By Mark Gutglueck
Week Thirteen of the Colonies Lawsuit Settlement Public Corruption Trial featured an epic confrontation between two skilled, knowledgeable and well-prepared attorneys over facts, issues, interpretations and events underlying the criminal case.
Deputy San Bernardino County Counsel Mitch Norton, whose testimony began last week, had been a strong key witness for the prosecution under direct questioning by California Supervising Deputy Attorney General Melissa Mandel. He provided an overarching and detailed description of the civil litigation the Colonies Partners had pursued against the County of San Bernardino and its flood control district from 2002 until 2006. That case served as the backdrop for the criminal charges that would eventually be filed against two former members of the board of supervisors, Bill Postmus and Paul Biane, the chief of staff of another board member, Mark Kirk, the former president of the county sheriff’s deputies union, Jim Erwin, and one of the principals in the Colonies Partners development consortium, Jeff Burum.
This week, Burum’s attorney, Stephen Larson, began what is expected to be an extended and two-pronged cross examination of Norton intended to not just simply mitigate whatever damage Norton inflicted under direct testimony on Larson’s client and his codefendants but to explore other legal ramifications of the civil litigation and its settlement which Mandel did not dwell upon and which the defense contends delegitimizes the prosecution’s entire case.
The Colonies Partners, which purchased 434 acres in northeast Upland from the San Antonio Water Company in 1997, sought to develop that property both residentially and commercially. Of significance in that effort was that as the first phase of the project, consisting a residential subdivision, was coming to fruition, the California Department of Transportation, known by its acronym Caltrans, was moving ahead with the construction of the below-grade 210 Freeway extension through that area. This was of both benefit and hindrance to the Colonies Partners. One benefit was that the northernmost strip of the 434 acres the Colonies Partners had purchased would be needed by Caltrans for freeway right-of-way. The outcome of Caltrans’ effort to condemn, take by eminent domain and utilize less than ten percent of the property acquired by the development company was that the Colonies Partners was paid $18 million – $2 million more than it had paid for the entire 434 acres – for the roughly 40 acres of land used for the footprint of the freeway. The terms of the agreement between the Colonies Partners and Caltrans for the purchase of the land used for that span of the freeway included a clause that the Colonies Partners accepted this payment as compensation for any damage the Colonies Partners may have sustained as a consequence of the severance, taking and use of that property. Another benefit to the Colonies Partners was that the immediate proximity of the freeway to the company’s land greatly enhanced the value of the commercial subdivision the company was purposed to establish. The hindrance to the Colonies Partners was that the development of the freeway and the accompanying improvements in the area resulted in the need to create storm water infrastructure. The county had recorded flood control easements on the Colonies property in 1933, 1934 and 1939 when the property was owned by the San Antonio Water Company, which gave the county the right to use 31 of those acres as a water holding basin and to use another 30 acres on the property for flood control purposes, pursuant to arrangements between the county and the property owner.
Controversy would subsequently erupt when the county conferred a $102 million settlement on the Colonies Partners to end litigation over this matter. The substance of that controversy is the lynchpin of the corruption case and pertains to whether the Caltrans damage clause in the $18 million payment to the Colonies Partners covered the county’s liability for its flood control district’s use of existing easements for greater-than-historical amounts of flood water that would be directed through the county’s catchment basins as a result of the new and larger storm drain improvements built to control flooding flowing off of what was then the newly-constructed freeway.
The City of Upland had land use authority within its jurisdiction and had the power of approval of the Colonies Partners’ residential and commercial subdivisions. The county flood control division, at the behest of the City of Upland and Caltrans, had constructed the 20th Street Storm Drain, which was designed to channel rainwater from the watershed area north of the freeway as well as water accumulating within the trough of the 210 Freeway itself. Relying on the easements from the 1930s, the county placed the terminus of the 20th Street Storm Drain on the Colonies Partners property. In giving approval to the Colonies Partners’ first residential phase, known as the Colonies at San Antonio, the City of Upland had not made clear which entities bore responsibility for the provision of drainage and flood control infrastructure. In 1999, the county and the Colonies Partners had entered into an agreement relating to the Colonies Partners constructing a water retention basin, but subsequent issues relating to the channeling of storm water onto the Colonies property and what the Colonies Partners perceived as interference with its development plans instigated a dispute with the county that led to the litigation which began in 2002.
As that litigation dragged on, the Colonies Partners engaged in increasingly more intensive efforts to bring the litigation to a close on terms it considered favorable. This included, according to prosecutors, efforts to pressure Bill Postmus, who in 2005 and 2006 was the chairman of the county board of supervisors and the chairman of the San Bernardino County Republican Central Committee, and Paul Biane, who in 2005 and 2006 was the vice chairman of the county board of supervisors and the vice chairman of the San Bernardino County Republican Central Committee, to settle the lawsuit. That pressure, prosecutors allege, included creating “hit piece” mailers which dwelled upon Biane’s financial difficulties and Postmus’s drug use and homosexuality, and threatening to post them to voters throughout San Bernardino County. According to prosecutors, one-time San Bernardino County sheriff’s deputies’ union president Jim Erwin had participated in conveying those extortionary threats, having done so as part of his effort to assist Colonies Partners co-managing principal Jeff Burum in achieving a settlement of the litigation. On November 28, 2006, the board of supervisors in a 3 to 2 vote, with Postmus, Biane and then-supervisor Gary Ovitt voting in the affirmative, approved a $102 million payout to the Colonies Partners to settle the lawsuit. Beginning four months later, in March 2007 and running until the end of June 2007, Burum and the other managing principal in the Colonies Partners, Dan Richards, made three separate $100,000 contributions to political action committees which prosecutors allege were either openly or secretly controlled by Biane, Erwin and Mark Kirk, who was Ovitt’s chief of staff, along with two $50,000 donations to two political action committees secretly controlled by Postmus. By early 2007, Postmus, who had successfully run for county assessor in 2006, was serving in that capacity and had hired Erwin to serve as assistant assessor. The contributions to the political action committees were disguised bribes, prosecutors allege, made in return for the $102 million settlement. Prosecutors allege the bribe to Kirk was made in return for delivering Ovitt’s vote in favor of the settlement. Postmus and Erwin were charged with participating in an extortion and bribery scheme in February 2010. Both entered not guilty pleas, but in February 2011, Postmus entered guilty pleas to 14 political corruption charges and agreed to turn state’s evidence. He then served as the star witness before a grand jury which in May 2011 handed down a 29-count indictment alleging conspiracy, extortion, bribery, perjury, conflicts of interest, and income reporting violations that named Burum, Biane, Kirk and Erwin. That indictment superseded the charges lodged against Erwin the previous year.
During Norton’s single day of testimony last week, Mandel questioned him in such a manner as to bring about an illustration of the underlying situation and the basis and much of the substance of the legal wrangling that had been ongoing between the Colonies Partners and the county. This included descriptions of and references to the flood control easements, the degree to which they played a vital role in the dispute, and the victory the county had scored after the judge who heard the first phase of the litigation, Judge Peter Norell, was overturned in 2005 by the appellate court on his 2003 ruling that the county had abandoned those easements. The county’s victory on appeal significantly compromised the Colonies Partners’ strength in the litigation, according to Norton. He further corroborated elements of the prosecution’s case by giving detail with regard to a March 25, 2005 meeting at Biane’s Rancho Cucamonga office. During that meeting, Norton, as deputy county counsel, and the county’s outside attorneys, Paul Watford and Steven Kristovich, provided to Biane and Postmus interpretations of the status of the litigation, including the appellate court’s tentative but not yet finalized decision reversing Norell’s finding with regard to the easements. Competing interpretations were offered by the Colonies Partners’ legal representatives, Scott Sommer and Heidi Timken, who were present at the meeting with Burum and his colleague in the Colonies Partners, Dan Richards, along with the Colonies Partners’ lobbyist, the-then recently termed out California State Senator Jim Brulte. After the lawyers concluded their briefing/debate, they left the conference room, Norton testified, and he gave a description of what he was able to witness inside the glass-walled meeting room as Brulte refereed and guided the negotiating session that ensued, in which Postmus and Biane were outnumbered and outgunned. Norton testified that Biane, had gone into the meeting anxious to use the county’s advantageous strategic position derived from the appellate ruling on the easements which essentially eradicated the Colonies Partners’ contention that the county was seizing its property without having the right to do so. But after the one-sided negotiating session with Brulte, Burum and Richards, Norton testified, Biane and Postmus emerged with a proposed $77 million settlement, giving the Colonies Partners $22 million in cash and some surplus county flood control property valued at $55 million. Norton testified how that proposal was opposed by Watford and Kristovich and all of the county attorneys in the loop on the matter, and that Watford and Kristovich authored a memo counseling the entire board of supervisors to reject it. Postmus and Biane sought to keep the memo from being distributed to the other members of the board, Norton testified. When the board pushed toward finalizing the $77 million settlement, Norton testified, Watford and Krisotovich and their law firm, Munger Tolles & Olson, resigned. The subsequent public revelation of what had occurred resulted in the deal not going through, Norton testified.
Norton last week gave further testimony about the pressure the Colonies Partners were exerting in seeking to move the board toward a settlement in its favor, including using what he termed “inappropriate” benchmarks in making appraisals to raise the claimed value of its property and inflate its loss claims.
This week, on Monday, Norton was again testifying on direct examination by Mandel, unmolested by defense counsel. In that forum, he continued to provide an account of events, tinged with his interpretation that both generally and in specific detail comported with the prosecution’s theory of guilt.
One such indicator was the degree of intensity with which Postmus was shepherding, indeed stampeding, his board colleagues and the entire county toward a settlement on the Colonies Partners’ terms. By late 2005, Postmus had commandeered from Biane, who had earlier been the board member most intent on bringing closure to the Colonies Partners’ lawsuit, the lead in getting the matter resolved. That effort came during phone calls Postmus made to him, Norton testified, as well as during in-person one-on-one contact he had with the then-board of supervisors chairman, during closed session meetings with the other supervisors present, as well as at meetings with members of the county’s legal team.
One of those phone calls from Postmus came at about 3 p.m. on December 14, 2005, Norton testified. He had been so struck by it that he had memorialized it in a “memo to file” he said he believed he had written that day. Mandel displayed that memo to those in the courtroom, including the jury hearing the case against Burum, Biane and Kirk, and a separate jury that is to decide Erwin’s fate, using the courtroom’s video and visual display screens.
In that memo, Norton said that Postmus had called him to ask “where we stand on the mediation.” Norton replied that “at this point we are waiting for the hearing on Monday to get the matters consolidated.”
The issue of consolidation pertained to the county’s efforts to involve Caltrans and the City of Upland, as well as the regional transportation agency, San Bernardino Associated Governments, all of which had a hand in creating the flood control issues impacting the Colonies Property, into the negotiations or the litigation to achieve what Norton referred to as a “global settlement.” In this comprehensive settlement, Norton said, the ColoniesPartners’ true damages, if any, would be recompensed in accordance with each agency’s differing level of responsibility. But Norton’s memo makes clear that Postmus was not concerned with safeguarding the county’s interest and was more focused on advancing the Colonies Partners’ efforts to achieve a settlement on its terms.
“Well, you got an email from the Colonies lawyers, right?’ Norton’s memo quotes Postmus as having asked. The memo then says that Norton told Postmus “We would not agree to go with Justice Panelli.” Norton testified that the legal team did not approve of using former California Supreme Court Justice Edward Panelli to mediate a settlement because Panelli was generally in his mediation services less focused on the issues than on arriving at a compromise, and that the county’s legal team felt that the issues in the Colonies matter favored the county. Using Panelli, with his focus on accommodation rather than issues, Norton said, would be likely to lead to a settlement far less favorable to the county than was likely to be had under some other mediator’s guidance. Panelli had been the mediator the Colonies had suggested should be used. In the memo, Norton pointed out that Postmus tried to simply blast through the county’s lawyers’ objections to Panelli. “Well, you would not agree to go with Justice Panelli – the board hasn’t said so,” Postmus said, according to the memo. Norton said he then attempted to refocus Postmus to the legal team’s conclusion that using Panelli was not in the county’s best interest. “We would recommend not using Panelli,” Norton told Postmus, according to the memo. This provoked Postmus. “You guys have had your gig,” Postmus then replied. When Norton said that the entire board had not voted to authorize unilateral negotiations, Postmus snapped, “There are three votes on the board to get this past us and we need to get rolling.”
Mandel asked why Norton had made note of the conversation in the memo. Norton testified that the phone encounter with Postmus was “jarring” and “I found his demeanor very strange and out of character and irritating. I wanted to document it because I wanted to have a very clear record of it moving forward on what he said and how I replied.”
Norton said Postmus was becoming “rude, short-tempered and impatient” throughout this time and was evincing anger and extreme disrespect toward members of the county’s legal team who were attempting to be methodical and deliberate in their handling of the litigation. One such manifestation came during what Norton referred to as the “Valentine’s Day Massacre” on February 14, 2006. Norton, along with the assistant county administrator who had responsibility over the county flood control division, Norm Kanold, came with Tom Malcolm and Jeffrey Kirzner, two of the attorneys with the law firm Jones Day, which had replaced Munger Tolles & Olson in representing the county in the Colonies Partners litigation the previous year, to meet with Postmus to discuss issues arising out of a mediation session that had taken place with Panelli some 11 days previously, on February 3, 2006.
Postmus was “abhorrent” in his comportment during the meeting, Norton said. He said Postmus “accused me of being a monkey wrench in whatever type of settlement we were trying to achieve.”
Mandel asked Norton how he had responded. Norton said in a “respectful manner” he told the board chairman “We’re evaluating all of our options and trying to make sure whatever settlement we achieve is acceptable to the county.”
When Kirzner was giving his presentation, Norton said, Postmus was especially disrespectful. “He would talk over Mr. Kirzner saying, ‘Blah, blah, blah,’ as if to say, ‘There is no importance to what you are saying.’ It was amazing.”
Norton testified that on March 10, 2006, he and Kirzner had a meeting with supervisor Josie Gonzales in which they discussed the upcoming trial in the case which was no longer being heard by Norell but would go before Judge Christopher Warner.
“We had a conversation about the upcoming trial in April of that year and the settlement under consideration and all of the mediation issues being discussed by the parties,” Norton said. “She informed us that she would prefer to take the case to trial as opposed to settling.”
It was at that time that the Colonies Partners settlement demands reached toward the $100 million mark, Norton said. He said Gonzales near that time indicated that Biane and Postmus were the only members of the board inclined to support the settlement at that figure.
Provided with documentation from a closed session of the board of supervisors on April 4, 2006, Norton confirmed there had been direction from the board majority authorizing a $78.5 million settlement with mutual releases and that there had been subsequent objections to it by the Jones Day firm. To Mandell’s question, Norton indicated that Postmus had not disclosed to the board or the legal team that he had spent three hours in a meeting with Burum’s public relations team just prior to that settlement being approved. “He did not disclose that at any time,” Norton said.
Norton testified that on April 11, 2006, Jones Day brought a senior member of the firm’s home office in Cleveland, Brian Toohey, to a meeting with the board to emphasize the “ethical significance” of the firm’s objection to the proposed $88.5 million settlement.
“I don’t think it really moved Bill [Postmus] at all,” Norton said.
During the trial in Warner’s court, Norton testified, he saw Jim Erwin in the gallery and that at one point Burum coordinated Erwin’s interaction with the press and that Erwin gave a statement to reporters.
Mandel asked Norton if Ron Reitz, who was then chief county counsel had resigned during the trial.
“He did,” said Norton, saying he remembered it occurring in either April or May of 2006. Mandel asked if Norton knew why Reitz resigned.
Norton said he did have an understanding of why Reitz left, having gleaned the reason from multiple conversations over the years. Mandel, however, stopped short of asking Norton what the reason for Reitz’s departure was.
To Mandel’s questions, Norton indicated that the next county counsel hired to replace Reitz was Dennis Wagner, who had been Postmus’ private attorney, and that he learned of Wagner’s hiring when Burum told him about it.
Norton testified that on July 31, 2006 Judge Christopher Warner entered his intended statement of decision following a trial over the issues dividing the county and the Colonies Partners, and that it was not favorable to the county. He characterized it as “Armageddon [and] very harsh.”
He said the county had made written objections to Warner’s findings and decisions, which he had participated in drafting as an assistant to the Jones Day legal team. Those findings included referencing “fraudulent” dealings by the county and criticism of the county’s flood control district director, Ken Miller. “I believe the legal team expressed disagreement with Judge Warner on those issues,” he said.
Mandel asked if Norton “became aware that day or shortly thereafter that Mr. Postmus and Mr. Biane spoke to Mr. Burum’s public relations team?”
“This is the first I heard of it, so no,” said Norton.
Norton confirmed the accuracy of closed session memos showing that as of August 15, 2006, just a little over two weeks after Warner’s statement of intended decision, he and another deputy county counsel, Charles Scolastico participated in the drafting of a history of the litigation to outline the issues to be taken up on appeal. Included in this was “substantive inconsistencies with the court of appeal opinion holding that all easements still exist for omnibus flood control.”
Warner had heard the matter as a bench trial, serving in the capacity of both judge and jury. A central tenet of his decision was that the county no longer had a valid claim to the flood control easements, not because it had abandoned them as Norell had ruled, but because it had overused them. Warner had used the term “surcharged,” which had been provided to him by Colonies Partners attorney Scott Sommer to convey the concept of overuse.
“Was it your position the county should, and did you advise the board they should, wait for the Warner decision to become final and then appeal it?” Mandel asked.
“I believe so,” said Norton.
Norton further testified that Dennis Wagner while serving as county counsel “had submitted a written document to the California Office of the Commission on Judicial Performance,” that is a complaint, and that “the correspondence identified a concern regarding the two judges [Norell and Warner] who had been presiding over the quiet title trial.”
Norton testified that during settlement negotiations in October and November, Postmus was using his Blackberry device to communicate with outsiders outside the negotiating room.
Norton testified that as the board was heading toward adopting the $102 million settlement in late October and November of 2006, the board had been informed that the county could be subjected to a taxpayer lawsuit as a consequence. He said Postmus “was not mindful of the risks going forward of exposing the county to a taxpayer challenge” and had said, “Be that as it may, it is still preferable to settle the lawsuit and deal with those consequences at a later date.”
Norton testified that the Colonies Partners and its attorneys were not forthcoming with the documentation of the losses the Colonies Partners were claiming until the very last minute before the settlement was voted upon, which did not give adequate time to examine that documentation.
“Without evidence and without documentation of the damage claims Colonies was advancing, a settlement at such a high number would be hard to justify,” he said.
Norton said he was advising against the settlement because “other agencies [the City of Upland, the regional transportation agency and Caltrans] should be legally encouraged to contribute to any settlement the county would pay in respect to the Colonies.”
When Mandel asked Norton why he had advised against the settlement but then prepared and worked to pursue a validation of the settlement once it was passed by the board of supervisors, Norton justified it thusly, “The validation action was a very important tool to enable the county to perform the settlement agreement. We had to approve the settlement in order to protect the county’s interest and the taxpayers’ interest. At the bottom, we had to take the necessary steps not to be in default of our obligation under the settlement. Because of the $80 million [in bonds issued to eventually pay the Colonies Partners in addition to the first $22 million cash installment put up in November 2006], it was an important part of enabling the county to perform its obligation under the settlement and not be in breach.”
With Mandel’s direct examination of Norton concluded on Monday, and no court proceedings on Tuesday or Wednesday, the cross examination of Norton began on Thursday. Entrusted with the first sally against Norton, his credibility and the breadth and depth he had contributed to the prosecution’s narrative was Burum’s lead attorney, Stephen Larson. The Larson-Norton confrontation featured two combatants with impressive educational, legal, professional and experiential backgrounds. Larson, 52, attended Georgetown University and USC Gould School of Law, passing the bar at the age of 25. After two years of private practice, he went to work in the U.S. Attorney’s Office and was elevated to the federal bench in 2005 where he remained for nearly four years before returning to private practice with the law firm of Girardi Keese. In 2011 he moved to the law firm Arent Fox in Los Angeles as a partner and shortly thereafter became the lead attorney in Arent Fox’s complex litigation division. He formed, with Robert C. O’Brien, the law firm of Larson O’Brien in 2016. In addition to his domestic law practice, he practices in international courts and he is vice president and lead counsel for the Ontario Airport Alliance.
Norton is a year younger than Larson, a summa cum laude graduate of UCLA and Georgetown University Law Center. He has been practicing law since the age of 28. Considered among the leaders of the county’s staff attorneys, he is on a career trajectory toward becoming chief county counsel in San Bernardino County.
Going into their head-to-head confrontation on Thursday, Norton found himself at a distinct disadvantage. A litigator by profession, he was thrust into what is for him the rare position of being a witness cross examined by a hostile attorney. That attorney, Larson, was being called upon to dig into a set of facts and circumstances of tremendous moment to his wealthy client, Burum, who has spared no expense all along in providing his legal team with the information, background and preparation needed to advance his civil case and now finds himself in a situation of tremendous extremity, engaged in the fight of his life to not only clear his name and avoid prison but prevent the State of California and the County of San Bernardino from forcing his company and all of its investors to disgorge the $102 million paid out to it more than a decade ago. More disadvantageous yet, Norton found himself in the highly problematic circumstance of having been the county’s lead in-house attorney representing it in its arguments, assertions and court papers that the Colonies Partners’ claims were invalid prior to the settlement, while having been, and remaining, the county’s lead in-house attorney in representing it in the effort after the settlement to recover from its insurers the money the county claims is owed to it over its indemnification policies that are applicable to its $102 million payout to the Colonies Partners. In this way, in attempting to recover from the county’s insurance carriers, Norton has, on occasion, filed court documents, and made assertions in court that the county was justified in having conferred the $102 million settlement on the Colonies Partners. Making the matter more problematic still is that while one of its insurers, Travelers Insurance, provided the county flood control district $9.5 million to satisfy its indemnification responsibility with regard to the Colonies Partners’ lawsuit settlement, the California State Association of Counties Excess Insurance Authority has rejected the county’s claim. In the legal action for recovery the county has pursed, lawyers for the California State Association of Counties Excess Insurance Authority have propounded the prosecution’s theory that the settlement vote was tainted by conspiracy, graft, extortion, bribery, collusion and political corruption, which they claim absolves the authority of having to make good on its indemnification of the county. This has put Norton in the position of taking up at least a portion of the position of the Colonies Partners’ lawyers in arguing that the county had wronged the company.
Present in the courtroom during all of Norton’s testimony was Andrew Prout, a lawyer from the firm Theodora Oringher, which is serving with Norton as co-counsel in the effort to force the California State Association of Counties Excess Insurance Authority to make good on its indemnification commitment. Prout made occasional objections to the questions thrown at Norton, all of which Judge Michael Smith overruled.
Larson, a skilled examiner made more effective still by his imperious bearing and resonant baritone, refrained from the tactic of questioning Norton at a frenetic pace as he had previously done with another prosecution witness, former supervisor Dennis Hansberger. Instead, Larson proceeded with an air of calm deliberation, giving Norton, for the most part, the opportunity to choose his words carefully and run through the relevant issues raised in the questions he was asked. On occasion, though, Larson made use of a show of impatience, particularly when Norton appeared to avoid or move away from the subject Larson was inquiring about. On one occasion, Larson made use of indirection, essentially asserting that Norton and other county lawyers had failed to disclose to the board of supervisors that there was a risk of loss to the county if it continued to litigate the matter with the Colonies Partners. When Norton said that he had made that disclosure and read through a document and found the passage where that caveat had been provided, Larson pounced and referenced verbiage a few lines down which he took Norton to task over. Larson also offered up changes of pace in his questions, asking what came across as general or almost philosophical questions with regard to legal concepts or practices and then punctuating such an opening with a riveting and hard-edged and even barbed point of inquiry on a specific issue. Larson in this and other ways sought to keep Norton off balance. Larson further sought to shape Norton’s responses to both his own client’s as well as the other defendants’ benefit, by layering into his questions assertions of fact that undergirded the defense’s theory of innocence. Norton to some extent allowed Larson to proceed in this manner, but qualified some of his answers or phrased them in such a way to state that he was answering to accommodate the question and the spirit of inquiry rather than the facts. At one point, Norton from the witness stand attempted to question Larson with regard to an element in one of the questions he had been asked. Larson would not indulge the question at all. At another point, Norton lightly chided Larson, saying his questions were based on “hypotheticals.” Nevertheless, by the day’s end, Larson was indeed able to wring from Norton statements and admissions that undercut a portion of the prosecution’s assertions and even some of what Norton had himself added to that narrative. Remarkably, Norton managed to hold up under Larson’s sometimes vicious cross examination without losing his equanimity, basic credibility or dignity. And rather subtly, Norton managed to use his disadvantageous position as the individual being questioned, to deliver the suggestion that he possessed a more comprehensive, accurate and nuanced understanding of the civil case than Larson, Judge Warner, Judge Norell and several others.
Larson sought to make headway with Norton by having him acknowledge that the county’s attorneys had overvalued the appellate court’s reversal of Norell’s ruling with regard to the abandonment of the easements and had misrepresented the degree of its significance to the members of the board of supervisors, in so doing referencing that the county had still lost at trial before Judge Warner afterward. Norton stood by his belief that the appellate court’s ruling “meant that the Colonies would not be able to successfully advance the inverse condemnation claim.”
Inverse condemnation is a government’s taking of private property without just compensation for it.
“But the inverse condemnation case was alive and well after that tentative decision, correct?” Larson asked.
“Yes,” said Norton.
“That was bad advice,” Larson asserted.
“Given the full context of the pending tentative decision and circumstances, I would not agree that was bad advice,” Norton said.
When Larson pointed out that as a matter of law, in an inverse condemnation case the governmental entity taking the property must pay a price on the property as valued when put to its highest and best use, Norton acknowledge that was so, but still managed to contest Larson’s suggestion that all of the property the county needed to use would have been obtained through inverse condemnation.
Larson got Norton to acknowledge that though the lawyers had reservations about members of the board holding settlement discussions with the Colonies Partners principals, it was permissible for those meetings to be held.
“There is nothing illegal or inappropriate about that from an ethical perspective, right?” Larson asked.
“Correct,” said Norton.
Larson referenced the meetings between Postmus and Biane and Richards and Burum outside the presence of the attorneys, and asked, “Did you state an objection to that?”
Norton said, “No, not that I recall.”
Larson then scored his biggest coup of the day when he delved into the outcome of the trial before Judge Warner and how that carried over to the $102 million settlement. He referenced Norton’s use of the term “Armageddon.”
Norton said of the trial “It’s fair to say it was going badly.”
Larson then referenced another phrase Norton had used, in which he said Warner’s ruling represented “changing the landscape.” Norton acknowledged having said both.
When Norton was questioned about the $102 million settlement before a grand jury in 2009, he had come to accept it as being, he said “objectively reasonable,” he acknowledged. Norton explained that based on the “risk and exposure of going forward, I would describe it as objectively reasonable given the extremely negative language in Judge Warner’s tentative decision. It having become finalized would have exposed the county to about $300 million [in potential damages]. A compromise on that claim for one third on the dollar was objectively reasonable given all the factors at that time.”
Larson asked Norton to provide the basis of his and the Jones Day law firm’s advice to the board of supervisors to spurn the $102 million settlement and appeal Warner’s decision. Norton said the leverage to be gained in the settlement talks was one reason, the belief that Judge Warner had defied the appellate court by essentially repeating Judge Norell’s ruling that the county no longer held the flood control easements was the second reason and a third reason was that there was yet a pending complaint pertaining to judges Norell and Warner to the Commission on Judicial Performance.
Larson challenged Norton with regard to the latter two. Larson pointed out that Warner’s ruling that the county no longer had the easements was based on his contention the county had overused or surcharged the easements, while Norell had said the easements were abandoned for having not been used. The differing reasoning the judges used notwithstanding, Norton said, the bottom line was that the appellate court said the county still had the easements.
Larson strongly suggested the basis of the judicial performance complaint had been based on erroneous information provided by one-time Hesperia Mayor Jim Lindley. Norton, however, indicated that he did not believe the information was inaccurate and he said the basis of the complaint came from sources and information other than that originating with Lindley.
Larson pressed Norton on whether the board of supervisors had been informed that continuing with the litigation had carried with it the potential of defeat and a substantial monetary loss to the county. Detecting some softness in Norton’s response that a disclaimer had been made but “I don’t have a specific recollection of a specific conversation,” Larson asked, “Did you give them a realistic assessment of the risks and benefits of pursuing litigation and the odds or percentages of failure?”
Recognizing at once that he had been presented with a rare opportunity to derogate Larson, Norton did not squander it.
“I can almost guarantee you that I didn’t give them odds,” Norton responded.
Larson cited and displayed for the jurors and courtroom observers a November 1, 2006 email Norton had sent to Paul Watford, who had resigned as the outside counsel representing the county on the Colonies matter in 2005, about a mediation session that was to take place later that day, following by not quite two weeks a previous mediation session on October 19. Larson got Norton to acknowledge he “never had authorization from the board of supervisors to discuss with Mr. Watford that mediation session.” Larson then focused on the email’s contents. “I’ll call in the next day or so and give you the post-mortem,” Norton had written. “We’ve taken their draft agreement generated after the 10/19 session and added a panoply of what I like to call poison pills. We even added a ‘mediator’s certificate’ for Panelli to warrant that it’s fair equitable and legal. We’ll see how that goes over. Also, still huge is their refusal to produce any documents to substantiate their damage claims until after the agreement is signed and performed. That may swing the two swing BOS [board of supervisors] votes back.”
Larson focused on the “poison pills” reference, averring that Norton was actively seeking to sabotage any concordance that might have been forming between the supervisors and the Colonies Partners.
Norton said, “My objective was to protect the county’s interests as best I could. If that meant putting provisions into the agreement to give the members pause before going forward with the agreement, that was my purpose. It is my job to give the county the best foot going forward. I did not try to sabotage the settlement or keep it from going forward.” He said the use of the phrase “poison pill” essentially conveyed “the fact that I don’t think Mr. Burum or Mr. Richards are going to like them. That’s the meaning.”
Norton is due back on the witness stand Monday morning.
It is anticipated that Larson will focus some of his cross examination on Norton’s previous testimony before the grand jury and the demonstrable differences in that testimony with assertions in documents relating to the county’s efforts to force the California State Association of Counties Excess Insurance Authority to honor its indemnification of the county with respect to the Colonies Partners lawsuit settlement. There is a further expectation that Larson will attempt to have Norton shed light on supervising deputy district attorney Lewis Cope having actively obstructed him from informing the grand jury of exculpatory evidence during his testimony before that panel..