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State auditor lawsuit over Huntington Beach Pacific Airshow settlement continues with court hearing

March 17, 2026

Lawyers in an evidentiary hearing of a state auditor’s lawsuit against Huntington Beach engaged in testy exchanges Monday.

Orange County Superior Court Judge Carmen Luege heard the city’s explanation for why it has not complied with a state-ordered review of its controversial settlement with operators of the Pacific Airshow.

Luege said the point of the hearing was to clearly flesh out which records California State Auditor Grant Parks is looking for and, more importantly, where and how they can be obtained.

“I don’t want my court to become an impediment to what I consider the fact-finding mission of the auditor,” Luege said. “I want to establish a path so that the goal of the auditors, at least in some respect, can be met, which is to receive documents that provide some level of clarity on the issue and the amount of the settlement.”

City Treasurer Jason Schmitt took the stand to explain the process of how the city keeps its records and which records his office has access to. Schmitt, who was appointed to the position in August, said he has asked his deputy and assistant to look for email communications that reference the Pacific Airshow, as well as relevant physical records, such as binders containing settlement documents. Schmitt testified that he has access to, but “not custody” of, records that the state auditor is seeking.

Luege appeared frustrated as she peppered Schmitt with follow-up questions, such as which records does the treasurer think he has access to and are there any electronic communications between the city and the Pacific Airshow that he can provide? Schmitt answered no to most of the queries.

The exchange turned combative when the city’s attorney, Norman Dupont, accused Lueuge of “badgering” Schmitt — a remark that earned Dupont a rebuke from the judge.

“You are out of place in your tone and your demeanor,” Luege said. “You’ve been disrespectful.”

In 2023, Huntington Beach leaders announced a settlement with the Pacific Airshow operators in which the city agreed to pay the operator $4.9 million for losses incurred after the final day of the 2021 show was canceled due to an oil spill. The settlement also gave Pacific Airshow exclusive rights to host an annual air show for up to 40 years, waiving fees and allowing the operator to monetize thousands of public parking spaces.

Parks sued the city in October 2024 for its failure to comply with a state audit approved by the California Joint Legislative Audit Committee that May. Parks had subpoenaed then-city Treasurer Alisa Backstrom for an interview and the city for permits and contracts with Pacific Airshow.

The city has called the probe a “witch hunt” and argued that the subpoena violates the home rule doctrine in the state constitution, which grants “individual charter cities” such as Huntington Beach the authority to manage its own finances. Luege rejected that argument last month and overruled the city’s motion to dismiss the lawsuit.

Luege said Monday that the city has not proven its argument with state law or any legal precedent.

Earlier in the hearing, Luege also had a tense discussion with the state auditor’s attorney, Michael Strumwasser, over procedural issues about how an audit can be conducted.

Should a city refuse to comply with a state audit, Luege said, the state has the option of issuing subpoenas to obtain the records it needs. Strumwasser argued that requiring the state to issue a subpoena as a response to the city’s non-compliance is “utterly incompatible with state standards for an audit.”

“I know your position is that you should be able to knock on the city and they must open the door,” Luege said to Strumwasser, adding that she was not convinced by that interpretation. “The framework of this case is not that different to the framework of any case: you file a petition, you have the right to subpoena whoever it is you want to be able to talk to.”

Luege said months earlier that she wanted to tread carefully with the case because there are few precedents for cities that have contested state audits.

“If I’m going to dive into issuing a ruling about enforcement, I want to dive and step lightly because I don’t want to drown,” she said in November.

The evidentiary hearing is set to continue today.

Orange County Register

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State auditor lawsuit over Huntington Beach Pacific Airshow settlement continues with court hearing

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