Settlements wrapping up in BlueGo bankruptcy |

Settlements wrapping up in BlueGo bankruptcy

by Tom Lotshaw
BlueGo bus service has been operated by the Tahoe Transportation District since 2010. Douglas County commissioners approved a settlement with a former contractor over operation of the bus service.
Annie Flanzraich/Tahoe Daily Tribune |

More than three years of litigation between a California company and the former operators of the BlueGo bus appears to be wrapping up.

A string of good-faith settlements between MV Transportation, South Tahoe Area Transit Authority and the 11 public and private entities that once funded the authority have been approved over the last several months.

A settlement agreement with the company was approved by Douglas County commissioners in September. Douglas County and several other local governments who financed the authority are on the hook for $200,000 from a global agreement to clear up the lawsuit. Douglas is expected to pay its share from the loss provision account of the self-insurance account.

The Fairfield, Calif.-based transportation company entered a contract to operate, manage and maintain the BlueGo transit system in 2009.

The company sued the authority, its board of directors and its members for breach of contract, unpaid services and damages as it ran out of money and entered Chapter 11 bankruptcy in 2010. Litigation has been ongoing ever since, with numerous cross-complaints and settlements approved piecemeal in federal bankruptcy court in Reno.

“MV (Transportation) is delighted that the matter has been concluded with amicable settlements among all the parties,” said Kaaran E. Thomas, a Reno attorney who has represented the company.

MV Transportation sought more than $5.6 million in damages, according to Thomas and court records.

That total included compensation for $1.9 million in unpaid invoices, $394,930 in interest, an $825,000 promissory note, $1.2 million in lost profits and $869,771 in attorneys’ fees, according to court records.

The company is estimated to have recovered about $2.38 million.

According to court records, the company has received about $908,000 from settling defendants. The last settlements were approved in early December, Thomas said.

That list includes the authority board and its insurance company, El Dorado and Douglas counties, Tahoe Transportation District, Tahoe Regional Planning Agency, the city of South Lake Tahoe, Ridge Tahoe Property Owners’ Association and the parent companies of Heavenly Valley, Harveys Lake Tahoe, Horizon Casino, MontBleu Resort Casino & Spa and Lakeside Inn and Casino.

In the good-faith settlement agreements, the defendants deny liability and say they are settling to “buy their peace” and control litigation expenses.

MV Transportation is also estimated to receive about $1.475 million from a liquidating agent assigned by the bankruptcy court to pursue and liquidate the authority’s assets to satisfy its creditors.

The final settlement figures are unknown. The liquidating agent will pay his expenses and all of the authority’s other small creditors, all of whom are being paid in full, and any money left over will go to MV Transportation, Thomas said.

That’s expected to include at least some amount of grant money the California Department of Transportation awarded to operate BlueGo.

“Those grant moneys are being collected, and when collected will be distributed to MV as well,” Thomas said.

A lawyer at the law firm representing the authority could not be reached for comment on the case.

Not long after the bankruptcy filing in 2010, the Tahoe Transportation District took over the BlueGo bus service and has been operating it ever since.