Fluvanna suit over bonds dismissed
By:
|
The Daily Progress
Published: February 23, 2012
Published: February 23, 2012
A judge on Thursday agreed to dismiss a
Fluvanna County lawsuit that claimed a Richmond-based financial company
duped officials into issuing nearly $70 million in bonds to build a new
high school so the company could earn more by charging higher fees.
The lawsuit, filed Sept. 6 in Fluvanna County
Circuit Court, alleged officials with Davenport & Company LLC
“knowingly or negligently misled the board in order to increase its own
revenues at the expense of the board and Fluvanna County taxpayers” in
the 2008 bond issue.
County officials say they were neither surprised nor
deterred by the decision and that they will appeal the dismissal to the
Virginia Supreme Court.
Judge Benjamin N.A. Kendrick dismissed the case with
prejudice, meaning the county cannot refile the lawsuit. Kendrick said
the state Constitution separates the legislative branch — the county
board, in this case — and the judicial branch of government so that the
courts cannot delve into reasons why the county board made its decision,
court officials said.
“The judge said that this was not the kind of case
of the courts in Virginia will consider,” said William Allcott, of the
McGuireWoods law firm in Richmond. Allcott represented Davenport. “The
separation of powers means that the courts don’t inquire into the
decision-making process of legislative branches of the state
government.”
Davenport officials were pleased with the dismissal.
“We have always been confident that Davenport would
prevail on the merits of the case, and we remain so, because throughout
our long relationship with Fluvanna County we always acted in the
county’s best interest,” said Coleman Wortham III, chairman and chief
executive officer of Davenport. “We are gratified that all parties will
be spared the time and expense of a trial on this meritless claim.”
County officials said they stand by their claims and plan to appeal the decision.
“It was not entirely unexpected that it would likely
have to go to the Supreme Court,” said Shaun V. Kenney, chairman of the
county board. “The Board of Supervisors plans to appeal. It doesn’t
change the substance of the [lawsuit.]”
The lawsuit came in response to events in 2008 when
the board was planning to issue bonds to build the county’s new high
school. The stock market crashed in September before the bonds could be
issued, leaving the board wondering whether to join with the Virginia
Public School Authority’s bond issue or go it alone.
In December 2008, the county board approved the use
of standalone bonds, which the lawsuit alleged cost the county almost
$18 million in excess interest payments. The county bonds were issued
two weeks after the Virginia Public School Authority approved the pool
bonds.
The state bond pool came in at an interest rate of
4.75 percent. The county bonds were sold at 5.95 percent, according to
the lawsuit.
The county claimed Davenport should not have recommended the standalone bonds and should have offered other alternatives.
Davenport officials said they offered the county
several options, “carefully explaining every aspect of each option. The
contention that Davenport recommended one option over another to enhance
its fees is absurd.”
Please contact us if you need legal advice.
Tucker Griffin Barnes P.C.
Charlottesville, VA
434-973-7474
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