HomeMy WebLinkAboutAgenda Report - January 7, 2004 J-02AGENDA ITEM J-02
CITY OF LODI
COUNCIL COMMUNICATION
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AGENDA TITLE: Ordinance No. 1739 entitled, "An Ordinance of the City Council of the City of Lodi
Amending Title 8 — Health and Safety — Chapter 8.24, Comprehensive Municipal
Environmental Response and Liability, By Repealing and Reenacting Section
8.24.090 — 'Miscellaneous Provisions,' Subsections 'D' and 'E,' and Adding
Subsection 'F' to the Lodi Municipal Code Relating to Availability of Contribution"
MEETING DATE:
PREPARED BY:
January 7, 2004
City Clerk
RECOMMENDED ACTION: Following reading by title, it would be appropriate for the City
Council to adopt the attached Ordinance No. 1739.
BACKGROUND INFORMATION: Ordinance No. 1739 entitled, "An Ordinance of the City Council of
the City of Lodi Amending Title 8 -- Health and Safety — Chapter
8.24, Comprehensive Municipal Environmental Response and
Liability, By Repealing and Reenacting Section 8.24.090 —
'Miscellaneous Provisions,' Subsections 'D' and 'E,' and Adding Subsection 'F' to the Lodi Municipal
Code Relating to Availability of Contribution" was introduced at the regular City Council meeting of
December 17, 2003.
Pursuant to state statute, an ordinance may be adopted five days after its introduction following reading
by title.
This ordinance has been approved as to form by the City Attorney.
FUNDING
SJB/JMP
Attachment
None required.
APPROVED:
councillcouncom/Ordinancel . doc
Susan J. Blackston
City Clerk
H. Dixon' -Flynn, City Manager
JR2 It 0 1161 FAT, 1, 11.P K11:611 *50111 EORN
_SECTION 1. Section 8.24.090 — "Miscellaneous Provisions" Subsections "D" and
"E" of the Lodi Municipal Code is hereby repealed and reenacted to read as follows:
D. Settlement Procedures and Consequences.
1 . Settlement of Joint and Several Liability. Any person alleged by the city to be
jointly and severally liable pursuant to this chapter, or any person who has been found to
be jointly and severally liable pursuant to this chapter by a final and binding
administrative order or final order of a court of competent jurisdiction, who has entered
into an Effective Settlement, Administrative Settlement, or Judicially Approved
Settlement shall not be liable for claims for contribution, equitable indemnity, or partial or
comparative equitable indemnity regarding matters addressed in the settlement. Such
settlement does not discharge any of the other potentially responsible parties unless its
terms so provide, but it reduces the potential liability of the other jointly and severally
liable parties that have not settled by the amount of the settlement. Unless the
settlement qualifies as an Administrative Settlement (the final action validating and
approving which has neither been stayed nor reversed by a court 0 competent
jurisdiction) or as a Judicially Approved Settlement (the final order validating and
approving which has neither been stayed nor reversed on appeal by a court of
competent jurisdiction) pursuant to this subsection, the status of any settlement of all or
any part of any joint and several liability imposed by this chapter as an Effective
Settlement may be challenged in a civil action by any person not party to the settlement
agreement whose rights or interests are or may be adversely affected by the settlement
and whose claims against the settling party are not otherwise barred by operation of law.
2. Administrative Settlement. The validity of any settlement of all or any part of
any joint and several liability or obligation imposed by or pursuant to this chapter (or any
other liability that the city attorney is authorized to assert on behalf of the city or the
people of the state of California related to protection of public health, welfare and the
environment and which is not required by the general laws of the state of California to be
judicially validated or reviewed for good faith purposes by another prescribed process
that is exclusive of the processes available pursuant to this chapter) as an Effective
Settlement may be determined by a final action of the city council validating and
approving the settlement pursuant to the following methods that is applicable:
a. If at the time of the effective settlement there is not pending an
administrative adjudicatory proceeding brought pursuant to this chapter to which the
settling party is a respondent, by a resolution of the city council adopted at or following a
properly noticed public meeting of the city council, provided that advance public notice of
the council's consideration of the settlement for purposes of validating it as an Effective
Settlement has been published in the Lodi News -Sentinel for at least two consecutive
two-day periods commencing at least two weeks in advance of the scheduled meeting of
the city council at which the. settlement will be considered. The notice required by this
subsection 2.a shall provide the public with notice of the availability of the settlement for
public review, the general nature of the pending settlement and its general effects if
approval of the settlement as an Effective Settlement is granted, the date and time
scheduled for city council meeting, and provide for an public comment period in advance
of the council meeting of at least ten (10) days duration during which any person may
submit written comments on the settlement to the city attorney for timely presentation to
the city council, and of the opportunity of interested parties to attend the city council
meeting and request time to present orally their views to the city council; or
b. If there is an administrative proceeding brought pursuant to this chapter to
which the settling party is a respondent pending at the time of the effective settlement,
by Joint motion for approval of the settlement brought before the hearing officer by the
city attorney and by the settling party or parties, provided that advance public notice of
the motion has been published in the Lodi Sentinel for at least two consecutive two-day
periods commencing at least two weeks in advance of the scheduled hearing before the
hearing officer at which the motion for validation and approval of the settlement will be
considered. The notice required by this subsection 2.b shall provide the public with
notice of the availability of the settlement for public review, the general nature of the
pending settlement and its general effects if approval of the settlement as an Effective
Settlement is granted, the date, time and place scheduled for hearing, and provide for a
public comment period in advance of the hearing of at least ten (10) days duration during
which any interested members of the public may submit written comments on the
settlement to the city attorney for timely presentation to the hearing officer together with
the written responses of the settling parties, if any, and of the right of any person whose
interests are or may be adversely affected by the settlement to petition the hearing
officer for permissive leave to intervene in the proceedings for the sole purpose of
protecting their interests that are or may be adversely affected by the settlement, which
leave, if granted by the hearing officer, may be conditioned as the hearing deems proper
in the interests of justice and as appropriate given the nature of matter pending before
the hearing office and its actual or threatened adverse impact on the public health,
welfare or the environment, and the right of interested members of the public to seek
leave from the hearing officer, which leave is committed to the sale discretion of the
hearing officer, to address the hearing officer on the record regarding the merits of the
motion at the scheduled hearing. If timely and properly objected to by any party to the
administrative proceeding (specifically including any person granted leave to intervene in
the proceeding), the hearing officer's report and recommendation regarding the motion
for approval and validation of the settlement, which shall be rendered and filed by the
hearing officer on an expedited basis, shall, together with any timely objections to that
report and recommendation, be brought before the city council for final action at its next
public meeting held pursuant to the regularly applicable notice requirements.
3. Judicially Approved Settlement. The validity of any settlement of all or any
part of any joint and several liability or obligation imposed by or pursuant to this chapter
(or any other liability that the city attorney is authorized to assert on behalf of the city or
the people of the state of California related to protection of public health, welfare and the
environment and which is not required by the general laws of the state of California to be
judicially validated or reviewed for good faith purposes by another prescribed process
that is exclusive of the processes available pursuant to this chapter) as an effective
settlement under this chapter may be judicially determined and finally resolved, as
follows:
a. In an action brought by the city attorney in the name of the city pursuant
to Part 11, Title 10, Chapter 9 of California Crede of Civil Procedure, Sections 860--870; or
b. If, at or within sixty days following the date of settlement, there is a judicial
action pending between the settling party and the city in which the city has asserted one
or more claims arising under this chapter; by joint motion brought in such pending action
for judicial approval of the settlement, with such advance public notice, if any, deemed
appropriate by the court of the availability of the settlement for public review, the general
nature of the pending motion and its general effects if granted, the date and time
scheduled for hearing of the motion, the available intervention procedures, and the
opportunity for interested or affected members to submit comments on the settlement to
the city attorney for timely presentation to the court, together with the city's response
thereto.
4, Persons , Not a Party to Settlement, if the city has obtained less than
complete relief with respect to an Environmental Nuisance from a person who has
resolved its liability to the city imposed pursuant to this chapter in an administrative or
judigially approved settlement, the city may bring or continue an action against any
person who has not resolved its liability imposed pursuant to this chapter with respect to
such Environmental Nuisance.
E Contribution.
1. To the full extent authorized by, and subject to the terms and conditions set
forth in., the general l w.of the state of California, any person who is or may be liable to
the City pursuant to this Chapter 8.24 for payment for, or performance of, some or all of
an Abatement Action or other obligation imposed pursuant to this chapter, or for
recovery of some or all of Abatement Action Costs incurred or to be incurred by the city,
may seek contribution pursuant to the general laws of the state of California from any
other person, specifically including the city, liable under this chapter for some or all of the
Baine relief who has not obtained valid contribution protection that precludes by
operation of law such contribution recovery from such person. Any contr' ution action
brought under this subsection EA of this section 8.24.090, or concernin any liability
arising pursuant to this chapter, shall be governed by the general laws f the state of
California.
2. Notwithstanding the provisions of subsection E.1 of this section 8,24.090, if
any court of competent jurisdiction determines that the general lags of the state of
California dos not provide for any legal process by which a person: who is or may be
jointly and severally liable to the city pursuant to this Chapter 8.24 for payment for or
performance of some or all of an Abatement Action or other obligation imposed pursuant
to this chapter, or for recovery of some or all of Abatement Action Costs incurred or to be
incurred by the city, may seek contribution from any other jointly and severally liable
parties, specifically including the city, then, and in that event only, such a contribution
action may be commenced and maintained pursuant to this subsection E.2 of this
section 8.24 .090 by: (6) any person who is or may be jointly and severally liable to the
City pursuant to this Chapter 8.24 against any other jointly and severally liable or
potentially liable party, specifically including the City, during or following any civil action
commenced by the City Attorney pursuant to this Chapter 8.24; or (ii) a respondent to
an administrative order issued pursuant to this chapter that has become final and
binding and not subject to further direct judicial review who is in complete compliance
with the requirements of that order against any other party who is also jointly and
severally liable or potentially liable for some or all of the relief imposed by the order.
a. In any contribution action commenced or maintained pursuant to this
subsection E.2 of this section 8.24.090, the court, in resolving contribution claims, may
allocate Abatement Action Costs, the costs or performing Abatement Actions or other
joint and several relief imposed pursuant to this chapter among liable parties using such
equitable factors as the court determines are appropriate.
b. In resolving any contribution claims brought pursuant to subsection E.2(4)
of this section 8.24.090, the court shall give the highest priority to securing the
expeditious and complete compliance with the terms and conditions of the final and
binding a dmin 1 strative order and shall manage the proceedings in the contribution action
so a.. to secure the uninterrupted, timely and complete compliance with the requirements
of.the final and binding administrative order.
c. Nothing in this subsection E. of this section 8.24,090 shall diminish the
right, if any, of,
L any person to bring an action for contribution under federal law or
under the general Jaws of the state of California in the absence of a civil action
commenced by the city attorney under this chapter; or
ii. a respondent to an administrative order issued pursuant to this
chapter to bring an action for contribution under federal law or under the general laws of
the state of Califomia although such respondent is not in complete compliance with the
requirements of that administrative order.
3. In any contribution action to apportion any liability arising under this chapter,
the rights, if any, of a person who has resolved its liability to the city to recover
contribution from other jointly and severally liable parties shall be subordinate to the
direct rights of the city to seek and recover the relief authorized by this Chapter 8.24
from those same liable parties.
AkP11_QN 2. Section 8.24.090 "F" ® "Computation of Time" of the Lodi Municipal Code
i. 9 he .`eby added to read as follows:
F. Computation of Time. In computing any period of time prescribed or allowed by
thischapter, the day of the act, event, or default from which the design ed period of
time begins to run shall be included. The last day of the period so coat uted shall be
I u
included, unless it is a Saturday, a Sunday, or a legal holiday, in which e ent the period
runs until the end of the next day which is not one of the aforementioned days. When
the period of time prescribed or allowed is less than eleven days, intermediate
Saturdays, Sundays, and legal holidays shall be excluded in the computation.
§gPj1QN 3. All ordinances and parts of ordinances in conflict herewith are repealed
insofar as such conflict may exist.
JECTION 4. No Mandatory Duty of Care. This ordinance is not intended to and shall
not be construed or given effect in a manner which imposes upon the City, or any officer
or employee thereof, a mandatory duty of care towards persons or property within the
City or outside of the City so as to provide a basis of civil liability for damages, except as
otherwise imposed by law.
SEPTIN 5. Severability, If any provision of this ordinance or the application thereof
to any person or circumstances is held invalid, such invalidity shall not affect other
provisions or applications of the ordinance which can be given effect without the invalid
provision or application. To this end, the provisions of this ordinance are severable, The
City Council hereby declares that it would have adopted this ordinance irrespective of
the invalidity of any particular portion thereof.
SECTION 6. This ordinance shall be published one time in the "Lodi News Sentinel", a
daily newspaper of general circulation printed and published in the City of Lodi and shall
take effect thirty days from and after its passage and approval.
Approved this 7'h day of January, 2004
LARRY D. NSEN
Mayor
Attest,
SUSAN J. BLACKSTON
City Clerk
----------
State of California
county of San Joaquin, ss.
1, Susan J. Blackston, City Clerk of the City of Lodi, do hereby certify that
Ordinance No. 1739 was introduce . d at a regular meeting of the City Council of the City
of Lodi held December 17, 2003, and was thereafter passed, adopted and ordered to
print at a regular meeting of said Council held January 7, 2004, by the following vote'.
AYES:
COUNCIL MEMBERS — Beckman, Howard, and Land
NOES;
COUNCIL MEMBERS — Hitchcock and Mayor Hansen
ABSENT:
COUNCIL MEMBERS — None
ABSTAIN:
COUNCIL MEMBERS — None
I further certify that Ordinance No. 173.9 was approved and signed by the Mayor on the
date of its passage and the same has been published pursuant to law.
SUSAN J. BLACK ON
City Clerk
RANDALL A. HAYE3
City Attorney
Jennifer Perrin
From: Ron Bernasconi [Ron@BernasconiCommercial.com]
Sent: Wednesday, January 07, 2004 4:45 PM
To: Susan Blackston; Susan Hitchcock; Emily Howard; Keith Land; John Beckman; Larry Hansen
Subject: We need independent legal advise before we make any changes to MERLO or our Contract with
Envision
Honorable City Council Members,
am very concerned by the actions recently taken in dosed session and would have appeared before
the Council tonight. However, I haveto run a practice tonight and therefore request that the City
Clerk file thefollowing as my public testimony at tonight's regular meeting of the Lodi City Council.
I n 1999 City Attorneys Michael Donovan and Randy Hays expressed no doubt that the city would
more than recover all expenses incurred when we relied upon their advise to borrow $16 million
dollars from Lehman Brothers at 20 to 300/6.
I n fact City Attorney Hays told the SOcramento Bee, "The way the laws are designed, we can't
lose'll
Then on December 24, 2003 the Sacramento Bee reported that A "Court ruling may put Lodi on the
spot for million' after Judge Damrell ruled that portions of the city's cleanup ordinance known as
MERLO conflicted with federal lav and was unconstitutional.
Asa result, Lodi cannot recover the $22.5 million it spent in legal fees or the $7.5 million in interest
financing Envision's ill-conceived legal strategy.
In his40 page ruling Damrell removed the portions of MERLO that were unconstitutional and
approved the remainder of the ordinance.
Now our City Attorneys are asking the Council to consider new additionsto MERLO, which would be
ill-advised without an independent legal review.
Frankly, 11th hour additions to MERLO on the eve of trial may further anger the Judge if they are
viewed as attempts to d rcumvent his regent rul i ng.
Another potential threat to our City emanates from the plan to renegotiate our contract with Envision.
Now, we would all love to have Envision slash its fees, but can we trust them not to slip in dauses
that elevates thei r i interests above those of the City?
We should be able to rely on our City Attorney. However, Randy Hays has proven to be nothing more
that a rubber stamp to anything Donovan presents and it would be foolish to believe that any member
of the City Council can negotiate contract language with an attorney(s) without independent counsel to
protect the City's interests. As the sayi ng goes, "Those who act as thei r own attorney have a fool
for a dient."
1/8/2004
Moreover, renegotiating our contract with Envision after the Court's recent rebuke of our legal
strategy not only makes the City look weak and stupid; it may undermine the City's ability to
proceed against Envision for malpractice, which maybe our only way out of this debacle.
Apparently, 4 Council members believe it would be too expensive to hire another outside attorney
because even though Envision'sfees Ere accruing at an alarming rate, Envision is collecting only
what they can squeeze out of our insurer, USF&G.
ronically, this is how it should have been from the start. H aving to be accountable to USF&G would
have stemmed the overbilling that occurred while Hayswasasleep at the SNitch as Envision burned
through the $16 million dollar Lehman Loan before they even got to trial.
Now after spending dose to $30 million dollars on a lawsuit that is basically being thrown out of
court on the eve of trial, it should be painfully apparent to everyone that there is nothing more
expensive than bad legal advise and that falling to secure independent legal counsel would beafalse
economy.
Why doesn't the City use the firm it has already retained to review Envision'sLegal Bills especially
since that expenditure has already paid for itself.
Clearly, we need independent legal counsel to deal with Hays and Envision. This what Redding did
when they suspected H ays of malfeasance.
Accordingly, I respectfully request that the City Cound1;
1) Secure independent legal counsel to review, the conduct of our City Attorney(s) and make sure any
contract with Envision requires Envision to maintain Lawyer's professional liability insurance to
protect the city from Envision's errors and omissions.
2) Secure independent legal counsel to review any changes to the City's Contract with Envision. I an
also making a public records request for the City's current contract with Envision and I am requesting
a copy of the proposed replacement contract with Envision at least 5 days prior to any vote by the City
Council to approve the replacement contract.
3) Table any changes to MERLO until you have secured independent legal counsel to review and
approve our Attorneysi proposed changes to ME RLO.
Thank you for your consideration,
Ron Bernasconi
Court ruling may put Lodi on the spot for millions
By Cameron Jahn -- Bee Staff Writer
Published 2.15 a.m. PST Wednesday, December 24, 2003
Two key Lodi city off idals reacted in shock Tuesday to afederal judge's ruling that they say guts the
dty's high-stakes toxic deanup lawsuit, leaving the taxpayers potentially Iiablefor millions of dollars in
legal costs.
1/8/2004
US District Judge Frank C. DamrelI Jr. on Monday ruled that the city'sdea up ordinanceconfIicts
with federal law and is unconstitutional.
DamrdI said the city's legal strategy --
winning
-
winning money f rom insurance carriers of
pol l uti ng busi nesses -- is set up to benef it
attorneys and investors rather than speed up
environmental cleanups as Congress
i ntended.
Asa result, Lodi cannot recover the
estimated $22.3 million it has spent in legal
expenses since 1996 or the more than $7.5
million in interest costs on f i nand ng those
Expenses.
The city has invested $6.3million of itsown
money in lawsuits agai nst several downtown
busi nesses and thei r i nsurers. The bal ance of
$16 million spent on legal outlayswas
borrowed at credit-card interest rates from
the investment banking firm Lehman Brothers of New York.
Lawyers for the city had pitched the loan as a no -risk way of financing a legal battle it otherwise could
not afford. They said Lehman would be repaid only from insurance money won in settlements or
j udgments.
Some city officials now believe Lehman is not going to walk avay from the loan and will try to recover
the money f rom the city.
Lodi, with apopulation of 59,000, has an annual budget of about $29 million.
"The way it appears to me, everything we've worked on for the last eight years has been thrown out,"
Councilwoman Susan Hitchcock said. "The people who are losing are the citizens of Lodi."
Lori Gualco, lead attorney for Guild Cleaners, one of the defendants, called thejudge'sruling "the
death knell -- it's ail over for the city, basically."
But Michael Donovan, the head of the city's legal team, disputed Damrell'sruling. He said Monday's
decision would not be a significant setback.
"I would say that the strategy is sound," Donovan said. "The trial judge has given us his opinion, and
it's far from the final judgment on the matter."
The 40 -page ruling was Darnrell's harshest yet in the city's 3 -year-old suit to compel dry cleaners and
other businesses to remove industrial solvents that tainted an estimated 600 acres in the central
business district.
1/8/2004
In his ruling this week, Damrell granted two insurance companies, Fireman's Fund and Unigard, a
permanent injunction preventing Lodi from enforcing adeanup ordinance the city enacted in 1997.
DamrelI agreed with an appellate court that said Lodi can't legislate its way out of liability in the
cleanup because the city also is partly responsible for the contamination: The city's leaky sewer system
may have allowed the pollutants to seep into the ground.
He also said the ordinance is the polar opposite of what Congress intended decades ago when it passed
the federal toxic cleanup act, known asthe,perfund law.
The laAt d lows for limited cost recovery in cleanups but not "an opportunity to profit at the expense of
the environment," Damrell said.
Lodi's ordi nance compels businesses found responsible for the pollution to paynot onlythecost of the
cleanup but also to reimburse the city for all itslegai and finandai costsin bringing enforcement action.
The city's "cost recovery scheme generates the opportunity for a fi nanciai wi ndfal I for some few
fortunate professionals, aswell as Lehman Brothers, Inc., an investment bank, which has no interest in
cleaning up the contaminated site," Damrell said.
Thejudgesaid Lodi'sattorneys "hate often produced unnecessarily voluminous or redundant filings
and imaginative ploys that havesent this litigation needlessly down paths." That means"important
remediation efforts have been brought to a grinding halt."
Lodi has a Jan. 12 trial date before Damrell, but some city off idais now wonder whether to risk trial.
"I is as if the judge said, 'We've given you enough dues along the way but you haven't followed them,
and wdretelling you onceand for all don't go this route because you'll bewasting your money,'"
Hitchcock said.
The Lodi City Council will meet in dosed session Dec. 30 to decidewhat to do.
Lodi Mayor Larry Hansen said thecity isnow in "limbo," suspiciousof its Expensive legal team and
their risky strategy yet entirely reliant on thosela yersfor advice.
"I try not to have knee-jerk reactions, but their credibility isdefinitely in question," he said. "I feel like
we're losing control of the strategy."
Lodi cannot fire Donovan without consent of the Lehman Brothers investors, who remain anonymous.
Meanwhile, thedty has launched an audit of Donovan'sbills, which total morethan $14 million.
Hitchcock on Tuesday said she had already heard from a number of Lodi residents outraged by the
city's legal quanday and looking to point fingers.
"This is reel ly a travesty of poor management and poor leadership," shesaid. "I definitelythink the
publicwill hold people accountable" at thebailot box.
1/8/2004