The lawsuit between the East Hampton School District and Sandpebble Builders took a public turn this week, with both the school district and the construction company issuing statements in which they threatened to take the matter to trial rather than settling to save on lawyers’ fees.
The construction company, which is owned by Victor Canseco, sued the school district for $3.75 million in 2006, claiming that it was illegally terminated when the district hired another construction manager as it embarked upon an $80 million, three-school construction project.
The school district fired the first shot this week: a declaration on Friday morning that Sandpebble had offered to settle for $2.9 million back in December 2010, but had backed away from that offer as recently as February 6 of this year.
“The community has legitimately inquired of the status of the pending Sandpebble Builders’ litigation,” said a statement from the district, which maintains that a “contractual relationship no longer existed prior to the commencement of the recently completed construction project.”
Signed by the district’s general counsel, Kevin A. Seaman, the statement said that the East Hampton School Board had sought for a great many months to generate settlement negotiations, but that Sandpebble’s attorneys had said in February that they would not entertain any settlement that was not “in excess of $2.9 million” despite having expressed a willingness to settle for $2.9 million a number of months ago.
“Therefore, unfortunately, the district will have no choice other than to continue to expend legal fees through the ‘discovery’ process leading to what will ultimately be a trial on the merits of the legal contentions of both the district and Sandpebble,” the statement said.
The attorney for Sandpebble Builders, Stephen Angel, said on Friday afternoon that he was “shocked” by the statement from the school district. “I don’t know what they’re talking about,” he said.
Mr. Angel said Mr. Canseco made a formal offer of settlement in December 2010 in which he had reduced his claim, and that the district “never responded.” According to Mr. Angel, “This stuff about exhausting settlement negotiations is a myth.”
Also on Friday, Mr. Canseco issued a statement of his own accusing the School Board of “irresponsibility” and “misrepresentation. ”His statement indicated that the case will have to be tried in the face of recent statements by the School Board.
“This is a situation where elected officials will say or do anything to divert attention from the budget reconciliation issues which they face as well as distance themselves from responsibility for what happened,” Mr. Canseco’s statement asserted. “They will even misrepresent a confidential settlement offer.”
At last count, the East Hampton School District has spent more than $2.3 million on the lawsuit and countersuits. Last spring it replaced the law firm of Morgan Lewis Bocklus, which was charging around $600 per hour, with Pinks, Arbeit and Nemeth of Hauppauge, which then-Superintendent Raymond Gualtieri said at the time would be paid $375 per hour.
The district’s attorneys in the lawsuit have maintained that Sandpebble, which was originally hired to oversee a much smaller, $18 million construction project, did not perform any construction work for the district. “If you look at the facts, not a single brick was put into place,” Jonathan Lipshie said in an interview in January. “It’s a tough case to prove when you’re suing as a construction manager and there ain’t no construction.”
The statement from Mr. Seaman went on to say that “The Board of Education remains extremely disappointed that it is not able to generate a settlement that would be based upon a fair and reasonable consideration of Sandpebble’s claimed loss of the opportunity to represent the district in the subject construction project as against the capacity of the district to absorb a payment that is not crippling to the district’s budget and its programs, much less a prospective tax rate increase that would be able to be absorbed by its taxpayers.”
Mr. Angel said in December that if there were a trial, it would probably not start for six to 12 months. It would be held in Suffolk County Supreme Court, probably in Riverhead.