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Small town on the brink

Americans love to go to court - but what's the cost?   One town found out and now it is bankrupt.  NBC's Jeannie Ohn has details.
/ Source: NBC News

Tucked outside Branson, Missouri you’ll find Reeds Spring - a town with its future on hold.

“There’s a lot of things we want to do but we can’t afford to do it,” according to Mayor Dan Lade, who has plans for new tourist attractions.  Instead he’s replacing a motor in a police car: “these guys will be on the road again by the end of the week or so.”

Every Reeds Spring employee has taken on extra work since the city went bankrupt last year after losing a $100,000 lawsuit - nearly half the town’s annual budget.

“It should never have come to this,” said Sally Stewart who sued the town.  “It was a difficult decision.  I’ve never sued anybody.  I never intended to sue anybody.” 

It started when she tripped on a grassy hole. Her injury required ankle surgery.  The city argued it was part of a state highway but a jury and the Missouri Court of Appeals found the city responsible. The town had no insurance at the time because its coverage had lapsed.

No one in Reeds Spring can recall the town ever being sued until Stewart’s lawsuit.  But, cities across the country have been dealing with slip and fall claims for years - often paying millions of dollars annually:  St Louis last year paid more than half a million dollars, Los Angeles nearly $5 million and sidewalk injuries cost New York City $53 million, prompting changes in its laws shifting liability to property owners.

Critics of the legal system argue additional changes are necessary to prevent abuse. “The word has gotten out that if something bad happens to you, you have a shot at getting significant moneys if you bring a lawsuit, said Phillip Howard, Chairperson of Common Good.

But consumer advocates argue limiting liability would cost the public more than money.  According to Joanne Doroshow of the Center for Justice and Democracy, “Lawsuits are really the only means that we have to ensure safety and to ensure that cities take these steps to correct hazards.”

Stewart says that’s exactly what she was trying to do: “The city has portrayed me as the villain.” 

But, people here say Stewart is welcome even though they’ll be paying her for the next seven years.  Alderman Luke Gann said: “If she wants to come in and spend some of the money we’re giving her that’s fine.”  And, the Mayor added: “We don’t want the town to go.  This is our town.   This is a family.”

Pulling together to repair the past and save for the future.