10/26/2012Louisiana: Traffic Camera Company Sues Client Over Cash
Redflex Traffic Systems sues sheriff of Jefferson Parish, Louisiana demanding he hand over $8 million.
The sheriff of Jefferson Parish, Louisiana petitioned a federal judge last week for more time to answer the charges leveled by a red light camera company. Redflex Traffic Systems in August had filed suit demanding Sheriff Newell Normand hand the Australian firm a check for $8 million.
Redflex is irate that its photo ticketing contract was swept up in a parish government corruption scandal two years ago. A new set of government leaders intent on cleaning up the parish decided on January 27, 2010 to suspend the red light camera program. Officials were most concerned about documents that showed Redflex paid a 3.2 percent cut of the firm's profit on each ticket to lobbyist Bryan Wagner, a former New Orleans city councilman, who in turn shared the funds with the wife of District Judge Robert Murphy. Wagner was set to earn an estimated $90,000 a year from this deal. Jay Morris Specter, the lobbyist who hired Wagner on behalf of Redflex, was released from federal prison on October 21, 2010 after serving time on unrelated fraud charges.
While the cameras were active, Redflex issued tickets that generated $20,756,050 in profit which the Australian company placed in a "lockbox" bank account in the sheriff's office name. Redflex expected payment of $4,741,158 and has assessed $2,622,346 in late fees on the sheriff. Redflex cited this lockbox arrangement specified in the contract with the parish as proof that officials had no legal basis to deny payment.
"Redflex anticipates the sheriff will assert in defense of this complain that the money is being held pending resolution of litigation concerning the automated traffic signal enforcement ordinance in which it is alleged that the ordinance is unconstitutional," Redflex attorney Dominic J. Gianna wrote in a brief to the court. "The agreement does not allow the sheriff to withhold payment to Redflex on this basis."
The photo ticketing firm also decided to tack on claims for additional damages, including a request for all attorney's fees and the full cost of defending the ticketing program from constitutional challenges in three specific court cases in the parish.
"Sheriff's breach of contract has caused and continues to cause Redflex damage in the nature of lost profits under the agreement as well as the loss of future profits," Gianna wrote. "Redflex is concerned that the breach, in conjunction with comments from the sheriff's office officials, will negatively impact Redflex's reputation and ability to obtain future contracts in Jefferson Parish and will negatively impact Redflex's ability to negotiate similar contracts in other parts of the United States. Redflex is therefore entitled to damages for the loss of any future earnings as a direct result of sheriff's breach."
Redflex had issued a demand for payment in March 2010 (read letter), but the money is still being held in escrow. The red light cameras are also installed, but they do not issue tickets.