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Sanitation district attorney misled ratepayers

January 30, 2015
Matt Guerrero

Matt Guerrero

By KAREN VELIE

Confidential documents obtained by CalCoastNews reveal a long-term plan by South San Luis Obispo County Sanitation District officials to delay fines and findings of mismanagement by mounting a legal battle against the state — a fight they did not expect to win.

In 2010, failures at the sanitation district resulted in 384,000 to 3 million gallons of raw sewage flowing into Oceano homes and the ocean. The Central Coast Regional Water Quality Control Board then determined the spill was the result of mismanagement.

In March 2012, the sanitation district sent a confidential settlement offer of $50,000 along with an agreement to spend $100,000 on repairs to the state water board. The sanitation district serves the residents of the Oceano Community Service District, Arroyo Grande and Grover Beach and is governed by a three-person board consisting of one representative from each community.

On April 20, 2012, the state rejected the district’s settlement offer. Instead, the state proposed a settlement that included a $400,000 fine and the requirement for the district to spend $375,000 on specific plant upgrades.

On May 16, 2012, the three sanitation district board members, Oceano Community Services District President Matt Guerrero, Grover Beach Councilman Bill Nicolls and Arroyo Grande Mayor Tony Ferarra, rejected the state’s settlement offer in closed session.

On June 6, 2012, in a sanitation district closed session meeting that wasn’t properly noticed on the agenda, the board discussed an anticipated timeline and a proposed strategy developed by then district administrator John Wallace, district legal counsel Mike Seitz, and outside legal counsel Melissa Thorme.

In their timeline, Wallace, Thorme and Seitz do not consider winning their battle against the state.

The timeline notes that after the district loss of a hearing in Sept. 2012, the district can appeal to the state water board in a process slated to take about a year. After the district loses the appeal against the state it can then file a lawsuit in San Luis Obispo County Superior Court, which will take up to two years, the timeline says.

“The district does not have to pay fine until matter is settled in Superior Court,” the timeline says.

The district then paid about $750,000 to Wallace’s engineering firm, the Wallace Group, and a team of lawyers to argue against the allegations of mismanagement and the proposed fine. And as predicted in the timeline, the sanitation district lost the case and appealed to the state.

On Oct. 24, the state water board rejected the sanitation district’s petition for an appeal of the fine. In turn, the district board voted to file a lawsuit against the state in superior court, again as predicted in the sanitation district’s timeline.

State and federal laws provide for sanctions against firms and attorneys affiliated with legal actions that are taken primarily to “cause unnecessary delay or needless increase in the cost of litigation.”

During a Dec. 17 district board meeting, Seitz said that reports that the district had been offered a $300,000 settlement were untrue, and that the district had offered significantly more, a statement water board officials said is untrue. Several years ago, CalCoastNews reported that the state had offered the district a cash settlement of $300,000, an amount stated by Oceano Community Services District Director Mary Lucey.

“I can tell you that from my knowledge from those days that the water board never was below, well, let me back up, settlement discussions are confidential, so how anybody got information regarding a $300,000 proposed offer is kinda beyond me, but in terms of that, I can tell you that the district has never received an offer of $300,000 and the district has offered substantially more than $300,000 to try and settle it,” Seitz said during the taped meeting. “And having said that if the water board offered a settlement of $300,000 it would be my recommendation that the board take it.”

Sanitation district board member Guerrero, who was on the board during the 2012 closed session settlement negotiations, did not inform the public of the inaccuracies or challenge Seitz’ Dec. 17 statement.

Guerrero, a local attorney, recently applied to Gov. Jerry Brown to be appointed as a superior court judge.

SouthSLOCo Sanitation Settlement Offer

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Debbie Peterson and Kevin Rice will discuss this issue Monday at 5:05 p.m. on News/Talk 920 KVEC. Tune in! Call in!


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I know a consulting engineer who makes a decent living. She says she finds it best to have a clearly spelled out contract with her clients, following the California law. That way she knows what she needs to do and the client knows what they are getting and for how much. She only does Time and Materials contracts for projects that the client either doesn’t know the full scope themselves or it is with a long-standing client with clearly spelled out tasks. She never charges for work under a Time and Materials contract before the contract is signed. She enjoys working with her clients and it seems like it is reciprocal.


This engineer said she worked for different local engineering firms before going out on her own. Some were very honest and straight forward. Some outright ignored California law with regard to a legal engineering contract. Primarily this was charging for work on a Time and Materials contract before the contract was signed. She recognized the benefit of working in a larger multi-disciplined engineering company by being able to use the strength of others in the company to complete a project. She also said there were many good people in those companies, but it usually was the upper management and owner that frequently ignored California law, even when it was pointed out to them.


Overall, it sounds like engineers and lawyers face the same type of dilemma. An unscrupulous engineer or lawyer can easily pad their contracts with an unsuspecting client. It all boils down to the due diligence of the customer, in my opinion.


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Water, sewage and garbage districts are big bucks. I would expect any relationship that involves the State Water Quality Control Board, the taxpayer and a Sewage District to be nothing less than a shit storm. The bigger the district, the greater the layers that buffer the drama imposed by the public. In the larger districts the ratepayers just shut up and flush. Welcome to the big city where Gov has an army of officials to process and harvest the taxpayers.


As for Mr. Guerrero, his nature does not fit the allegations. If we all had septic tanks, then you could manage your own crap, but growth has been the choice and with that the taxpayer’s crap becomes an industry.


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Breach of Fiduciary Duty


People in a position of trust or fiduciary relationship, such as officers, directors, high-level employees of a corporation or business, agents and brokers, owe certain duties to their principals or employers. Fiduciary relationships, which are by their very nature relationships of good faith, may involve a variety of obligations depending on the exact circumstances.


Fiduciary duties require that the fiduciary acts solely in the best interest of the employer/principal, free of any self-dealing, conflicts of interest, or other abuse of the principal for personal advantage. Thus, corporate directors, officers, and employees are barred from using corporate property or assets for their personal pursuits, or taking corporate opportunities for themselves. More traditional fraudulent conduct, such as thefts, acceptance of secret commissions, and conflicts of interest also violate the duty of loyalty, and may be prosecuted as such in addition to or instead of the underlying offence.


A breach of fiduciary duty is often easier to prove than fraud. The claimant does not need to prove criminal or fraudulent intent or the other elements of fraud. To prevail, the claimant must show only that the defendant occupied a position of trust or fiduciary relationship as described above and that the defendant breached that duty to benefit personally.


A breach of fiduciary duty claim is a civil action. The claimant may receive damages for lost profits and recover profits that the disloyal employee earned. In some instances, it may even be possible to recover the salary paid to the employee or agent during the period that the fiduciary was in breach of his duties. The claimant may recover profits earned by fiduciary even if the claimant did not suffer an actual loss.


Fiduciaries who act carelessly or recklessly are responsible for any resulting loss to the corporate shareholders or other principals. Damages may be recovered in a civil action for negligence. Corporate officers who carelessly fail to enforce controls, or to pursue recovery of losses might breach their duty of care.


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Mr Guerrero has breached his fiduciary duties as a director in both the Oceano C.S.D and the South County Sanitation District.

Unfortunately, since he used his office to endorse our new District Attorney and works for the county we can expect little help from the local judiciary.

Because of the conflicts of interest this needs to be investigated at the state level, for justice to prevail.


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welcome to slo county where the dukes of hazzard is not just a show…


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Thank you Tacoma for a very concise explanation of the roles and responsibilities of board members, public servants, and electeds.


Posters and readers can make a difference by emailing, texting, calling, meeting with their council or district representatives, and by speaking during public comment at Council and Board meetings:


Grover Beach 1st & 3rd Mondays 6:30 p.m. 154 S. 8th St. Grover Beach (Feb. 2) JShoals@grover.org; Council@grover.org


South San Luis Obispo Sanitation District 1st & 3rd Wednesdays 6:00 p.m. Arroyo City Chambers E. Branch St. (Feb. 4 & 18) Amy@sslocsd.org


Oceano 2nd & 4th Wednesdays, 6:30 p.m. 1600 Front Street, Oceano (Feb. 11 & 25) (no viable email address)


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So then, everyone who sat on the San Board for the last 10 years or so is responsible ? Peterson? Hill? Etc.


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Let the chips fall where they may.


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I do not know what can be proven in a court of law or in a hearing before the California bar about the conduct of Michael Seitz as an attorney. However, he has zero credibility in acting in the best interests of the sanitation district. He has been so aligned with John Wallace in so many questionable and mismanaged situations that it defies belief he is still around. He needs to be held accountable and his contract terminated immediately.


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Pressure needs to be applied to Shoals, and Guerrero.

Jim Hill has already made it quite clear where he stands with respect to Seitz.


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Matt Guerreo is a politically, motivated dishonest man. He regularly had Brown Act violations while head of the Oceano district, many of which he corrected only after cure and correct letters forced him.


He breaks rules for his own agenda, does not follow laws, and gets into political bulling of activists and journalists. He is not judge material. People like him are why attorneys have a bad name.


Watch his leadership in Oceano as he cuts speakers off against the Brown Act because he doesn’t like what they say. He is a junior level Adam Hill. The difference is Adam is consistent while Matt changes depending who is in the meeting. Put a reporter in the room and he suddenly acts decent. He also tells people he supports their cause, though he does the same with the other side.


He has parroted politically motivated untrue rumors on the dais as fact. Judges need to be beyond reproach and to have a respect for the law. Matt breaks laws such as the Brown Act which don’t matter to him and the Adam Hill crew, but are laws.


Matt also participates in online bullying in an attempt to discredit those who question his leadership, though he knows the allegations are false.


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Agreed, Matt is in this mess up to his eyeballs.


Judging from his participation in the deceit,

reluctance to transparency, and overall dishonesty,

he is not judge material.


Anyone with a close association to A-Hill should be considered highly suspect.


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Accusations & speculation: does not get us any closer to the truth than bogus online “news” !


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What is bogus about this reporting??? I think we would all be interested to know what is falsely stated in the article.


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The word bogus has its origins From a Noun – a machine to make counterfeit money & as a noun may also be used to note “any odd looking object”


By posting a photograph of Director, Matt Guerrero alongside the article headline – to me is bogus. it’s deceptive & evokes the misleading notion that Mr. Guerrero is solely at fault. It makes “the piece as a whole” BOGUS – an odd looking object. Being such in appearance, it shows possible intent to commit fraud. furthermore, it promotes negative comments directed at Guerrero – it is tantamount to posting a bullseye on his face, as it’s a set up to single him out and target him as the ONLY villain.


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It’s not appropriate to put Guerrero’s picture by the headline that includes “attorney mislead ratepayers”. He has been a vital supporter of some of the positive changes that have already taken place at the Sanitation District.


However, it has been disingenuous of Guerrero to ask for more information from the public which would support an investigation of Wallace. Appleton, Mascolo, and Devina Douglas put their jobs and reputations on the line, stating the plant was out of compliance and mismanaged. During Appleton’s testimony at the Water Board hearing in 2012, he directly blamed Wallace for mismanagement. Recent fixes, which Guerrero celebrates, were necessary because the plant was out of compliance and wasn’t fixed until Wallace was gone.


Appleton was the State Water Board’s witness in an open and shut case. The Governor should be aware of that. Guerrero would make a good judge, but how much proof does a prospective judge need?


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Respectfully snooky156, Velie’s report factually states, “On May 16, 2012, the three sanitation district board members, Oceano Community Services District President Matt Guerrero, Grover Beach Councilman Bill Nicolls and Arroyo Grande Mayor Tony Ferarra, rejected the state’s settlement offer in closed session.”‘


Given this, it is appropriate that Guerrero’s picture highlights the article. Because he was there and the attorney on the Board. He should have acted then — and not have been part of the consensus ignoring the facts of or finessing the matter.


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I’m totally fine with Guerrero’s photo being in the article. Guerrero was at the Dec. 17, 2014 meeting (the lone remaining board member from the settlement era) who could have corrected or clarified the historic record regarding settlement discussions as laid out in this very revealing memo of June 2012 … and didn’t.


Please watch Guerrero’s report to his Board this last week (should be on Ch. 21 at 6PM tonight). He makes the cost of the audit sound like an over priced fishing expedition. Ridiculous! $40,000 or even more is a cheap price to pay to let the sunshine in.


What does $40,000 in government dollars buy these days? At SSLOCSD (before 2013 resignation) it gets ya two weeks of Wallace, less than a months worth of chlorine (under Wallace), at OCSD it gets ya two months of Paavo Ogren, in AG it pays for two months of Steve Adams severance, and just half of a water conservation public relations campaign. $40,000 goes a long way at my house, but not when it’s the faceless ratepayers money.


$40,000 for an in depth audit is a bargain. The real waste is that no matter how much is spent on an audit, the district paid Wallace approximately $20,000 (more invoices were provided after I wrote the linked OpEd) to purge and gut some 57 boxes of files (see: http://calcoastnews.com/2014/12/wallace-purged-sanitation-district-documents/) AFTER the man no longer worked for the district. While Guerrero was beating the drum to get those files back, he approved the expense!


As an attorney, who apparently aspires to be a judge, he failed in his duty to protect the district and the constituents he represents. As the San Dist just begins to recover, the Oceano CSD continues to bleed out right under Guerrero’s nose. He is no longer at the helm, handing the wheel of the sinking ship over to the one board member who is the common denominator to many of the districts missteps over the last 6+years, Mary Lucey. Aimed at the iceberg, Lucey will sink the ship unless there’s one helluva Hail Mary rate increase.


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Mr. Guerrero needs to accept responsibility and accountability for his actions.


It is time for his resignation !


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I believe it’s YOUR goal to sink ships! Destroy all the local governments & make room for huge developments – in cahoots with Pismo. You really think they will stop at $40k? And how much money have YOU cost the districts? Staff time, Board overtime, etc., etc. ? Why don’t you calculate all the money your wasting time cost the rate payers? Investigate that!


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Let’s have a open public televised debate with Mary, paavo, guerrero with Julie.


What say you. I will pay for the moderator. Let the public and free press judge for themselves.


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So you are okay with a lawsuit that was not winnable and footing a 750,000 dollar bill—I find that hard to believe.


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I know that Guerrero was there, he is an attorney, and he was on the board. But, he is not serving as the Sanitation District’s attorney. That responsibility lies with Mike Seitz. It should be Mike Seitz pictured there.


If Guerrero made a bad vote, he may have to answer to the people of Oceano…. the same way Ferrara and Nicolls need to answer to ratepayers. The danger is that over time Guerrero engages in a string of bad votes, which tied together make it appear that he has protected potential criminal behavior. The more they talk, the more they vote, the more we find out.


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Respectfully, the more some talk, the more they lie.


When confidential information such as the above comes out,

now THAT’s when we really learn the truth.


It will be difficult to believe anything Mr. Guerrero says from now on.


How do we know when he’s speaking the truth,

or feeding us a line of BS, not only to cover his own @ss,

but that of Wallace as well?


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Ferrara is no longer in office and cannot answer to the people of AG, and would not have answered to the people in AG had he won the mayoral election. And if it wasn’t for Julie Tacker, Karen Velie, and Dan Blackburn, along with a myriad of other people, we wouldn’t “find out” anything from the above leadership—they hide as many actions as they can from the public.


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Disagree – he was not “ignoring” anything. Quite the contrary !


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When will The Trib wake up and smell the sewage?

Their headline this morning of “Gamble on fine could be costly for sewer district”

is almost laughable.


Gamble? What gamble?


The board never expected NOT to pay the fine,

their own timeline clearly shows they WILL eventually pay.

The issue is WHEN, where is the gamble in that?

The one and only purpose of litigating was to STALL–

there was no expectation of reducing the fine.

So, who benefits from stalling?

Certainly it is not the ratepayer, legal fees,

when added to the fine are simply insult added to injury.

Only the lawyers and Wallace Group would benefit from delaying the inevitable.


Now we really know why Seitz did not follow the recent board directive

for an immediate mediated settlement.

He’s part of the dream team working to save Wallace’s hide!

All along, the gameplan has been to extend this into 2016

when Wallace would no longer be on the hook.


It seems to me the only thing the board gambled on

was whether or not they could adhere to their proposed timeline.


Fortunately for ratepayers, the recent election threw a big monkey wrench

into their plan, Jim Hill.


Perhaps that was the boards biggest gamble, albeit unbeknownst to them at the time.

They NEVER figured Tony losing the election onto the timeline!


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The “when” in this timeline for paying the fine is “when” the ratepayers have forgotten the reason for the rate increases (6 years after the spill). The “when” comes after a 218 protest process that takes 50%+1 of the customers (could be property owners) to approve or deny the increase.


The rate must identify the reason for the increase. Surely it will identify shiny new objects associated with the district’s new goals; i.e. recycle water, redundant treatment processes, no ocean outfall (farce), administration (here is the “Where” … the fine will be lumped in there with legal fees as the ‘cost of doing business’).


SSLOCSD ratepayers should be on the phone to these board members for the next five days making your concerns known. If you’re more comfortable with a board/council member from the agencies involved, ask them to relay your concerns to their representatives.


This is a critical time for activism to play an important roll in the change needed in the district! Call a board member or council member today.


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There is a stark difference between being an “activist” & being an agitator & being disruptive, & calling people names & speculating & spewing lies. So, as long as we are speculating … Chew on this: of course Julie defends the article – she wrote it!


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Sometimes disruption and agitation is necessary to make changes. Disruption is not a bad thing—maybe if someone disrupts your sleep or screws with your retirement account, but if disruption makes change possible in local government where there is honesty, transparency, and true leadership, then I am just fine with disruption.


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Indeed. Without disruption and agitation, our own country would never have been formed.


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Whether she wrote the article or not has nothing to do with the quality of the contents of the article. Going by your failed logic, every article ever written could be discounted because of the person who wrote it!


The way to refute information in Julie’s article is to do your own research and write an opposing op-ed.


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Exposing this coverup and corruption is only the beginning if San Luis Obispo County is to smell fresh again.


When our Electeds begin to lie it is usually part of a web that has already been constructed and you either play ball or be marginalized. As for the sanitation district if you care to see, all is now being revealed. Usually the one with the longest elected status are the “KingPins” and that is why the voters voted out the past mayor of AG – 16 years. One of the old guard was re-elected as mayor of GB!


CalCoastNews has more stories to write because they choose to write about what is really happening in our county. They will never run out of material in my lifetime as the corruption covers many topics and many cities.


YES there is RIGHT and WRONG no matter how many times our foes paint the world as “go along to get along” and “I’m OK and You’re OK”.


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Phoenix, that is incredibly perceptive and sadly, true. What we are now discovering is not only the tip of the iceberg at the Sanitation District, but countywide.


These corrupt practices are perpetuated and defended by the Tribune, so wedded to its political view and its right to maintain it that it is blind to the truth, euphemising bad practice and damning those of any faction, even their own, who dare to call it out.


The underside of our government agency carpet is thick with payoffs and coverups of behaviors that would horrify a good human relations professional, bolstered by a culture fixated on avoiding any perception of scandal at any cost, smoothed over by agency attorneys who have no concept that they serve the people or the ideals democracy espouses.


Fixing it takes courage and passion and a consistent high profile effort by those of us who see it and care.


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Yes, the corruption started eons ago. So why must we blame the newer folks who have been trying to uncover it for the past 4 years?


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I don’t think the “new folks” are being blamed, they are being called out on their own actions which are less than ethical—why are you against the changes? Is it because you are getting something in return from the people who are being called out??


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And the “new folks”, with the exception of Jim Hill, are not trying to uncover it.


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Don’t confuse an attempt to bring those who obviously were involved in a conspiracy to cover-up illegal actions and gain political power…recent and past board members at large.


The SSLOCSD officers, administration and legal counsel have used SSLOCSD as their personal piggy-banks, and then get pissy when the rate-payers confront them about it.


We need a forensic investigation, that goes back to the beginning of the SSLOCSD, if we are ever going to get things straightened out.


Those who are not guilty have nothing to fear. Those who are guilty do have something to fear.


It is not an issue of WHO they are but WHAT THEY DID.


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