4th DCA Shuts Door On Suit To Recover $102 Million Colonies Payout

Defendants in the Colonies Lawsuit Settlement Public Corruption Case this week received word of some measure of vindication when the Fourth District Court of Appeals in Riverside reversed a San Bernardino Superior Court judge’s decision that would have allowed a civil lawsuit growing out of the criminal case to proceed to trial.
In May 2011, a grand jury indicted former San Bernardino County supervisor Paul Biane, one-time sheriff’s deputy union president/assistant county assessor Jim Erwin, former Fourth Supervisorial District chief of staff Mark Kirk, and one of the managing principals of the Colonies Partners, Jeff Burum, on conspiracy, extortion and bribery charges relating to the November 2006 settlement of a lawsuit brought by the Colonies Partners against the county over flood control issues at the Colonies at San Antonio and Colonies Crossroads residential and commercial subdivisions in northeast Upland.
The indictment alleges that after supervisors Bill Postmus, Paul Biane and Gary Ovitt voted to approve a $102 million payout to settle the lawsuit, Burum made three separate $100,000 donations to political action committees controlled by Biane, Erwin and Kirk and paid Bill Postmus another $100,000 in two $50,000 installments to two political action committees he controlled as rewards, i.e., bribes after the fact. Kirk was paid, according to prosecutors, for having influenced Ovitt in his vote in favor of the settlement. Erwin was paid, allegedly, for having assisted in pressuring Biane and Postmus to support the settlement. Prior to the May 2011 indictment, Postmus pleaded guilty to 14 separate counts relating to acts of political corruption during his time in office as a supervisor and county assessor and turned state’s evidence, serving as the star witness before the grand jury that indicted Biane, Erwin, Kirk and Burum.
Shortly after the indictment was handed down, Cory Briggs, an attorney with offices in Upland and San Diego, filed suits on behalf of two citizens groups – the Inland Oversight Committee and Citizens for Responsible and Equitable Environmental Development – seeking to have the Colonies Partners disgorge the $102 million based on the contention that the settlement should be null and void because it was tainted by bribery, extortion, conspiracy and other criminal acts as well as a conflict of interest involving Biane and Postmus.
The criminal case in which the allegations of conspiracy, extortion and bribery are contained has not yet gone to trial. Biane, Erwin, Kirk and Burum have maintained their innocence, contending that the $102 million settlement was a reasonable and fair one, based upon monetary damages the Colonies Partners had suffered as a consequence of action the county and its flood control district had taken in conveying flood waters collected at the northwest end of Upland through a facility known as the 20th Street Flood Drain and vectoring that water onto the Colonies Partners’ property.
Furthermore, the county and lawyers for the Colonies Partners asserted that a validation proceeding that took place in early 2007 and was granted and finalized by Judge Robert Fawke on March 29, 2007 permanently ratified the settlement. They collectively argued that the suits brought by Briggs on behalf of the Inland Oversight Committee and Citizens for Responsible and Equitable Environmental Development should be dismissed because the plaintiffs lacked standing to sue. San Bernardino Superior Court Judge David Cohn sided with Briggs, however, ruling that the matter should proceed to trial. The county and Colonies Partners appealed Cohn’s ruling to the Fourth District Court of Appeals.
The appellate court reversed Cohn, determining that the Inland Oversight Committee and Citizens for Responsible and Equitable Environmental Development lacked standing to sue in that only public officials directly involved with a public contract under question can sue to contest a contract on the grounds of a conflict of interest. The appellate court took notice of the settlement validation judgment rendered by Fawke.
The validation judgment, the court wrote, “binds and permanently enjoins and restrains all persons or entities, public or private, from the institution of any action or proceeding or maintaining any action or proceeding challenging… the validity of the settlement agreement.”
Burum’s attorney, former federal court judge Stephen G. Larson, said, “The Court of Appeal has confirmed what we have maintained, and others have ignored, throughout this political persecution: The Colonies settlement agreement is entirely valid and lawful. Since 2007, the county’s supervisors and lawyers have consistently recognized – in validation proceedings, indemnification litigation, and secret arbitration proceedings – that the settlement agreement that forms the basis of the charges filed against Mr. Burum was legal and indeed necessary to avoid a liability that the county’s own experts calculate as ‘between $249 million and $276 million.’”
Larson said, “The county has now repeatedly admitted that this liability was a result of county officials’ erroneous legal interpretations and serious misconduct relating to their handling of the civil litigation with the Colonies. Partners.”
Briggs told the Sentinel, “The taxpayers deserve to be paid back every penny that the Colonies got by bribing public officials. My clients are disappointed by the rulings and are evaluating whether they will seek review in the Supreme Court.”

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