E-Mail
Print
tool name
closeA judge has told current and former Los Osos officials sued by a citizens group that they aren’t entitled to attorney fees and that they aren’t shielded from liability for allegedly misspending agency funds.
It’s the latest in a multifaceted legal battle among community members and current and former Los Osos Community Services District board members over the bankrupt agency’s finances. The Aug. 11 ruling by San Luis Obispo Superior Court Judge Barry LaBarbera essentially precludes board members from filing a countersuit against Taxpayers Watch because the time limit to do so has passed, according to Kate
Neiswender, an attorney for the citizens group.
Taxpayers Watch sued in January 2006, alleging that board members Chuck Cesena, Julie Tacker, Lisa Schicker, Steve Senet and former board member John Fouche improperly spent about $488,000 to settle five lawsuits against the agency’s old leadership.
Before voters recalled the majority of the Los Osos district board on Sept. 27, 2005, the agency was involved in several lawsuits.
On Nov. 20, 2005, a new board majority dropped the old board’s lawsuit against Measure B, which limited where a sewer plant could be built.
That initiative was designed to block construction of a midtown sewage treatment plant. Voters narrowly approved the measure, and as part of the same election overthrew the board majority.
On Nov. 23, 2005, the district settled the activists’ lawsuits.
The lawsuit by Taxpayers Watch argues that the new board members—who had supported the activists’ efforts — had personal ties to the organizations that benefitted from those settlements.
Money to pay those settlements came from a low-interest state loan given to the district to build a sewer, according to the suit.
Part of the lawsuit also alleges that in 2006 the five board members used property tax revenue devoted to fire protection services and bond payments to pay attorney fees and various unbudgeted costs.
Board members deny the allegations, saying that they “acted within the scope of their duties” and that their actions were “reasonable and prudent under the circumstances.”
The board members pointed to several reasons why the former board should instead be held accountable for the alleged misspending.
Chief among those reasons include allegations that actions by the former board members resulted in the district’s ailing financial situation.
According to their cross-complaint, the board members said that they spent money in reserves because the district’s operating account— which it typically uses to pay its contract with County/Cal Fire—had insufficient funds to pay the fee. The board members made a similar argument for its inability to make a September 2006 bond payment.
The board members also allege harassment, obstruction of the district and pre-election squandering of funds.
The complaint also alleges that former board members Gordon Hensley, Richard LeGros and Stan Gustafson “deliberately or negligently failed to create a special account for deposit of property taxes that the district intended to use to pay for fire protection services.”
Even if the current Los Osos board members are found liable to repay those fees as demanded by Taxpayers Watch, the complaint argues that liability would be based “solely upon a derivative form of liability not resulting from their conduct, but only from an obligation imposed upon them by law.”
However, according to LaBarbera’s ruling, a public official who controls public funds could be held personally liable to repay improperly expended funds. A trial is set for Oct. 6.
@Nyx.CommentBody@