Bell Sues Attorneys for Finance Fiasco

     LOS ANGELES (CN) – The City of Bell sued its former city attorney and the two law firms he worked for, claiming their negligence allowed city officials to pay themselves salaries so exorbitant they made international news.
     City Manager Robert Rizzo, for example, got $787,000 a year for managing the city of 36,000; Rizzo and seven other former officials face multiple charges of corruption.
     Bell sued Best Best & Krieger, its former partner Edward W. Lee, and Oliver Sandifer & Murphy, in which Lee also was a partner.
     Lee was Bell’s city attorney for 15 years while he worked at the two co-defendant firms, according to the city’s Superior Court complaint.
     Bell claims that Lee helped Rizzo and his cronies arrange their astounding salaries.
     While Rizzo was being paid nearly twice the salary of the U.S. president, his assistant Angela Spaccia was getting $376,000 – more than Los Angeles County’s top administrator – and Police Chief Randy Adams was pulling down $457,000 – more than the Los Angeles police chief, according to contemporary news reports.
     All but one member of the City Council were paid $100,000 a year for the part-time job; the honest one was paid less than $9,000.
     The state sued eight Bell officials in September 2010, including Rizzo, Spaccia, Mayor Oscar Hernandez and former council members George Mirabal, Teresa Jacobo, Luis Artiga, George Cole and Victor Bello. All were arrested and charged with misappropriation of public funds; all have resigned or been recalled.
     The city says the scandal never would have happened had attorney Lee done his job. It claims Lee helped city officials circumvent California state laws limiting municipal salaries, and helped push through a city law that purported to limit compensations for council members but in fact increased their salaries.
     Five city council members got base salaries of $96,000, at a time when council members in cities of similar size in California received salaries of $4,800 a year.
     Bell claims that Lee and his law firms negligently failed to discover or impede the city officials from paying themselves excessive and wasteful compensation, negligently permitted Rizzo and Spaccia to write their employment contracts to conceal their full compensation from the public, negligently failed to oversee such employment contracts, and negligently failed to disclose the excessive and wasteful compensation.
     The city claims that Lee and his firms also failed to exercise reasonable care and skill in dispensing legal advice on among others things, compliance with the city charter, environmental impact surveys, business license fees, loans, business taxes, expense reimbursement policy, and ethics training.
     “While acting as city attorney for Bell, defendants negligently permitted members of the Bell City government, including Rizzo and Spaccia to manipulate and ignore the requirement of the law and to act secretly and unlawfully,” the complaint states.
     Bell also claims that Lee’s most recent firm, Best Best & Krieger, failed to properly advise the city on a $35 million bond offering in 2007.
     The bonds were issued to pay for redevelopment of property used by international shipping and logistics. When a community group learned that the redevelopment would include allowing BNSF Railroad to park up to 700 trucks on a 15 acre site, the citizens sued. As the bond sale proceeded, Lee and his firms stated, erroneously, saying that no pending litigation could have a material adverse effect on the city’s plans, according to the complaint.
     “As a direct result of the defendants’ negligent failure to properly advise the plaintiffs, the city has been damaged by the loss of value of the collateral for the 2007 bonds, exposure of the city and authority to legal liability, damage to the city’s credit rating with resultant increase costs of borrowing, and further encumbrance of the property among other damages,” the city says.
     Bell seeks compensatory damages, disgorgement of all attorneys’ fees or other compensation paid to the defendants, and costs, on claims of legal malpractice, breach of fiduciary duty and breach of contract.
     The city is represented by William Stoner with Yuhl, Stoner and Carr of Los Angeles.

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