease agreement also stated the contract would not continue after it expired in November 2020, unless the City Council explicitly authorized it, according to Thornton.

Calculating the recommendation for the period between December 2020 and March 2023 proved more difficult because it wasn’t under contract, he said. As a result, he recommended seeking compensation for the company’s use of the property then through an “unjust enrichment” claim, which covers situations outside of formal contracts or agreements “but which, in fairness and equity, one party has obtained a benefit that they’re not entitled to lawfully and they should be required to pay restitution to the other party.”

To determine what recommendation to make under unjust enrichment, Thornton said he considered the number of days Team Summit used Park on the River during that period, then used the rent formula from the 2015 agreement. According to the attorney, the company used the property for only about 19 days during that period, due in large part to covid restrictions and precautions.

“I don’t think an unjust enrichment claim would support restitution for an entire month of 31 days if Team Summit only used it for two days,” he said, justifying his decision to recommend the city seek money for only the days in which the property was used.

Mosley said he believed the city should instead pursue compensation as if Team Summit remained under contract during the roughly 28 months between the close of the 2015 agreement and the latest, month-to-month one, which was signed in April and is set to expire in September. Maumelle Director of Finance Beatriz Sousa determined that, if the contract had been in effect throughout that period, the company would have been charged about $68,000.

“I do feel like the city and Team Summit acted as if the contract was still in force,” he said. “The city continued to refer anybody that was interested in renting that facility to Team Summit, just as it had been before. It really wasn’t offered to the public, to anybody else.”

Holt also criticized the resolution, faulting Team Summit for not contacting the city once it stopped receiving invoices. In March, he called the company’s use of the property as a “financial travesty.”

Ward 2 council member Terry Williams questioned whether the city had a “legal leg to stand on” if they tried to charge Team Summit on a month-to-month basis for the time they used the property after their contract expired. Thornton said they did not for two reasons: The language in the 2015 contract that explicitly stated the agreement would end after November 2020, and the city didn’t act as if the contract was still in effect upon its expiration.

R. J. Mazzoni, Ward 2 council member, said he thought the settlement seemed “almost like a slap on the wrist,” but said it “also doesn’t seem like we have legal footing to really do anything else.”

Michael Tierney, Ward 3 council member, described the settlement’s pursuit of restitution under unjust enrichment as a “double-edged blade,” adding that it didn’t seem fair for Team Summit to “unjustly enrich themselves at the expense of the city,” but it also wasn’t fair for the city to charge Team Summit “for something they weren’t even able to use at the time.”

“I think really, in any type of situation like this you’re going to have to come to a compromise,” he said. “And the thing about a compromise is nobody’s happy, and I kind of feel like that’s where we’re at right now.”

Two Maumelle residents spoke about the settlement during a public comment period, with both leveling criticism again against the resolution. Janet Watkins said she lives about a quarter of a mile from Park on the River, and spent about 35 years working in real estate.

“I know when you rent a property, you’re supposed to pay the rent on it,” she said. Watkins asked the city to reject the resolution, describing it as “cutting a deal” with Team Summit.

While he didn’t think the city should necessarily seek full payment for the period outside of contract in which the company used the property, Allen Bruce Wagner encouraged city officials to consider asking for more than what Thornton recommended for the period between contracts. Wagner suggested the city seek between $12,000 and $15,000 for that period.

“I think there is money there that is owed us more than $1,154.12,” he said.

Norris did not immediately indicate when he planned to begin executing the settlement with Team Summit.