RICHMOND -- The West Contra Costa school board's former bond counsel will pay the district $1.4 million to settle a lawsuit.
"Both the district and the defendants sought to avoid the expense of further litigation and have reached an agreement to settle the litigation despite the defendants' continuing denial of any liability to the district," said Superintendent Bruce Harter, in a prepared statement.
The district filed the suit against Orrick, Herrington & Sutcliffe LLP, saying the bond counsel gave bad legal advice in 2009 that resulted in the district having to pay $3.5 million to buy back bond redemption rights from Kinsell, Newcomb and Dedios Inc., along with about $1.7 million in legal fees.
The district intends to deposit the money into its bond construction fund to help pay for school projects, said board President Charles Ramsey.
"It's not about winning or losing money," he said. "It's about: Did we take on the issue we felt was important to take on and hold people accountable and responsible for things that happened? We believe we did. It's about making sure that we look out for the interests of the district."
But district resident Anton Jungherr, a former member of the Citizen's Bond Oversight Committee, said he didn't think the taxpayer-funded bond construction program should have to foot the bill for this legal dispute.
"I don't see why the bond fund would be financing this litigation," he said. "Any way you look at it, they lost money on the deal. And the bond fund is picking it up."
The district initially paid Kinsell $3.5 million out of its general fund at the direction of its former state-appointed trustee, who oversaw the district's budget while it was under state receivership, Ramsey said. West Contra Costa later received court approval to pay back the general fund with its voter-approved bond money, Ramsey said.
A spokesman for Orrick could not be reached for comment late Tuesday afternoon. According to the settlement, Orrick denies that it was negligent or engaged in wrongful conduct in representing the district from 2000 to 2009.
The dispute centered around the district's sale of bond redemption rights to Kinsell, Newcomb and Dedios Inc. for $555,000 in 2002, which could have prevented the district from refinancing those bonds in 2009. The district claimed in the lawsuit that Orrick should have known about the problem and advised it of its options ahead of time, instead of waiting until the district had no choice but to pay for the rights so its 2009 bond refinancing could go through.
The district used the $555,000 from the sale of the redemption rights to install lockers at Lovonya DeJean Middle School in Richmond, Ramsey said. "We didn't realize we didn't have the (redemption) rights," Ramsey said. "We told investors we did. So, we had to purchase the ... rights back, which we did."
The settlement agreement does not blame either party for the dispute.
"Nobody's saying anybody's at fault," Ramsey said. "To prevent the case from going to trial, we entered into a settlement mediated by a federal magistrate."
Theresa Harrington covers education. Contact her at 925-945-4764. Follow her at Twitter.com/tunedtotheresa.