San Juan Lawyer’s Misuse-of-Funds Suit Is Dismissed

After two years of court battles and about $800,000 in legal costs, city officials declared victory Thursday over local attorney Carlos F. Negrete, who had sued alleging government waste.

Orange County Superior Court Judge David C. Velasquez on Wednesday dismissed the last part of Negrete’s lawsuit that alleged misuse of government funds involving the city’s $1-million purchase of the San Juan Capistrano Decorative Arts Study Center in 1988.

The dismissal came days before a trial on the final phase of the suit was scheduled to begin.

“Basically, the judge said there is nothing to try,” City Atty. Richard K. Denhalter said.

Despite the court action, the dispute may not be fully resolved. Under Velasquez’s ruling, Negrete could refile his lawsuit involving the center.

And he vowed Thursday to do just that.

“I want my day in court, I want my jury,” Negrete said. “I’m in there for the distance.”

Negrete filed the lawsuit in March, 1991, against seven city officials, including former City Manager Stephen B. Julian, alleging misuse of public funds.

After a trial in August, Velasquez dismissed most of the suit, saying he found no evidence of illegal expenditures, waste, misuse of public funds or fraud.

The suit also included allegations--also since dismissed--that City Councilman Gary L. Hausdorfer voted on unspecified matters in which he had a financial conflict of interest.

Last month, the judge ordered Negrete to pay the city $417,000 in attorney fees and court costs.

Denhalter said he will go back to court to seek more compensation for attorney fees and court costs from Negrete.

“It was just one of these harassing things,” Denhalter said. “It was a real irritant. It cost us a lot of money we couldn’t afford.”