23 February 2012
Fluvanna County Circuit Court Judge Benjamin N.A. Kendrick Thursday (Feb. 23) dismissed the $18 million lawsuit the Fluvanna Board of Supervisors filed against Davenport & Co. LLC, the company that advised the supervisors on bonds to fund the new high school.
In a statement e-mailed to the Fluvanna Review, lawyers representing Davenport said:
“We are pleased that the lawsuit filed by the Fluvanna Board of Supervisors has been dismissed. We have always been confident that Davenport would prevail on the merits of the case, and we remain so, because throughout our long relationship with Fluvanna County we always acted in the county’s best interest. We are gratified that all parties will be spared the time and expense of a trial on this meritless claim.”
Not so fast, said Board President Shaun Kenney.
“This is not an unexpected decision,” Kenney said. “The board will discuss this and more than likely vote to take it to the Supreme Court.”
Davenport had a long relationship with the board, advising it for more than 15 years before being replaced in 2010.
The lawsuit claimed Davenport took advantage of that long-standing relationship for its own benefit.
The suit, filed about six months ago, accused Davenport officials of deliberately misleading the board regarding the best method to finance the school construction. Davenport officials advised the board not to consider funding through the Virginia Public Schools Authority (VPSA) which offered a more favorable interest rate because VPSA loans could not be refinanced, the suit alleged. In fact, VPSA bonds can be refinanced, the suit claimed.
The county claimed that Davenport steered the county away from the VPSA financing because Davenport was prevented from dealing with VPSA on behalf of clients because of an ongoing relationship between Davenport and VPSA. If the county chose VPSA financing, Davenport would have had to withdraw from representing the county which would have resulted in the firm losing fees, the suit stated.
The heart of the legal action is a claim that Davenport received excessive fees, caused Fluvanna County to be liable for nearly $18 million in excess interest payments and gave deceptive and self-serving advice.
Davenport vigorously denied the allegation, saying in an e-mail that Davenport “stands behind the advice given to Fluvanna County one hundred percent.”
The new high school will open for the 2012/2013 school year and cost the county $73 million.