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Inland Empire News 05-20-2014.002
Inland Empire News 05-20-2014.002

SB County’s $14 Million Award in Colonies Case Creates Paradox in Criminal Case

San Bernardino County has been awarded $14 million from an insurance claim from the California State Association of Counties Excess Insurance Authority (CSAC) according to the San Bernardino County Sun Newspaper. The $14 million covers a portion of the $102 million settlement between the county and Colonies Partners.

The Colonies Crossroads project located in Upland is a large commercial and residential project located south of the I-210 freeway. During the design and construction of the I-210, existing flood control facilities were redesigned to divert flood control water onto Colonies property. The Colonies Partners constructed a 60 acre flood basin and other improvements in order to safely develop the remaining property.

The Colonies Partners then filed a lawsuit against the county for damages caused by the diversion of flood control onto their property without a legal easement. The county lost twice in two separate legal actions before Judges Peter Norrell and Christopher Warner before settling the lawsuit for $102 million in 2006.

The County of San Bernardino then entered into litigation against Caltrans, San Bernardino Associated Governments (SANBAG), and the City of Upland to recoup fair-share portions of the settlement as these other government agencies were also responsible for the funding, design and construction of the 210 Freeway and the flood control facilities.

In 2011, a Grand Jury at the request of the District Attorney filed charges against three former county officials and one of the Colonies partners alleging conspiracy, bribery, and that the $102 million dollar settlement was a gift of public funds.

This is where the paradox becomes obvious. The county had consistently defended the settlement up until 2013. Civil attorneys for the county filed briefs stating that the settlement was fair and that damages to the Colonies property were legitimate. In order to collect any remuneration, county attorneys had to show evidence that actual damages occurred and that those damages were covered by the insurance policy.

The District Attorney’s office, an agency of the County of San Bernardino, has consistently alleged that these damages were nonexistent and that the settlement, which they also allege was due to corruption and bribery, was a gift of public funds and illegal.

Clearly, the County of San Bernardino cannot hold two diametrically opposite positions: On one hand successfully proving damages occurred and winning $14 Million, and on the other claiming in a criminal case that there were no damages and the settlement is illegal?

We need to be reminded that these inconsistent positions are not new. The County Board of Supervisors voted consistently up through this recent judgment that the Colonies damages were legitimate and that the county is entitled to fair compensation for its losses. According to the article in the Sun, the county also received $9.5 million from a previous insurance claim. The county’s position has been consistent since 2006.

Yet in 2011, the District Attorney convened a Grand Jury to bring criminal charges against only a few of the participants in the Colonies settlement making the argument to the Grand Jury that the settlement was baseless, that the Colonies Partners were not entitled to any compensation and that the settlement was a gift of public funds.

The District Attorney brought forward numerous witnesses who were involved in closed session discussions of the Board of Supervisors including County Supervisors themselves and County Counsel Ruth Stringer and County Attorney Mitchell Norton (the lead county attorney in the $14 million insurance case). Yet in all the questioning before the Grand Jury, no question was asked as to the county’s position that the settlement was legitimate (or evidence that would prove it was) nor did any of the witnesses volunteer that information.

What is also abundantly clear is that the District Attorney was obviously aware of the county’s civil litigation and the official position of the county. Yet, the District Attorney purposely refused to share any of this information with the Grand Jury.

And there is another twist to this story. The county’s insurance claim against CSAC was, under the insurance contract, to be challenged in binding arbitration. The county’s claim was filed in 2010 and has proceeded in secret under seal to which both the county and CSAC agreed. What purpose does hiding a big legal win for the county, a public entity serve? The only logical explanation: It keeps the facts out of the hands of the criminal defendants that would be exonerated by the evidence.

How much is this going to cost county taxpayers?

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