School district moves against homebuilders School district moves against homebuilders (May 07, 2004)

Complaints being pushed, as well as charges of fraud and deceit against executives
by Jeb Bing

The Pleasanton school district will ask the state Court of Appeals to reinstate a series of complaints that an Alameda County Superior Court judge dismissed to force two homebuilders to pay the cost of building Neal Elementary School in the Vineyard Corridor.

School Superintendent John Casey said the action, to be taken after Tuesday night's school board meeting May 11, would require Judge Ronald Sabraw to reconsider his ruling over an Amended Cooperative Fee agreement that stipulated how Neal would be financed. Signed by Signature Properties and Standard Pacific Homes in 2001, the agreement called for Signature to build the school at a cost it had projected as $8.5 million, and to cover any added costs. Only the $8.5 million would be reimbursed over time as developer fees were collected by the district.

When Casey was hired as superintendent in 2002, he found that Neal construction costs had escalated to $13.5 million, a $5 million difference that the district could not afford and the developers refused to cover. After months of verbal wrangling, the developers asked the Superior Court to rule that they never signed an open-ended agreement, and to lock their commitment in at $8.5 million. Much to everyone's surprise, Sabraw nullified the entire agreement, saying that it could not be enforced because the district had failed to reference a state code exempting it from a requirement for competitive bids on public projects.

It's that action that the school district wants changed, and will petition the Appeals Court to have Sabraw review his ruling.

At the same time, Casey said the district will move forward on another part of its legal complaint that accuses Signature executives James Ghielmetti and James McKeehan with fraud and deceit. The complaint against McKeehan was being discussed by the school board last Friday at the same time that McKeehan was in Washington, D.C., as a legal consultant to the Amador Valley High School Civics team during its "We the People" national civics competition presentations.

The board's decision to continue court action against the developers was apparently spurred by some trustees and members of the City Council who have been publicly outraged by Signature's stand on the Neal school project. According to City Attorney Michael Roush, Signature representatives have said they will no longer cooperate in building Neal, and have also said they will not reimburse the city for construction costs for a newly aligned Vineyard Avenue that was built to serve the school.

Although technically not an appeal, the new petition to the Court of Appeals could further delay an already complicated case of complaints, cross complaints, demurs, case management and shifts in the court districts assigned to hear the suit. Lawyers believe that no formal appeal of any of the decisions can be made until all of the lower court arguments are heard and decided, both those involving the Amended Cooperative Fee Agreement and the more personally-directed fraud and deceit complaints. That could take years to resolve, Roush said, with the ultimate decision on whether to build Neal on hold.

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