Contaminated water fight leaves city, lawyers at odds Aircraft dispute adds fuel to the MtBE case
CITY HALL — When lawyers hired by City Hall were grappling with 18 oil companies for contaminating Santa Monica’s drinking water, they ran up some hefty bills. Among them were meals at the city’s most expensive restaurants, stays at upscale hotels and trips by private jet.
The attorneys’ efforts to get taxpayers to foot the bills, which have been buried in a pile of expenses that nearly total $1 million, have raised eyebrows — and more legal fees.
What’s more, the contingency fee arrangement in the multi-million dollar case is in dispute, though the case was largely successful, resulting in a settlement the tactics of which are also in dispute. The two sides are set for trial in March. At issue is just how much City Hall owes its team of contingency lawyers for securing a $121 million cash settlement, plus building a water treatment facility to clean up seven water wells.
Already, more than $600,000 has gone to lawyers working the case. While hundreds of thousands of dollars in taxpayer money was reimbursed to the contingency lawyers for their expenses, city attorneys refused to pay a substantial amount, contending they strayed beyond reasonable levels.
Like $88,543 in air travel billed to City Hall by Dallas-based attorney Fred Baron in 2002. The total balance on the invoice? $206,275. It included such expense totals as $11,850 for hotels; $2,463 in meals; $3,937 for cabs, car rentals and parking; $10,000 for conference rooms and more than $300,000 in office expenses, including copying costs and research.
City officials also felt $300.21 for a meal at Capo restaurant; $214.98 for dinner at Giraffe and $168.31 at Valentino was a bit extravagant. Those meals were billed to City Hall in January 2003 by Miller, Sher & Sawyer, a Sacramento-based law firm.
City attorneys said they weren’t present for any of those meals, consumed instead by outside lawyers working for the city on a contingency basis.
REASON USED IN UNREASONABLE CIRCUMSTANCES The January 2003 invoice from the Sacramento firm totaled $11,641.77, for everything from meals to hotel and airfare costs to cabs and business expenses incurred from September to November 2002. The invoice showed that City Hall owed Miller, Sher & Sawyer $75,324.74, with $13,604.40 already having been paid.
Visions of the outside lawyers wining and dining, and flying around on private planes irked city attorneys enough to contest them.
City Hall’s other law firm, Baron & Budd, had billed Santa Monica taxpayers for trips on Baron’s private jet, and other airfare costs from Washington D.C. to California, a trip which wasn’t necessary to the case, according to city officials (See related story). And hotel charges rung up by private lawyers also exceeded city guidelines.
The invoices were submitted by the law firms sporadically and didn’t have detailed expenses. City officials would pay only the fees they felt were reasonable. City officials asked for documentation to back up the expenses, which showed private aircraft use, Lincoln Town car rentals and limousines.
In a Feb. 10, 2003 letter to the lead attorneys on the case — Duane Miller, Victor Sher and Baron — City Attorney Marsha Moutrie gave them the bad news: their bills were unreasonable, in view of the fact that taxpayers of far fewer means would be expected to pay them.
“As you know, our retainer with you obligates the city to provide reimbursement for ‘reasonable’ expenses incurred in the course of your work on the city’s behalf,” Moutrie wrote. “Most of the individual items on the expense claims we have received from you are within the realm of reasonableness. However, there are some flagrant exceptions. For instance, we have received claims for extremely expensive meals at a couple of the city’s most expensive restaurants. These claims far exceed the city guidelines and any common understanding of what would be considered ‘reasonable’ cost for dinner.”
City guidelines establish $45 a day in expenses for meals — breakfast, $8; lunch, $12; and dinner, $25, with no alcohol reimbursement. Nightly lodging costs of up to $175 are considered reasonable, Moutrie wrote — amounts that might be considered stingy by many law firms.
The lawyers hadn’t been informed of the city’s expense guidelines until Moutrie’s Feb. 10, 2003 letter.
“I think it’s emblematic of a huge culture clash in this case,” Moutrie said. “We obviously operate in different worlds.
“They may have assumed that it was OK to bill the city for expensive meals because that’s the world they live in.”
Behind the dispute over meals, hotels and planes looms a larger battle over exactly what the contingency lawyers are owed for representing City Hall in its litigation against the oil companies, which admitted to allowing gasoline additive MtBE to seep into Santa Monica’s drinking water, contaminating seven wells.
At issue is just how much City Hall owes its team of contingency lawyers for securing a $121 million cash settlement, plus building a water treatment facility to clean up the water wells.
In a letter dated May 3, 2004, Moutrie offered to process the lawyers’ payment requests on services rendered, based on documentation establishing hours worked on individual tasks and information that supported hourly rates. Moutrie indicated that when the dispute was over, the city would deduct fees paid on those billings from any amount agreed or ordered to pay.
In response, Baron indicated on May 4, 2004, that the case was prosecuted based on a contingency fee and his firm didn’t keep hours and didn’t agree to an hourly rate. He declined the offer.
That offer was hashed out again in mediation between city attorneys and the contingency lawyers, who continue to argue they were retained by City Hall on a contingency fee basis. Then the two sides sued each other.
The battle over lawyer fees and expenses is expected to go to trial in March.
Originally published in the Santa Monica Daily Press print edition on October 17, 2005. Read the original PDF.