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CARMA files lawsuit against Sherwood over 2008 tornado cleanup

It has been five years since portions of Sherwood were significantly damaged by a tornado which struck the area in April of 2008.

While the cleanup is long past done, the bill given to the city of Sherwood has not been paid.

On Dec. 16, the Central Arkansas Risk Management Association (CARMA) filed a lawsuit against the City of Sherwood stating it never received money it advanced to the city which was used for cleanup costs.

CARMA is a self-insuring entity for local governments in Central Arkansas. At the time of the tornado, Sherwood was a member of CARMA, according to the lawsuit.

“On or about Dec. 23, 2008, CARMA and Sherwood entered into an advance agreement,” states the lawsuit.

CARMA agreed to advance Sherwood money to assist Sherwood in paying expenses incurred by the city as a result of an April 2008 tornado that exceeded the indemnification available under CARMA’s self-insured retention program.

“The agreement provided that Sherwood would repay the advance to CARMA after the parties had negotiated the terms and conditions of such repayment during the 12 months following execution of the agreement,” according to the lawsuit.

CARMA advanced Sherwood the money on or about Dec. 23, 2008.

On June 18, CARMA demanded repayment of the $200,000 unpaid for the advance.

In a letter dated June 18, CARMA wrote a letter to the city of Sherwood wanting the $200,000.

“I request that you inform me whether the city is willing to enter into negotiations as to the terms of repayment of this debt,” wrote CARMA Administrator Timothy J. Miles. “We are no longer interested in discussing whether the city owes this money to CARMA, as the board believes that the city incurred a lawful debt. If the city is not willing to negotiate repayment in good faith, please inform me of this fact so that CARMA can proceed with its collection efforts.”

“Sherwood has failed and refused to repay the remaining balance of the advance in the sum of $200,000 and is therefore in breach of the agreement,” according to the lawsuit.

CARMA is asking for a jury trial to resolve the issue.

Besides $200,000, CARMA is seeking attorney fees, costs, and pre- and post-judgment interest as provided by law.

In the advance agreement between CARMA and the city of Sherwood, CARMA said it maintains an unencumbered aggregate loss fund in excess of $4 million for the benefit of its members.

“The city has asked CARMA to advance some money to it from the unencumbered aggregate loss fund to assist the city in paying expenses incurred as a result of the tornado,” states the agreement.

The agreement allowed Sherwood to get the advance at no interest rate for a 12-month period.

“The city is not obligated to repay any portion of this money within the initial 12-month term of this agreement,” according to the agreement.

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