DHS Lawsuit Against Agua Dulce Developers

At the August 8 DHS City Council meeting City Attorney Duran said the city was filing 10 lawsuits. At the time he would not identify the parties involved, nor what the issue was. I guessed that it had to do with incomplete developments, and I guessed right in at least one instance. (I'm still waiting to hear about the other 9). Mr. Duran's office forwarded me a PDF of the filing against GHA Paloma Group (developers of Agua Dulce) and Insurance Company of the West (bond issuers).

The PDF of the filing is available here. What follows is my non-legal-professional summary of highlights of the contents.

In 2005 the developers of Agua Dulce agreed to "provide development services to the City and specifically subdivision and road grading services." Assurance bonds in the amount of $650,000 were obtained by the developers from Insurance Company of the West. The public improvements were to be completed by May 2006. Only some were actually completed. Unfinished are "assuring the integrity of the street paving work and finalizing all water and sewer improvements required." The city has made demands on the insurance company, but the insurance company says the statute of limitations has lapsed. The city asserts that since the city never accepted the work, the bonds have never been exonerated "and so any statute is tolled by the very language of the agreements."

I think the insurance company's angle is interesting. If a developer drags his feet long enough, the bonds just go poof. If that were true, then I think we would need to get bonds on the bonds.

City Councilmember Karl Baker told me he voted against these suits — well, technically, I suppose he told me only that he voted against this suit, since the other nine are still confidential — because he thinks the city is spending too much on legal bills and we could accomplish the same results by other means.

Trivial interest: the attached paperwork includes the signatures of Jerry Hanson (the infamous city manager) and Rossie Stobbs who was city clerk at the time.