A Luzerne County Council majority voted Tuesday to approve a $4 million settlement with neighboring Lackawanna County that will close out their dueling litigation over a Triple A baseball franchise they had purchased together in 1986.
The counties disagreed over which should keep $7.3 million, or half of the $14.6 million paid when the New York Yankees and Mandalay Baseball Properties bought the franchise through their joint SWB Yankees LLC in 2012.
Luzerne County filed its suit against Lackawanna in 2010, arguing it is entitled to $7.3 million due to the wording in a 1986 agreement when the two counties bought the franchise for $1 million each. A franchise is a claim to own a minor league team, and this one is occupied by the Scranton/Wilkes-Barre RailRiders.
The 1986 agreement says the two counties shall share equally in the distribution of “any such proceeds” if the franchise is sold after the Lackawanna County Multi-Purpose Stadium Authority receives up to $345,000 for its cost to bring the franchise here.
Lackawanna, which later countersued, has maintained Luzerne isn’t entitled to any proceeds and owes Lackawanna millions of dollars for baseball stadium repairs and construction required to keep the franchise here.
The council members who supported the settlement: Harry Haas, Eugene Kelleher, Tim McGinley, Robert Schnee, Jane Walsh Waitkus, Rick Williams and Linda McClosky Houck.
Kathy Dobash, Eileen Sorokas, Stephen A. Urban and Edward Brominski opposed the settlement.
Urban said the county should reject the deal and proceed to trial because he is confident the 1986 contract is clear and would hold up in court. Luzerne has no legal interest in the stadium, which also is used for events not connected to baseball, he said.
Some of the council members supporting the settlement said they based their decision primarily on a recommendation from the county’s outside legal counsel presented in a closed-door executive session before Tuesday’s meeting.
Williams referred to risks of advancing to trial and possible appeals.
“According to what they’re telling us, the contract is not that strong,” McGinley said.
County officials said they can’t discuss the specifics of what was said in executive session because the settlement is not final until it is publicly approved by Lackawanna. Schnee suggested outside legal counsel attend a future meeting to publicly explain the settlement rationale.
Several citizens urged council to proceed to trial, pushing for the additional $3.3 million.
County Manager C. David Pedri said he welcomes the litigation closure because the counties should work together and not bicker.
The county will net less than $4 million because $313,646 has been spent on a franchise appraisal and legal fees to date, including $77,469 to the county’s current legal counsel, Pittsburgh-based Murray, Hogue and Lannis, officials said.
The settlement proceeds will be segregated and earmarked for deficit reduction, council decided.
In other business:
• A draft audit released Tuesday said the county brought in $1.375 million more than it spent in 2016.
As a result, the operating deficit the county has been carrying on its books will decrease from $9.35 million to $7.98 million, said the audit completed by CliftonLarsonAllen, of Plymouth Meeting.
Pedri had predicted the surplus earlier this year and said the audit is independent verification the administration is staying within budget.
“People can say whatever they like, but the numbers don’t lie,” Pedri said. “It’s our second year ending in a surplus. There’s still more work to do, but we are very pleased with these results.”
The final audit is slated for release Friday. County home rule charter drafters imposed the aggressive June 30 audit deadline in response to the county’s history of late audits. The charter also requires “unqualified” audits that are more thorough and meet generally accepted accounting standards.
A detailed presentation of the audit findings is scheduled for the July 11 council meeting.
