Monica Agrees to Pay Record $55 Million in Legal Fees
By Jorge Casuso
March 13 -- The City of Santa Monica will pay the largest
legal bill in its history -- $55 million -- to attorneys who assisted
in a water contamination lawsuit under a settlement agreement approved
by the City Council Tuesday night.
The record settlement resolves all outstanding and potential claims and disputes
with a dozen attorneys who assisted in a case filed by the City in 2000 against
major oil companies that contaminated the City’s wells with a gasoline
additive. The case led to a 2003 landmark settlement..
The settlement amount approved Tuesday night is far less than the $90 million
to $100 million the attorneys had initially requested, City officials said.
“The City considers this a fair resolution that brings a highly contentious
lawsuit to an end,” said Mayor Herb Katz. “The City can now pay
full attention to our primary goal of restoring the City’s drinking water.”
The settlement represents 22 percent of the $250 million total recovery the
City received from Shell, ChevronTexaco, ExxonMobil and other companies sued
in 2000 for contaminating the City’s water in West Los Angeles with the
gasoline additive Methyl Tertiary-Butyl Ether (MtBE).
The contamination affected five of the City’s 11 wells and led to the
loss of much of Santa Monica’s drinking water. The City was forced to
begin importing water from the Metropolitan Water District in 1996 at a cost
of $3 million a year, which is paid for from proceeds of the final 2006 settlement
with the oil companies.
The outside attorneys contended that under a Legal Services Agreement with
the City, they were owed 25 percent -- or nearly $30 million -- of the landmark
$121.5 million settlement.
In addition, they contended that under the agreement, Santa Monica owed them
25 percent of the cost of a state-of-the-art water treatment facility the City
estimated would cost between $339 million and $537 million.
In December 2006, the City negotiated an additional $131 million settlement
with the oil companies which cashed out their promise to construct the water
treatment facility for water produced from the Charnock Well Field.
“This is much less than is normally paid to contingency attorneys who
typically are paid up to 40 percent” of settlements, City Attorney Marsha
Moutrie told the council members before they voted to approve the settlement.
At the center of the fee dispute was how to compute the contingency fee, particularly
when it related to the value of the oil company’s promise to help build
the treatment facility. Once that issue was resolved, City officials said, there
was greater opportunity to settle.
“This settlement finally allows the City to focus on building the treatment
facility and reinstating our water independence,” said City Manager P.
“After paying the contingency attorneys, the City will have enough funds
to build the treatment facility, purchase replacement water, maintain and monitor
test wells and perform other related tasks associated with cleaning up the Charnock
wells,” Ewell said.
The City has begun the process of designing the treatment system and anticipates
that water will once again be produced from this source in 2010, officials said.
The outside attorneys the City settled with are Baron & Budd, P.C., Miller,
Sher & Sawyer, Miller & Sawyer, Miller, Axline & Sawyer,
Sher Leff LLP, Cooper & Scully, P.C., Frederick M. Baron, Scott
Summy, Victor M. Sher, Duane C. Miller, and A. Curtis Sawyer, Jr.