$51M Later, County Drops Colonies Recovery Lawsuit

After the expenditure of more than $50 million in public funds by all four entities, the county of San Bernardino this week dropped the litigation relating to the Colonies settlement it has been pursuing for nine years against the city of Upland, the California Department of Transportation (Caltrans) and the county’s own transportation agency, San Bernardino Associated Governments, known by its acronym SANBAG.
The suit was filed by the county in 2004 after the county and its flood control district were sued in 2002 by the Colonies Partners over drainage issues at the Colonies at San Antonio residential and Colonies Crossroads commercial subdivisions in northeast Upland. The county’s lawsuit against the three other governmental agencies was filed as a precaution before the Colonies Partners’ lawsuit went to trial, on the assumption that the other entities had some level of liability with regard to the issues involved in the underlying lawsuit. The Colonies Partners, which had obtained approval for its residential and commercial projects from the city of Upland, sued the county because its flood control division had diverted stormwater collected in what was known as the 20th Street Storm Drain onto its property. The 20th Street Storm Drain was a project built by the county at the city of Upland’s behest to alleviate flooding originating at the northwestern corner of Upland. The storm drain ran along the periphery of the 210 Freeway, which was built by Caltrans in part with money provided by SANBAG. It was the county’s contention that Upland’s commissioning of the stormdrain and its failure to spell out in the approval of the Colonies projects which entities bore responsibility for the provision of infrastructure and the mitigation of developmental impacts contributed in large measure to the circumstances which led the Colonies Partners to file suit, as did  Caltrans’ and SANBAG’s designing of the freeway. The county’s lawsuit for two years was a relatively inexpensive formality until a November 26, 2006 vote by the county board of supervisors to settle the Colonies lawsuit with a $102 million payout to the Colonies Partners. The 3-2 vote to settle the suit was favored by then-supervisors Bill Postmus and Paul Biane as well as Gary Ovitt, who remains on the board. Since that time, the legal war between the county and the three defendants has escalated, to the point that the county expended roughly $26 million in pursuing the suit, while Caltrans has spent $11 million defending itself, SANBAG spent $8 million and Upland about $6 million.
In addition to the seemingly interminable legal squabbling and the expense that entailed, other events and factors at last convinced the county to abandon the lawsuit.
In 2010, Postmus and the former president of the San Bernardino County sheriff’s deputies’ union who had served as a consultant to the Colonies Partners, Jim Erwin, were indicted, charged with bribery and extortion with regard to the 2006 settlement vote that conferred the $102 million on the Colonies Partners. The following year, Postmus pleaded guilty to 14 of the counts contained in that indictment, including accepting a bribe from one of the managing principals in the Colonies Partners, Jeff Burum, as well as engaging in a conflict of interest, fraud and conspiracy. Postmus then went before another grand jury as a star witness and that grand jury issued a superseding indictment alleging conspiracy, bribery, extortion, fraud and misappropriation of public funds against Erwin, who had previously pleaded not guilty; Paul Biane, who had joined with Postmus in the 2006 vote to approve the settlement with the Colonies Partners; Mark Kirk, the chief of staff to Gary Ovitt, who had also voted for the settlement; and Burum. The indictment referenced three separate $100,000 donations made by Burum to political action committees controlled by Biane, Kirk and Erwin in addition to two $50,000 donations made to two political action committees controlled by Postmus.  Prosecutors allege those donations were in fact bribes. Kirk is alleged to have influenced Ovitt to support the settlement and Erwin is alleged to have assisted Burum in threatening Postmus and Biane prior to the vote. That criminal case is yet ongoing.
The county’s civil case against Upland, Caltrans, and SANBAG had been removed to the San Diego Superior Courtroom of Judge Ronald Prager. On February 5, Prager entered a finding that dismissed a major portion of the suit against the three civil defendants. Prager ruled that the county cannot compel Upland, SANBAG, and Caltrans to pay for a settlement that violated state law. He referenced both the state’s conflict of interest code, Government Code Section 1090, and Penal Code Section 182, the prohibition against bribery.
“Postmus’ guilty plea is evidence of a violation of section 1090,” Prager noted, which he said rendered the settlement with the Colonies Partners null and void. “SANBAG presented evidence that Postmus pled guilty to conspiracy to accept a bribe, in violation of penal code section 182 and having a conflict of interest in violation of section 1090 by accepting bribes from Jeff Burum to vote in favor of the settlement agreement,” Prager wrote. The activity Postmus and others engaged in was “unseemly… disgusting” and representative of the “worst of the worst” in government, Prager said, making it “fundamentally wrong to perpetuate this case.” Prager all but directed the county to seek to recover the money from the Colonies Partners rather than pursuing redress from the three governmental entities it had sued.  “I don’t understand why the county of San Bernardino is not going after the Colonies and getting their money back,” Prager said.
The board of supervisors on March 12 met in closed session and voted to finalize bringing an end to the county’s effort to recoup from  SANBAG, Upland and Caltrans the $102 million it paid to the Colonies Partners as a result of the November 2006 settlement. This week’s vote was made pursuant to an understanding among all four litigants that none of the parties would seek legal fees from each other in the case. The parties immediately informed Prager of the agreement.
Prager then issued an order that executed a  dismissal with prejudice of the entire lawsuit and all of its causes of action.

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