THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Thursday, May 18, 1995 TAG: 9505180827
SECTION: LOCAL PAGE: B1 EDITION: NORTH CAROLINA
SOURCE: BY LANE DEGREGORY, STAFF WRITER
DATELINE: BUXTON LENGTH: Medium: 75 lines
Former accountants for the Cape Hatteras Electric Membership Cooperative contend they did not overcharge the power company between November 1993 and October 1994.
Although billings for financial and consulting services reached nearly $400,000 during that 11-month period, an attorney for Johnson and Dooley accountants of Danville, Va., insists that ``the services were necessary and performed as requested in accordance with applicable professional standards.''
Johnson and Dooley had been the primary accountants for Hatteras Island's electric system since 1979.
In January, directors of the power co-op fired the accounting firm after an outside auditor said Johnson and Dooley had overbilled Cape Hatteras Electric by more than $100,000.
The electric company then filed a civl suit in U.S. District Court in Richmond, asking for at least $200,000 in compensatory damages and another $500,000 in punitive damages.
Earlier this month, Johson and Dooley's attorney finally reponded to that suit.
``The plaintiff, by its words and conduct, represented to Johnson and Dooley that Cape Hatteras Electric Membership Cooperative understood that the written agreement did not include many of the additional services which Johnson and Dooley were performing at the plaintiff's request,'' says the seven-page response.
``Johnson and Dooley relied upon the plaintiff's representations in agreeing to perform such additional services.''
Primarily, the accountants' response admits that the bills were sent out - but says the costs were legitimate charges for services rendered.
The accountants deny that they ``ever provided or assumed responsibility for providing ALL accounting services ... because Cape Hatteras Electric maintained an in-house staff which provided such services.''
Johnson and Dooley's lawyer wrote that, under Virginia law, a court cannot award any party more than $350,000 in punitive damages.
The response also says the electric company's complaint about being billed more than $164,000 for work during the 1990 Bonner Bridge collision came too late.
Cape Hatteras Electric's suit says those bills were ``excessive and unreasonable and not rendered in accordance with applicable professional standards.''
Johnson and Dooley's response says all claims about the Bonner Bridge accident ``are barred by the three-year period'' of statute of limitations.
Richmond lawyer Alan Wingfield, who is representing Johnson and Dooley, refused to explain or elaborate on his response.
``As the court case progresses, Johnson and Dooley will be explaining its position,'' Wingfield said Wednesday. ``We're not there yet.''
Cape Hatteras Electric lawyer Robert O'Donnell said he had not yet seen the response. But he said he realized the limit on both punitive damage awards and statutes of limitations.
``Those are typical legal defenses,'' O'Donnell said from his Norfolk office Wednesday. ``But I don't think this is a Virginia transaction. North Carolina has different standards and statutes governing some of these issues.''
O'Donnell said the electric company filed its suit in Virginia because that's where the accountants are based. A judge or jury, however, could decide that North Carolina laws should apply to the case, said the lawyer.
``We've got jurisdiction in Virginia,'' O'Donnell said. ``But we could try this under North Carolina laws.''
A non-profit cooperative that is owned by its 3,800 Outer Banks members, Cape Hatteras Electric Membership Cooperative employs about 20 people full time and provides power for all Hatteras Island businesses and homes. Lawyers for the electric company have requested a jury trial. No date has been set. by CNB