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FUSD, Builder Ask Supreme Court to Review Ruling in No-Bid Contract Suit

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Harris Construction Inc. and Fresno Unified School District are asking the California Supreme Court to review a recent appellate decision in a lawsuit that claims the district’s award of a no-bid construction contract to build Gaston Middle School in southwest Fresno was illegal.

Harris filed a petition for review of the Fifth Appellate District Court of Appeal decision on Dec. 29, and Fresno Unified filed a similar petition the next day, according to the court docket.

Fresno Unified and Harris are defendants in a lawsuit brought by Stephen Davis, a local contractor who contends that the lease-leaseback contract the district awarded to Harris to build Gaston violated California bidding laws, state education code, and conflict of interest laws.

Davis, who filed as a Fresno Unified taxpayer in the case, says that because the contract was illegal, Harris should be required to return the contract’s $37 million to the district.

The petition for review marks the second time that Harris and Fresno Unified have asked the higher court to intervene in an appellate decision on the case. Davis’ original case, filed in November 2012, was thrown out in Fresno Superior Court, but that decision was overturned by the appellate court.

When Harris and Fresno Unified sought a review of the appellate decision, the Supreme Court declined the request and the case was returned to the Superior Court.

Second Time Around

The defendants then filed motions seeking to have the case dismissed since the construction project was completed and the funds disbursed. The Superior Court found in favor of the defendants and then dismissed the suit altogether, ordering Davis to cover Harris’ and Fresno Unified’s legal costs. When Davis appealed that ruling, the appellate court once again ruled in his favor.

Fresno Unified is in the somewhat unusual position of battling a lawsuit that seeks to have money returned to the district’s coffers. Fresno Unified had spent more than $1 million in legal fees on the case prior to the Nov. 24 appellate court ruling.

Michael Spencer, president and CEO of Harris Construction, declined to comment “at this time,” a spokeswoman said Monday.

Davis’ attorney, Kevin Carlin, could not be immediately reached for comment Monday.

Fresno Unified spokeswoman Amy Idsvoog confirmed late Monday that the district is seeking the high court’s review of the appellate decision, which the district contends added requirements to lease-leaseback contracts that are not contained in the Education Code.

In addition, Idsvoog said, the Fifth District’s opinion conflicts with other recent appellate decisions. In the most recent case, McGee v. Torrance Unified School District, the Second District Court of Appeal’s opinion lined up with Fresno Unified’s position, and the state Supreme Court declined to review that appellate decision, she said.

Because of the conflicting appellate decisions, “there is confusion among California school districts regarding the legal and procedural requirements applicable to lease-leaseback contracts,” Idsvoog said.

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