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FUSD Refuses to Disclose Legal Fees in Long-Running Lawsuit over School Construction Contract
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Published 11 months ago on
August 23, 2023

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Fresno Unified School District is refusing to say how much money it has spent on defense legal fees in a 2012 lawsuit filed over how the district had awarded the contract to build Rutherford Gaston Middle School.

And those costs undoubtedly are steep. A 2019 court filing by attorneys for contractor Harris Construction, a co-defendant in the lawsuit, claimed a total of $873,252.40 in legal fees through Oct. 9, 2019.

District spokeswoman Nikki Henry told GV Wire on Tuesday, in response to a query seeking the amount of money FUSD has spent thus far on the case, that the district cannot comment on pending litigation.

In 2015, then-district spokeswoman Amy Idsvoog told The Fresno Bee that the district had spent $117,000 litigating the case.

The district and contractor Harris Construction are co-defendants in the lawsuit brought in 2012 by Fresno contractor Stephen K. Davis as an individual and FUSD taxpayer. Davis’ suit maintains that FUSD’s lease-leaseback contract with Harris Construction to build Gaston was illegal because it skirted competitive bidding rules. State law allows public agencies to recoup payments for contracts deemed illegal.

The southwest Fresno school, which cost $37.6 million to build, opened in August 2014.

School Board Members Seek Answers

The cost of the legal fees was raised at the Aug. 9 School Board meeting by Board Clerk Susan Wittrup, who also wanted to know why the district has continued to award contracts to a company that is suing the district. In addition, Wittrup asked if Davis Moreno Construction’s recent contracts would have been awarded as the low bidder if the district had added the cost of the district’s legal fees to the company’s bids.

While Davis is president of Davis Moreno, the company is not a party to the lawsuit.

Wittrup and other School Board members made it clear that they want the district to stop spending money on the lawsuit.

She said Wednesday she is still waiting for answers to her queries and plans to bring them up again at tonight’s School Board meeting.

Are Payments Public Record?

David Loy, legal director of the First Amendment Coalition, said public agencies are allowed to keep legal bills under wraps while litigation is pending or active.

In a 2016 ruling, the California Supreme Court held that invoices for work in pending and active legal matters are so closely related to attorney-client communications as to be privileged and protected by confidentiality, Loy said.

“It’s a terrible decision, unfortunately,” he said.

The Fifth Circuit Court of Appeal and the California Supreme Court ruled that the district’s lease-leaseback contract was illegal because the district financed the project with voter-approved bonds. Lease-leaseback contracts were supposed to be used for districts that do not have sufficient funds for projects at the outset, allowing them to repay contractors over time.

The district has not used that method of contracting since the Harris contract.

Trial Date Scheduled

The case has been remanded to Fresno County Superior Court. Judge Jeffrey Hamilton has scheduled a mandatory settlement conference for Feb. 21 and a trial date for March 18.

San Diego attorney Kevin Carlin, who represents Davis, said the 2016 Supreme Court decision does not extend confidentiality to the checks paid to attorneys by public agencies.

As for the issues raised at the Aug. 9 School Board meeting, Carlin contends that “someone has been whispering poison and lies” into the ears of School Board members, who he said were “misinformed and incorrect” in their comments at that meeting about Davis and the lawsuit.

He emphasized in an email to GV Wire that Davis’ suit specifies that he is suing on behalf of himself and all other FUSD taxpayers. The suit “does not seek the payment of one penny to himself by this action,” and is intended to recoup the $37.6 million in contract costs for the district.

Photo of Rutherford B. Gaston Middle School in Fresno, CA
Harris Construction built Rutherford Gaston Middle School under a lease-leaseback contract that the California Supreme Court found to be illegal. (Fresno Unified School District)

Settlement Proposed in 2016

However, a 2019 declaration by Harris’ former attorney, Sean SeLegue, says that Carlin offered in an email to settle the lawsuit for a “seven-figure” amount. SeLegue said Carlin spelled out the seven figures in a subsequent phone call: $7.4 million, to be paid to Davis and not Fresno Unified. The declaration is referenced in several other court documents filed by Harris’ attorneys.

Carlin initially declined Wednesday to discuss the attorney’s declaration. But he insisted that Davis was not going to receive money from the proposed settlement or from the lawsuit.

“We’re entitled to our attorneys’ fees,” he said.

Carlin said he questions whether the district’s claim of confidentiality extends to the checks that have been written to the two law firms, Atkinson, Adelson, Loya, Ruud & Romo, and Lang, Richert & Patch, that have represented FUSD in the lawsuit.

“I think they still have to issue copies of the checks. They can’t hide how much they’ve paid,” he said. “They can hide what they’ve paid it for, the detailed bills, while the litigation is pending.

“But remember, they can voluntarily release that as well, it’s their stuff. They can voluntarily release it. In fact, their School Board members have asked, how much have we been paying our lawyers? Well, I think if the school trustees want to know that, I think the public wants to know that. I think the district ought to release it.”

And Wittrup said that if even if the district claims confidentiality regarding the legal bills, such information should be releasable to the School Board during its closed session or in confidential communications.

School Board members must have access to such information to make informed decisions, especially when it concerns how tax dollars are spent, she said.

“They still need to answer my question, confidential or not, because it really gives the context, I believe, to decisions that we’re making now,” Wittrup said. “This has been going on for 11 years. I do think the taxpayers have a right to know how much money is going towards this lawsuit. And I am really urging district leadership to do what they can to put an end to this. It’s gone on long enough.”

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