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Meeting Date: January 9, 2001

Subject/Title: Oregon Investors v. City of Brentwood

Submitted by: Dennis Beougher, City Attorney

The parties in the above-entitled litigation attended an all day mediation session in Sacramento with retired Presiding Justice Court of Appeal Robert K. Puglia on Thursday, November 30th. Based upon the expected cost to complete the trial and possible award of attorney's fees to the prevailing party even if the damage award is only $1.00, I have agreed to recommend to the City Council settlement, as attached hereto, based upon the following major terms:

a) the City would pay the plaintiffs $150,000; and
b) agree to amend an executed the previously executed agreement 
concerning payment of an amount in lieu of property tax payment by 
clarifying the term “operating expenses” to include depreciation, so long 
as Oregon Investors owns the land.

I recommend that the City Council authorize settlement and mutual release agreement based upon the terms stated above.

Plaintiff’s claims relate to the construction of the 126 affordable housing units generally known as the Marsh Creek Apartments (“Project”). The City had previously denied the conditional use permit for the Project. Two separate lawsuits were filed, one in federal court and another in state court. In 1996, the parties executed a settlement and mutual release in these two cases. The settlement agreement required the city to “act diligently in processing and issuing all permits and approvals to achieve prompt completion of the Project.” Plaintiff’s primary contention in this litigation is that the City breached its previous settlement agreement by not cooperating and thereby delaying the occupancy of the units. 

The primary damages alleged in the lawsuit include the following:

a) $179,000 for interest due to 3 month delay in occupancy
b) $160,000 for lost revenue for 3 month delay in occupancy
c) approximately $200,000 for damages (i.e., water meter, traffic
signal processing delays, right of way acquisition delays, plan checking
costs outside reimbursement agreement, and hotel lodging of tenants)
d) attorney fees of approximately $150,000

In any litigation, attorneys and clients must review all the possibilities, including the financial risks, to arrive at a fair settlement. In this case the City has the additional burden of a previous litigation that required the City to cooperate with the plaintiff to achieve prompt completion of the Marsh Creek Apartments and the term of the settlement agreement requiring the prevailing party to pay its attorney fees. 

The plaintiff has also requested a jury trial. All members of a jury bring their background and attitudes to the jury and no one can predict with any accuracy how a jury will react to the city’s facts and defenses. A jury may want to punish the city for its actions. While the city has an explanation for all the damages, there is always the risk that the jury will listen to the plaintiff’s explanation of the facts and ignore the city’s defenses, resulting in a monetary damage award against the city. 

Another factor is the cost to get this case to trial. The trial is scheduled for early February, less than 30 days away. In that time, the city expects to take or defend at least 19 depositions and prepare for a two week trial. The budget estimate has been prepared and the bottom line is an estimated city cost of between $300,000 and $350,000. Beyond the damage award potential, the settlement agreement requires the losing party to pay the prevailing party’s attorney fees. 

City Administration
City of Brentwood City Council
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Brentwood, CA 94513
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