Two taxpayer organizations will be allowed to pursue their lawsuit to recover the $102 million paid to the Colonies Partners by the county of San Bernardino in 2006 to end litigation brought over flood control issues at the Colonies project in Upland, Superior Court Judge David Cohn ruled last month.
The Inland Oversight Committee and Citizens for Responsible and Equitable Environmental Development, represented by attorneys Cory Briggs and John McClendon, filed suit against the Colonies Partners in San Bernardino County Superior Court in February 2012, seeking the return of the money.
That lawsuit alleges that former board of supervisors chairman Bill Postmus’s March 2011 guilty plea to receiving bribes from Colonies Partner principal Jeff Burum in exchange for his endorsement of the settlement established that Postmus had violated California Government Code Section 1090, the state’s conflict-of-interest statute. The lawsuit propounds that the violation of Section 1090 negates the applicability and validity of the settlement vote, requiring that the settlement money be refunded.
In 2002, the Colonies Partners, headed by co-managing principals Dan Richards and Jeff Burum, brought a lawsuit against the county and its flood control division over drainage issues at the Colonies at San Antonio residential and Colonies Crossroads commercial subdivisions in northeast Upland. The county was managing the construction of a city of Upland project to construct what was known as the 20th Street storm drain, which conveyed storm waters originating in the northwestern portion of Upland to a water basin located on the Colonies Partners’ property.
On November 26, 2006, three weeks after Bill Postmus had been elected county assessor and Paul Biane had cruised to reelection to the board of supervisors unopposed, a 3-2 vote of the board of supervisors conferred the $102 million settlement on the Colonies Partners, bringing that litigation to an end. Postmus, in one of his final acts as a supervisor before he left that position to become assessor joined with Biane and supervisor Gary Ovitt in approving the settlement that was opposed by supervisor Josie Gonzales and then-supervisor Dennis Hansberger.
In February 2010, Postmus and Jim Erwin, a former sheriff’s deputy union president who had served as a consultant to the Colonies Partners before Postmus hired him as assistant assessor, were indicted by a grand jury and charged with extortion and bribery related to the settlement vote. In that indictment, Biane, Burum, and Richards were identified as unnamed and unindicted coconspirators in the bribery and extortion scheme, along with Patrick O’Reilly, who had worked as a public relations consultant for the Colonies Partners, and Mark Kirk, who at that time was Ovitt’s chief of staff.
Both Postmus and Erwin pleaded not guilty to those charges but in March 2011, Postmus entered guilty pleas to 13 felony counts contained in the indictment, including conspiracy, soliciting and receiving a bribe, conflict of interest, fraud and perjury. He then served as the star witness before another grand jury, which in May 2011 issued a superseding indictment that named Erwin, Burum, Biane and Kirk as participants in an extortion and bribery scheme in which Burum and Erwin were alleged to have first threatened to send out but ultimately withheld mailers and electioneering material during the 2006 election season intended to expose Postmus as a drug-addicted homosexual and Biane as insolvent and then, after the November 26, 2006 vote, rewarded Postmus, Biane and Kirk with $100,000 each in the form of donations to political action committees they directly or indirectly controlled. It was alleged that Kirk had used his influence with Ovitt to sway his vote in favor of the settlement.
In the lawsuit itself and papers filed in conjunction with it, Briggs and McClendon assert that the vote in favor of the settlement was influenced by the provision of bribes to Postmus, Biane, Ovitt and Kirk. Central to the lawsuit is citation of Postmus’s guilty plea, which establishes, according to Briggs and McClendon, a violation of Government Code Section 1090.
One of the provisions of Government Code Section 1090 is that any contract or approval entered into by a governmental entity is rendered null and void if one of those voting on it has a financial interest in the outcome of the vote. Any violation of Section 1090 is a strict liability crime, meaning that intent or foreknowledge of any or all of the parties engaged in the crime does not have be established. In this way, according to Briggs and McClendon, the settlement is no longer operative and the money must be disgorged. This argument represents the heart of the case.
As the defendant and real party in interest, the Colonies Partners in March 2012 filed a demurrer, objecting to and challenging the legal sufficiency of the lawsuit and its causes of action as well as the standing of the parties bringing the action, simultaneously seeking sanctions against the Inland Oversight Committee, Citizens for Responsible and Equitable Environmental Development, Briggs and McClendon for having filed a frivolous lawsuit. That demurrer resulted in Briggs and McClendon amending the suit and the court determining that the plaintiffs have standing and grounds to proceed.
The county filed a demurrer of its own, arguing that the taxpayers associations could not directly bring a suit to recover taxpayer money against a third party, as the Colonies Partners is in this case.
On December 13, Cohn denied the Colonies Partners’ petition to have the lawsuit dismissed and on the same day, Cohn overruled the county’s demurrer.
According to court documents filed by Briggs on November 30, the county lawyers have sent mixed signals with regard to the taxpayer action. On one hand, according to Briggs, the two county attorneys assigned to the case, Mitch Norton and Kevin Dorst, initially appeared to be willing to accommodate and cooperate with the taxpayer groups’ lawsuit, but wanted Briggs and McClendon to delay the prosecution of the suit while the county sought to recover a portion of the settlement cost from the county’s insurance company as well as while it pursued an indemnity/contribution lawsuit from three other governmental entities the county considers to have liability in the matter – the California Department of Transportation; the county’s transportation agency, known as SANBAG; and the city of Upland. Briggs said that in March Dorst requested that Briggs and McClendon “stay,” i.e., delay the suit while the efforts to recover a portion of the $102 million from Caltrans, SANBAG, the city of Upland and the county’s insurance company is ongoing.
“When I asked Mr. Dorst how a stay would help the county, he told me that the county did not want this court to reach the merits of the Section 1090 claim because it feared that a finding that the $102 million settlement agreement was tainted by the bribe accepted by former supervisor Bill Postmus would make it impossible for the county to prevail on its insurance claim and its indemnity/contribution lawsuit,” Briggs stated in a declaration to the court.
Briggs and McClendon stated that the county had a “non-discretionary duty” to ensure that Section 1090 is adhered to. “When it comes down to it, defendants are essentially arguing that, even in the face of substantial evidence that unlawful bribes have been given to county officials, defendants should be given the discretion to turn a blind eye to any such illegalities so long as it makes financial sense to them.  It is an absolute abuse of discretion for defendants to have a ‘guilty’ plea from a member of their governing board admitting to violating Section 1090 in making the $102 million settlement agreement but then refuse to invalidate the agreement.”
Briggs and McClendon openly state in filings with the court that Ovitt, who has not been charged by the district attorney’s office and the state attorney general’s office with any crime, like Postmus and Biane participated in the bribery scheme related to the Colonies lawsuit settlement. Because of that involvement, Briggs and McClendon maintain, Ovitt, who remains on the board of supervisors, is actively resisting pursuing a strategy of triggering the Section 1090 provision to vacate the settlement and is strongarming the county’s lawyers to resist and oppose the taxpayer lawsuit.
County officials at this point, Briggs and McLendon assert in court papers “have no intention of ever going after the Colonies because one of the persons who also took a bribe – supervisor Gary Ovitt – is still on the board of supervisors and does not want to risk exposing himself to civil discovery concerning his role in the $102 million settlement. Unfortunately, supervisor Ovitt is using his influence to make sure that defendants pursue everyone except Colonies.”
Briggs told the Sentinel that there is clear indication that Ovitt “is into this whole thing up to his eyeballs.”
According to lawyers for the Colonies Partners, former federal judge Stephen Larson and Scott Sommer, the entire civil lawsuit Inland Oversight Committee, Citizens for Responsible and Equitable Environmental Development, Briggs and McClendon are pursuing is without merit, as is the criminal case the district attorney’s office and the state attorney general is pursuing against Burum, Biane, Erwin and Kirk. The Colonies defense team has asserted repeatedly that the criminal case against the Colonies Partners is a fictitious and politically motivated abuse of prosecutorial discretion.
Larson said Cohn had erred in his rulings on the demurrers and motion to strike.
“Colonies Partners agrees with counsel for the county of San Bernardino that the lawsuit brought by Cory Briggs and his so-called taxpayer organization is both improper and inappropriate as a matter of law.   We believe that Judge Cohn’s decision to allow the case to proceed is mistaken, and we will appeal that ruling to the Court of Appeal,” Larson said.