CHELSEA — Selectmen voted unanimously Wednesday to pay a former town clerk a $6,152 settlement, with the Maine Municipal Association paying the remaining $22,000-plus.

The association and its lawyer, Mark Franco, and former town clerk Flavia Kelley and her lawyer, Clifford Goodall, agreed during a mitigation meeting last Friday that Kelley will be paid $28,520 in back pay and benefits. Kelley was terminated by the town in June.

At a special town meeting July 23, residents rejected a proposed $25,000 agreement with Kelley, saying they were sick of being “taken advantage of” by “unscrupulous people.” A state legislator at the meeting called the settlement proposal extortion.

Kelley filed a complaint with Kennebec County Superior Court in September that said the town owes her $89,437 in back pay and benefits after she was terminated. Maine law encourages plaintiffs to take responsible steps to mitigate and the Maine Municipal Risk Pool, the town’s liability insurance provider, agreed to take responsibility for the case, hiring attorney Mark Franco of Thompson & Bowie in Portland.

Town attorney Stephen Langsdorf has said former town manager Angela Gordon signed a three-year contract with Kelley in 2010 without the approval of selectmen. Town officials maintain state law does not give Gordon that authority and Kelley never had a valid contract.

Franco, who attended Wednesday’s selectmen’s meeting, said after reviewing the case he determined it was in the best interest of the town to settle out of court.

Randa Veilleux, a municipal association senior claims representative at the meeting, said Chelsea’s liability insurance requires that the town pay a portion of the settlement because it had to do with wages. That portion was determined to be $6,152, with the association paying the rest.

Franco said the circumstances in the case have never been seen in a Maine court.

“This was not an easy case to deal with,” Franco said Wednesday. “I could have defended this case all the way to trial, but I determined it was in the best interest of the town to resolve this now rather than go to court.”

Franco said a court judgment could have cost the town $30,000 plus legal fees, thought the association is responsible for his fees.

Residents at Wednesday’s meeting asked why the settlement wasn’t brought before the town for a vote since residents were against paying Kelley anything.

Town Manager Scott Tilton said residents were told at the special town meeting in July that if municipal association took over the case it would probably be resolved out of court.

“That’s how they do it,” Tilton said. “Also, we’ve got money in our operating budget that has already been approved to pay the amount that would be our share.” Tilton said officials last July needed voter’s permission to spend $25,000 because it wasn’t an amount that had been budgeted.

Rick Danforth, a former selectmen, said at the meeting, “At this point we’re looking for the board to approve the $6,000 and change and I think you should do that. Accept the agreement and approve the funds for the town’s share.”

Selectmen voted to pay the $6,152 and have it come out of the town’s salary account.

Kelley was given a pay package in 2010 that exceeds that of clerks in most neighboring towns. With no municipal experience, she was given four weeks of vacation and 12 paid sick days a year during her first year, plus full health insurance benefits and a salary of $17.50 per hour, with automatic annual wage increases.

Langsdorf said former Board of Selectmen Chairman Carole Swan had the town manager sign Kelley’s contract without first bringing it to the board for a vote. Langsdorf said the contract was signed without the knowledge of the other two selectmen.

Swan pleaded not guilty in U.S. District Court in Bangor Thursday to federal extortion charges, and she and her husband, Marshall, are both accused of working together to defraud the Federal Emergency Management Agency of money and failing to report more than $600,000 in income to the Internal Revenue Service.

Mechele Cooper — 621-5663

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