A Baldwin County Circuit Court hearing that lasted less than eight minutes turned into a moment of judicial self-scrutiny this month, as newly assigned Judge Clark Stankoski opened proceedings in a nearly six-year-old fraud lawsuit by asking attorneys on both sides to flag any conflicts of interest before the case moves forward.
“I know there have been all kinds of issues with Judge Norton. Having not had this case since 2014, what do I need to look at as far as any conflicts of interest? I want that on the record right now,” Stankoski told the parties gathered for the Feb. 5 hearing in the case of Bass Enterprises v. Pennstar LLC and other defendants.
Stankoski inherited the case in October after Judge Joe Norton recused himself. Norton had ruled against the plaintiffs on the substance of the fraud allegations just a week before the case was set to go to trial. He later disclosed a conflict of interest stemming from his relationship with a business partner connected to some of the defendants. Norton’s dismissal of the complaint had already been affirmed without a written opinion by the Alabama Supreme Court, and his recusal came the same day the Alabama Judicial Inquiry Commission confirmed it had received a complaint about his handling of the case and that the complaint would “receive serious consideration.”
At the center of the litigation is a 242-acre tract in Magnolia Springs that was purchased in 2005 as a potential site for a new sewer treatment plant for Baldwin County Sewer Service, the largest privately owned utility of its kind in Alabama. The only issue left to resolve in the case is an equitable sale for division of that property.
Plaintiff Phillip Bass alleges that Baldwin County Sewer Service owners Clarence Burke and David DeLaney, along with former Baldwin County Commissioner Tucker Dorsey and other defendants, schemed to sell him a half-interest in the land for about $2.4 million while telling him the total sale price was $4.8 million. According to the lawsuit, Bass was told that once permits for the sewer plant were secured, he would be repaid his initial investment plus a $300,000 fee.
Bass later discovered that he had actually funded the entire purchase price of the property, though the defendants contributed $700,000 toward buying an assignment of a purchase contract that Bass says he did not know existed at the time. Court records also show the defendants set up a “straw” company to acquire the land and agreed to indemnify that company’s principal, Wayne Hopper, a college friend of Dorsey’s, against any future liability tied to the deal.
The case has also seen turnover among the attorneys representing Bass. Will Chason, who represented Bass throughout much of the litigation, filed notice of his withdrawal Feb. 3. Attorney Riley Powell agreed to take over the case just a day before the Feb. 5 hearing and told Stankoski he was not yet prepared to move forward.
“We were just engaged yesterday, so we’re doing our best to scramble and get up to speed,” Powell said. “In terms of any kind of conflicts, in the initial case there were a lot of different players — Mr. Burke, Mr. DeLaney, Mr. Hopper — back in the mid-to-late 2000s when there was a lot of wheeling and dealing and buying options, and that’s kind of what this is about. I don’t know of any conflicts you may have, but I don’t know who you may have represented in your private practice who may have crossed over.”
Stankoski responded that he did not believe he had ever represented any of the parties involved in the Bass litigation, noting that his income disclosures filed with the Alabama Ethics Commission and the Alabama Supreme Court are a matter of public record. The question of judicial conflicts has loomed over the case since Norton’s statements of economic interest, filed with the Ethics Commission, showed he reported income from his former law partner, Brian Britt, described as “referral fees.” Those payments totaled between $10,000 and $50,000 annually from 2014 through 2016, then rose to between $50,000 and $150,000 annually in 2017 and 2018 — meaning Norton could have received anywhere from $130,000 to $450,000 over that period.
Norton recused himself from a separate, unrelated fraud case last year in which Britt was representing the defendant, the same day questions were raised about those referral fee payments. Britt has said Norton was entitled to the payments because they stemmed from cases referred to another law firm during the years the two men were partners, but neither Britt nor Norton has disclosed which cases were referred or which firm ultimately handled them.
“I would assume with the nature of this case you have seen what I’ve disclosed, and I don’t think I have any conflicts, but I wanted to come right out of the gate and ask anybody if they saw any,” Stankoski told the parties. “Just from the contentious nature of this case, I want to get this case done.”
Attorney Larry Sutley, who represents Pennstar LLC, told the court he had offered to let Powell select a real estate agent to market the disputed property for six months at its appraised value of $1.4 million. “If that doesn’t lead to an offer, maybe we’ll get back to you at the end of the six-month period with another idea, but that seems to be the most cost-effective way to resolve it,” Sutley said.
Powell said he was not comfortable committing to that arrangement without more time to review the case file and asked Stankoski to reset the hearing. “My obligation to my clients is to go through approximately six years of very complex, high-level litigation that went all the way to the Supreme Court and back and see what options they may have,” Powell said. “I’m going to try to get it resolved. If we propose an order before then, we may not have to have a hearing.”
Stankoski granted the request, resetting the hearing for Thursday, Feb. 27, giving Powell additional time to get up to speed on a case that has already made one trip through Alabama’s appellate courts.