Former clerk’s lawsuit against Harpers Ferry moves forward

CHARLES TOWN – A defamation lawsuit filed by a former town clerk against Harpers Ferry, along with its former mayor and treasurer, will move forward, a judge has ruled.

In a July 30 ruling, Judge David Sanders of the Jefferson County Circuit Court ruled against a motion to dismiss the case brought by Brenda Smith against the town, former Mayor Jim Addy and former Treasurer Shauna Johnstone.
Smith alleges that Johnstone, at Addy’s direction, filed a knowingly false insurance claim that stated that she had misappropriated $150,000 of town funds. Smith was subsequently fired in April, 2011.
It was later revealed that approximately $75,000 in overdue water bills – which Smith was charged with collecting, according to statements Addy made at the time – had not been collected, with much of that amount many months in arrears.
Smith is seeking civil and punitive damages for loss of reputation and a subsequent inability to find employment based on these statements, which she says prevent other employers from trusting her.
Jeffrey Molenda, counsel for the town, Addy and Johnstone, filed a motion to dismiss the suit on June 15. The motion argued that the lawsuit was barred by several kinds of immunity from civil suits that state law offers to municipalities and their employees, including general immunity from civil damages, immunity from punitive damages,
The motion to dismiss also states that Addy and Johnstone were acting in good faith when they filed the insurance claim, because they had “discovered a loss which they believed might total as much as $150,000.” It also promises that “the Corporation of Harpers Ferry has, or will, retract the allegation of ‘misappropriation of funds’ reported to” the insurance company.
In his ruling, Sanders noted that most of the charges made against the town, Addy and Johnstone swung on the question of whether they acted in good faith, and that Smith specifically alleges that they did not.
“Good faith ordinarily encompasses honesty of intention and freedom from knowledge of circumstances which ought to put the holder upon inquiry. (Smith) alleges that (Addy and Johnstone) knew that (she) was not involved in any misappropriation of funds,” Sanders wrote. “Where the evidence tends to show indifference to the facts or available information, the question of good faith is for the jury.”


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