Red Bank, a city with a $5.1 million annual budget, faces five lawsuits seeking a combined $16 million, but that may not be the scariest part: The city's liability insurance won't cover any damages levied by courts.
"We're responsible," Red Bank City Manager Chris Dorsey said. "But just because you have a lawsuit doesn't mean you have all the facts of the case."
He declined to elaborate.
Red Bank gets its insurance through the Tennessee Municipal League Risk Management Pool, which insures about 490 other municipalities, housing authorities and utility companies. Last fiscal year, Red Bank paid $44,384 in insurance payments. It budgeted $46,000 for payments in the current year.
Dawn Crawford, president of the insurance pool, said the annual premiums go toward "discovery, depositions, everything else related to defense," but not damages.
Tennessee's Governmental Tort Liability Act, though, may help Red Bank pull through with minimal financial damage if the city is found liable. It exempts government from tort liability except when plaintiffs can prove specific types of negligence.
Several Chattanooga attorneys with cases against Red Bank - Lee Davis and Robin Flores among them - have said they will be able to prove negligence.
Still, Red Bank already is running up legal fees for City Attorney Arnold Stulce for work on the five lawsuits.
According to invoices, Red Bank has paid Stulce $10,355.28 on a class-action lawsuit that two Chattanooga residents filed against the city's three sets of traffic cameras.
And in defending itself against a "retaliatory discharge" lawsuit from ousted police chief Larry Sneed, who is alleging political conspiracy on the city's part, Stulce has earned $5,885.86 since the complaint was filed July 13.
Figures related to three lawsuits filed in August, all involving the city's law enforcement wing, were unavailable last week.
Stulce charges Red Bank a $700 monthly retainer and $160 per hour for litigation.
When it comes to paying damages should Red Bank lose any of the lawsuits, Dorsey said "there has been no discussion" about settling the lawsuits for reduced amounts since "it's way too early in the process."
Crawford hinted that it might be in the city's best interest to hedge its bets. A city's insurance premiums depend on three factors: the entire pool's combined risk and history, along with "member exposure and member experience," she said.
In Red Bank, "whether premiums go up could depend on how much expenditure goes up for these five cases," she said. "But I don't have a crystal ball."
Contact Chris Carroll at ccarroll@timesfreepress.com or 423-757-6610.