Board Won’t Waive Attorney-Client Privilege

Prosecutors’ hopes of using the notes of closed door discussions involving members of the county board of supervisors to prove that two of the board’s members and one of their chiefs of staff had been bribed by a development company were dashed this week when the board collectively refused to waive the attorney-client privilege that applies to those documents.
At issue are the minutes, summaries, notes or other documentation pertaining to the board’s discussion in 2005 and 2006 regarding the settlement of a lawsuit first brought against the county by the Colonies Partners.
In that suit, the Colonies Partners, which involved 19 investors  and managing partners Jeff Burum and Dan Richards, had sued the county over flood control issues at the companies residential and commercial development projects, the Colonies at San Antonio and the Crossroads at San Antonio, in northeastern Upland.
The city of Upland had allowed the Colonies Partners to proceed with that project on land that had previously been designated as undevelopable open space and flood control property. Included in the 460 acre development site were three flood control easements assigned to the county’s flood control division, recorded in 1933, 1934 and 1939, including an existing 30 acre water basin. Concurrent with the early stages of the development of the Colonies project, the county’s flood control district, at the behest of the city of Upland, constructed  the 20th Street storm drain, which carried storm water runoff that originated in the foothills at the northwest border above Upland and conveyed that water eastward along the north periphery of the newly constructed 210 freeway before dropping below the freeway to deposit the water onto the Colonies property where the flood control easements recorded in the 1930s were located.
The Colonies Partners suit alleged that the water from the storm drain had been improperly deposited at that location and damaged the Colonies Partners in that it prevented the property in question from being developed residentially or commercially. In the suit, the Colonies Partners further maintained that the county was required to provide all of the infrastructure needed to deal with drainage issues on the property.
The county, in its response, asserted that the flood control easements granted it the right to dispose of flood water at the basin and that it was in no way required to assist the Colonies Partners in providing infrastructure to convert the property, which was by virtue of its location and natural topography subject to flooding, into developable land or in any way defray the cost of constructing flood control appurtenances there.
In 2002, the Colonies Partners provided then-Rancho Cucamonga councilman Paul Biane with $70,000 in campaign donations in his successful electoral effort against then-incumbent supervisor Jon Mikels, who was opposed to using county funds to pay for infrastructure at the Colonies development. In 2004, the Colonies Partners provided then-Ontario mayor Gary Ovitt with $50,000 in campaign donations for his successful electoral effort against then-Chino mayor Eunice Ulloa for the post of county Fourth District supervisor. And the Colonies Partners over the years provided then-First District supervisor and later county assessor Bill Postmus with over $400,000 in campaign donations made both directly as well as through various political action committees, for his electioneering efforts.
In early 2005 Postmus and Biane, acting as a subcommittee of the board of supervisors, entered into negotiations with Richards and  Burum in an effort to settle that lawsuit. Little progress toward that end was initially made during these negotiations. Then, on March 25, 2005, Biane and Postmus asked the lawyers representing the county and the Colonies Partners to leave the room while they attempted to settle the matter with Burum and Richards, under the supervision of former state senator Jim Brulte, a Colonies consultant. In this forum they came to a tentative deal whereby the county would give the Colonies Partners $77 million to end the suit. Before that pact was finalized however, a firestorm of adverse publicity broke out.
The attorneys representing the county, Stephen Kristovich and Paul Watford of the law firm Munger, Tolles & Olson, outraged at Biane and Postmus’ action, authored a memo dated April 4, 2005, calling the $77 million excessively generous and tantamount to a gift of public funds that if ratified would endanger any efforts to involve the city of Upland, SANBAG (the county’s transportation agency) and Caltrans [the state of California’s transportation division] in defraying the cost of the settlement with the Colonies Partners.
Shortly thereafter, Kristovich and Watford resigned as the county’s attorneys.
In 2006, the case  went to trial before Judge Christopher Warner. Both sides agreed to forego a jury trial and entrust to Warner the verdict and a decision as to damages if he found in favor of the Colonies  Partners. After he had heard the case, Warner in July 2006 rendered a tentative ruling in the matter that went against the county on nearly all of the substantive points raised in the lawsuit.
The county, this time represented by the law firm Jones Day, was on the verge of appealing Warner’s ruling even before it was finalized, based on numerous issues at trial including a finding by Warner that the county’s flood control easements on the property had been “extinguised,” which was in direct contradiction to a previous appellate court ruling. It was at this point, in November 2006 while Warner had yet to make a determination as to what the county owed the Colonies Partners in terms of monetary damages, that Postmus, Biane and Ovitt approved a $102 million settlement of the lawsuit. Supervisor Josie Gonzales and then supervisor Dennis Hansberger opposed making the $102 million payout.
The settlement so provoked the Jones Day law firm that like Watford and Kristovich of Munger, Tolles & Olson before, it too resigned.
The San Bernardino County District Attorney’s Office and the California Attorney General in a criminal complaint filed in February against Postmus and Jim Erwin, who was formerly one of Postmus’ closest political associates, alleged that the Colonies settlement, involved bribery, conspiracy and extortion involving Postmus and Erwin, as well as uncharged co-conspirators  Burum, Richards, Colonies public relations consultant Patrick O’Reilly, Ovitt’s chief of staff Mark Kirk and Biane, all of whom are identified in court documents as John Does one through five, respectively. Prosecutors say there are grounds to believe that Burum and Richards provided $100,000 kickbacks to Postmus, Biane and Kirk, laundered through political action committees those three founded or controlled, for ratifying or delivering the settlement.
Prosecutors believe that documents relating to the discussions between the board members themselves concerning the settlement as well as any minutes or notes pertaining to Biane and Postmus’ settlement negotiations with Burum, Richards and Brulte, both with and without the county’s and the Colonies Partners’ lawyers present, could shed tremendous light on whether any illegal inducements or attempts at extortion took place during the negotiation process.
On March 23, the board of supervisors announced that it will not release any of what it characterized as confidential attorney-client information to prosecutors.
“Much of the information sought by prosecutors is shielded by the mediation privilege, as well as by the attorney-client privilege,” the board collectively stated in a press release.
State law relating to the confidentiality of mediations requires that all parties to such exchanges consent to the release of information for such a waiver to be made, the board asserted.  The Colonies Partners have not granted that consent, the board said.
“On March 10, 2010, Colonies advised the county and the prosecutors that, at this time, it will not waive the mediation privilege,” according to the board. “Therefore, the county could not waive the mediation privilege even if it were prepared to do so.”
The statement, authored by county spokesman David Wert, continues, “The attorney client privilege is one of the cornerstones of American jurisprudence, and it should not be waived without careful consideration of the impact it could have on related matters in which the county is significantly invested. The county is suing Caltrans, SANBAG and the city of Upland for indemnity stemming from the original Colonies litigation. Separately, the county is seeking coverage from its insurance carriers for the losses it has sustained. A waiver of the attorney client privilege related to the Colonies settlement might have significant implication in those related, but independent proceedings. These implications must be studied carefully.”
County counsel Ruth Stringer was said to have been engaged in discussions with county and state prosecutors over the continuation of efforts to have the information released.
According to senior assistant California attorney general Gary Schons, Ovitt referenced advice provided to him by the county’s attorneys as his justification for the vote favoring the Colonies Partners with the $102 million settlement. Schons said his office therefore wanted to access that advice to confirm that Ovitt’s representation was accurate. Biane made similar statements to Ovitt’s in justifying his vote to ratify the settlement.
Under this pressure both Ovitt and Biane on March 24 said they would forthwith no longer participate in county discussions relating to the waiving of the county’s legal privilege with respect to releasing the requested documents.
Also on March 24, Schons sent a letter to the board of supervisors, pointing out that the attorney client privilege that is being cited in this case is not absolutely ironclad, hinting his office might move to pierce that veil of privilege.
“In its public release concerning this matter, the county noted that our request for a waiver of the mediation privilege required that both the county and Colonies waive that privilege<” Schons wrote. “By letter of March 18, Colonies has stated that it specifically objects to the disclosure of communications and documents and other materials generated in connection with the mediation. Despite its numerous public statements defending the $102 million settlement of the litigation by citing to the mediator’s purported approval of that settlement; it is evident that Colonies has little interest in all of the facts coming to light. We pause to note here that California Evidence Code section 1119 limits the admissibility of mediation related evidence only to ‘non-criminal’ proceedings. Thus, application of this privilege to a criminal investigation and prosecution is questionable. Nevertheless, rather than allowing this aspect of the matter to delay us at this juncture, we are setting aside our request for consideration of a waiver of the mediation privilege. If Colonies is interested in discussing this matter, it knows how to contact the county’s attorneys and the prosecutors. Otherwise, this is a matter that can be taken up in court.”
Colonies Partners attorney George Speier, in a letter dated March 18 to San Bernardino County Counsel Ruth Stringer, stated, “Although the Colonies Partners is open to a waiver of the mediation privilege, as counsel for the Colonies in those matters I am notifying you by this letter that until such discussion occurs and the Colonies Partners and other necessary parties reach agreement on a waiver, it specifically objects to disclosure by the county or the flood control district, of any communications made or documents or other materials generated, during or related to the series of mediation sessions which took place between the Colonies Partners and San Bernardino County Flood Control District and/or the county of San Bernardino.”