CLAREMORE — A decade-long dispute is winding to a close and it could cost Rogers County property owners millions in ad valorem taxes. That case is on appeal, but in October, a Mayes County jury awarded a $12.5 million judgment against Rogers County Commissioners. Recent requests by the plaintiff , Material Service Corporation, in interest and fees add up to nearly $25 million total.

Worst case scenario is Rogers County could have to pay that $25 million price tab and Rogers County taxpayers would foot the bill. The remedy would come through a dramatic increase in ad valorem taxes that would sting residential property owners and  could potentially cripple some of the county’s largest industries.

County Assessor Melissa Anderson provided a “very rough estimate” of how $25 million in judgment and damages would affect property owners. On a $100,000 home, ad valorem taxes would increase by $137 per year for three years. A $300,000 home would pay three times that amount. The largest industries in the county would be forced to pay in excess of $300,000 in additional ad valorem taxes for a three year period.

Assistant District Attorney Barry Farbro, who has been handling the case, is working to make sure that worst case scenario does not happen.

“I believe the county has a good chance of getting this judgment reversed or reduced by the appellate court,” said Farbro. “The county is asserting on appeal that they (Material Service Corp.) failed to exhaust their administrative remedies before they filed the lawsuit, among other allegations of reversible error committed at the trial court level.”

The attorney for MSC is unapologetic.

“There was an extremely compelling documentary case made,” said MSC attorney Jack Mattingly, Jr. “Not ‘he said, she said,’ but black and white. A man decided to open another quarry in Rogers County and sell rock to the taxpayers as well as private people and as soon as MSC published in a local newspaper, a notice of their application to start mining, the county commissioners saw that and went into overdrive.”

Mattingly the commissioners were “in the middle of an extremely expensive planning study” at that time, which is prudent government but that they took action before that study was completed. He claims the county commissioners at that time were trying to protect a competitor.

The commissioners at that time were District 1 Gerry Payne, District 2 Glenn Sweet and District 3 Kenny Crutchfield.

“The Acme Brick company over west of Oologah went to mining clay for brick, and it got the community to talking about zoning. They were working on (HWY) 169 and the community was going to grow,” said Payne .

The Oologah community was driving the issue and had multiple meetings about zoning and growth in the area.

He said communities had been discussing zoning and brought it before the Board of County Commissioners.

“It eventually came to a vote and passed,” said Payne.

The decade-long legal battle has involved two law suits and various appeals and outcomes over the course of time.

On Dec. 9, 1999 Material Service Corporation entered a lease agreement (the Begley Lease) to mine and sell limestone rock on 320 acres in Section 16, Township 22 North, Range 15 East of Rogers County near Oologah.

On Feb. 28, 2000 the Board of County Commissioners approved the annexation of 155 sections of land, the “Fourth Planning Area,” covering approximately 99,200 acres of land. Annexing the property put it under the jurisdictional control of the Rogers County Planning Commission and the Board of County Commissioners.

The zoning and land use regulations in place would have prohibited mining. Material Service had a permit pending with the Oklahoma Department of Mines but now could not proceed.

“The county’s expert witness was the competitor who stood to benefit from MSC not getting to open their quarry,” said Mattingly. “Why would they say they don’t want a better market?”

Material Service could have requested a zoning change, said Farbro.

Instead, the company filed a case against the county, CJ-200-247 seeking a Declaratory Judgment against the County on the basis that the County failed to comply with “statutory notice requirements,” according to a summary of the case filed with a Petition in Error by Farbro in an appeal with the Oklahoma Supreme Court .

The suit declared the County’s annexation of the Fourth Planning Area was void.

“When they put him out of business, they were in such a hurry, they didn’t even publish a proper meeting notice,” said Mattingly.

The hearing for the annexation had been published, but the date, time and place of the hearing was not included in that publication, said Farbro.

Summary judgment was granted in favor of the Defendant, the Rogers County Commissioners. The Oklahoma Court of Civil Appeals reversed that order and “remanded the case to the trial court.”

On July 31, 2003 the annexation was declared void as to the Begley Lease by Material Service Corp.

On May 7, 2007, MSC filed a second law suit, CJ-2004-234 seeking damages for “inverse condemnation.”

The allegation is that MSC was prohibited from mining the Begley Lease due to the annexation.

“It’s a lucrative business. It would have saved the taxpayers a lot of money and they never made much of an attempt to settle the case,” said Mattingly. “They put a good business out of business just to protect a local guy is what it looks like.”

The case was tried by jury in Mayes County in October and a verdict returned in favor of MSC and against the Rogers County Commissioners for $12.5 million.

The District Attorney’s Office filed a Petition in Error and Designation of Record on Appeal  with the Oklahoma Supreme Court on Feb. 17, seeking “a reversal of the $12.5 million judgment.”

MSC, in turn, filed an application for costs and fees associated with the case including over $7 million in pre-judgment interest, $307, 118 post-judgment interest, $50,609 in expert witness fees, $13,060 in costs and nearly $5 million in attorney fees to bring the grand total requested of the courts from Rogers County to nearly $25 million.

In many cases, insurance coverage will help to off-set such a lawsuit, but in this case, insurance does not apply.

“There is no insurance coverage for the Material Service Corporation lawsuit and/or judgment,” said Farbro.  “The county’s policy with Travelers specifically excludes condemnation actions, even though this was a temporary regulatory takings inverse condemnation claim initiated by a property owner, instead of a physical takings eminent domain condemnation action initiated by the county.”

Even after zoning allowed it, MSC never mined the property in question according to Farbro and Anderson.

“The Highway 169 project was near this property. Rogers County was growing,” said Mattingly. “By the time it was over with, there was not nearly so much wind in their sales. The highway project had finished, growth was tapering down, and it was not as economically viable as it was before.”

Mattingly said there are still remedies.

“They can cut a deal in a variety of ways but there has been no attempt to do that,” said Mattingly. “The taxpayers should be incensed, but they shouldn’t be incensed at the jury or MSC, they should be incensed at the county commissioners who were trying to decide who could and could not do bus in Rogers County.”

Both sides claim the other party refused to settle.