YOUNGSTOWN — With new legal counsel hired, Youngstown is seeking the dismissal of counterclaims to its $834,608 civil lawsuit filed by developer Dominic Marchionda and two of its companies over contentions that the city was the victim of a “calculated scheme” to defraud it.

The city filed the lawsuit Nov. 21 against Marchionda, U.S. Campus Suites and Erie Terminal Place LLC as well as ex-city Finance Director David Bozanich in Mahoning County Common Pleas Court for their involvement in a public corruption case. Marchionda, Bozanich and U.S. Campus Suites LLC all pleaded guilty to felonies after taking deals on Aug. 7, 2020.

Attorneys for Marchionda and his two companies as well as Bozanich have responded in court documents that the lawsuit should be dismissed because it is past the statute of limitations and barred by a previous plea bargain agreement, among other issues.

Gregg Rossi, the lawyer for Marchionda and the two companies, filed a Jan. 2 motion to grant summary judgment in favor of his clients as well as a counterclaim that raised the possibility of the return of $1 million paid from Youngstown to his clients.

In a Feb. 11 motion similar to a Jan. 2 answer and counterclaim, Rossi wrote that summary judgment should be granted because a plea agreement with his clients prohibits the city’s lawsuit.

He wrote the city first became aware of the one issue it raised in the lawsuit in a state audit issued Dec. 20, 2012, and the other in a Dec. 19, 2013, audit — and chose to do nothing about it for years and thus exceeding the statute of limitations. The city contends it has not gone past the statute of limitations on the matter.

The plea agreement signed the day the deals were taken, Rossi wrote, prohibits “any governmental body seeking restitution in any form or amount from” Marchionda related to the case.

He added: “The terms of this agreement are clear and unambiguous and, therefore, enforceable.”

In a Feb. 18 answer to this lawsuit, Bozanich’s attorney Timothy Cunning wrote: “The city has suffered no economic harm or loss as a result of Mr. Bozanich’s actions and the city should not be wasting taxpayer dollars pursuing what it knows to be frivolous and time-barred claims.”

The city has until April 28 to file a response in opposition to the summary judgment request.

Rossi filed a Jan. 2 motion asking that the city’s legal counsel, attorneys with the Roetzel & Andress’ Cleveland office, be disqualified because it acquired a law firm that served as Marchionda’s personal attorneys and corporate attorneys for the two companies.

The city agreed Feb. 18 to seek different legal counsel to avoid the appearance of a potential conflict.

The city hired Brennan, Manna & Diamond LLC of Akron as its attorney. Hilary DeSaussure of the law firm in a Monday filing asked visiting Judge W. Wyatt McKay to dismiss the counterclaim against the city.

In the filing, DeSaussure wrote: “The city of Youngstown has absolute, qualified, statutory and / or common law immunity from suit, including but not limited to the immunity afforded to political subdivisions of the state of Ohio and employees under (state law) and all other applicable immunities under federal, state and common law.”

Statutory immunity gives government entities in Ohio immunity from liability in which it is performing a government function.

DeSaussure added several other affirmative defenses such as the defendants failed to state a claim upon which relief can be granted, the claims are barred by public policy, the defendants are barred by the applicable statute of limitations, barred by the defendants’ own acts or omissions, and the city didn’t cause damages.

The city’s lawsuit accuses Bozanich, Marchionda and the companies of defrauding Youngstown out of $834,608.

Marchionda, Bozanich and U.S. Campus Suites LLC all pleaded guilty to felonies after taking plea deals on Aug. 7, 2020.

Bozanich pleaded guilty to one count each of bribery and tampering with records, both felonies, and two misdemeanor counts of unlawful compensation of a public official. Bozanich spent nearly a year in a state prison for his crimes.

Marchionda pleaded guilty to four felony counts of tampering with records, all occurring on Oct. 6, 2011, admitting he used false invoices to get money from the city for his Erie Terminal Place downtown-housing project to pay bills he owed for the Flats at Wick.

U.S. Campus Suites LLC pleaded guilty to a felony count of receiving stolen property for illegally obtaining money from the city.

Charges against Erie Terminal Place LLC were dropped as part of the deal.

The city received $100,000 from Hartford Fire Insurance Co., Bozanich’s bonding company when he was finance director, as partial payment of the $614,608 it is seeking specifically related to funding given at Bozanich’s behest to Marchionda to develop the Flats at Wick.

The $100,000 from Hartford would be deducted from the amount the city is seeking though the company filed a motion to intervene in this case on Jan. 17 seeking to get that money from Bozanich.

Bozanich’s tampering with records conviction was for him giving $1.2 million from the city’s water and wastewater funds, divided evenly, to Marchionda if he gave $1 million of it to the city’s general fund in December 2009 to buy the property for a Madison Avenue fire station, which was subsequently closed. That transaction allowed Bozanich to balance the city’s general fund that year.

The lawsuit states the fire station purchase “was a calculated scheme, facilitated by U.S. Campus Suites and orchestrated by Dominic Marchionda and David Bozanich to illegally transfer money from the city’s water fund and wastewater fund to the city’s general fund in violation of” state law.

Marchionda, who wasn’t convicted in the scheme, got to keep the extra $200,000 from the city grant.

The city also paid $3,220 in closing costs.

The appraised value of the fire station at the time was $411,388, according to the lawsuit.

As for the $200,000 from the original $1.2 million grant, Rossi wrote in his Jan. 2 filing that more than that amount was used for water and wastewater work related to the student-housing project.

The fire station, Rossi wrote in a Jan. 2 answer and counterclaim, was deemed as surplus property by the city “with no value and no use” so the monetary recovery claim “is unfounded.”

If U.S. Campus Suites LLC is liable for the value of the fire station, Rossi wrote the fair market value is zero with the county auditor valuing it at $46,000 for property tax purposes.

If it’s determined that the lawsuit is not barred by the statute of limitation, Rossi wrote U.S. Campus Suites LLC seeks the $1 million “in grant money improperly received by the city of Youngstown as a result of the transaction.”

The lawsuit seeks a total of $614,608 from the two men and two companies: $411,388 for the fire station purchase, $3,220 for the closing costs, $100,000 from the wastewater grant and $100,000 from the water grant.

The city is seeking $220,000 from Marchionda and Erie Terminal Place LLC – $110,000 each for water and wastewater grants given to that project that Marchionda pleaded guilty to creating false invoices.

In addition to the $834,608, the city is seeking costs and interest on the money, and for Bozanich to “forfeit and disgorge any and all compensation he received from the city during the relevant time period pursuant to the faithless servant doctrine in an amount to be determined at trial.”

Bozanich was city finance director from Nov. 15, 1993, to Dec. 31, 2017.