Del Terra Construction Group Declares Victory in Litigation against Santa Ana Unified School District.

Business Editors

LOS ANGELES--(BUSINESS WIRE)--April 14, 2004

Construction Firm Vindicated as District Drops Lawsuit, Rescinds

Termination and Agrees to Pay Portion of Fees Owed to Del Terra

In a major development in the ongoing saga of the troubled school bond program in the city of Santa Ana, Del Terra Construction Group has announced that the Santa Ana Unified School District (SAUSD) has dropped its lawsuit against the company. The company also announced the district agreed to pay a portion of the fees owed Del Terra, as well as withdrawing its termination of the previous bond consultant contract, and agreeing that the contract would be mutually rescinded. The announcement was made by Luis Rojas, CEO of Del Terra Construction Group.

"The fact that the district's actions speak loudly to the truth makes this is a great day for Del Terra Construction Group," said Luis Rojas. "It's obvious the overwhelming preponderance of evidence gathered during the course of discovery leading up to the trial caused the district to reconsider its position, and drop their lawsuit against Del Terra, as well as rescind the termination.

"Although we were always convinced of our position in this matter, it took the process of discovery and the potential for an overwhelming loss in the courtroom to get the district to take this action," Rojas continued.

Excerpts taken from testimony provided by some of the district's former and current employees, as well as documents discovered by Del Terra's litigation team most likely provided an impetus for the district to do a turnabout on its previous position.

During the course of discovery a number of current and former employees of SAUSD were interviewed in preparation for the trial. In testimony, the previous Assistant Superintendent and Facilities Manager, Mr. Vail, revealed that he had "no problem" with Del Terra during the time he had oversight responsibilities for the schools' bond program.

Uncovered documents, such as a letter authored in December 2002 by Bill Sharp, the District's own Chief Facilities Officer, to Del Terra's vice president of operations, which stated that SAUSD was expanding Del Terra's role as a result of the successful passage of Proposition 47 and went on to state that Sharp was "pleased with moving forward with Del Terra in their expanding role" didn't help the district's position either.

The district's case against Del Terra was further weakened by a memo from the current district facilities manager, Margie Brown, which stated, "District delay in the architect selection process may be a mitigating factor that will affect the consequential damages calculation."

According to Chris Roux of Weston, Benshoof, Rochefort, Rubalcava, MacCuish and a member of Del Terra's litigation team, "These are just a few examples of information we gathered as a result of subjecting these current and former employees of the district to deposition. It's interesting to note how the district reversed its position when these and other items surfaced in preparation for the trial.

"The district is trying desperately to put its best spin on the current situation," Roux continued. "They now find themselves in a position of trying to explain to the bond oversight committee and the taxpayers of Santa Ana why the district missed out on securing $17 million in Proposition 1A modernization funds, and still remain sorely behind in schedule for modernizing existing facilities and building new schools to accommodate the district's burgeoning student population." The evidence elicited in the case established beyond any doubt that the District was solely responsible for failing to obtain state matching funds.

"It's not going to be a pretty picture and I wouldn't want to be in their shoes when the public comes knocking on their door demanding an explanation why the district spent millions of dollars on a lawsuit that their own facilities manager stated was essentially without merit in a memo dated June 2003 to Superintendent Mijares," said Rojas. "I'm sure the board is going to want to put this issue behind them right away, but there's still an issue of public accountability."