Enviros Seeking to Overturn 30 Years Practice in City-County Development Permits BEWARE

Keep in mind the figure “$5 million” — that’s likely to be the right ballpark for a total legal costs budget for groups seeking a TOTAL DEVELOPMENT MORATORIUM (at least for more than three weeks!) plus NEW LAW, seeking to give Anne Arundel County control over all development permitting in the city of Annapolis. This rather confusing “bank shot” strategy seems to be what the Annapolis Neck Coalition has settled on in order to stop the Crystal Springs Farm and Reserve at Quiet Waters.

Here’s the cautionary tale of the legal costs incurred by Salisbury, Maryland for a much simpler contract dispute over the construction/upgrade of a wastewater treatment plant.

Legal fees take chunk of city wastewater moneyThe (Sailisbury, Md.) Daily Times

Legal fees take chunk of city wastewater money

Jeremy Cox, DelmarvaNow.com 8:08 p.m. EDT June 2, 2014
(Photo: STAFF PHOTO BY LAURA EMMONS )

Story Highlights

  • The city has collected nearly $13 million in lawsuits related to a botched upgrade project at its sewage treatment plant.
  • Of that, though, more than $4 million is going to legal fees.
  • City officials say that’s money well spent on an intricate and lengthy negotiations and court battle.

In the end, the city of Salisbury retrieved nearly $13 million from the contractors and engineers involved in its debacle of a sewage treatment plant upgrade.

But it didn’t come cheap.

The municipality had to hand over about $4.7 million of that sum in legal fees.

The Pikesville law firm of Goldberg & Banks, which shepherded the city through the lengthy legal battle, received the lion’s share of the amount, city officials say. The balance covered fees for expert witnesses and the city’s in-house legal firm.

It was money well spent, the city’s elected officials say.

“I knew from the time I came into office that we were going to have to get an incredible law team that specialized in these types of cases, and that’s what we got,” said Mayor Jim Ireton, who inherited the tangled legal dispute when he was first elected in 2009.

The saga came to an anti-climatic close recently when Maryland’s highest court declined to hear an appeal filed by the project’s construction manager. Construction Dynamics Group had sought to overturn a jury’s 2012 ruling that it repay the $2.7 million it got from the city.

Councilman Tim Spies and Council President Jake Day don’t see eye to eye on several city issues. But they agree that the $4.7 million in legal fees, though painful, had to be spent.

“It was a heavily specialized case,” Spies said during a break from Monday’s council work session.

“And the appeal,” Day chimed in from the next chair over. “It got stretched to the nth and final degree. I don’t think anyone likes paying lawyers.”

“But,” Spies quipped, “they must be paid.”

Attorney Howard Goldberg, who represented the city in negotiations and in court, didn’t return a call seeking comment Monday. The firm says on its website that it offers clients “over 80 years of combined experience in complex civil litigation and representing participants in the building and construction industry.”

Goldberg serves as a mediator and arbitrator for both the American Arbitration Association and private alternative dispute resolution, according to the site. And the firm specializes in clashes involving commercial law, insurance coverage, intellectual property and labor and employment law.

“10 percent or nothing”

The city’s dispute grew to be as complicated as the wastewater technology at its heart.

The plant was one of 66 around Maryland targeted for upgrades to improve its nutrient-removal capability. The goal was to reduce its nitrogen and phosphorus output by 70 percent to help clean up waterways leading to the Chesapeake Bay.

City leaders chose a first-of-its-kind technology that promised to reduce maintenance costs and remove more waste and bacteria from the treated wastewater. The plant reduced the concentration of nitrogen in wastewater flowing into the Wicomico River from 21 to 15 milligrams per liter — well above the 6 milligram limit set by the Maryland Department of the Environment.

In September 2012, the agency signed a consent order with the city, requiring officials to get the plant to produce effluent that meets the requirement by the end of 2017.

Construction on the $68 million fix is on pace to begin in June 2015. The state is shouldering nearly $25 million of that share while the city plans to get a $36 million, 0-percent interest loan.

In the meantime, the city has settled its legal disputes with three of the companies involved in the original construction. The most notable was the $10 million settlement with engineering company O’Brien & Gere, which was in charge of the design.

The Construction Dynamics case was the only one to go to court. The case ultimately took more than three years to resolve. The jury trial lasted for 10 days and involved more than 400 pieces of evidence.

After legal fees, all the battles ended up netting the city $8 million, or about 10 percent of the original planning and construction cost of the upgrades.

But “it was either 10 percent or nothing,” Ireton said.

The city could have pressed for more cash, Ireton said, but it might have ended up with nothing. During early negotiations, some of the companies indicated that if the city asked for too much, they would simply declare bankruptcy.

Determining what’s fair in attorneys fees is an inexact science. The Maryland Lawyers’ Rules of Professional Conduct states that its followers “shall not make an agreement for, charge, or collect an unreasonable fee or an unreasonable amount for expenses.”

But what is “reasonable” is often a matter of debate.

Maryland’s court system offers clients a way to dispute attorney fees, but that doesn’t seem like it’s going to happen in Salisbury.

Day, for one, said the $8 million isn’t exactly found money, “but it feels good for the public to get that money back.”

That money is as good as spent. In the budget that goes into effect July 1, the city set it aside to renovate three sewage pump stations and drill a new drinking water well.

jcox6•410-845-4630•On Twitter @Jeremy_Cox

80

cost in millions of dollars from 2005 to 2009 for planning and construction of upgrades at the Salisbury Wastewater Treatment Plant on Fitzwater Street

12.7

amount in millions of dollars retrieved by city in lawsuits against companies responsible for upgrades

4.7

amount in millions of the $12.7 million that went toward legal fees

Projects to be funded by lawsuit proceeds

Parkside Pump Station: $1.36 million

Fitzwater Street Pump Station: $2.81 million

Hampshire Road Pump Station: $1.59 million

Paleo Well No. 3: $2.85 million

Total: $8.6 million

About Bruce

Work for sustainable development of small islands; ex-Peace Corps (Volunteer and staff) in LA & Caribbean; cruised Caribbean on S/Y Meander for three years; like small tropical islands, French canals, Umbria, Tasmania, and NZ. Married 50 years. Former President (1995 to 2016) of Island Resources Foundation.
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