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Schools

District Vote on $2-Million Court Judgment Tonight

With all legal appeals exhausted, trustees of the Saddleback Valley Unified School District are being asked to approve a $2-million payment to the contractor who remodeled Esperanza. The district was offered a $474,000 settlement before trial.

A long and costly fight over renovating Esperanza Special Education School is expected to end Tuesday night, when the Saddleback Valley Unified School District’s board will vote on whether to pay a $2-million judgment to a construction company the district unsuccessfully battled in court.

Last month, a San Diego judge ordered the district to pay $2 million to Mepco Services, a Downey construction company, for back pay, damages, legal fees and interest for its renovation work on the Mission Viejo school in 2006.

That ruling increased a prior $1.4-million court verdict against the district, handed down in November 2010, by $522,193. The November increase was meant to pay its opponents for legal fees and interest accrued during the lengthy appeals process.

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The district appealed the case to the state Supreme Court, which declined to hear the case.

The district could have settled the dispute for $474,000 before it went to trial, attorneys said.

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“All in all, they made this nightmare last longer and become all the more expensive,” said Anna Carno, an attorney who represented Mepco. “At the end of the day, it’s the taxpayer who’s footing the bill.”

District staffers are recommending that the board authorize payment of $1,993,669.24, noting that “all appeals from the judgment have now been exhausted, and the judgment has become final.”

The district has been accruing interest on the judgment at the rate of $539.27 per day and will continue to do so until it is paid, the agenda also notes.

The item is on the school board’s consent calendar, meaning it will likely be approved without debate.

The $2 million is be to paid from Saddleback’s facilities improvement fund, a pot of money separate from the one used to fund classroom expenses such as teacher salaries, according to district officials.

In 2006, Mepco’s owner, Elie Abinader, was awarded a $1.6-million contract to renovate Esperanza during three summer months. But the school district’s architect altered plans for the project several times, requiring Abinader to expand his original scope of work.

During the process, Abinader filed 43 change orders and ultimately asked for a five-month extension to complete the work, according to court documents.

Saddleback approved 19 of the 43 change orders, but Abinader never received any money for the extra work. So he walked off the job and sued the district. He offered to settle the case for $474,000, for the cost of the disputed change orders and the portion of the original $1.6-million contract that the district had yet to pay.

District officials filed a countersuit against Mepco for not finishing the job on time.

Ultimately, the court sided completely with Mepco, and the judge noted that much of the evidence that the district had breached its contract with Mepco came from Saddleback’s own witnesses.

“It truly was a bad business decision all around. This case should have been settled,” said Carno, Mepco’s attorney. “We used the district’s own employees to prove the case of the defendants. The jury vote was unanimous. I don’t understand what would compel the district to go on to the appeal.”

Those appeals ultimately proved costly to the school district, as an appellate court raised the judgment from $1.4 million to $2 million due to interest and additional legal fees, Carno said.

The district was represented by attorneys from the law firm Bergman & Dacey.

In a related item on the consent calendar, the board will also consider whether to accept a settlement with Telacu, the construction manager on the Esperanza project, in which the company will pay the district $128,000 and relinquish a claim that the district still owed it $47,000 for its work.

The school board will meet at 6:15 p.m. on Tuesday, June 14, at the Education Center boardroom at . The meeting’s full agenda can be found online here.

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