Education

Fresno Unified’s legal bill in leaseback case approaches half a million

Harris Construction employees work on the roof of Fresno High School in 2012. The firm came under scrutiny over a contract given to it for construction of Gaston Middle School.
Harris Construction employees work on the roof of Fresno High School in 2012. The firm came under scrutiny over a contract given to it for construction of Gaston Middle School. Fresno Bee Staff Photo

Since Fresno Unified School District was taken to court in 2012 over a no-bid school construction contract, the district has paid nearly $500,000 in legal fees related to the case.

In addition to about $437,000 spent in attorney costs, Fresno Unified has paid more than $60,000 to an outside firm to help respond to a federal subpoena investigating the district’s no-bid contracts.

The total cost includes about $76,000 that Fresno Unified spent to file a motion to dismiss the lawsuit earlier this month. The motion, filed in Fresno County Superior Court, argues that the plaintiff, local contractor Stephen Davis, does not have a right to go forward with his claims.

Davis alleges that Fresno Unified’s “lease-leaseback” contract with Harris Construction to build Gaston Middle School is illegal, and that administrators deliberately misused the alternative financing method, which allows districts to circumvent the traditional competitive bidding process. Davis wants Harris Construction to return to the district $37 million – the amount the project cost.

Other costs related to the case include $178,276 for when the district petitioned the state Supreme Court in an attempt to reverse a previous court opinion that criticized the contract. The petition was unsuccessful, with the state Supreme Court last August denying the district’s request for review.

Nearly $55,000 has been spent so far on criminal defense attorney Carl Faller, who was hired in September to help oversee the grand jury process, which required administrators and trustees to hand over emails and other personal information.

That is in addition to the hiring of Discovia, a San Francisco-based company that specializes in helping organizations comply with electronic evidence collection in litigation or government investigations.

So far, Fresno Unified has paid about $60,000 to the firm, but, according to the district’s contract, the cost could grow to $98,000.

In a statement Friday, Fresno Unified spokesman Miguel Arias compared the district’s legal costs – $2.5 million in fiscal year 2015 – to other local public agencies, saying the district focuses on being “good fiscal stewards.”

“As the largest employer in our region with more than 12,000 employees, our sheer size alone makes us a vulnerable target for litigation  ,” he said. “Fresno Unified remains committed to keeping legal fees at a minimum. However, there are circumstances that require us to commit legal resources, as is the case when we respond to litigation, negotiate labor contracts or work through arbitration issues with our various bargaining units.”

Kevin Carlin, the San Diego attorney for Davis, has invited Fresno Unified to join him in his fight to retrieve the $37 million, but the district so far has refused.

“The district had three options: They could do nothing, they could join me or they could oppose me. They have chosen to oppose me, which is the most expensive option, and it makes no business sense,” Carlin said Friday.

Mackenzie Mays: 559-441-6412, @MackenzieMays

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