Judge rolls UI lawsuits into one case

BOISE – Multiple lawsuits over the University of Idaho’s failed Boise real estate development deal were rolled into one Wednesday, but key players in the saga are likely to invoke their Fifth Amendment rights against self-incrimination and refuse to testify in the case.

“That can be very problematic – some of them are very key witnesses,” said Walt Sinclair, attorney for Civic Partners, a California real estate developer that’s been sued by the UI Foundation for its role in the deal.

Former UI Vice President for Finance Jerry Wallace is among those likely to take the Fifth. “Mr. Wallace’s attorney has indicated he will counsel his client” to do so, Sinclair said. Wallace’s Boise attorney, Larry Westberg, couldn’t be reached for comment.

Also on Wednesday, other attorneys involved in the case told the court that they’re suing former University of Idaho President Robert Hoover and Wallace, who in addition to his university position also served as financial chief for the foundation during the development deal that cost the university and foundation millions.

“There may be other third-party defendants, but those are the two we have now,” attorney Mark Wagner told the court. He told senior Judge Daniel Hurlbutt that his firm, which represents the law firm Elam Burke, has served both Hoover and Wallace with tort notices that they’ll be sued as part of the case, and both are likely to become additional defendants in the complex litigation.

The UI Foundation sued Civic Partners for more than $7 million over the development deal, and both the university and the foundation sued two law firms, Givens Pursley and Elam Burke, and four individual attorneys for malpractice. In court, Hurlbutt combined both those cases into one, added Boise’s downtown redevelopment agency as an additional third-party defendant, and set a January 2007 trial to run for up to eight weeks.

The lawsuits stem from the university’s efforts to develop a grand Boise campus to increase the Moscow-based school’s profile in the state’s capital city. When the deal collapsed amid financing problems, the project, variously called University Place and Idaho Place, was reduced to a single building, the Idaho Water Center.

The water center was built and opened this year, as part of a downtown redevelopment project in Boise that includes Ada County’s new courthouse and an apartment and parking complex developed by Civic Partners. In addition to the university, the new water center houses the Idaho Department of Water Resources and a U.S. Forest Service water research center.

The university and foundation lost millions that they’d spent on pre-development costs for the larger project, and a criminal investigation is under way, led by Oregon U.S. Attorney Allen Garten, after Idaho’s U.S. attorney cited a conflict of interest.

Both Hoover and Wallace resigned in 2003 in the wake of the project. Its financial impact worsened budget problems at the university, which has had to cut more than $4 million from its budget and eliminate 67 positions.

In yet another lawsuit, the university and foundation have sued their insurance company, Cincinnati-based Great American Insurance, for up to $10 million. The suit says the company should pay up on a policy that insured against losses from dishonest acts or omissions by employees.

Great American shifted the case to federal court, but there’s now a motion pending there to remand it back to state court, where it could join the other cases before Hurlbutt in Ada County’s 4th District Court.

The judge drew laughter from the numerous lawyers assembled in the courtroom when he asked wryly, “There’s no motion to remove these cases to federal court?”

Wagner called the complicated litigation over University Place “just a monster in terms of paper and witnesses. Every day I get another e-mail about another eight or 10 boxes of documents that are just now becoming available.”

Plus, he told the court, “We have every reason to believe that at least one or two of the key witnesses and essential parties will take the Fifth Amendment. … We’ll have to figure out what the legal consequences of that are.”

Later in the hearing, Hurlbutt said, “There has been no criminal action filed in any jurisdiction.”

Beth Andrus, a Seattle attorney who represents the foundation, responded, “There is a federal grand jury proceeding pending, but there have been no indictments.”

Andrus argued that rather than combining the cases, the court should allow the lawsuit against Civic Partners to go forward sooner. She called it a “fairly simple case for breach of warranty,” and said, “We’re ready to rock and roll – we’ve had a lot of these documents now for a long time.”

But Sinclair argued, “The facts are the same, the witnesses that are involved in this transaction are all the same.”

Lawyers for various parties said combining the cases will keep witnesses and the court from sitting through the same testimony twice.

The judge said, “We’re only going to play this once.”

The malpractice case against the lawyers charges that they didn’t adequately represent the university and foundation in the University Place project, in part because some also represented other involved parties at the same time, including Civic Partners and Boise’s redevelopment agency. The Idaho State Bar also has filed complaints against the same lawyers with similar charges.

The case against Civic Partners centers on sharply differing claims between the foundation and the developer over which one owes the other money as a result of the University Place collapse.