August 30, 2014

Medina
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Medina school board wants $1M from Stepp

The Medina school board went on the offensive in its legal battle with former Superintendent Randy Stepp, filing an amended counterclaim Wednesday in federal court demanding more than $1 million in damages.

The school district and Stepp have been at odds since April when the board placed Stepp on paid leave pending the outcome of a state audit into his spending of district funds and rescinded his new contact, which the board unanimously approved in January.

Stepp responded in May with a lawsuit filed in U.S. District Court in Akron, charging school board members and other district officials with breach of contract, defamation and invasion of privacy.

The suit asks that Stepp be awarded the “full value” of his Jan. 7, five-year contract — valued at $1.2 million by the teachers union — and compensation for damage to his reputation and “mental anguish and suffering,” along with attorney fees and court costs.

The school board responded in July with a countersuit, demanding Stepp repay an $83,000 bonus he was paid when the contract was approved.

Last week, the board voted unanimously to fire Stepp, following the release of the state audit that included “findings for recovery” against Stepp for “public money illegally expended,” which must be paid back.

Christopher Ernst, a partner with Bricker and Eckler, who is defending the school board members and Treasurer Jim Hudson in federal court, said the audit finding backed up the board’s decision to rescind Stepp’s contract in April and provided evidence to support the counter claims against Stepp.

In Wednesday’s amended suit, the board is asking for $259,132 in compensatory damages and $777,396 in punitive damages for failing to deal with the board in “good faith.”

The compensatory damages including the $4,121 the state auditors flagged as illegal, the $83,000 signing bonus and the payoff of Stepp’s old college loans, which totaled $172,000.

The state auditors questioned whether the payoff of the loans should have been reported on Stepp’s W-2 form as taxable income. Stepp directed the payment be made using district money held in a “carryover” fund maintained by the Medina County Schools’ Educational Service Center.

Ernst pointed out that the state examiners said an addendum to the audit would be filed once they receive more information from the U.S. Department of Education on what loans were paid off with the money.

He also said that the audit found Stepp directed the repayment of three of his student loans with only a computer “screenshot” of his account with the U.S. Department of Education as documentation of the amount of the debt.

“I thought it was interesting the state only found one piece of paperwork to support the payment,” Ernst said. “I know they haven’t reached a final conclusion on it, but they didn’t find it to be proper.”

Ernst said the audit’s findings against Stepp supports the school board’s argument, included in Wednesday’s counterclaim, that Stepp’s lawsuit should be dismissed under the “doctrine of unclean hands” — a affirmative defense that requires someone bringing a lawsuit must be innocent of wrongdoing.

“A state agency determined wrongdoing,” Ernst said. “They made a determination based on their accounting of paperwork they received. It bolsters our case.”

Stepp’s attorney, David Drechsler, could not be reached for comment Wednesday.

School board President Karla Robinson didn’t want to comment on the specifics of the case, but praised Bricker and Eckler for their work.

“Our attorneys are doing everything possible to look out for the best interest of our district,” she said.

Filings in the case show it’s expected to be a lengthy proceeding. Deadlines for preliminary motions and pretrial actions are set for July 30.

Contact reporter Loren Genson at (330) 721-4063 or lgenson@medina-gazette.com.