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Victorville to get $54M in power plant suit
City settles litigation with Foxborough design firm
VICTORVILLE • The city of Victorville will receive $54 million from the designer of the failed Foxborough power plant, after the City Council approved a settlement offer during a closed session meeting Friday afternoon.
While the award won’t right all of the city’s financial woes, Mayor Ryan McEachron said “it’s a huge step in the right direction.”
Victorville sued design firm Carter & Burgess in 2009 after losing an estimated $120 million in an attempt to build the Foxborough power plant, intended to generate electricity for businesses at a discounted rate.
A jury in Riverside Superior Court unanimously awarded the city $52.1 million in damages in December 2010, following a seven-week trial. The judge later tacked on another $1.8 million in attorney’s fees and costs, bringing the total settlement to nearly $54 million.
Carter & Burgess appealed the award and has been trying to fight it ever since, while also making repeated settlement offers to the city — all of which were reviewed and denied during closed session meetings. Meanwhile, the city touted the fact that interest was accruing at 10 percent, hoping to get upwards of $64 million if the judgment stood.
Victorville called Friday’s special meeting after receiving a written settlement offer for $54 million from Carter & Burgess, according to City Attorney Andre de Bortnowsky. The council agreed to accept the offer on a 4-1 vote, with Councilwoman Angela Valles voting no over disagreement with forgoing the interest payment.
“I voted against the agreement because I was told we could get another $10 million and that we were getting $15,000 a day in interest,” Valles said. “The attorneys told me our case was rock solid. I was told we could just sit back and wait for the appeal to be thrown out and then we could collect. Then all the sudden it changed and they wanted to settle, and I’m not comfortable with that.”
McEachron acknowledged that Victorville walked away from a hefty interest payment by accepting the settlement. However, he said the rest of the council felt it wasn’t worth risking $54 million on the chance that Carter & Burgess’ appeal was upheld.
The city entered into a contract with Carter & Burgess in March 2003 for planning, construction management, design and engineering work on three city utility projects, including Foxborough.
Foxborough was originally touted as a $22 million cogenerational power plant at Foxborough Industrial Park, located between Hesperia Road and the Mojave River. The plant was supposed to be completed in 2006, attracting jobs and tax revenue to the city by offering city-generated electricity 10 percent below Southern California Edison rates.
In 2007, with costs skyrocketing and construction on the plant halted forever, Victorville ended its contract with Carter & Burgess and hired Orange County-based Inland Energy to take over.
In March 2008 Carter & Burgess filed a civil suit against the city, claiming it was still owed $107,000 for work performed under the contract.
In June 2009, Victorville attorneys filed a cross-complaint, citing breach of contract, negligence, fraud and more, with the city seeking to recover a portion of the $120 million spent on construction, equipment and operation costs, plus attorney fees and punitive damages for the claims of fraud and negligent misrepresentation.
“We brought on a consultant that didn’t advise us properly,” McEachron said, grateful the jury recognized that fact.
However, Valles argued that by settling the case, Carter & Burgess isn’t left with the same “scarlet letter” on its record as the company would have had the battle played out to the end in court.
“Now they can go to another city and do what they did to us,” she said. “These people have to be stopped.”
Victorville plans to use the settlement to help reduce the hefty debt it accumulated in trying to build the plant.
The first $30 million will go to pay down an $83 million bond debt issued for the plant’s construction, a city press release states. The remaining $24 million will be used to pay back some $22.5 million in interfund borrowing and to shore up the city’s general fund.
“There is still work to be done,” City Manager Doug Robertson said in an emailed statement, “but we are happy to have the majority of our financial difficulties behind us.”
Brooke Edwards Staggs may be reached at (760) 955-5358 or at BEdwards@VVDailyPress.com.
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