CHARLESTOWN — A tentative settlement has been reached in a federal lawsuit brought against the city of Charlestown and others by multiple former landlords in the Pleasant Ridge neighborhood.
Attorney Mike Gillenwater, representing the city, Charlestown Mayor Bob Hall, four council members and other city entities listed in the lawsuit, confirmed Monday that the tentative settlement was signed off of late last week to pay $1.5 million to 13 former landlords who owned properties in the neighborhood.
Of this, about $1.2 million is coming from the city's insurance company, $100,000 from the city, with the remaining settlement funds coming from the other defendants.
"We want to stop the bleeding," Gillenwater said. "This is one of those situations where it's cheaper to capitulate than it is to keep fighting."
The agreement also states that the insurance company will no longer pay the municipal defendants' attorneys' fees in this and a separate state case, after a final $150,000 is paid.
The lawsuit was filed in January 2018, citing complaints of racketeering and civil rights violations including the Equal Protections Clause of the Fourteenth Amendment.
It also alleged that the defendants had engaged in a "scheme of extortion to coerce plaintiffs, under threat of imposition of several million dollars in municipal fines, to sell over one hundred (100) parcels of rental property for exactly $10,000 apiece to a private company, Pleasant Ridge Redevelopment, LLC, owned by a private individual, John Neace", according to the February 2018 amended complaint.
The racketeering issue was dismissed earlier this year.
The rental property owners — who made up a large part of the 300-plus residences in the 1940's-era neighborhood — say they were fined for code violations without a grace period to pay. They would not have to pay the fines if they repaired, sold or demolished what Gillenwater said was "substandard housing."
Gillenwater said all property owners were notified of new code enforcement six months before it began and that many of the owners had chosen to sell the homes to Pleasant Ridge Redevelopment, LLC for $10,000 apiece rather than make repairs or raze the homes.
"When we gave them the choices of fix them up, tear them down or be fined, most of them chose to sell out because they didn't want to put any money into them and they didn't want to pay fines," he said. "They sold out because it was the best economic decision, then after that all happened [they sued]."
He further said that most of the property owners within Pleasant Ridge were never fined, and of fines that were imposed, the city never collected on any of them. The property maintenance code enacted by the city council which led to violations has since been rescinded.
"This was about safe housing," Gillenwater said. "I think 215 of those substandard houses have been purchased and almost all of them demolished.
"I know that there's been improvement because the number of police calls is way down, the number of criminal arrests is way down, the amount of drug activity is way down, the number of dog bites is way down, the number of animals running loose is way down."
J. David Agnew, representing the 13 rental property owners who filed the federal case, declined to comment for this story.
STATE CASE STILL ONGOING
The federal case is separate from a state case filed a year earlier in January 2017 by the Pleasant Ridge Neighborhood Association against the city and its board of public works.
In that case, the plaintiffs also say the city unfairly imposed fines against homeowners, while not fining the properties purchased and not immediately demolished by developer Neace and John Hampton through Pleasant Ridge Redevelopment, LLC.
"Defendants have favored one person over other persons simply because it wants one kind of people out of a neighborhood...," the lawsuit reads, in part.
In October, special judge Jason Mount denied a motion for summary judgment by the plaintiffs. The case, which was set to go to trial Nov. 12 in Clark County, is expected to be rescheduled at an upcoming hearing Dec. 20.
Josh Craven, president of the Pleasant Ridge Neighborhood Association, said he's not surprised the federal case has been settled, but he doesn't agree with the lawsuit even being filed.
"I don't support the landlords receiving any kind of compensation given what they left us with and how this whole thing happened," Craven said. "I'm not saying that what the city [did] to them was right or wrong — but what I do not approve of is the way the landlords allowed these houses to get dilapidated all these years and then once it became a situation, they sold out and then sued the city after our court case gained momentum. I feel as if we were used, as if the homeowners up here were used as a pawn in their game for them to get money."