Vance man stuck after overpayments


It looks like legal action will be a Vance County resident’s only hope for a refund of more than $2,000 he says he overpaid the city of Henderson over nearly two decades, and the lawyer who leads the City Council’s finance committee said Thursday that the man wouldn’t have much of a court case.

Samuel Smith lives in a Shank Street mobile home park that’s just outside Henderson — the city line runs across his front porch.

Even though he lives outside the city and pays the higher water rates charged to nonresidents of Henderson, Smith also has been charged the monthly city sanitation fee, which covers the pickup of trash and recyclable goods. Smith does not receive those services.

Smith brought the erroneous billing to the attention of city Finance Director Traig Neal last month, and Neal responded by giving Smith a check for $757. That covered 37 months of sanitation fees Smith shouldn’t have been charged — the three-year period City Attorney John Zollicoffer advised was allowed by the statute of limitations on such claims against the city, plus the monthly charge that came due while Neal was looking into the matter.

But in an appearance before the City Council last week, Smith said he has paid the sanitation fee for his entire 18 years in the Shank Street home, and he wants all of that money repaid.

A key point of Smith’s argument is that he said he complained about his high water bills years ago but was told he was paying the proper amount. He believes that he met his obligation to inform the city of its mistake, and the city compounded its error by telling him his bill was correct.

The council referred the request to the Finance and Intergovernmental Relations Committee, which took up the matter Thursday at a meeting attended by all council members except Ranger Wilkerson. Smith did not attend the meeting.

Although the council appeared unanimous in its sympathy for Smith’s plight, in the end only Mary Emma Evans advocated paying him any more money.

She argued that the city wrongly took the man’s money and should give it back.

Other council members countered that Smith bears a large portion of the responsibility for not demanding action sooner and that the city can’t do more than it has. What might be the right move for Smith, Bernard Alston and other council members said, would be wrong for the more than 16,000 people who live in Henderson.

City Manager Eric Williams reported that the total for the sanitation fees would be $2,995 for the full 18 years, meaning that the city would have to pay an additional $2,238 to satisfy Smith. And that’s not taking into account a history of late fees that Smith attributed to the hardship of being overcharged.

That’s where Smith runs into trouble.

First, Neal’s records on water accounts go back only to 2000, so there’s no documentation about how much Smith has paid or even how long he has lived in the same home.

Second, Williams said there’s no way to know whether Smith was late on his payments because of the sanitation fee, which over the 18 years has averaged less than $14 a month.

Third, it’s not clear when he first complained about his bill, what he said or whom he talked to. Peggy McFarland, Neal’s assistant, said Thursday that no one is left in the water payments office from 18 years ago, and Neal did not work for the city then.

Smith told the council that his original complaint was about being charged out-of-city water rates, not about the sanitation charge. The water rates were correct; apparently no one paid attention to the sanitation charge, which by definition shouldn’t be applied to a customer paying nonresident water rates. Under questioning from Evans, Neal said he can only guess that the source of the erroneous bills was a data-entry mistake in the creation of the account.

Fourth, and perhaps most important, there’s the issue of the statute of limitations and the implications if the city government ignores that law.

Alston, a lawyer as well as the FAIR chairman, made the case for not paying Smith more money.

“It may not be the most popular thing in the world, but … what we have given him is probably all that we both should give him and need to give him,” Alston said. “From a practical standpoint, we’re boxed.”

Zollicoffer was not at Thursday’s meeting. That left Alston to lead the legal discussions.

He said Smith could not get more than three years of reimbursements if he sued the city. Even if Smith convinced a jury otherwise, Alston said, the city would be better off losing a court case than willingly setting a precedent of ignoring the statute of limitations.

“We’ve got 16,457 other people that are going to come in here wanting money from 18 years ago, and we can’t do it,” Alston said.

Just the initial newspaper report of Smith’s complaint last week sparked several calls for other old claims, Neal said.

Council member John Wester clarified with Alston the legal consequences of giving Smith a full refund and ignoring the three-year limit. “By waiving it one time,” Wester said, “from that point on, we no longer have the defense.”

Council member Elissa Yount asked about the possibility of binding arbitration, but Alston saw no advantage to the city in that step.

Neal previously said he didn’t think giving Smith a discount on his future water bills would be allowed under the terms of the revenue bonds backing the water plant. Neal said Thursday that he will try to verify that belief.

But Neal received Alston’s agreement that there is no legal difference between paying Smith and cutting him a break on future bills: Either step would set a precedent of ignoring the statute of limitations.

“We open up the floodgates” by paying Smith more, Alston said.

“It’s embarrassing” to turn Smith away, Evans said.

That appears to leave Smith with the option of accepting his loss or suing the city.

Alston said that even if Smith overcame the odds and the clear letter of the law, he would wind up worse off by suing. Alston said Smith could not claim punitive damages because the city did not knowingly harm Smith.

“For $2,200, he will spend substantially more than that amount to get it,” Alston said. “I hate to sound like a hard-butt lawyer, but I guess right now that’s what I’m saying.”

That comment sparked an exchange between Alston and Evans over whether the right thing to do in this situation is repair the damage done to Smith or protect everyone in the city from future damage.

“We can only do what the law allows,” Wester said.