2012-03-27
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GERALD A. VERGILlS.
KENNETH M. STENGER
ALBERT P. ROBERTS
THOMAS R. DAVIS
STEPHEN E. DIAMOND....
JOAN F. GARRETT"
VERGILlS, STENGER, ROBERTS, DAVIS & DIAMOND, LLP
ATTORNEYS AND COUNSELORS AT LAW
1136 ROUTE 9
W APPINGERS FALLS, NEW YORK 12590
(845) 298-2000
FAX (845) 298-2842
wWVI'.vsrp.com
e-mail: info@vsrp.com
OF COUNSEL:
KAREN MacNlSH
LEGAL ASSISTANTS:
AMY E. DECARLO
SANDRA A. OAKLEY
SARAH SALISBURY
CLOSING COORDINATOR'
MARIA L. JONES
KEVIN T. McDERMOTT
ANGEL I. F ALC6N
ANTHONY M. DEFAZIO".
JAMES P. HORAN".
LISA M. COBB
M. ELLEN O'SULLIVAN
MARINA O'NEILL
MELISSA A. MANNA-WILLIAMS
POUGHKEEPSIE OFFICE
By Appointment Only
(845)452- I 046
. ALSO ADMlTIED IN FLA.
.. ALSO ADMlTIED IN CONN.
... ALSO ADMITIED IN NJ
. .... ALSO ADMITIED IN FL & MA
March 26, 2012
Sedore & Company, C.P.A.'s, P.C.
2678 South Road, Suite 1
Poughkeepsie, New York 12601
Attention: Ms.Linda Hannigan
[R1~~~~~~[J)
Re: Town of Wappinger
Pending or Threatened Litigation
File No.: 12951.0060
MAR' 2 7,2012
TOWN OF WAPPINGER
TOWN CLERK
Dear Ms. Hannigan:
Pursuant to the letter request dated March 14, 2012, from Barbara A. Gutzler, Supervisor
of the Town of Wappinger, the following is the status of material Pending or Threatened
Litigation, Claims and Assessments against the Town of Wappinger, as known to the best
of my knowledge through March 23,2012.
PENDING OR THREATENED LITIGATION
(Excluding Unasserted Claims and Assessments):
I hereby report that as of the date of this letter, to the best of my knowledge, the only
material Pending or Threatened Litigation matters in which the Town of Wappinger is or
may be named as a party to are listed in this letter below. With respect to Tort actions,
please be advised that there are several claims pending against the Town which are being
defended by the Town's insurance carriers. I am unaware of the exact number, nature,
status or probability of success with respect to any of these actions except as noted below.
Please be further advised that the Town's Tax Certiorari proceedings are presently
handled by Scott L. Volkman, Esq., with offices at 75 Washington Street, Poughkeepsie,
New York 12601, and it is my understanding that he will submit a separate opinion
regarding same.
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March 26, 2012
Claim of MJW Consulting. Inc.
I reported on this matter previously. The matter is now settled in full and is no longer an
Issue.
PETNY Deficiency
Claim of Westchester Fire Insurance Company
The Town was previously a member ofPETNY, a Workers' Compensation self-
insurance trust consisting of several municipal subdivisions. As reported in previous
letters regarding this matter, the NYS Workers' Comp Board required PETNY to post a
$750,000.00 Surety Bond. This Bond was posted by Westchester Fire Insurance
Company who eventually paid $750,000.00 to the Workers' Comp Board. Westchester
Fire Insurance Company then demanded payment from all of the constituent
municipalities, including the Town of Wappinger. The Town of Wappinger, together with
the Village ofWappingers Falls, opposed the lawsuit and by decision dated June 16,
2009, Dutchess County Supreme Court Justice, James V. Brands, dismissed the case and
that matter is no longer pending.
In consequence of what appeared to be significant deficiencies in the funding of PETNY,
the Workers' Comp Board hired an independent accounting firm to conduct an audit of
the of the books and records of PETNY and to calculate the estimated deficiencies due by
each municipality. The auditor, Lumsden & McCormick, LLP, determined the estimated
deficiencies to be $7,557,515.00 and determined that the Town of Wappinger's share of
said deficiencies is $283,752.78.
The Town has vigorously opposed payment of this sum but has entered into an interim
Tolling Agreement by which the applicable statute of limitations would be tolled pending
negotiation of the amounts due. The Town of Wappinger has beenjoined by several other
municipalities who were also members of PETNY in opposing the alleged deficiencies.
The investigations made by the constituent municipalities have disclosed a number of
deficiencies in the calculations made by the Workers' Comp Board however, the matter is
still being investigated and negotiation settlements are still pending.
UNASSERTED CLAIMS AND ASSESSMENTS
This letter includes matters that existed as of December 31, 2010, and, further, through
March 23,2012.
The undersigned knows of no other unasserted claims or assessments considered to be
probable of assertion and! or if asserted, would have a possibility of an unfavorable
material outcome. However, in the course of performing legal duties for the Town of
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Wappinger with respect to a matter recognized to involve an unasserted possible claim or
assessment that may call for financial statement disclosure, and I have formed a
professional conclusion that the Town should disclose or consider disclosure concerning
such possible claim or assessment, as a matter of professional responsibility to the Town
of Wappinger, I will so advise the Town and will consult with the Town concerning the
question of such disclosure and the applicable requirements of Statement of Financial
Accounting Standards No.5.
There are no other potential liabilities or loss contingencies that are required to be
disclosed or accrued in the financial statements, other than the abovementioned matters.
There are no other potential liabilities or loss contingencies which in my professional
judgment are required to be disclosed or accrued in the financial statements. All
contingent liabilities set forth above are as of the date of this correspondence.
The scope of this letter includes litigation commenced against the Town to present,
except as noted above. To the best of the knowledge of the undersigned, there are no
actions that have been commenced against the Town, or threatened to be commenced
against the Town, nor are there any actions pending which would subject the Town to any
monetary payment or financial loss, except as above stated.
OTHER MATTERS
The amount that the Town of Wappinger was indebted to my firm for services and.
expenses as of December 31, 2011 was $21,356.00.
The undersigned knows of no other unasserted claims or assessments considered to be
probable.
Very truly yours,
cc: Hon. Barbara A. Gutzler, Supervisor
Hon. Christine Fulton, Town Clerk
Scott L. Volkman, Esq.
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