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City wants Old Y lawsuits kept separate

BY Spencer Durham - sdurham@chronicle-tribune.com

The City of Marion is opposing the request by London Witte, its former financial adviser named as a defendant in legal action by the city, to consolidate that lawsuit with another lawsuit between the city and First Farmers Bank & Trust.

Both lawsuits concern the failed Old YMCA renovation project.

The city charges that public funds meant for the project were used for political donations during Mayor Wayne Seybold’s tenure, as well as payments to the former mayor’s relatives. The city has alleged negligence, breach of fiduciary duty and fraud against its former adviser.

London Witte has requested to have its case and the First Farmers case consolidated for pretrial proceedings and discovery. Discovery is the phase during a case where parties gather evidence. The firm has argued that the two cases should be merged due to “judicial economy,” according to one of its lawyers, Thomas Falkenberg. There are overlapping discovery issues, Falkenberg said at the end of January. Consolidating could prevent some legal steps from being duplicated.

“The whole purpose of consolidation is judicial economy,” Falkenberg said Tuesday. “I think it’s the right move.”

Through court documents, London Witte’s attorneys contend the city is holding both the firm and First Farmers accountable for the same damages – the loss of taxpayer money.

“It makes no sense to sue two different parties for similar damages,” Falkenberg said.

In its case against First Farmers, the city alleges the bank, which acted as the trustee for the Old Y project, failed to follow a written agreement requiring more detailed recordkeeping when dispersing funds.

The firm’s lawyers, in their motion to consolidate, argue that the parties involved are the same for both cases, as are witnesses and documents, as well as damages.

In response to London Witte’s motion, the city argues the opposite.

Eric McKeown, one of the attorneys with the law firm of Ice Miller representing the city, wrote that “the determinative facts and legal issues in the two actions (cases) are completely different.”

McKeown stated that discovery for the two cases would be “substantially different in scope.”

McKeown wrote that the issue present in the First Farmers case is whether or not the bank violated its responsibilities as trustee, an issue that is not relevant to the lawsuit involving London Witte.

The attorney goes on to argue in the city’s response that consolidating the cases could bog down the First Farmers case as there are additional parties involved who could seek Fifth Amendment protection against self-incrimination.

Chad Seybold, construction manager for the Old Y project and the brother of the former mayor, sought Fifth Amendment protection in the case involving him, London Witte and others. The court eventually ruled against Chad Seybold’s request but the matter did consume time. McKeown wrote that it’s expected other parties might do the same.

McKeown declined any further comment other than what is stated in court documents on Tuesday.

The Chronicle-Tribune also reached out to Daniel King, one of the attorneys representing First Farmers. King declined to comment further on the case or the motion to consolidate but did say they have filed a document in regards to the motion, though none was yet available according to online records.

London Witte and the city will go to court Thursday, March 15 at 10 a.m. in Superior Court I. Judge Jeffrey Todd will hear arguments from both parties.