BATH

The city council agreed on Wednesday night to pay West Bath $1.2 million in a settlement that prevents the city from going to trial.

West Bath filed a lawsuit in October 2012, contending that Regional School Unit 1, which operates schools in Arrowsic, Bath, Phippsburg, West Bath and Woolwich, overcharged West Bath when it applied the legislated cost-sharing formula to only a portion of overall education costs. West Bath believes it was overcharged more than $1.9 million between 2008 and 2012; and that Bath underpaid by $1.6 million.

David Ray of Bernstein Shur has defended Bath in the matter and explained Wednesday that Justice Andrew Horton had found the RSU 1 did incorrectly apply the formula, and believed West Bath may be provided remedy through the equitable jurisdiction of the court — theories of unjust enrichment or mistake.

Ray said Horton “concluded that he was going to hear the evidence in this case to determine whether or not under either of those equitable theories, he had the authority or power to undo the error that he had already determined had occurred.”

The case was scheduled to go to trial this week, Ray said, and had it gone to trial, there wasn’t much of a compromised result anticipated but rather an “all or nothing” situation. If the judge decided to give a judgment to West Bath, “in all likelihood it would have been for the full amount that West Bath was claming from Bath, which was $1.6 million plus interest, which would have brought it up closer to a $2 million adverse potential judgment against the city had we lost the case.”

Regardless of which side lost or won, it was likely the judgment would have been appealed and there was no good case law, Ray said. Given the risk of litigation, the city entered negotiations to try to find a way to resolve the claim and reduce the risk for everyone.

The insurance carrier for RSU 1 will pay $50,000 to West Bath for a total $1.25 million payment. Bath’s approval means the claim is dismissed without prejudice.

The council granted first passage for an order authorizing the issuance of bonds not to exceed $1,215,000. City Manager Bill Giroux said this allows the city to borrow the money to pay the settlement agreement and payments would likely be made over 10 years. The council will take a final vote on the order Dec. 17.

Councilor Kyle Rogers was the single opposing vote on both the settlement and resulting bond order.

West Bath officials attended the meeting.

“We are very pleased with the decision that they have made,” said West Bath Selectwoman Paula Nelson after the vote.

West Bath Selectmen Peter Oceretko added that through negotiations they arrived at a mutual agreement with which both parties are satisfied.

West Bath’s attorney Sally Daggett of Jensen Baird agreed there is a large expense and uncertainties associated with going to trial. The total $1.25 million settlement must be paid to West Bath on or before Jan. 5, 2015.

The council met in executive session with its attorney regarding the litigation before the meeting ended, which Giroux said was to clarify a question a councilor had which does not change the settlement. No action was taken after the executive session.

dmoore@timesrecord.com

THE INSURANCE CARRIER for RSU 1 will pay $50,000 to West Bath for a total $1.25 million payment. The Bath council granted first passage for an order authorizing the issuance of bonds not to exceed $1,215,000. City Manager Bill Giroux said this allows the city to borrow the money to pay the settlement agreement and payments would likely be made over 10 years. The council will take a final vote on the order Dec. 17.

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