YOUNGSTOWN — A judge dismissed a counterclaim by David Bozanich, the ex-Youngstown finance director, that his former bonding company shouldn’t have paid $100,000 to the city, which contends in a lawsuit that he participated in a “calculated scheme” to defraud the city.

The issue with Bozanich and the Hartford Fire Insurance Co., his former bonding company, comes from an $834,608 civil lawsuit filed Nov. 21 by Youngstown in Mahoning County Common Pleas Court against Bozanich, developer Dominic Marchionda and two of the latter’s companies: U.S. Campus Suites LLC and Erie Terminal Place LLC.

The city received $100,000 from Hartford 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, a student-housing complex. Bozanich isn’t named as being responsible for the remaining $120,000 the city is seeking in the lawsuit.

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

McKay ruled Aug. 7 that Hartford could intervene in the case.

Timothy Cunning, Bozanich’s attorney, filed an Aug. 18 counterclaim against Hartford, claiming the company’s “decision to pay the city was a cowardly dereliction of the duty of good faith that it owed to Mr. Bozanich.”

In a Sept. 11 response, Marc Sanchez, Hartford’s attorney, wrote that Bozanich cannot cite any Ohio case that recognizes a principal’s bad-faith claim against its surety. In this case, Bozanich is the principal, Hartford is the surety, and the city is the obligee.

“The only Ohio courts to address this issue have held just the opposite,” Sanchez wrote. “Accordingly, Bozanich cannot establish any set of facts that would entitle him to relief on his bad-faith claim and the claim must be dismissed as a matter of law.”

Visiting Judge W. Wyatt McKay, who is overseeing this case, agreed Tuesday with Sanchez.

McKay ruled that Bozanich had no standing in the matter as the agreement to pay the $100,000 was between Hartford and the city.

“There is no set of facts for which Bozanich can recover, and the counterclaim by Bozanich must be dismissed,” McKay wrote.

McKay scheduled the trial in the civil case to start Nov. 9, 2026.

In a separate criminal case, Bozanich pleaded guilty Aug. 7, 2020, 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.

On the same day, 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. As part of the deal, charges against Erie Terminal Place LLC were dropped.

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 state auditor began its investigation into the transaction after The Vindicator extensively reported on it.

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 wasn’t convicted of any crime related to the fire station transaction and got to keep the remaining $200,000.

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, Gregg Rossi, attorney for Marchionda and the two companies, wrote in a 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, 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. The county auditor puts its value at $46,000 for property tax purposes.

If it’s determined that the lawsuit is not barred by the statute of limitations, 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 which 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.