KRUM — City leaders agreed Saturday to pay $310,000 in damages to two sets of Old Town landowners after losing a pair of inverse condemnation lawsuits in April.

The vote to accept the settlement came late Saturday afternoon at the end of a 75-minute special-call work session that put the Krum City Council with its attorney in one room at City Hall and the litigants, Joe and Jackie Beall and Jack and Sue Knight, with their attorneys in another.

City Council member Christine Rodriguez said that even though the city lost the suit in April, it took some time to determine damages and how the city would pay for them.

The Bealls and the Knights filed suit in 2005, after the city began a $4 million overhaul of its aging water and sewer system. City crews installed lines on the Bealls’ and Knights’ property without obtaining the proper easements, the lawsuit found.

In April 2009, Denton County Probate Judge Don Windle ruled that, with the construction of the new pipes, the city had effectively “taken” the property.

When the judge ruled in favor of the property owners, the Texas Municipal League, which had been representing the city, withdrew its support for the case, City Attorney Shanna Cargill said, causing some delay in settling for damages.

Insurance will not cover the damage settlement, Rodriguez said. “We’ll be paying, I think, out of the water and sewer emergency funds, since they are utility related,” Rodriguez said.

Both of the couples, their attorney and Rodriguez said the city was on the hook now because city leaders didn’t follow the right steps to secure the easements in 2005.

“You can’t undo who got elected and how they handled things,” Rodriguez said.

Former Mayor Larry Lamonica, who oversaw the construction projects, disputes that his administration created the problems. He said the city went ahead with the best information it had at the time.

“It’s a terrible misconception on that point,” Lamonica said. “The fact is that all of those plans were approved before I ever came into office.”

Jack Knight disagreed, laying the problem squarely at Lamonica’s feet.

“I don’t know what they [the city] thought they’d done, but what they actually did was criminal trespass,” Knight said.

The City Council agreed Saturday to pay $250,000 of the settlement now, and the final $60,000 in quarterly installments through 2011.

The two sides had been in talks off and on since April, said the couples’ attorney, Scott Alagood. After another mediation Wednesday, they realized they were close enough that they could avoid court hearings on the matter, the first of which was scheduled for today.

Judge Windle had appointed three special commissioners for each case to determine damages. Had the hearings been required, it would have cost the city another $30,000 in court costs, Rodriguez said.

Cargill said she had no estimate of what the city paid for representation on the case, since her firm, Hayes, Berry, White & Vanzant, also serves as the city’s attorney for day-to-day matters and the items weren’t segregated.

Beall is on the City Council, but recused himself from the discussions on the matter from the beginning. He said that by the time all the math is done on the settlement, “it’s not anything to write home about.”

The two couples paid $38,000 for representation up front, and must split the final settlement with Alagood and Cartwright, Beall said.

“Then there’s income tax on it,” Beall said, adding that means they’ve sold part of their property to the city.

The settlement means that the city now has proper easements on the two properties and can complete the sewer project it began four years ago. 

Work stopped on that portion of the system when the lawsuit was filed. Rodriguez was unsure when the final portion of the system would be completed.

“We’ll have to have the engineer do the drawings and city crews will finish it,” Rodriguez said.

PEGGY HEINKEL-WOLFE can be reached at 940-566-6881. Her e-mail address is pheinkel-wolfe@dentonrc.com.