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Santa 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. Lamont Ewell.

“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.

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“The City considers this a fair resolution that brings a highly contentious lawsuit to an end.” Herb Katz



“This is much less than is normally paid to contingency attorneys." Marsha Moutrie


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