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Dec 14, 2010 6:10 PMPublication: The East Hampton Press

East Hampton School Board To Discuss Settling Multi-Million Dollar Lawsuit

Dec 14, 2010 6:10 PM

The East Hampton School Board and its legal team were scheduled to sit down with Sandpebble Builders Inc. owner Victor Canseco on Monday afternoon to discuss settling a four-year-old breach of contract lawsuit his firm filed against the district.

The suit centered on a contract the board signed with the builder to oversee an expansion and renovation of the district’s three schools, before ultimately hiring a different contractor to perform the work. Facing increasing pressure from taxpayers over mounting legal bills, the district finally agreed last month to have the full School Board meet for settlement negotiations, a demand made by Mr. Canseco’s lawyers, Esseks, Hefter and Angel of Riverhead.

“It’s the board’s decision. We want to speak directly to those people,” attorney Stephen Angel said. “My client wants to communicate the settlement offer with the board.”

But the district’s attorney, Bernard Garbutt of the New York City-based firm Morgan, Lewis & Bockius, said it was a “very unusual” step for Sandpebble to demand that the full School Board be present before any initial settlement offer would be discussed.

“We’ve made several requests to them to make a settlement demand to us and they have refused to do so for eight months,” Mr. Garbutt said. “I have no idea what their motives are, and I really can’t figure them out. I cannot understand why they would not have made a demand a long time ago.”

As the lawsuit has dragged on, and legal bills have piled up, the school district has come under fire from residents for the amount of money being spent to fight the case. Officials revealed in October that Mr. Garbutt’s firm has billed the district more than $2.2 million for its handling of the case. The notice of claim, for breach of contract, filed by Sandpebble in 2006 was for $3.75 million. Mr. Garbutt’s firm, it was revealed at a recent board meeting, was hired by another school district in Pennsylvania, which East Hampton Superintendent of Schools Dr. Raymond Gualtieri also headed.

Thus far, Mr. Canseco has won every battle in the legal war that has stemmed from that notice of claim, and the multiple claims the district filed in response. The judge in the case, state Supreme Court Justice Emily Pines, has twice ruled against the district, last year dismissing one of its claims that the contract with Sandpebble had been abandoned before the district hired another construction firm to handle the $79 million renovation and expansion project, and rejecting two motions last June to have Sandpebble’s suit thrown out on technicalities.

The district hired Sandpebble in 2002 to oversee what was originally planned to be much less extensive renovation project in the district. The district had reportedly set an initial cost estimate of the project at $18 million. But as Sandpebble inventoried the district’s facilities and assessed what needed to be done, the size of the project ballooned into the massive undertaking that is now nearing completion.

Sandpebble claims that despite the contract it had with the district to oversee the project, the district put out a bid for a new contractor to handle the work in 2006.

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I'd really like to understand this fully.

They chose another contractor, so he sues to be paid 3.75 million for what?

What costs needed to be re-couped by him, or is it just to receive severance in the amount of millions for being dismissed from the project?
By Mr. Z (11847), North Sea on Dec 15, 10 11:22 AM
signed contract, unions, blah blah blah. Bottom line is the legal firm hired by the Gualtieri and approved by the board should have informed them of :
1. Potential cost to defend
2. Chance of winning
Looks like Gualtieri's self appointed defense team was incompetent. We are left hung out to dry while he leaves for greener pastures. I find it laughable that politicians yell about business people getting bonus and salaries who dont deserve it. How about elected officals and public officials ...more
By razza5350 (1911), East Hampton on Dec 15, 10 2:06 PM
1 member liked this comment
I don't trust the district's law firm or the Superintendent to make decisions that are in the best interest of the community. It's incredible that the district has spent two million dollars on a contract dispute. Taxpayers have been taken to the cleaners by an unethical law firm and some incompetent board members.
By harbor (415), East Hampton on Dec 15, 10 11:43 AM
The school boards incompentence is on full display here. Over 2 million dollars in legal fees and so far they have lost every step of the way. It shouldnt be about "setting and example" or not wanting to "set precedence". This is East Hampton taxpayer money they are playing with. Someone needs to explain to them how the legal system works. I'm sure they could have settled for less then 2 million. Now it looks like we will have to pay the legal fees and still settle (or worse pay the 3.75). Gualtieri ...more
By razza5350 (1911), East Hampton on Dec 15, 10 2:00 PM
Doesn't the school district have insurance for contract errors and omissions?
I haven't read anything about that. Msmarple is correct.. shame on the old board for letting Gualtieri steamroll them. Who chose the district's law firm? Did the Board know the firm had previously worked for Gualtieri? Have they challenged any of the law firm's bills? Someone should investigate this cozy relationship.

Looks like the new Board members are getting their hands around the problem, thankfully.
By harbor (415), East Hampton on Dec 16, 10 8:54 AM
1. Mrs. Marple is partially correct. Read my response above
2. Gualtieri picked the law firm and school board approved it
3. Don't know if board knew prior relationship
4. I don't know if they challenged any of the bills
5. It DEFINITELY should be investigated
By razza5350 (1911), East Hampton on Dec 16, 10 11:34 AM
Thing would be very different indeed if politicians were held personally liable for their actions. Spending millions of taxpayer dollars to defend a legal action instigated by a contractual dispute the board created would in any civilized country be a criminal offense.
By Noah Way (450), Southampton on Dec 16, 10 1:52 PM