TIMELINE
October 2004: Crawford Lewis becomes superintendent of the DeKalb County School District and later hires Pat Reid to oversee Heery International Inc. and E.R. Mitchell & Co., which jointly manage construction projects.
April 2006: Heery and Mitchell suspended, then fired 10 months later.
February 2007: Heery/Mitchell sue for $478,000 and damages.
March 2007: DeKalb counterclaims for $17 million, eventually seeking more than $100 million.
December 2008: Lewis tells school lawyers that Reid tried to blackmail him, recommended firing Heery/Mitchell and wanted to hire her friends to work on projects funded by a special sales tax for school construction.
July 2009: DeKalb's law firm, King & Spalding, agrees to work on contingency, retroactive to June 1, 2008. It had been paid $6.5 million.
May 2010: Lewis, Reid, her then-husband Tony Pope, and Reid's assistant indicted. (The assistant is later dismissed from the case.) Lewis had been fired a month earlier.
October 2010: Heery/Mitchell file second amended complaint, claiming criminal fraud drove their termination.
June 2012: School board approves settlement with E.R. Mitchell & Co.
February 2013: Civil trial date with DeKalb Superior Court Judge Clarence Seeliger, since postponed.
April 2, 2013: DeKalb "special master" Judge Stanley Birch signs an order dismissing the bulk of Heery's financial claims against the school district.
May 3, 2013: A pair of DeKalb residents, one a Heery executive named as a defendant in DeKalb's lawsuit, file a legal challenge to the district's contract with King & Spalding, alleging it puts the district illegally in debt to the lawyers.
June 3, 2013: DeKalb school board votes to authorize signing an amended contract in which King & Spalding agrees to waive $30 million in legal fees and to pay ongoing court costs.
June 7, 2013: Heery offers to settle lawsuit and "donate" $1 million to the school district.
June 10, 2013: DeKalb school board approves amended contract with King & Spalding.
June 11, 2013: DeKalb rejects Heery's settlement proposal.
A courtroom stalemate that has dragged on for six years, costing the DeKalb County School District $18 million and incalculable damage to public confidence, has finally given way to settlement talks.
Heery International Inc., the district’s former construction management firm, recently made an offer to end the legal battle, but the district rejected the company’s $1 million proposal as less than “meaningful.”
Both sides, though, say they want to keep bartering.
“I think the fact that an offer was made is a positive step,” interim Superintendent Michael Thurmond said of the lawsuit that helped drive up DeKalb’s legal bills to the point of political distraction.
For years, the battle between the district and Heery escalated, with no end in sight. The litigants filed claim after claim, with DeKalb alleging mismanagement and billing fraud, and at one point seeking more than $100 million.
An accreditation agency, the Southern Association of Colleges and Schools, placed the district on probation in December, in part because of legal costs it considered excessive. The Heery lawsuit has become a symbol of waste for many parents whose children have suffered from classroom cutbacks during a time of fiscal austerity.
The district poured $6 million into attorney fees before transitioning to a contingency arrangement with its lawyers in 2008. Still, the costs mounted. As of this month, DeKalb had paid a total of $12 million on non-lawyer “case” costs, which include things such as expert witness fees and travel expenses.
The expense concerns parents such as Robin Aldrich, who watched class sizes rise at her daughter’s elementary school after budget cuts last year. Even more distressing is the distraction, she said. “I would like for them to come to a settlement, so we can move on to things that are more important for the children and learning.”
Heery has been making overtures since March, when a new school board was installed, and on June 7 put cash on the table. The Atlanta Journal-Constitution used the Georgia Open Records Act to obtain a copy of the company’s offer. Heery proposed that both sides walk away from their damage claims and pay their own attorney fees. The letter from Heery’s lawyer, DLA Piper, said the company would “donate” $1 million for “educational purposes” once a settlement agreement was inked.
DeKalb rejected the proposal four days later. The district’s law firm, King & Spalding, responded that the money was far less than the damages sought. Hence, the lawyers “do not consider it to constitute a meaningful settlement offer.”
The letter said DeKalb was “evaluating whether or not it is worthwhile to make a counteroffer.”
Heery spokesman David Rubinger said the company hopes discussions will continue. “We look forward to the DeKalb School District joining us in putting an end to this regrettable episode,” he said. He would not say whether the company has made, or plans to make, a higher offer.
Thurmond said he wants to keep negotiating, too.
Recent developments put both sides in a talkative mood.
Gov. Nathan Deal replaced six of DeKalb’s nine board members. The prior board felt the case had merits, but the new members ordered Thurmond to rein in legal costs.
King & Spalding had piled up $30 million in unpaid fees, making the price tag for Heery unpalatable.
This month, however, Thurmond and the lawyers renegotiated the contingency agreement, wiping out those accrued legal bills. Now, the school district can accept a lower offer and still recover more than would have been possible previously.
Recent events could still leave taxpayers in the hole, though.
Decisions this spring in DeKalb Superior Court wiped out Heery’s damage claims for false termination but also humbled the school district, reducing its possible monetary damages by about two-thirds.
Based on the new contingency agreement, Heery would have to surrender at least $30 million for the district to recoup its costs, and the company may not be motivated to give that much since its exposure for damages at trial isn’t much higher.
Thurmond signaled, though, that money is no longer the object. Rather than recovering “every dime” spent, he said, his priority is to settle the case.
This legal battle “crystallized the perception of dysfunction and mismanagement” that plagues the district, Thurmond said. “The cost in terms of trust and credibility with stakeholders far exceeds the dollars spent.”
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