Stephen Larson, the defense attorney for Colonies Partners co-managing partner Jeff Burum, speaks during public comments at the San Bernardino County Board of Supervisors meeting on Tuesday, Nov. 14, 2017. Colonies Partners, the Rancho Cucamonga developer embroiled in years of litigation with San Bernardino County including this yearÕs failed public corruption prosecution, wants the Board of Supervisors to restore $45.2 million the partnership spent to successfully defend itself in both civil and criminal court. The amount includes $32 million in legal fees and $13.4 million in lost profits on hasty land sales made to help defray legal costs. (Stan Lim, San Bernardino Sun/SCNG)

By Richard K. De Atley | and Joe Nelson | | The Press-Enterprise
Published: November 14, 2017 at 12:05 pm | Updated: November 14, 2017 at 4:52 pm

San Bernardino County owes $45.2 million to Rancho Cucamonga developer Colonies Partners, the cost of civil and criminal litigation that spiraled upwards for years over a flood control basin in Upland, according to a demand letter hand-delivered Tuesday to the Board of Supervisors.

The letter outlining the informal indemnification demand, plus nearly inch-thick binders of summaries, supporting legal documents, and a breakdown of costs — including $32 million in legal bills — was sent to each supervisor’s office as well as the County Counsel, supervisors were told at their regular public meeting at the County Government Center.

Stephen Larson, who represented Colonies co-managing partner Jeff Burum in the criminal case, made the presentation to the board and said it was in advance of an anticipated Dec. 5 closed-session meeting to review the letter’s demands.

“As we have told the County’s attorneys on numerous occasions, Colonies sincerely wishes to end this wasteful and unnecessary dispute,” Larson read from a letter that accompanied the material.

“I am always hopeful, but I am not overly optimistic,” Larson said in an earlier interview.

“This has to stop, this loop-the-loop of this county saying, ‘I’m not going to deal with it…. I don’t have to worry about it right now, that’s going to be some other supervisor down the road who’s going to have to worry about it.’ That is the concern I have,” Larson said in the interview.

Supervisors on Tuesday did not comment after Larson’s brief presentation during the public comment period.

County spokesman David Wert said Tuesday afternoon in an email that the County Counsel’s office hadn’t yet reviewed the material, and he did not expect a reaction soon.

The documents say the county and its flood control district violated an indemnity clause and breached good faith and fair dealing covenants when it failed to meet terms protecting Colonies Partners in the $102 million settlement supervisors approved 3-2 in November 2006 to end the storm drain case with the developer.

The agreement states the district will hold Colonies Partners harmless from a list of possible legal actions including claims, demands and damages, and defend the developer with counsel.

In 2008, the San Bernardino County District Attorney’s office began investigating and decided bribes had been used to get the three approval votes. Jurors earlier this year acquitted three defendants of all charges, and the case against a fourth defendant was dismissed after his separate jury deadlocked on all counts.

The indemnity clause was a key reason Colonies signed the 2006 agreement and gave up chasing up to $198 million more in damages if the case went to trial, documents given to supervisors Tuesday said.

“Despite this agreement, the District failed to defend the validity or enforceability of the settlement agreement, and even worked against Colonies” during a taxpayer lawsuit filed against the settlement and the criminal action,” the documents stated.

The binder notes said the district turned down Colonies’ requests to both protect it from the taxpayer lawsuit, and to argue that the agreement was valid, “and instead worked against the Colonies by taking actions that weakened Colonies arguments and delayed resolution of the lawsuit — a clear violation…of the Settlement Agreement.”

The documents presented to supervisors also said county officials testified falsely at both the Colonies public corruption criminal trial earlier this year and before the grand jury that voted for the indictments in 2011.

The demand is for both Colonies Partners and criminal case defendant Jim Erwin, who had acted as a consultant for Colonies leading up to the 2006 settlement. Erwin has separately filed a $25 million malicious prosecution claim against the county.

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