Nevada County paid $1.9 million in a lawsuit settlement this week.

That's following at least two previous settlement offers in the case, The Union has learned: One offer of $30,000 in fall 2009, and a settlement offer of $1 million in September 2010.

County officials maintained Thursday that the facts in the case had not changed between the time the offers were made and the settlement was announced this week.

The decision to accept the $1.9 million settlement was due to the hundreds of thousands of dollars being racked up in legal fees, officials said.

Software firm AtPac Inc. sued the county, Clerk-Recorder Gregory J. Diaz and the software firm Aptitude Solutions in February 2010 for breach of contract and copyright infringement.

On Wednesday, AtPac lawyer Michael Thomas of Downey Brand said his client has received payment in the settlement, approved recently by Nevada County's Board of Supervisors.

Auburn-based AtPac provided software for the Nevada County Clerk-Recorder's office through 2008, when it lost its contract to Florida-based Aptitude.

In the switch to Aptitude, county employees and Diaz allowed Aptitude access to AtPac's trade secrets, AtPac claimed in the suit filed in the Eastern District of California federal court in Sacramento.

County officials denied any wrongdoing in the settlement, which was announced Tuesday.

AtPac first offered to settle for $30,000 before it filed a lawsuit in the case, Thomas said.

Nevada County could not agree to AtPac's terms at that time, said Nevada County Counsel Michael Jamison in an e-mail to The Union.

“However, that letter, a copy of which was sent by Downey Brand to Aptitude Solutions, included a demand that Aptitude Solutions not compete in the 13 counties that AtPac stated was being serviced by AtPac. The latter demand was not subject to the county's control,” wrote Jamison, who announced his retirement on July 1.

AtPac offered to settle again in September 2010, said county Board of Supervisors Chair Ed Scofield.

“At that time there was no indication the county had done anything wrong,” Scofield said. “The $1 million seemed very extreme, and the defense cost was minimal at that time.”

By February 2011, attorney fees began to climb, and the contract for legal fees began to grow, Scofield said.

“Around that time, we were making changes and adding to (the contract) at the board meetings,” Scofield said. “The cost was becoming very difficult for us to swallow as a board. It really became a business decision.”

Thomas called into question the county's legal strategy.

“Instead (of settling) ... the county engages in months of litigation and racks up legal fees,” Thomas said. “And then they settled. Who's the Einstein that settled on that strategy?”

Change in counsel

Legal fees for the county's first outside defense firm — Los Angeles-based Cypress LLP — totaled $725,000 before the two parted ways in May.

The county then signed on with Sacramento-based Pillsbury Winthrop Shaw Pittman for a maximum of $500,000.

It's unclear how much the county charged against that contract, but it did not reach the maximum, Jamison said.

Taking the case to trial would have cost an estimated $1.75 million, said Jamison, citing figures provided to him by Pillsbury Winthrop.

This week, when the county settled with AtPac, it announced all of the legal fees and most of the settlement was covered by its insurance pool, made up of public agencies across the state.

Taxpayers were left on the hook for $100,000, the county's total financial commitment to the case, county officials said in a statement accompanying the settlement.

To contact Staff Writer Kyle Magin, e-mail kmagin@theunion.com or call (530) 477-4239.