As a result of a spike in legal costs and payouts last year related to liability claims filed by Morgan Hill residents and visitors, the city has developed a “risk management plan” in hopes of reducing the frequency and expense of such claims.
For the 2011-2012 fiscal year that ended June 30, the city paid about $827,000 in claims for property damage and injuries allegedly caused by city negligence or malfeasance. The cost also includes legal fees and other expenses associated with litigation filed by citizens.
That’s about 37 percent over the budgeted amount for the year, which was about $602,000.
The jump in general liability costs is more of a spike than a trend, as it illustrates the resolution of numerous cases that were filed in previous years – some that date back to 2008 – according to city attorney Danny Wan.
“It’s more an indication that we’re trying to get these things squared away,” Wan said.
A five-year analysis of claims and lawsuits filed against the city, presented to the City Council along with the risk management plan, showed also that in terms of both frequency and cost of complaints, police misconduct allegations top the list of categories in which someone might file a claim.
Also among the most frequent claims filed with the city or courts in the last five years are property damage related to water or sewer system backup into homes, and damage or injuries resulting from road hazards or infrastructure design, Wan said.
Other types of claims filed in the last five years include allegations of injuries suffered when people fell on city property, utility service disruption or bill disputes, city vehicles and their drivers causing accidents or damage, damages from trees and environmental hazards, Wan said.
The costs include about a $15,000 payout to a patron of the city’s Aquatics Center, who was injured due to a faulty piece of equipment that the city has since repaired, Wan said.
They also include ongoing and settled costs for a handful of lawsuits or threatened lawsuits alleging police misconduct and, in one case, allegations of poor road design that lead to the death of Rory Tomasello, 22, in an accident on West Edmundson Avenue in 2009.
In the utilities department, goals to reduce the city’s risk include clarifying city ordinances to define property owners’ responsibilities when it comes to sewer backflow device installation and maintenance, Wan said.
The city prevailed in the Tomasello lawsuit, in which the victim’s family alleged the design and construction of the crosswalk in which he was hit by a motorist contributed to the accident, but paid $100,000 to defend the complaint, which is the City’s maximum per claim deductible, according to Kathleen Bailey in the city attorney’s office.
“Even when people sue for frivolous reasons we spend money defending that,” Wan said.
The five-year analysis and the accompanying list of “risk management goals” presented to the council Wednesday were produced with the help of a consultant funded by the city’s insurer, the Association of Bay Area Governments.
Those goals include ensuring public safety officers are properly trained to recognize “best practices” for law enforcement, and further training based on “lessons learned” from previous incidents.
Police Chief David Swing has also agreed to invite a consultant and an attorney who represents police management, to conduct seminars with officers on risk management, interaction with the public and personnel management. Other goals include improving public outreach when water or sewer systems fail, and an assessment of “response protocols” for leaks and pressure-related issues in the water system.
City Council members said they’re not too worried about last year’s spike in liability-related costs, as they recognize it was a culmination of several years’ worth of claims.
“I’m delighted we’re taking the actions we’re taking,” Mayor Steve Tate said of the risk reduction plan, which is scheduled to be implemented over the next six months.
Councilwoman Marilyn Librers added, “I’m not worried about it because (the claims) were going to be dealt with eventually anyway.”
Perhaps the most notorious of last year’s legal costs is a $75,000 payout to Gilroy resident Casey Serrano, who threatened to sue the city after police officer David Ray arrested her, and then accessed her smartphone and posted an “intimate” photograph to her Facebook account, according to Serrano.
Another legal action stemming from that incident, which happened in July 2011, is a lawsuit filed by Ray, who claims he was illegally terminated from the police department as a result of the Facebook incident. That case is ongoing, and Wan said the city so far has spent about $7,000 in legal costs.
The city also settled a case with former Morgan Hill resident and attorney Bruce Tichinin, who claimed the city abridged his First Amendment rights when it publicly condemned him for spying on city manager Ed Tewes.
That case dates back to 2004, and the city settled with Tichinin for $200,000 in September 2011. Wan said at the time that while the city was prepared to go to court, the city’s insurer the ABAG Plan advised the city to settle to avoid potentially even higher legal costs.
