San Lorenzo Valley Water District ratepayers are still paying legal bills connected to actions by former director Terry Vierra.
The original November 2014 lawsuit challenging Vierra’s role in a 2010 real estate deal in Boulder Creek – filed by Boulder Creek ratepayer Bruce Holloway – was split nearly two years ago into two case numbers but based on the same set of facts: one with Vierra as the defendant, and one with the water district as defendant.
In the first case, Vierra faced individual penalties for violating state conflict-of-interest laws. The second case was created when the judge ruled that Holloway did not have standing to sue and separated the district from Vierra’s conflict-of-interest case.
Vierra decided to appeal to the Sixth District Court of Appeal. Holloway also appealed, contending that the real estate deal was illegal because of Vierra’s actions, and should be voided.
The appellate court this month decided to coordinate the appeals of both cases, which means the same panel will hear all arguments related to Vierra’s conflict of interest. Oral arguments are likely a year away.
The coordination of the appeals may simplify things for the Court of Appeal in San Jose, but it makes sorting out the legal payments difficult for ratepayers, because the same law firm, Colantuono Highsmith & Whatley PC, of Grass Valley, is representing both Vierra and the water district. Details of legal bills may be protected under lawyer-client privilege.
Payment of legal bills with ratepayer money has been a hot button for many SLV water ratepayers.
The district paid approximately $160,000 for Vierra’s legal bills in Superior Court, for the trial and for an unsuccessful attempt to convince the trial judge to reverse his own decision. In April, the water board decided it would not fund a continuing appeal, and Vierra decided to continue on his own.
In his appeals, Vierra is asking the appellate court to reverse a December 2016 Superior Court decision that resulted in a $9,346.67 fine, plus $116,647.47 in plaintiff’s legal fees. Vierra is arguing that he did not violate the state Political Reform act when he and his wife pocketed real estate commissions from a 2010 water district decision in which the trial judge determined Vierra had participated.
In its defense of Holloway’s appeal, the water district is arguing that even if its decision to buy property in Boulder Creek was illegal, the decision cannot be challenged in court by its ratepayers.
A Superior Court judge in October 2015 had separated the district from the Vierra lawsuit brought by Holloway, and said Holloway did not have standing to seek to void the 2010 contract even though it involved a conflict of interest. The district has called this a “victory.”
State law gives citizen taxpayers the right to challenge illegal expenditures by public agencies. The trial judge said that law didn’t apply to Holloway.
On April 3, Gene Ratcliffe, president of the Board of Directors of the San Lorenzo Valley Water District, stunned a packed Boulder Creek meeting room with the announcement that the board had just voted in a closed-door session “to stop all financial commitments to the Political Reform Act case,” which Ratcliffe described as “the case of Bruce Holloway versus Terry Vierra, the San Lorenzo Valley Water District, etc.”
The district had actually been separated as a defendant in that case 18 months earlier, leaving Vierra as the only defendant.
“Now that a legal decision has been rendered and reaffirmed by the judge,” she said the board had concluded unanimously that “the district’s obligation [to Vierra] is complete.”
Any decision to further pursue an appeal of the case would be “his [Vierra’s] choice moving forward” – and presumably at his expense – added Ratcliffe.
On July 14, the announcement by General Manager Brian Lee of the July 13 decision by four water district directors proposing five years of water rate increases included in its “Frequently Asked Questions” the question: “Will any funds from the proposed rate restructuring be spent on legal fees related to the Terry Vierra case?”
Lee’s first answer: “No, for two reasons: 1) the district is no longer funding legal costs in the Holloway/Vierra case: and 2) the proposed rate restructuring would support capital improvement projects and building the District’s emergency reserves.”
In a later version of this statement, Lee added this qualifier: “Legal costs are considered to be operational costs and therefore would not be funded through this [rate restructuring] proposal.”
There is no language in the legal document that is the subject of a final Sept. 21 public hearing on new water rates that includes any language with regard to “legal costs.”
On Aug. 17, Lee reported to the water district directors that he had paid a $13,624.61 bill from the Colantuono law firm for “services through June 30.” The board accepted his report without a vote, following its new procedures for approving payment of the water district’s monthly bills.
The Colantuono firm had been retained by the board early this year to convince a Superior Court judge to reverse his own decision in December that had ruled Vierra had violated state conflict-of-interest law when he was on the water district board. That ratepayer-funded Colantuono effort to seek a new trial for Vierra was rejected by the judge in March, which prompted the water board’s April decision to stop paying Vierra’s legal bills.
Lee authorized payment of $2,473 to the Colantuono firm for “services through April 30,” on July 20.
Colantuono, meanwhile, had continued to represent Vierra after April, presumably at the former director’s expense.
The law firm in June unsuccessfully sought to reduce Vierra’s legal obligation to pay plaintiff Bruce Holloway’s legal bills.
Sometime in late June or early July, Colantuono was asked to take over the board’s appeals, although the only record of any board discussion of the appeals was at a closed-door meeting on July 20.
The board’s discussion included the Terry Vierra case that it had publicly washed its hands of in April.
That discussion occurred one full week after Colantuono filed a stack of supplemental briefs in the case in which the district is still the defendant.
The district never announced it had retained Vierra’s lawyer for its appeal, and it was unclear who made the request or when it was made.
The firm was paid $13,624.61 on Aug. 17 for work done “through June 30.” A July invoice from Colantuono could appear in the Sept. 21 bill list.
The water district changed its district counsel on July 1, hiring Nossaman LLP of Los Angeles, which assigned Gina Nicholls as the district’s counsel. She is to be paid $370 per hour.
“Our representation of the district does not include a representation of the individuals or entities that are officers, directors, joint ventures, employees or members of such entities,” Nicholls wrote in her contract.
The previous district counsel, Marc Hynes, who originally represented both Vierra and the district in the Holloway lawsuit, continues to be paid a retainer of $3,500 per month through September.
