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Lodi's former environmental attorney sues city for $7 million
Twenty months after the Lodi City Council fired him, environmental attorney Michael C. Donovan has sued the city for millions of dollars in legal fees.
Donovan, who for years led the city's fight against local businesses and insurers in an attempt to clean up polluted groundwater, wants almost $7 million in fees. That doesn't include 12 percent annual interest, damages and the cost of Donovan's attorney.
The suit, filed this week in San Francisco County, is Donovan's response to a fraud lawsuit the city filed against him in January. In that lawsuit, Lodi accused him of creating a "legal quagmire" to make at least $12 million in profits.
Until January 2004, Donovan had represented the city for years in its groundwater contamination case. More than 100 parties were ultimately involved, including the News-Sentinel. Other parties ranged from Guild Cleaners and the Odd Fellows Hall Association to various insurance companies.
The goal, city officials and attorneys said when they began the legal fight years ago, was to force insurance companies to clean up potentially carcinogenic chemicals that had been dumped in the sewers, which then leaked. Along the way, the city borrowed some $16 million from Wall Street firm Lehman Brothers in order to continue paying for the litigation.
The issue led to a federal lawsuit and at first the city declared small successes. Then came a series of court rulings against Lodi -- including one that struck down a city ordinance used in the legal fight.
So the City Council fired Donovan and City Attorney Randy Hays, hired new attorneys and began pushing for settlement. The city has since settled with a number of parties, including the News-Sentinel and Guild Cleaners. All money from the businesses has been designated for cleanup and associated costs.
But, Donovan's attorney, Kevin L. Cifarelli, wrote in the lawsuit, any money the city received was to first go toward paying Donovan's legal fees, as laid out in his contracts.
Donovan began working for Lodi in November 1996 with the law firm of Zevnik, Horton, Guibord and McGovern. Under a contract with the city, the firm would be paid up to $65,000 a month, with any extra bills to not be paid unless the city succeeded in getting money from the various businesses and insurance companies.
Two years later, Donovan left the law firm and formed Envision Law Group, taking Lodi's case and the outstanding bills with him.
The monthly fees remained the same for a time, though Donovan would be paid 12 percent interest on any extra billings, plus a 20 percent "success fee" of all money the city got from parties involved in the case.
After the city borrowed money from Lehman Brothers to fund the legal battle, Donovan and his co-workers instead began billing hourly.
Before the case could go to federal trial, the city fired Donovan on Jan. 13, 2004. He then filed a claim with the city, seeking an unspecified amount of wages. The City Council denied the claim May 6, 2004.
In California, a claim is a precursor to a lawsuit, and the claimant has six months to file a lawsuit once a claim is denied.
"Obviously, the city will be filing a motion to dismiss (Donovan's) complaint based on his failure to follow the statute of limitations," City Attorney Stephen Schwabauer said Thursday.
But Cifarelli wrote in the lawsuit that city officials, in denying the claim, asked Donovan to instead wait because they were still auditing legal invoices and trying to resolve issues with their own insurers.
Donovan could not be reached for comment Thursday, and Cifarelli did not return a message. The case is scheduled for a status conference Nov. 4 in San Francisco.
Contact reporter Layla Bohm at layla@lodinews.com.

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