Checks and large balances

PALMER — The legal fight over who should have to pay severance to two fired Matanuska Electric Association executives continued Monday with testimony from the co-op’s current board of directors president.

The case began when IT director Bruce Scott and assistant general manager and human resources head Tuckerman Babcock filed a lawsuit against MEA shortly after they were fired in April 2009, seeking severance they said MEA refused to pay. MEA later filed a lawsuit against former general manager Wayne Carmony, alleging that if Babcock and Scott were entitled to severance it was only because Carmony offered them illegal contracts. Scott and Babcock have since settled their claims. So now MEA is suing Carmony, seeking to collect those costs from him.

Current board president Lois Lester offered testimony that cleared up what had been something of a murky incident, at least as far as the public record was concerned, in the co-op’s history. Back in April 2009 just after the board ordered Carmony to fire Scott and Babcock, but before the board fired Carmony, the board hastily called a special meeting.

The directors went into executive session and came back out to make two motions — that Carmony was not allowed to give former employees any money without first talking to the board and that Carmony’s move to fire a second assistant general manager, Don Zoerb, was null and void.

There was no explanation given at the time as to what exactly was going on, but on the stand Monday Lester laid out the situation as she saw it.

“I had received a call that Mr. Carmony was trying to get certain staff to sign checks that would send $1 million out the door for Mr. Babcock and Mr. Scott,” she testified. “It was a dire situation. Do you let the million dollars go out the door and then try to get it back because it wouldn’t be legal or do you stop it?”

Lester said Carmony had tried to get Zoerb to sign those checks, and when he didn’t Zoerb was fired — hence the board’s action to reverse that decision.

To be clear, that’s not how Carmony or his attorney, James Gorski, see the situation. Gorski got Lester to admit that in the letter Carmony wrote explaining his actions to Zoerb there was no mention of the refusal to sign the checks.

Lester said that though Carmony didn’t mention it, it was clear to her what his motives were for sacking Zoerb.

As for her testimony saying that the payments would have been illegal, that’s actually one of the points the jury will have to decide.

Former executives have testified on previous days of trial that Carmony gave them contracts, which made it much more difficult for anyone but Carmony to fire them. The contracts stipulated that if someone besides Carmony dropped the axe, each of the executives would be entitled to between $300,000 and $500,000 in severance.

Former head of communications Michael Pauley testified that he saw it more as a measure of financial security at a business where a change in the political winds during a board election could quickly cost him his job.

MEA has argued that Babcock and Scott were not entitled to the severance since it was Carmony, not the board, who fired them. On the other side, Carmony and his attorney argue that the firings came as a result of orders from the board and thus were not an action Carmony took using his “sole discretion.” The contracts stipulated Carmony had to be exercising his sole discretion.

On the other side, current general manager Joe Griffith has argued that the severance amount was above the $100,000 maximum Carmony could authorize without board approval. And since, Griffith argued, Carmony didn’t get the approval of the full board of directors, the contracts were illegal.

Gorski, in questioning Lester, also seemed to want to prove that general managers often make decisions regarding contracts without first seeking board approval. He noted that after Griffith was on the job he sent Zoerb a letter explaining that he was letting the time left on his contract run out rather than terminating it early.

Lester conceded that Griffith didn’t seek board approval before sending that letter.

Contact Andrew Wellner at andrew.wellner@frontiersman.com or 352-2270.