Judge denies Fresno Unified’s motion to dismiss no-bid contract case

A judge has denied Fresno Unified’s motion to dismiss a lawsuit that alleges district leaders signed an illegal $37 million no-bid contract.

In a tentative ruling released Tuesday, Fresno County Superior Court Judge Donald S. Black said local contractor Stephen Davis has adequately alleged his claims against Fresno Unified, despite the district’s argument that he didn’t have the right to do so.

A court hearing regarding Fresno Unified’s motion to dismiss was scheduled for Wednesday, but as of Tuesday evening no attorneys for the district had requested to petition, meaning the tentative ruling stands.

Davis alleges that Fresno Unified wrongfully used the “lease-leaseback” financing system, which allows districts to circumvent the traditional competitive bidding process, in order to ensure a pricy Gaston Middle School project was awarded to Harris Construction. Davis also claims Fresno Unified broke conflict-of-interest laws by allowing Harris Construction to perform consulting work on the same project before bidding on it.

Many of Fresno Unified’s leaseback contracts – several of which were awarded to Harris Construction – are now under federal investigation.

In a motion to dismiss the case filed last month, Fresno Unified argued that Davis could not pursue the lawsuit as a taxpayer who was not directly involved in the contract in question.

In Tuesday’s ruling, Black says that argument “would give hope to those who seek to profit where there is a conflict of interest – the result the Legislature wanted to avoid.”

In opposition to Fresno Unified’s motion to dismiss, an attorney for Davis called the district’s argument “arrogant.”

“Certainly this court will not rule taxpayers have no judicial recourse when their local school district violates the law, for if it does, then taxpayers will have no option but to take up pitchforks and torches,” said the opposition motion, filed in April.

Last year, the state Supreme Court denied Fresno Unified’s request to review an appellate court decision that criticized the district’s use of no-bid contracts, allowing Davis to move forward with his claims.

Last week, however, the 2nd District Court of Appeal ordered publication of a decision that rejected similar challenges to leaseback contracts involving Torrance Unified School District. That ruling contends the leaseback process is still a legal option that does not require competitive bidding.

California’s school districts have been watching the Fresno Unified case, and many have stopped using the leaseback method entirely, pending a final ruling regarding the parameters of its use.

This story was originally published May 10, 2016 at 5:42 PM with the headline "Judge denies Fresno Unified’s motion to dismiss no-bid contract case."