August 13, 2014

Bailey seeks to have North Myrtle Beach lawyers sanctioned over fraud claim

A lawyer for William Bailey, this city’s former public safety director, says the city filed a frivolous lawsuit against his client and should be held liable for the nearly $41,000 it cost Bailey to defend himself.

A lawyer for William Bailey, this city’s former public safety director, says the city filed a frivolous lawsuit against his client and should be held liable for the nearly $41,000 it cost Bailey to defend himself.

Randy Mullins, Bailey’s lawyer, last week filed a motion for sanctions against the city’s lawyers over a fraud claim they filed related to Bailey’s forced retirement in 2010. A jury last month found no basis for the fraud claim. City spokesman Pat Dowling said the city will not appeal the verdict.

Mullins now wants the city to pay $22,449 in fees and expenses he compiled while representing Bailey in the lawsuit. He also wants the city to pay $18,300 to Kenneth Moss, another lawyer representing Bailey in a separate wrongful termination case, for work he did defending the fraud charge. No court date has been set to hear the motion.

Dowling said the city “is confident that William Bailey’s motion for sanctions has no merit.”

“We would remind everyone that it was at William Bailey’s request that the city’s fraud claim was tried separately from the wrongful discharge lawsuit that he brought against the city,” Dowling said in a statement. “Court records reflect that Bailey tried three times to have the city’s fraud claim dismissed: once with a pre-trial motion for summary judgment and twice during the actual trial. Three times, the court found sufficient evidence existed to deny his motions. In light of that, and under the terms of the S.C. Frivolous Proceedings Act, a motion for sanctions should not prevail.”

The city’s fraud claim stemmed from two days of negotiations in late April 2010 over how long it would take Bailey to raise enough money to buy five years of service credits for his forced retirement. The city’s lawyers claimed Bailey and Moss misled them and wasted their time during the negotiations because Bailey had already arranged financing for the purchase. The city sued Bailey to recoup $3,150 for its lawyers’ time spent during the negotiations.

Mullins said in the court filing that the city knew nearly three years ago there was no evidence to back up the fraud claim. Mullins said the city obtained Bailey’s bank statements and other documents that showed Bailey had not arranged any financing for his retirement until after the negotiations were concluded.

“There was no justification for the continued fraud case against Bailey,” Mullins said.

Bailey retired from the city’s public safety department on April 30, 2010, after former City Manager John Smithson had given him a resign-or-be-fired ultimatum two days earlier. Moss and Stephen Savitz, a lawyer representing the city, spent a combined 14 hours on April 29 and April 30 of that year negotiating over how Bailey’s departure from the city would occur and whether he would be allowed to retire.

Bailey needed to be on the city’s payroll until April 30 of that year to retire with 20 years of service. Bailey also needed to raise about $160,000 to buy an additional five years of service credits, making him eligible for full state retirement benefits.

Bailey testified during last month’s trial that he met with state retirement officials in Columbia on April 30, eventually writing a check that afternoon to pay for the five years of service credits. At the same time, Moss was telling Savitz in telephone conversations that Bailey wasn’t sure how much time he would need to come up with the money for his retirement.

Bailey testified that he did not have enough money to cover the check he wrote to the state retirement system and he wasn’t sure how he would come up with the funds until the following week. Bailey said retirement officials assured him the check would not be cashed until his retirement application was completed, a process that could take weeks.

Bailey testified that he obtained a loan from Anderson Brothers Bank to cover the check on May 3, 2010 — days after the negotiations had ended.

Chris Johnson, a lawyer representing the city, unsuccessfully argued that Bailey knew he was going to get that money when the negotiations were continuing.

The city already has spent $214,000 in legal fees defending itself against Bailey’s wrongful termination lawsuit and pursuing the fraud claim. Bailey’s legal fees total about $170,000.

Bailey has said he was made a scapegoat for Smithson and other city officials who had grown weary of intense media scrutiny in the months following an April 2009 wildfire in the Barefoot Resort subdivision, where dozens of homes were destroyed.

Bailey ultimately was suspended from his job and then demoted to lieutenant after Smithson said the public safety director lied to him about how his gun had been stored on the December 2009 night it was stolen from Bailey’s unlocked truck.

Smithson said Bailey told him the gun had been locked in the glove compartment of his truck. Bailey has said he told Smithson and others that his gun was secured, but he never used the word “locked.”

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