WEST WILDWOOD — The borough must pay a $1.76 million judgment to police Chief Jacquelyn Ferentz in her whistleblower lawsuit against the borough, a big number in a municipality with about 600 year-round residents and an annual budget of about $2.5 million.
In most cases, insurance would help cover the cost of a lawsuit, but in this case, the insurer has argued in court the borough should pay the full award, believing the borough failed to properly defend itself in court. The matter is before Superior Court Judge James Pickering.
In the meantime, the borough appears to be bracing for a major financial hit. As of March 9, West Wildwood has furloughed workers each Friday, in what Administrator Christopher Ridings described as a cost-saving measure. Borough offices are closed each Friday. Police remain on duty.
“In no way will police and fire service be interrupted, and there is no reason to feel that public safety will be compromised in any way, shape or form,” reads an announcement on the borough website. “Thank you for your cooperation during this most difficult time.”
Even with that move, if the local government ends up on the hook for the full amount of the jury award, West Wildwood property owners will see an increase in their taxes this year, and likely for years to come.
The three-member Borough Commission expects to introduce this year’s budget April 4.
“We have to crunch the numbers. We have a small budget here,” said Ridings. “The settlement was huge.”
Ridings said he expects municipal taxes to increase by about 6.5 cents per $100 of assessed value. The borough saw a significant increase in the local taxes last year, going from a rate of 69.7 cents for every $100 of assessed value to 94.6 cents, according to budget numbers posted on the borough website.
Helping ease the expected impact, he said, is the expectation that the Board of Education will reduce taxes this year by about 3.7 cents on the rate. West Wildwood has a non-operating school district, sending students to the Wildwood school district. Ridings said that change would mean the average taxpayer would see an increase of 2.8 cents on the tax rate. For the owner of a house assessed at $250,000, average for the borough, that would mean an increase of about $70 this year.
The impact would be far greater if Ferentz and her attorney, Michelle Douglass, had not agreed to accept a payment schedule from the borough, Ridings said.
“Her attorney can demand payment immediately,” he said. “They have agreed to take timed payments, which allows us to manage it as best we can.”
Douglass confirmed both she and her client have agreed to a payment schedule to minimize the impact to West Wildwood taxpayers. She said she has been working on the matter for close to a decade, starting with a disciplinary hearing in 2008.
Ferentz filed the suit in 2008, while Herbert Frederick was mayor. She was later dismissed from the department. Soon after Christopher Fox was elected mayor in 2012, Ferentz was reinstated and named chief of the seven-member department.
Then-Mayor Frederick had accused Ferentz of several infractions, according to a report by The Press of Atlantic City on those disciplinary hearings. Ferentz filed her own suit, alleging Frederick sought to interfere with Police Department operations and with her role as acting chief, a role she took on while Chief Alan Fox — the brother of the current mayor — was out on medical leave. Alan Fox retired in 2009.
According to Press reports of that hearing, Ferentz and Christopher Fox shared a house together, although Ferentz said it was not a romantic relationship. Still, Fox abstained from the vote to reinstate her as police chief.
The borough reached a separate settlement with Ferentz over back pay for the years she was suspended.
Typically, a jury award from a lawsuit would be covered by the municipality’s insurance. West Wildwood is part of the Atlantic County Municipal Joint Insurance Fund, or JIF, under which municipalities pool their resources for insurance coverage. The JIFs, in turn, formed the New Jersey Municipal Excess Liability Joint Insurance Fund, or MEL, to cover big-ticket liability, such as million-dollar court awards.
But the MEL went to court to avoid paying the West Wildwood award. David Grubb, its executive director, said he could not comment on the matter while it was part of an active lawsuit.
Public records indicate the MEL argues the borough did not do enough to defend against the accusations leveled in Ferentz’s suit.
Neither Fox nor Ferentz responded to requests for comment.
Frederick said he was not involved in the lawsuit.
“I was dropped from the lawsuit way, way back,” he said when contacted by phone. “I have no comment at this point.”
On Nov. 9, borough officials appeared before the state’s Local Finance Board seeking the OK to bond to cover the cost of the lawsuit. Typically, a municipality would not be allowed to issue bonds for an award in a lawsuit, and it seems clear from the minutes of that meeting that finance board Chairman Timothy Cunningham was not convinced an exception should be made in this case.
“I will say that I disagree very strongly that the borough was operating and doing everything right. I think you’re doing an awful lot wrong,” Cunningham said, according to a posted transcript of the Nov. 9 hearing.
The transcript offers a detailed look at the issue, including confirmation that Fox and Ferentz are housemates, and that the MEL took issue with the new borough government’s defense against the suit. The transcript also notes the initial jury award, reported at $1.165 million, had grown to more than $1.7 million when the final judgment was entered, according to borough bond counsel Matt Jessup.
Finance board members questioned township officials on several issues, including giving themselves a raise, as well as approval of a raise for Ferentz by Commissioner Scott Golden. Her salary went from $64,000 in 2014 to $101,000 in 2017, according to the transcript.
At the end of the hearing, the board suggested West Wildwood return for the December meeting to discuss the matter further, but West Wildwood did not appear on the December agenda, nor on any Local Finance Board meeting agenda since.