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Former La Feria city manager settles lawsuit

A former La Feria city manager that was fired in 2016 has agreed to pay the city back in order to settle a lawsuit.

A former La Feria city manager that was fired in 2016 has agreed to pay the city back in order to settle a lawsuit.

After being fired in July 2016, former city manager, Sunny Philip, has settled a lawsuit with the city of La Feria in which he accused La Feria administrators of breaching his contract with the city.

The city on its part says they fired him because he misused city funds to pay for employee salaries and raises.

CBS 4 reached out to Philip, but he declined to comment on the settlement.

In a statement, La Feria mayor, Olga Maldonado, says, “As city manager for over two decades [Sunny Philip’s] duty was to keep the funds independent of each other and balanced. As a consequence of [fiscal year] 2016 financial mis-management, the city of La Feria tax payers are still responsible for reimbursing the entire amount of the $2.6 million.”

Mayor Maldonado says that according to an audit conducted in 2016, $2.6 million in restricted certificate of obligation loans were used to pay for daily city operations which included employee salaries and raises.

In July 2016, Philip’s termination was decided behind a closed door executive session with city commissioners. Many people were outraged at his dismissal.

Most recently in August of 2018, La Feria city commissioner Eric Hoff resigned stating that some city government bank accounts were in the negative.

Shortly after resigning, Hoff told CBS 4, “In my opinion, just mismanagement by the prior city administration, they just spent too much money and didn’t put the bond money aside as they’re supposed to.”

Mayor Maldonado says that with the city’s debt, residents still do not have a new police station or new paved roads.

The city of La Feria's full statement can be read below.

"The City of La Feria Commission convened for a special meeting on Thursday, November 1, 2018 at the La Feria Recreation Center to consider and discuss the mediation agreement tentatively agreed to and signed by the City of La Feria and Sunny K. Philip individually and officially on behalf of S.K. Philip Management LLC and also on behalf of the business entities that include the South Texas Collaborative for Housing Development, Inc. (STCHDI) and the South Texas Emerging Markets Development Fund, Inc. (STEMDF). The City of La Feria Commission unanimously agreed to accept the mediation agreement that in part included the following term: “Payments & Terms” Section 2A, “PHILLIP hereby agrees to make, or cause to be made, a monetary payment in the amount of FIFTEEN THOUSAND AND NO/100 ($15,000.00) made payable to the CITY OF LA FERIA, TEXAS in consideration for the dismissal and withdrawal of its claims in the Consolidated Lawsuit and in the Business Entity Lawsuit identified above [Sunny K. Philip vs City of La Feria, Texas Cause No. 2016-CCL-01195-B (County Court At Law No. 2, Cameron County, Texas) (hereafter “Consolidated Lawsuit”) and “City of La Feria v STCHDI, et. al., Cause No. 2017-DCL-02925 (107th Jud. Dist. Court - Cameron County, Texas), on appeal, La Feria v STCHDI, et.al., Case No. 13-18-00253-CV (13th COA - Corpus Christi, Texas ) (hereafter “Business Entity Lawsuit”)].

To summarize, the City of La Feria Commission voted unanimously to fire Sunny K. Philip on July 12, 2016; a few months later, he filed a lawsuit alleging breach of contract against the City of La Feria. The City Commission disagreed with Phillip’s allegations and counter-sued for mismanagement of fiduciary duties (the consolidated cases as noted above). The FY 2016 Audit while illustrating that the various city funds balanced did not negate the fact that the $2.6 million in restricted Certificates of Obligation funds (loans) were utilized to pay for daily city operations to include but not limited to employee salaries and raises. As City Manager for over two decades his duty was to keep the funds independent of each other and balanced. As a consequence of FY 2016 financial mis-management, the City of La Feria tax payers are still responsible for reimbursing the entire amount of the $2.6 million but do not have either a new police station nor paved streets among other earmarked projects to show for it.

The City of La Feria Administration and City Commission will continue to repair, to rebuild and to bring structural balance to the community’s financial position."

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