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Superior Court Judge Jay Bloom just issued a temporary restraining order to stop the Southeastern Economic Development Corp. from paying a $100,350 severance payment to its ousted president, Carolyn Y. Smith.
The judge issued the order at the end of a hearing on a lawsuit local activist Ian Trowbridge has brought against Smith and SEDC. Trowbridge argues that Smith’s severance payment should be voided because it was discussed and voted on in a closed session meeting of SEDC’s board of directors.
That’s a violation of the state’s open meetings law, known as the Brown Act, Trowbridge alleges, and the termination agreement that proposes the $100,350 payment be wiped away.
In today’s hearing, Daniel Gardenswartz, an attorney for Smith, said there was no discussion of the severance payment during the closed session meeting in question. He argued that Smith’s severance payment was simply calculated according to her contract, and was not something that was up for discussion in the meeting.
The Brown Act forbids the discussion of proposed compensation in a closed session. Gardenswatz argued that the board wasn’t discussing proposed compensation for Smith because it was merely calculating how much she was owed under her existing employment contract.
“It was simply to sit down and crunch the numbers and see how much vacation she’d accrued, what severance she was entitled to and things of that nature,” Gardenswartz said of the meeting.
Trowbridge’s attorney Cory Briggs argued in response that the board must have proposed the payment at some point in the meeting because SEDC board Chairman Artie M. “Chip” Owen announced at the end of the closed session that the board had voted unanimously to approve Smith’s payment.
Ultimately, Bloom agreed with Briggs. He said the evidence currently before him showed that Briggs had cleared the two hurdles he needed to push the case forward and for him to approve the temporary restraining order.
Firstly, Bloom said, Briggs had shown that there could be irreparable harm to the taxpayers if the order is not issued, because it would potentially be very difficult for taxpayers to claim back the $100,350 once it has been paid to Smith.
Secondly, Bloom said Briggs had shown him that he has a probability of prevailing in the lawsuit.
There will now be a preliminary injunction hearing on the case Nov. 7, when both sides will again be allowed to present their arguments to the judge, who may rule to take the case to trial or dismiss it.
Either way, Smith won’t be receiving a check from SEDC until the matter is resolved in court.
Outside the courtroom, Trowbridge and Briggs said they are committed to taking the case to trial if needs be.
“This is a lady who has been shown to basically get fraudulent paychecks. They weren’t approved by the City Council or the Mayor’s Office, so there’s a legitimate question about how much she’s entitled to be paid,” Briggs said,
An audit of SEDC, released last month, concluded that a clandestine bonus program overseen by Smith at SEDC “rose to the level of fraud.”