County sues CCT, industry council

Published 9:50 am Wednesday, August 19, 2015

Star Photo/Abby Morris-Frye  County Attorney Josh Hardin met with the Carter County Commission in a closed legal briefing during Monday night's meeting, after which the governing body voted to proceed with legal action but did not specify against whom.

Star Photo/Abby Morris-Frye
County Attorney Josh Hardin met with the Carter County Commission in a closed legal briefing during Monday night’s meeting, after which the governing body voted to proceed with legal action but did not specify against whom.

Carter County has filed a lawsuit against the First Tennessee Private Industry Council and Carter County Tomorrow, claiming CCT illegally took possession of PIC assets when the industry council dissolved. The suit also claims a lease agreement between the agencies is null and void.
The lawsuit, filed in Carter County Chancery Court Tuesday morning by County Attorney Joshua Hardin, asks the court for declaratory judgment and relief regarding the legality of a lease agreement and monies owed to the county.
The suit came following a vote by the full Carter County Commission at the end of a marathon meeting Monday evening, which included a closed legal session with Hardin.
In the lawsuit, Hardin says the county previously entered into a lease agreement with the First Tennessee Private Industry Council, Inc., (commonly referred to as the PIC) regarding the Workforce Development Complex on Highway 91.
The terms of that lease agreement stipulated if the PIC ceased to exist, all assets of the PIC would become the property of Carter County, Hardin said. Over a span of time, the PIC became inactive but never properly dissolved, Hardin added.
“In 2007, CCT assumed the identity of PIC and began filing annual reports with the Tennessee Secretary of State’s Office purporting to be PIC and substituting its Board of Directors as those of PIC,” Hardin said in the lawsuit. “CCT also assumed control of all assets of PIC and began management of the Complex. These actions were taken without any authority or any documented approval of the Board of Directors for PIC or the Tennessee Secretary of State.”
The county believes CCT took those actions based on a sublease agreement between that agency and the PIC dated August 28, 2007, Hardin said.
The county asserts in the lawsuit that the sublease agreement between the PIC and CCT is not legal and that all of the assets of the PIC should have reverted to the county when the PIC ceased to exist. The lawsuit also alleges that CCT has incurred debt against the Workforce Development Complex in the amount of $154,000.
“The county’s recent discovery of the improprieties detailed herein necessitates a determination as to the validity of the current lease agreement between the parties, as it appears PIC is no longer a proper entity legally doing business in Tennessee,” the lawsuit said. “The county would assert that, at best, said entity ceased to legally exist as of August 28, 2007, when all of its bank accounts and assets were ‘subleased’ to CCT. The county would assert that when PIC ceased to legally exist as an entity, all of its assets became the property of county and any subsequent lease is null and void.”
In its request for relief, the county asks the court to find that the current lease is null and void and to require “CCT, acting as PIC, to immediately vacate the complex.”
The county also asks that the court rule in their favor and declare all of PIC’s assets, and therefore CCT’s, as belonging to the county and also requested a court order be issued requiring a detailed accounting of the financial status of CCT.
As part of the order of business for the meeting on Monday evening, the Commission met in a closed legal session with Hardin, presumably to hear the results of his investigation into lease and rent agreements between the county and the two economic development agencies. At the beginning of the meeting, County Commissioner Al Meehan questioned the legality of having a closed legal session.
“Those are proper when there is pending litigation or litigation is likely to occur,” Hardin said.
Meehan asked if there was pending litigation the Commission needed to be briefed on and in response Hardin said “there is litigation that is likely to occur.”
Hardin advised the Commission that during a closed legal session he could give his report to the body and the members could ask him questions, but commissioners could not debate or vote on any matter during the closed session.
After the Commission conducted its scheduled business, the group entered the closed legal session, which lasted some time. When the meeting reopened to the public, Carter County Mayor Leon Humphrey, who serves as chairman of the commission, opened the floor for motions.
Commissioner Ray Lyons made a motion for the county to instruct Hardin to proceed with filing a complaint to seek declaratory judgment. However his motion did not specify who the complaint would be filed against or for what reason. The motion was seconded by Commissioner Nancy Brown.
Following the motion, Humphrey directed members of the Commission to cast their votes without asking if there was any discussion or debate on the motion. Additionally, no members of the body asked to be allowed to speak regarding the motion.
Prior to voting, Commissioners Danny Ward and Sonja Culler announced they had to declare a possible conflict of interest due to the fact they both serve on the board of Carter County Tomorrow.
Lyons’ motion passed on a vote of 20-4 with Commissioners Willie Campbell, Buford Peters, Robert Acuff, Brown, Meehan, Bradley Johnson, Ronnie Trivett, Charles VonCannon, Isaiah Grindstaff, Ross Garland, Bobbie Gouge-Dietz, Timothy Holdren, Randall Jenkins, John Lewis, Larry Miller, Lyons, Scott Simerly, Robert Carroll, Robert Gobble and Cody McQueen voting in favor of pursing legal action.
Commissioners Mike Hill, L.C. Tester, Culler and Ward cast their votes to oppose a lawsuit.
After the motion passed, Humphrey directed Hardin to proceed with filing the lawsuit as quickly as possible.
The county’s lawsuit was received by the Clerk and Master’s Office at 9:16 a.m. on Tuesday.

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