Directors of the San Lorenzo Valley Water District this year were worried by the threat of a lawsuit from former director Terry Vierra, as they continued to pay his legal bills in a conflict-of-interest case, director Bill Smallman revealed this week.
“The threat of Vierra suing the district has been brought up numerous times in closed meetings ever since I got on the board,” said Smallman.
Smallman went public this week with a request for his colleagues to release a 2014 letter from Vierra to the board. Board President Gene Ratcliffe said in April that Vierra had written the water board, asking it to pay his legal bills arising from his actions as a director in 2010. A judge would rule two years later that Vierra had violated state conflict-of-interest law.
“This is a public communication and needs to be released,” Smallman said this week, referring to the letter.
The district’s lawyer in those closed-door meetings, Marc Hynes, also was representing Vierra. Each month, the water board would pay Hynes’ $3,500 monthly retainer plus the legal expenses of Vierra’s efforts to contest the conflict-of-interest charges, even after he lost the initial court case.
Ratcliffe in April refused to release the letter, claiming it was protected by “attorney-client privilege.” District general manager Brian Lee reiterated that claim this week in response to a new request from the Press Banner for the document.
Legal experts have said the Vierra letter should be a public record if it is, as described by Ratcliffe, a simple written communication from Vierra to the board.
“There is fear that Vierra is going to sue the district, and I think this letter will be essential to fight this, so I believe it is important that we get a hold of it as soon as possible,” said Smallman in an email to the Press Banner.
He and his fellow directors were each asked individually this week by the Press Banner to release the letter, and offered an opportunity to say why it should or should not be released. The other directors – Ratcliffe, Margaret Bruce, Chuck Baughman and Eric Hammer – ignored the request.
The Vierra letter “may, in fact, be a deterrent for Vierra to not even try to file a lawsuit,” said Smallman. He said he would request a copy of the letter at the next board meeting, “and future meetings” if necessary.
Vierra lost the conflict-of-interest case, and was fined $9,000 by a Superior Court judge, who also later denied Vierra’s request for a new trial and for a waiver of the payment of plaintiff Bruce Holloway’s legal bills.
The district’s ratepayers ended up paying more than $160,000 in Vierra’s legal bills before directors pulled the plug on April 3, when Ratcliffe revealed the existence of the Vierra letter.
About half of these payments went to Marc Hynes, who also was the district’s own counsel until July 1, and who represented Vierra. The district had been separated from that Vierra case since October 2015.
The new district counsel hired to replace Hynes, Gina Nicholls of Los Angeles, traveled to Boulder Creek on Wednesday to meet separately with each director to discuss issues surrounding the Vierra letter raised this week by the new Press Banner inquiry. It was not clear whether she had seen the letter or been briefed about the controversy surrounding it.
Smallman said the issue of the letter came up briefly at the April 3 closed-door session in which his fellow directors – facing growing public concern about paying Vierra’s legal bills and the prospect of escalating payments for an appeal – reversed themselves and withdrew financial support for Vierra.
This had been Smallman’s public position since he joined the board shortly after Vierra lost his court case in December.
After the unanimous vote to end payment of Vierra’s legal bills, Smallman said there was no vote to withhold the letter. He said Ratcliffe referred to it and told her fellow directors it could not be released because of “attorney-client privilege,” which is what she said publicly two days later in response to a Press Banner inquiry.
Smallman said he did not see the letter. He believes other board members have.
“I have no idea what is in this letter,” he said.
He said that in the closed-door meeting on April 3, he made his first request to release the letter, which prompted Ratcliffe’s response.
Ratcliffe told the Press Banner that “the letter is subject to attorney-client privilege and should not be released publicly at this time.”
“As soon as that changes, we’ll be happy to release it,” she wrote in an April 5 email.
Because of these changes in the relationship between Vierra and the board, and the hiring of a new district counsel on July 1, the Press Banner on July 17 renewed its request for a copy of the letter.
On July 26, board secretary Holly Morrison said, “There are no documents responsive to your request.” Brian Lee, general manager of the water district, clarified that response on July 31 by saying “Attorney-client privileged documents are exempt from disclosure under the California Public Records Act. Ms. Morrison’s response remains correct.”
“A letter from an ex-director addressed to anyone in the district, including its legal counsel, would not be privileged,” and should be available to the public, said Terry Francke in April. Francke is a Sacramento lawyer and a recognized expert in open meetings and public records law in California. He helped write the Ralph Brown Act, the California open meeting law.
Ratcliffe had said the Vierra letter was strictly a letter from the former director to the board. She did not say that the letter was sent to or from an attorney. Nonetheless, she said the board chose to withhold the letter from the public.
Ratcliffe also refused to say when the letter was written, who received copies, or whether the board had ever actually voted to keep it private.
Ratcliffe, Hammer and Baughman were sworn in as new directors at the Dec. 18, 2014 board meeting that saw the election of Bruce as board president. Vierra had not sought reelection in 2014. Smallman was elected and Bruce was re-elected in 2016.
Holloway’s lawsuit alleging that Vierra had illegally profited from a real estate commission from the purchase of property by the water district was filed on Nov. 7, 2014.
One of Bruce’s first actions, in her first closed-door session, was to ask directors to agree to pay Vierra’s legal bills. At the time, the district was added as a defendant to the lawsuit after it had chosen not to be a plaintiff with Holloway. Over the next two years, the district argued that Vierra, while benefiting from a district real estate deal, had not participated.
If Ratcliffe’s account is accurate, the Vierra letter or some reference to it must have been presented to the new board members at that fateful Dec. 18, 2014 meeting.
On April 5, 2017, Ratcliffe wrote in an email to the Press Banner, , “I can tell you with 100 per-cent clarity, the letter is very straightforward with regard to the request for the district to support Mr. Vierra’s defense and contains no other statements, questions, or opinions.”
