Font ResizeFOSTER CITY — A salary dispute involving teachers at Vice Mayor Linda Koelling's former school emerged into public view Tuesday afternoon when a group of teachers and their supporters held a protest against Koelling outside City Hall.
The teachers hold the vice mayor responsible for the fact that they haven't been paid as much as $203,000 in wages and benefits from the last pay period before the school was sold over the summer in a bankruptcy case. Koelling maintains the decision to pay them is out of her hands.
After several months of delays, the attorney for the Kids Connection bankruptcy estate, Scott Goodsell, wired $134,000 during the week of Oct. 26 to the new owners of the school, Robert and Jan Judson, a San Mateo couple who do business as Burlingame Capital Partners. Whether the teachers will get the remaining $69,000 is up to a judge.
The teachers, however, have not gotten the $134,000 yet because Goodsell did not include a required $11,000 to cover payroll taxes, according to the Judsons.
Debbie Curran, a third-grade teacher at Kids Connection, served as the spokeswoman Tuesday for about 30 teachers and others who gathered at the corner of Foster City and Hillsdale boulevards, holding signs and waving to rush-hour commuters.
"We're so frustrated, because we haven't received our money," Curran said. "We've been sitting quietly, waiting for something to happen, but nothing's happened."
Koelling in 1989
The Judsons purchased Kids Connection in July, but Koelling refused to sign the purchase agreement in protest. As a result, Goodsell, the San Jose-based attorney for the bankruptcy estate, was designated as limited attorney-in-fact by U.S. Bankruptcy Judge Dennis Montali and authorized to sign the agreement.
Koelling claims that was the moment when she "walked away" from the whole affair, and in a declaration to the court on Tuesday she pointed to an Aug. 27 order by Montali in which the judge instructed Goodsell to follow through on the purchase agreement and pay the teachers from a bank account held in trust by his firm.
Koelling said Wednesday she feels maligned by the Judsons.
"I want to move on with my life," she said. "I don't want to be harassed any longer."
In a letter sent to Kids Connection teachers in recent days, Koelling reiterated her stance that she has "no authority to demand or direct payment to anyone." She also claims Goodsell is solely responsible for decisions to appeal Montali's Aug. 27 order first to the U.S. District Court in September and then the Ninth U.S. Circuit Court of Appeals in October. The latter appeal is still pending.
The question is whether Goodsell's appointment as limited attorney-in-fact to sign the purchase agreement and his authorization to pay the teachers mean that Koelling, whom the court named the "responsible person" for the bankruptcy estate in February 2008, no longer bears ultimate responsibility for decisions made by the estate.
The teachers and the Judsons feel Koelling is still in charge, regardless of whether she acknowledges it. Goodsell was merely authorized in the first instance to sign a contract and in the second instance to make a wire transfer, they say. The teachers draw attention to a declaration Koelling made ahead of Montali's Aug. 27 ruling in which she identified herself as "president of debtor Kids Connection."
"Under the court's current orders, she is still responsible for everything (the bankruptcy estate) does," said John Howard, the Judsons' San Diego-based attorney. "So whether (Goodsell) is making those decisions or not, she is ultimately responsible for those decisions being made."
Goodsell, who had not returned by Wednesday a phone call and e-mail seeking comment, argued in a recent court filing that Koelling "has never had any control over the net sales proceeds in (the firms') client trust account."
Regarding his status as attorney-in-fact, however, Goodsell wrote in a Nov. 4 e-mail to Howard that his duties were limited to signing certain documents during the July transaction.
Koelling's private attorney, Dennis Davis, echoed Koelling's claim that Montali left Goodsell in charge of the money owed the teachers. But he acknowledged that "strictly speaking" Koelling could have prevented Goodsell and his firm from filing their appeals, which delayed the payment by two months.
In her letter to the teachers, Koelling expressed regret that they have become embroiled in her long-running dispute with the Judsons.
"I miss you all and have fond memories of better days of old," she wrote. "I hope and pray each day that you all will be at peace and not be drawn into a web of fear and uncertainty."
