OID is now 0-2 in recent attorney-fee lawsuits

Owners of 31 homes in an east Oakdale neighborhood don’t have to pay the Oakdale Irrigation District’s $369,300 legal bill after the district prevailed in a lawsuit, appellate justices ruled Friday.

Deo Gloria Estates residents had sued in 2009, accusing OID of fraud stemming from a dispute over responsibility for the neighborhood’s domestic water system. A judge ruled in OID’s favor two years ago and required that neighbors pay $23,981 in court costs but spared them from paying OID’s attorney fees.

OID appealed that ruling, asserting that the neighbors should be taught a “life lesson” for having pursued a losing case. But a panel of three justices with the state 5th District Court of Appeal in Fresno sided with the neighbors last week, saying their initial lawsuit “was not entirely unfounded or frivolous.”

It’s the second time in five weeks that OID failed to convince judges to force others to pay its legal bills. In an unrelated case, a Stanislaus County judge on Sept. 19 refused OID’s request that two customers challenging the district’s fallow-for-money proposal pay attorney fees for board member Gary Osmundson after he was dropped from that lawsuit.

Requests for comment from OID General Manager Steve Knell, a defendant in the Deo Gloria lawsuit, and from the Damrell Nelson Schrimp law firm representing OID were not returned Monday and it’s not known whether the district might appeal to the California Supreme Court. Two attorneys who prevailed two years ago no longer are with the firm; partner Roger Schrimp died in February, and James Oliveira joined another company.

Deo Gloria neighbors, east of the Oakdale Golf and Country Club, are relieved at last week’s ruling, said Steve Aristotelous.

“It’s been a nightmare,” he said. “They made our lives miserable.”

Six of the initial plaintiffs, many of whom are seniors, have died since the lawsuit was filed seven years ago, and a number of others moved away, Aristotelous said.

OID primarily provides irrigation water for farmers, but also handles tap water for a few rural neighborhoods, including Deo Gloria Estates. Its developers constructed two wells and pumps for the subdivision and deeded the property they’re on to OID in 1978.

But the district contended it never took ownership of the water system and alarmed homeowners in 2004 with intimidating notices, saying, “Both of your wells are shot” and warning of high repair costs. “YOUR WATER SYSTEM is in dire need of repairs and YOUR COSTS to bring YOUR SYSTEM up to state standards will be SIGNIFICANT,” a notice said.

In 2007, a majority of residents voted for a major overhaul to be paid from assessments on their land, and $850,000 in upgrades were completed in May 2009. Two months later, property owners sued to reverse the vote and sought refunds, claiming that the water system had reverted to OID years before and that the district should have covered the repair costs.

OID exacted $10,000 from neighbors to explore an improvement but spent the money on something else, neighbors contended. They also claimed that OID wasted money replacing underground pipes with a nearly identical product, failed to restore torn-up streets to their previous condition, financed the project through a bank despite an OID board member’s interest in the bank, and ignored neighbors’ requests for information.

Stanislaus Superior Court Judge Roger Beauchesne granted immunity to OID in March 2014, killing the lawsuit before trial, but he declined a few months later to order that Deo Gloria neighbors pay OID’s $369,300 legal bill. That led to the appeal and Friday’s ruling, in which justices said Beauchesne was right in concluding that OID failed to prove the lawsuit had no merit.

“It’s gratifying,” said Berkeley attorney Joseph Hearst, who did not handle the initial lawsuit but represented neighbors in the fees matter.

“I’m glad the whole damn thing is over,” Hearst said. When Beauchesne declined OID’s 2014 request, leaders “should have licked their wounds and walked away,” Hearst said.

In the fallowing lawsuit, Beauchesne had leaned toward forcing OID customers Robert Frobose and Louis Brichetto to fork over $15,000, reflecting what OID paid another set of attorneys to represent Osmundson before he was dismissed as a defendant. But after hearing oral arguments, the judge last month changed course and handed OID another defeat.

Frobose and Brichetto, suing as the Oakdale Groundwater Alliance, initially named Osmundson because he might have gained $120,000 by fallowing some of his land just after casting the vote needed to secure a 3-2 decision establishing the fallowing program, although it never got off the ground.

A court date for the fallowing lawsuit is scheduled next week.

This story was originally published October 24, 2016 at 7:09 PM with the headline "OID is now 0-2 in recent attorney-fee lawsuits."