This article is the sixth in a series of in-depth stories related to the controversy surrounding the settlement of Quiet-Title litigation between the County of San Bernardino Flood Control District, County of San Bernardino, and Colonies Partners, L.P.

In this segment, we make available to you the 2006 Settlement Agreement between the Colonies Partners L.P., County of San Bernardino Flood Control District, and the County of San Bernardino.

To download a copy of the 28-page Settlement Agreement and Mediator’s Statement click here: 2006 Settlement Agreement

A settlement of all litigation between the Colonies Partners and County of San Bernardino was tentatively agreed to on November 1, 2006 and a final approval by the Board of Supervisors on November 26, 2006.

Primary terms of the global settlement require the Colonies Partners to convey in fee portions of Basin A and Basin B inclusive of drainage channels and related 72 total acres of land in exchange for $102 million.

All parties agreed to release each other from all claims.

The Flood Control District agreed to issue Judgment Obligation Bonds to fund the settlement.

The settlement acknowledges the following impacts:

* The Flood Control District would assume responsibility and control of all flood control structures.

* In 2006 an independent appraisal valued 67 of the 72 acres at $85 million.

* In the event the county would not have taken responsibility for the flood control basins and structures from Colonies, a non-profit entity would have been created to manage the facilities. The cost to endow such a non-profit was estimated at $75 million.

* The Flood Control District’s actions resulted in direct out of pocket cost to Colonies Partners of $43 million as a result of the cloud on title.

* The Flood Control District’s actions resulted in a delay in the projects second phase and an estimated loss of $36 million.

* The Flood Control District’s actions resulted in Colonies Partners designing and constructing Basin A and Basin B and related structures, and  legal expenses related to the protracted litigation at a cost of $28 million.

* The Flood Control District’s actions resulted in the loss of land available for the construction of 300 additional lots which increased the infrastructure cost per remaining developed lot by $15,000 each. This resulted in lost revenue to Colonies of $11.5 million.

* The amount of $2 million from settlement shall be paid to the County and Flood Control District upon successful settlement of all claims with the City of Upland related to existing litigation regarding the operation and construction of flood control works.

* The Flood Control District shall take all actions necessary and reasonable to enforce and defend the validity of the settlement agreement.

Total estimated damages claimed by Colonies Partners, excluding the establishment of a private non-profit to manage the flood control facilities ($75 million) were listed at $203.5 million.

Even though local newspapers report that no attorney signed off on the settlement agreement, one did exactly that.

An independent mediator was mutually agreed to by all parties and utilized to reach the final agreement.

The mediator Edward Panelli, Associate Justice of the California Supreme Court (Retired) and an attorney signed a statement of his opinion related to the settlement and authorized its incorporation.

The Mediator’s Statement reads as follows:

“The settlement reached was the result of hard bargaining on both sides. Given the fact that the SBCFCD had received a negative result in the trial court, the settlement reached and agreed upon was, in my opinion, based upon the information provided me, reasonable and within the parameters of what was involved in the present and pending future litigation. Given all the factors the settlement was a fair and reasonable compromise based on the consideration of the risks of further litigation to all parties.”

Panelli’s qualifications include the following:

Background and Education

  • Associate Justice, Supreme Court of the State of California, 1985-1994
  • Presiding Justice, Sixth District Court of Appeal, 1984-1985
  • Associate Justice, First District Court of Appeal, 1983-1984
  • Judge, Santa Clara County Superior Court, 1972-1983 (Presiding Judge, 1980)
  • Private practice, partner at Pasquinelli & Panelli specializing in probate, personal injury, domestic relations and general business practice
  • J.D., cum laude, University of Santa Clara Law School (Recipient: Outstanding Law Graduate Award)
  • B.S., cum laude, University of Santa Clara

Click here to read the full background on Edward Panelli.