School district back to court over Neal School district back to court over Neal (August 20, 2004)

Judge asked to reclassify developer agreement after losing appeal
by Jeb Bing

The Pleasanton school district will ask an Alameda County Superior Court judge Thursday to reclassify a Neal Elementary School development agreement so that it would no longer be governed by a state code that he ruled it violated.

In his decision in April, Judge Ronald Sabraw said the district's Amended Cooperative Fee Agreement with Signature Properties and Standard Pacific Homes was unenforceable because it failed to reference State Education Code Section 17406, which exempts projects like Neal from public bid requirements. The ruling stopped any further court hearings on the 2001 agreement, which the school district claims obligates the developers to build the school at a cost they estimated at $8.5 million and to pay any costs exceeding that amount. The price tag for Neal has risen to $13.5 million, a $5 million difference that the school district said it can't afford and wants the developers to cover. Both Signature and Standard Pacific claim that they never agreed to pay extra costs, only to advance the $8.5 million interest-free with the loan to be repaid by the school district.

Next week's hearing comes after the First District Court of Appeals rejected the school district's petition to reverse Sabraw's decision. Technically, the Appeals Court turned down the district's writ of mandate, which still leaves it free to appeal again after lower court issues affecting the case are resolved.

In Thursday's hearing, the school district's outside legal counsel, Louis Leone of the law firm of Stubbs & Leone of Walnut Creek, is expected to argue that the Amended Cooperative Fee Agreement with the developers is a financing document, not just a construction document. If Sabraw agrees, the agreement would no longer be governed by the Education Code guidelines and the court could reinstate the legal document for a hearing.

City Attorney Michael Roush will represent the city of Pleasanton, which is part of the school district's legal action against the developers.

Besides arguing against the district's complaint, attorneys for the developers will ask Sabraw to order the district to reimburse them $500,000 in design work and fees already spent on Neal School. That includes architectural work that gained a state permit to build Neal, although the permit, issued three years ago, is expected to expire before the school is built.

Attorney David Bonaccorsi, representing Signature Properties, and Kenneth Miller, representing Standard Pacific, are also expected to ask Sabraw to order the school district to reimburse the developers for their legal expenses if his ruling against the Fee Agreement stands.

Also, when he ruled against the Fee Agreement, Sabraw allowed the school district and city government to proceed with their fraud and deceit complaint against Signature executives James Ghielmetti and James McKeehan. Leone has accused the two with making "false and misleading" representations, arguing that they "never intended to abide by the terms and conditions of the agreement" they signed in 2001, the same one that Sabraw has ruled as unenforceable.

Next Thursday's hearing, which is open to the public, will start at 2 p.m. before Judge Sabraw in Courtroom Dept. 22, fourth floor, in the Alameda County Courthouse, 1221 Oak St., Oakland.

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