Lodi's legal 'nightmare' over

Perhaps the darkest and certainly one of the costliest legal chapters in Lodi's history is finished.

City leaders announced last night that Lodi has settled with the final party in its groundwater contamination case, first filed nearly eight years ago.

"Our long municipal nightmare is over," City Attorney Schwabauer said, referring to an ordeal that's expected to cost Lodi roughly $48 million.

The final settlement was for $50,000 from United Dry Cleaners. Roughly 100 individuals and businesses have agreed to pay for the PCE and TCE contamination, amassing about $15 million, Schwabauer said.

Another $19 million has been collected from the city's prior insurance companies.

PCE and TCE were chemicals used as industrial solvents and in dry cleaning in the 1970s and 80s.

The groundwater contamination was first discovered in 1989.

The News-Sentinel was among the many local businesses to settle, paying $2 million.

A faulty city legal strategy caused the most pain, current city officials said.

In the mid-1990s, a private attorney hired by Lodi, Michael Donovan, crafted a plan to sue the insurance companies of local businesses for their role in the contamination.

Because the city was found to be "a potentially responsible party" in the contamination, however, several courts ruled Lodi could not compel the companies to pay, city spokesman Jeff Hood said.

Following that strategy, the City Council in 2004 fired Donovan and City Attorney Randy Hays.

The city has since sued Donovan for fraud and malpractice. It is seeking "unspecified financial damages," Hood said.

Donovan has countersued, claiming the city owes him $14 million in legal fees.

Those cases are still outstanding.

The city's $48 million cost includes legal fees, paying for the actual cleanup and repaying its own water and wastewater funds, which were depleted to help pay for the lawsuit.

Residents were hit with significant water rate hikes starting in 2005 to help the city recover.

Councilman Bob Johnson called the matter "a horrible, horrible ... period in the life of Lodi. Thank goodness, it has finally come to closure."

The city's public works department is now working with the state's Regional Water Quality Control Board on a cleanup plan.

Cleanup is expected to last 30 years.

Hood, now the city's spokesman, covered the many elements of the lawsuit as a local journalist.

He noted a mid 1990s study estimated the cleanup and legal fees would amount to no more than $16 million.

That was prior to Donovan's legal strategy, he noted.

Numerous sewer and water pipe replacements, among other city improvement projects, have been put on hold over the past decade to pay for the legal mess.

Hood summed up the matter this way:

"In the city's 100-year history, this is probably the biggest setback in terms of what was borrowed from the city's future."

Contact reporter Chris Nichols at chrisn@lodinews.com.

Reader Feedback

papercut wrote on Jun 19, 2008 8:02 PM:

" nellie, still blaming it on Hayes, Donovan and Flynn? Why don't you try asking your "bud" Hansen to tell you the real story? "

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papercut wrote on Jun 19, 2008 2:25 PM:

" t & c have you seen that pump, or a picture of it? The pump in my fountain is bigger than it is. It's just a decoration, 30 million dollars worth. I also use a Brita and do you notice all those black specks at the bottom each time you fill that small reservoir? Many times it also brings along particles of sand and other silver particles. Do you know why Lodi's water is considered so pure? they test it from the point where it comes from the pump, not at a tap after it has been through the underground delivery system and then through the galvanized piping in your area on the eastside. Have an analyst come and test your water and I guarantee you he'll recommend either a purifier system or as you are doing now, use a brita filter. He'll flat tell you it's not close to what your city liters(pun) tell you it is. "

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whoa nellie! wrote on Jun 19, 2008 1:24 PM:

" Congratulations to City Atty Schwabauer. He had to clean up an huge legal mess left by Hays, and Donovan. He did an outstanding job under difficult circumstances.

And Cogito said it all, "Legal Boondoggle and Financial Nightmare" is perfect. "

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T & C wrote on Jun 19, 2008 11:47 AM:

" I live East of the railroad tracks and filter my drinking water thru a Brita Water filter. I know better then to drink Lodi water straight from the tap! Lodi could "LEASE 15-20 of those pumps to remove the Cancer causing Chemicals from the wells! IT'S NOT OVER until the wells are free of these PCE/TCE contaminents! Please don't tell us the Worst is over. As long as wells are contaminated, the Worst is not over. Lodi citizens shouldn't have to pay millions of dollars in service fees/rate increases to cover the millions not collected from Defendants! "

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OTH wrote on Jun 19, 2008 11:01 AM:

" The Lodi CC were hick kids going to town with the big boys. As usual the big boys sent them home with their overhaul pockets turned inside out. "

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papercut wrote on Jun 19, 2008 10:00 AM:

" And why would they be hiding that bottle? "

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papercut wrote on Jun 19, 2008 9:59 AM:

" Scrutiny, they only found one bottle in the cabinet. The rest had already been dumped on the ground outside. "

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papercut wrote on Jun 19, 2008 9:57 AM:

" You actually think this dilemna was worse than the tens of millions of dollars that were scammed out of Lodi when Hansen and his NCPA buddies thought they could be power buyers and brokers and lost twice what this lawsuit did? Payup Weybret and Katzakian, didn't you settle with your own council buddies behind closed doors? For zero personal responsibility? You all need to be exposed for your little games and favors you do for one another before election time. "

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Scrutiny wrote on Jun 19, 2008 9:13 AM:

" Papercut, Phil ain`t rich, his relatives maybe, depending on what you call"rich". The Sentinel`s insurance covered somewhere $1,000,000- $1,500,000. The rest was covered by personal check for being found "guilty" of having a single bottle of a PCE/TCE containing solution stashed away in some cabinet. "

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papercut wrote on Jun 19, 2008 8:35 AM:

" And aren't you good old boys that fell for the con job from Donovan and Hayes when you thought you were going to strike many of those dollars for your own pockets and they ended up conning you for millions and you still try to act like nothing happened? What the heck, raise the utility rates again and let those stupid and uninformed Lodians pay for it with higher electric rates. There's always plenty more where that came from. I say recall Hansen. "

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papercut wrote on Jun 19, 2008 8:31 AM:

" So when are the good old boys Katzakian and Lodi printing and Weybret from the news-sentinel going to pay their share? They were forgiven in closed door meetings by the good old boys on council and didn't have to pay a cent other than the shamefully paltry amount their insurance carriers came up with and we're ponying up their share of that 30 million or so. All we've got to show for that 30 million is a 500 dollar sump pump that'll take four hundred years or so to clean up that tiny plume it's being used on. C,mon, rich boys, pay your share for poisoning our ground and water supply. "

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Eileen St Yves wrote on Jun 19, 2008 8:12 AM:

" Please do not start looking for these fees to cease anytime soon. They were put into place in 2001. If you read the article its states the city has or will spend $48 million on the clean up, legal
fees and repaying all of the depleted water and wastewater funds. "

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Cogito wrote on Jun 19, 2008 7:45 AM:

" I wouldn't call this a "legal nightmare". I would call this a "legal boondoggle, and a fiscal nightmare". "

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mee thinks wrote on Jun 19, 2008 7:42 AM:

" I certainly hope that the PCE/TCE Water Clean Up fee on my City bill is gonna be disappearing now that you have someone else whose gonna pay for the clean up. As a kid during the 70's & 80's I know I didn't contribute to this mess but I've sure been paying for it. "

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OTH wrote on Jun 19, 2008 6:45 AM:

" Mr Johnson there are people in this town with long memories. Particularly come election time. "

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Comments on this story are now closed.

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