(Photo: exclusive-design/Adobe Stock) (Photo: exclusive-design/Adobe Stock)

The insurer for the city of Stockbridge, Georgia, paid more than $1.7 million in April to settle claims by a local barbecue joint owner that he had been targeted for official harassment after he refused to comp a city councilman's $60 bill.

Now the city's insurer says it's having some trouble of its own with the owner of BBQ Masters after mistakenly overpaying him $1 million, which it would very much like returned.

According to a complaint filed Wednesday in the U.S. District Court for the Northern District of Georgia, Atlantic Specialty Insurance signed a settlement agreement with restaurateur Arick Whitson and his company, Georgia Championship Barbecue, on March 10 in which it agreed to pay $1.725 million in three wire transfers: two for $1 million and $191,193 to Whitson and his restaurant and another for $533,807 to his lawyers at Hecht Walker.

In early April Atlantic Specialty transferred $1 million to Whitson's bank account via an Automated Clearing House (ACH) payment. Later that day, his lawyer Greg Hecht told the insurer the payment should have been made by wire transfer instead.

Atlantic Specialty "immediately took steps to stop the ACH transfer to Defendants from processing, and believed that the Settlement Payment had not been paid to Defendants," the complaint said.

"Based on its belief that it had, in fact, stopped the ACH transfer of the Settlement Payment to Defendants, ASIC wired a second $1,000,000 payment to Whitson's bank account on or about April 8, 2021."

On April 16, an Atlantic Specialty claims officer contacted Hecht, "explaining the mistake and requesting assistance to recoup the overpayment."

In a phone call and email, Hecht said he'd "spoken with Whitson, and 'to the extent there were any excess funds in [Whitson's] account he was going to send them back to the carrier but was in need of checking with a tax attorney to ensure that the carrier had not created an inadvertent tax liability and to ensure the correct way to do this,'" the complaint said.

A few days later Hecht said in a letter that "he would return the overpayment if he had control and possession of the money but that the money was sent directly to Whitson. Hecht further stated that he no longer represented Whitson and GCBC."

Over the next week, Atlantic Specialty's lawyers tried to contact Whitson via phone, email and a letter sent by FedEx.

The defendants "have neither responded to any of [Atlantic Specialty's] attempts to reach them, nor returned any portion of the $1,000,000 overpayment," said the complaint, which names Whitson and his company as defendants and levels claims including money had and received, unjust enrichment, conversion and breach of contract.

Reached by phone, Whitson declined to discuss the case at this point.

"I will say I don't think it reflects well on Atlantic Specialty," he said.

In an email, Hecht said he and his firm no longer represent Whitson.

"we worked very hard for years on a civil rights case and achieved a great $1,725,000 recovery in the matter," Hecht said.

"My firm was paid the correct amount for our attorneys' fees by the insurer. The rest was sent directly to Mr. Whitson by the Insurer," he wrote.

"My firm has never had possession or control of the money at issue," said Hecht. "Our position with regard to the money at issue is set forth correctly in paragraph 21 of the complaint, which is that we would return the money if we had possession and control of it."

Atlantic Specialty's lawyers, Dentons partner Nathan Garroway and associate Sarah Phillips, did not respond to request for comment.

The underlying case began in 2017 when Whitson and his company sued Stockbridge and City Councilman Elton Alexander for an incident the year before when the councilman allegedly came into the Whitson's BBQ Masters restaurant and asked the chef if he was "interested in doing 'business with the City.'"

Whitson said yes, and Alexander then ordered more than $60 worth of food.

"When it was time for Defendant Alexander to pay for the ordered food items, he told Mr. Whitson, 'I thought you wanted to do business with the City,'" the complaint said.

When Whitson refused to comp the order, "Alexander abruptly left the restaurant without paying for the food items," Whitson's complaint said.

Over the ensuing months saw city code enforcement officers "repeatedly harassed Mr. Whitson by performing warrantless inspections at BBQ Masters, issuing criminal warning notices and summoning Mr. Whitson to meetings to discuss manufactured 'problems'" at the restaurant.

The alleged harassment continued after Whitson relocated his restaurant, his complaint said. When he complained to the city, "Alexander did not deny that he initiated the Code Enforcement actions against BBQ Masters, proclaiming that he was 'not going to apologize' for what he had done to Mr. Whitson and his business."

Whitson's 2017 complaint included constitutional claims for First Amendment retaliation, denial of due process rights, reputational injury and defamation.

The case was set for trial this month but resolved after a settlement conference in March. It was dismissed April 12.

Greg Land

Greg Land

Greg Land covers topics including verdicts and settlements and insurance-related litigation for the Daily Report in Atlanta.

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