The Central Basin Municipal Water District, which became tangled in a federal corruption probe of a state senator, has settled a lawsuit against a firm it accused of overbilling.
The settlement was unanimously approved by Central Basin's board of directors on May 22, according to Donald Bradley, an attorney for the firm, Pacifica Services Inc.
He said the settlement will probably be filed this week at Los Angeles County Superior Court.
According to the settlement agreement, the public water agency plans to pay Pacifica $875,000 for unpaid invoices, attorney’s fees and other litigation costs.
Pacifica Services had provided consulting, engineering and other management services to Central Basin.
Additionally, the water district acknowledged that it shouldn't have made assertions of fraud or misrepresentation against Pacifica in its original July 2013 lawsuit. The district withdrew the claims that August.
“Resolution of this matter is in the best interest of both parties,” Central Basin Board President Phillip Hawkins said, adding that the settlement allows for the district "to move forward."
Pacifica Chief Executive Ernest Camacho also said his firm was pleased the dispute had been resolved.
"Pacifica is pleased that this dispute is resolved and looks forward to putting this matter behind it," he said.
Pacifica, once an ally of the water agency from which it received millions of dollars, is no longer providing services to Central Basin, officials said.
The lawsuit stems from payments the agency allegedly owed. Pacifica sought all delinquent amounts plus interest of about $268,504.
Water district officials claimed Pacifica continued to improperly bill them even though they did not extend their contract with the company.
The lawsuit was supposed to symbolize a turning point for the agency that is striving to reform itself and prevent the loss of its insurance coverage.
Instead, the suit has become the latest example of the dysfunction that has long plagued the agency.
Central Basin, which serves a large swath of Southeast L.A. County, has been the center of controversies, allegations of corruption and political in-fighting for years.
In April, the Assn. of California Water Agencies Joint Powers Insurance Authority said it was considering dropping Central Basin because of the high number of legal claims.
Those claims are in addition to a number of investigations in recent years.
Last June, the district came under scrutiny amid an FBI probe of state Sen. Ronald S. Calderon (D-Montebello).
Federal prosecutors served a subpoena requesting documents such as contracts and invoices, including records involving the senator's brother, Tom Calderon.
Tom Calderon had a $12,000 monthly consulting contract with the agency. Through 2011, the district paid the former assemblyman more than $750,000 in consulting fees.
In March, the agency's attorneys said it had violated state laws by secretly creating a $2.7-million fund for a groundwater storage project.
The district has also been accused of doing favors for the family members of politicians.
The elected leaders of the agency have faced their own troubles, including one suspected of impersonating his brother, a fellow politician, to get out of a DUI conviction, and another accused of sexually harassing a district employee.
A loss of insurance coverage would hurt Central Basin's standing in financial markets and make it harder for the district to secure loans and grants.
It would also mean the district would have to find another insurance provider, possibly at a higher rate.
Water district officials have said the insurance situation would not lead to rate hikes for its 2 million residents in Southeast Los Angeles County.Copyright © 2015, Los Angeles Times