City at Risk, Decides to Mediate on Alameda Point Lawsuits

I reported on the “suite of suits” that Alameda’s new City Manager John Russo will inherit, and in the last days there has been a seismic shift in these lawsuits. Former Fire Chief Dave Kapler filed a $2 million wrongful termination claim, and the City and Suncal have agreed to mediation for federal and state lawsuits that could amount to over $100 million. The Kapler lawsuit was expected and looks like a $2 million drop in the bucket compared to the amount that Suncal is demanding from the City.

There is a common thread in each and every one of these lawsuits: Former Interim City Manager Ann Marie Gallant. In addition to all the lawsuits against Gallant, she is also suing the city herself. That’s an HR issue if I’ve ever seen one.
Fortunately the Suncal/City lawsuits have seemed to take a turn for the better with the announcement that they will “Move to Resolve Lawsuits Through Mediation.” Being a novice legal beagle, I asked an attorney friend of mine a few questions to see if this actually is a turn for the better. I did my best to summarize her answers.

Why would the City of Alameda agree to mediation?

Most corporate lawsuits settle out of court – it is usually in the best interest of both parties and can save time and money. It seems the City has weighed the pro’s and con’s of the suit and has decided it would be better not to go to court. Usually, this means they feel they can’t win or it would be difficult to convince a judge/jury of innocence.

What about Ann Marie Gallant’s implication in all of the City lawsuits?

I would figure that is one of the reasons the City feels they can’t win. There are a few lawsuits stacked up against Gallant and she is also suing the city, not to mention she has a history of misconduct in many of her other government jobs. She wouldn’t appear guilt-free in front of a judge/jury and seems to be a significant risk for the City.

What do you think the outcome will be?

Well, mediation is an extremely effective way to avoid the (typically) 5 year long process of court proceedings. I wouldn’t want to plan a city budget knowing there is a potential $100 million payment looming – you can’t plan for that kind of thing. The city must know they are at risk and have chosen to mediate. It seems to be a good option for both parties.

(end Q&A)

I’m guessing this is also a nod from developer Suncal to show that their problem is with the former City Manager, not the City of Alameda. Now that she is out of the picture, they can sort out the pieces and hopefully we can all understand what really happened.

Russo Inherits Disastrous Alameda Lawsuits

Apparently former Oakland City Attorney John Russo loves a challenge. After making many fond memories with Oakland Mayor Jean Quan (read: sarcastic), it looks as if Russo will leave the elected city attorney position for the city manager position in equally-kooky Alameda. 

Russo will inherit about half a dozen lawsuits against the city and a history of suspicious behavior from elected and appointed officials. Still, I’m hopeful that this change will help turn things around in Alameda. With fresh blood in the council, a competent mayor and a new city manager, Alameda just may have a chance to straighten things out.

Not to continually reference the impending doom of the lawsuits against the city, but Alameda has racked up quite a suite of suits:

-          Three lawsuits filed by Suncal that could amount to over $100 million dollars

-          One lawsuit filed by previous interim city manager Ann Marie Gallant

-          One lawsuit filed by previous city attorney Teresa Highsmith

-          Potential lawsuit from former Fire Chief David Kapler

A recent Island of Alameda article by Michele Ellson revealed the city’s pressing financial woes: “Alameda Facing Millions in Budget Deficits; Treasurer Says City Heading Toward Bankruptcy.” According to this article:

Alameda is facing a $6.2 million general fund budget shortfall next year and growing deficits for each of the four years that follow it; without major cuts or more money, the city will exhaust its fund balance before the end of the 2013-2014 fiscal year, the forecast showed.

What’s more, the city must pay an additional $860,000 for medical services, $622,000 in fuel and supply costs, all while they’re losing $710,000 in sales tax and $900,000 in costs from the golf complex handover.

These lawsuits filed against the city could be the straw that breaks the camel’s back. The legal costs alone would be two (well-paid) full time jobs. What exactly is all of this costing the city per month? As it stands now, there’s not a dime to spare in the City of Alameda’s budget. Are we closing down a school or cutting teachers’ salaries to pay city lawyers?

Not to mention the cost of settling these lawsuits. What if a plaintiff wins a suit against the city? Can Alameda afford to pay the settlement without declaring bankruptcy? According to the City Treasurer, the answer is no.