In his ruling, Hernandez agreed with a key part of an earlier ruling by another Superior Court judge, Ronald M. Sabraw, that the district's agreement with Signature Properties and Standard Pacific Homes was flawed from the beginning because it violated state law requiring government agencies to seek public bids on projects. Even if the school district had followed those guidelines, the district never followed through with a signed construction contract. Without a secondary construction agreement, the initial amended cooperative fee agreement, which Hernandez called "ambiguous" is illegal and void, he said.
The final judgment based on the decision is now being prepared by lawyers for Signature, which has held the leading position of the two developers, which school district lawyers must also approve before Hernandez' ruling takes effect.
After that action, expected in the next week or so, Signature is expected to file at least one motion with the court seeking compensation for its legal costs, including numerous court appearances and depositions, and design and preliminary state approval work that it did on behalf of the school district,.
The next step would be for the school district to file a Notice of Appeal before the state Court of Appeal, which would give time for both sides to consider again if they want to settle their financial issues before starting the Appellate Court proceedings.
The school district filed objections to the judge's tentative ruling on the matter late last month, saying Signature and Standard Pacific have no right to recover damages or restitution from a contract that the judge ruled as illegal and void.
In its objection, the district said the developers would not be able to collect an estimated $500,000 Signature funded for design costs of what would be the city's 10th elementary school, just like the district wouldn't be able to collect the $4.1 million it expended for infrastructure of the school site off Vineyard Avenue, north of Thiessen Road.
Signature and Standard Pacific could ask the judge to render the district responsible for paying its legal fees, which former Signature executive Jim McKeehan estimated at $2.5 million.
The lengthy dispute between the district and the developers arose after then-incoming school Superintendent John Casey discovered that the price of the school was estimated to be substantially more than an original projection of $8.5 million. He turned to the amended cooperative fee agreement, which stated that Signature and Standard Pacific agreed to advance up to $8.5 million and claimed that the developers erroneously estimated the school's price tag and would have to release more funds. The developers stood their ground, saying that's not what the agreement said or meant. Since that point, both parties have been entangled in a legal dispute and Neal Elementary has yet to be built.