Fresno County Superior Court Judge Jeffrey Hamilton Jr. has ordered Fresno contractor Stephen Davis to shell out nearly $1.7 million to Harris Construction to cover its legal fees in the long running lawsuit over the lease-leaseback contract to build a Fresno Unified middle school.

But Hamilton stayed the order pending a new appeal by Davis that’s under consideration by the Fifth District Court of Appeal. It’s the third time Davis has appealed a Fresno County Superior Court decision on the lawsuit.

Hamilton ruled earlier this year that the defendants, Fresno Unified and Harris Construction, did not violate state law or commit fraud when the district hired Harris to be the general contractor as well as to provide preconstruction services on the $37 million project to build Rutherford P. Gaston Middle School in southwest Fresno in 2012 through a lease-leaseback contract.

Related Story: Judge Rules for Defendants FUSD, Harris in Epic Lease-Leaseback Lawsuit

His order regarding Harris Construction’s request to be reimbursed for $1,655,604.22 in legal fees found that the request met the requirements authorized by state statute: That the litigation “enforced an important right affecting the public interest” and provided a “significant benefit” to the public, and also that the claimant’s financial burden was out of proportion to what they might have been responsible for had they lost the case.

Michael Spencer, president of Harris Construction, released this statement on Thursday: “We are more than gratified by the Court’s decision to award Harris Construction our attorneys’ fees. With this ruling, nearly 13 years after the initial lawsuit by Mr. Stephen Davis, our competitor, the Court has affirmed, ‘there is no question regarding Harris’ status as prevailing party.’

“We believe this most recent decision by the Court is yet further vindication that Harris and Fresno Unified did nothing wrong in the building of Gaston Middle School and the time has come for a final resolution for all parties involved.”

FUSD Legal Fees Also Hefty

It was unclear Thursday whether Fresno Unified, a co-defendant in the lawsuit, plans to seek reimbursement of its legal fees. The court dockets do not show any such request. The district did not provide an immediate comment Thursday.

In February when Hamilton’s tentative decision was first announced, Fresno Unified estimated that its legal fees had totaled $1,723,343.87.

On July 15 FUSD filed a “notice of support for and nonopposition” of Harris’ motion to be reimbursed for its attorney fees.

The district’s notice said that FUSD could benefit substantially if the court ordered Davis to pay Harris’ legal costs “as it would correspondingly reduce any indemnification claim sum by Harris” against the district.

Davis’ suit had sought a repayment or “disgorgement” of more than $36 million from Harris, claiming all the funds paid by FUSD to Harris as general contractor and the funds Harris paid to subcontractors should be returned to the district.

The court’s decision validating the lease-leaseback contract paves the way for FUSD to continue using the contract method for future projects, which is of significant public interest, Hamilton’s order states.

Legal Fees Vastly Outweigh Net Profit

Harris Construction “assumed substantial risks that did confer significant benefits to the public,” Hamilton found. The company’s net profit from the contract was $236,129, the amount that Harris would have been on the hook for if its defense was unsuccessful. That’s about one-seventh of its legal fees.

Hamilton also dismissed the contention by Davis’ legal counsel that Harris could only claim legal fees incurred after June 3, 2023, saying that the bulk of Harris’ legal work prior to that was in connection with unsuccessful efforts to dismiss the lawsuit. The suit, first filed in 2012, wound its way twice to the Fifth District Court of Appeal and also the California Supreme Court before going to trial earlier this year.

Citing prior case law, Hamilton’s order says a claimant may be compensated for legal costs, even for attorney time spent on unsuccessful legal theory, so long as the claimant prevails in the long run as Harris did.

Hamilton’s order also states that Harris, as a defendant, would not receive a financial judgment that could have covered its legal fees. “The court has already found that, while Davis brought this action as a ‘taxpayer,’ his ‘primary motivations were for his and his company’s personal profit rather than a public benefit,’ ” Hamilton’s order said, quoting from his earlier decision.

Harris’ legal fees are continuing to mount as the lawsuit goes before the Fifth District of Appeal. Davis’ attorney, Kevin Carlin, has sought two extensions to file his opening brief and appendix. The new deadline to file the legal work is Sept. 19.