CHELSEA — Residents delivered a message loud and clear Thursday to a former clerk who wants to collect $72,000 on her disputed contract.

Bring it on.

At a special town meeting, residents rejected a proposed $25,000 agreement with former town clerk Flavia “Cookie” Kelley, who has threatened to sue to collect pay and benefits she says she is owed.

More than 20 people spoke Thursday, some saying they were “sick and tired” of being “taken advantage of” by “unscrupulous people.” A state legislator termed the settlement proposal “extortion.”

“This has happened to us so many times over the years,” resident Joe Mills said. “We still have one person waiting to do what Cookie is doing — and he will move in and be here next with his hand out.”

Mills was referring to Frank Monroe, a Whitefield plow contractor who also is threatening legal action to retain a town contract selectmen apparently never signed.

“What are we teaching our kids? ‘Go to the town of Chelsea, they’ll leave the checkbook out.’,” Mills said. “We’re not that kind of a town. Don’t give her any money. Set an example. We’re not an easy take. We’re going to fight back.”

Rep. Deborah Sanderson, R-Chelsea, who attended Thursday’s meeting, opposed the settlement with Kelley, calling it “extortion.”

“I personally feel, once again, we are in the middle of an extortion ring,” Sanderson said. “We’re being threatened . . . We need to push back. We’re not going to cave in and pay you off to make you go away. There’s right and there’s wrong and this is wrong.”

Resident Peter Hanson agreed.

“This is extortion,” Hanson said. “We’ve had unscrupulous people do unscrupulous things to us and I think it’s time to say no and vote down this settlement and put it away.”

Town Attorney Stephen Langsdorf told residents at the meeting he believes the town has a good case against Kelley.

He said former Town Manager Angela Gordon did not have the authority to sign a three-year contract with Kelley, saying she did it without the authorization of selectmen.

He has provided legal citations that indicate town managers cannot bind towns to contracts, and has said selectmen in Chelsea have never offered a contract to any town employee but the town manager — not Kelley, not Monroe.

The town has been in turmoil since the Feb. 10 arrest of former selectman Carole Swan, who is charged with accepting kickbacks from Monroe.

Police allege Swan received $10,000 from Monroe on two occasions in 2010 — including $3,000 paid to her in February 2010, a month before Monroe retained his original two-year contract without bidding.

Monroe and his attorney, Sean Farris, also have threatened to sue the town claiming breach of contract if selectmen opt to put the winter plowing contract — which Monroe claims is his — out to bid.

In April, selectmen voted to do just that.

Langsdorf has said Monroe doesn’t have a valid contract on file to plow Chelsea’s roads past 2010.

Farris — who could not be reached for comment Friday — has said his client owns the contract and would file a breach-of-contract lawsuit to collect the $114,000 he says the town owes Monroe.

But at Thursday’s meeting, it was Kelley’s contract that was on on residents’ minds.

They asked Langsdorf again Thursday if he thought her contract was valid.

“No,” he said. “It isn’t. But her attorney has a different opinion.

“I have a better argument, but we’re not sure of the outcome,” he said. “(A court case) is a time-consuming process and very expensive for the town. That’s why we negotiated an agreement to bring back to townspeople.”

Langsdorf said officials have approached the town’s insurance carrier to see if it would cover court costs in a legal fight with Kelley.

Chelsea is a member of the Maine Municipal Risk pool for its insurance coverage.

Langsdorf said the town’s policy specifically covers claims by employees against the town.

“We submitted the proposed settlement to MMA and requested that it be funded pursuant to the policy,” he said. “MMA was unwilling to fund the settlement because they had not been a part of the negotiations. Since the town rejected the settlement anyway, MMA’s refusal to fund it is moot.

“If Ms. Kelley decides to pursue a claim against the town, I am confident that MMA will be obligated to provide legal counsel and indemnify it against any potential judgment.”

Clifford Goodall, who represents Kelley, said in an email to Langsdorf on Friday he would hold off filing the court case for 10 days while the town negotiates with MMA.

Langsdorf has said it could cost the town $125,000 to defend the case, including wages Goodall claims is due Kelley under the disputed three-year contract.

“We will be going for the whole works — about $72,000 plus some benefits in theory she had the right to,” Goodall said Friday. “The town also would be on the hook potentially paying all her court costs and attorney fees.”

Despite her lack of municipal experience, Kelley’s disputed contract included a premium hourly wage, full health benefits, four weeks of vacation, 12 paid sick days and automatic annual wage increases — outsized perks for a town Chelsea’s size, the Kennebec Journal has reported.

Meanwhile, Swan is due in court Tuesday.

Swan’s legal jeopardy and the disputes over contracts for Monroe and Kelley are not the first time Chelsea has fought corruption charges.

Doris Reed, a former Chelsea assistant town manager and assistant tax collector, was arrested and charged with stealing more than $142,000 in auto excise taxes from the town between 1990 and 1992.

Mechele Cooper — 621-5663

mcooper@centralmaine.com