A lawsuit was settled last week with a judgment awarding the
City of Morgan Hill and the Morgan Hill School District $1.5
million to clean up an underground fuel leak in the Corporation
Yard.
A lawsuit was settled last week with a judgment awarding the City of Morgan Hill and the Morgan Hill School District $1.5 million to clean up an underground fuel leak in the Corporation Yard.
“Justice was done,” said attorney Mark Strombotne, who represented the city in this matter. “The city and the school district have recovered, through the state fund and now through litigation against the responsible parties, the costs incurred. This is a good result.”
The lawsuit was filed against Minter & Fahey, the construction firm that installed the piping and tank system in Corporation Yard located on Edes Court.
The city and school district share the facility. The district is looking for a new location for its transportation department so it can stop leasing the area from the city.
The site has a gas station for fueling the buses and city vehicles; the leaky underground fuel tank is no longer in use, but the district and the city have been attempting to clean up the site since they became aware of the problem six years ago.
“To January 2003, $1.5 million has already been spent by the city and the school district on clean up,” Strombotne said. “Fortunately, the state has a program for reimbursement called the state underground storage tank clean up fund, and they will reimburse up to $1.5 million in clean up costs.
“The way this has worked out, the city and school district have submitted claims, the state has paid almost the whole amount and will certainly pay up to $1.5 million. The funds from the judgment will be used to pay for clean up from this point.”
The judgment came out of a three-week jury trial before Santa Clara County Superior Court Judge Leslie Nichols presiding. The $1.5 million judgment came from Nichols.
“We basically had some causes of action decided by jury and some decided by the judge,” said Strombotne. “The judge made the more favorable award, and we elected to use that for judgment.”
The judgment also included awarding payment of attorney’s fees for the city and the district by Minter & Fahey.
There is a problem, however. According to Stombotne and Deputy Superintendent Bonnie Branco, the firm does not have the money to pay the judgment amount.
“They don’t have the resources to pay that,” Branco said. “The issue is now who will pay. (Minter & Fahey’s) insurance companies are not sure which company’s coverage was available at that time.”
The question the insurance companies are considering is when the leak began. Although the school district became aware of the leak six years ago, that is not necessarily the date it began, Branco said.
The district, the city and representatives from the insurance companies will begin mediation Monday to determine who will pay.
“The question now is how do we collect on the settlement,” said Branco. “It’s not really a done deal at this point. It is incumbent upon the district and the city to establish a time period (when the leak began).”
Strombotne said the insurance companies are disagreeing over which is the responsible.
“The insurance carriers will pay the judgment, so they are looking for ways to avoid paying that judgment against their insured,” he said. “We don’t know when that leak started. That is one of the issues they will be looking at during the mediation.”
The $1.5 million, if it can be collected, cannot be used for any other purpose or put into the district’s general fund. It can only be used for clean up.
“Although there is no stipulation, it is clear this is an award of damages for clean up,” Strombotne said. “The funds are intended to reimburse the city and school district for their costs in cleaning up the effects of the leak.”
