Loading...
HomeMy WebLinkAboutItem 6d - Approve Additional Funding for Legal Services Agreements with Civica Law Group and Richards Watson Gershon Item 6d Department: Attorney Cost Center: 1501 For Agenda of: 10/6/2026 Placement: Consent Estimated Time: N/A FROM: Christine Dietrick, City Attorney Prepared By: Sarah Zion, Legal Assistant SUBJECT: ADDITIONAL FUNDING FOR LEGAL SERVICES AGREEMENTS WITH CIVICA LAW GROUP, APC, RELATED TO THE 1150 LAUREL RECEIVERSHIP, AND WITH RICHARDS WATSON GERSHON RELATED TO THE RIGHETTI HILLSIDE LITIGATION RECOMMENDATION 1. Approve $273,000 as the new not-to-exceed amount for the existing legal services agreement with Civica Law Group, APC, related to the 1150 Laurel receivership (a $50,000 increase). 2. Approve $220,000 as the new not-to-exceed amount for the existing legal services agreement with Richards Watson Gershon for Righetti Hillside litigation (a $50,000 increase). 3. Authorize the City Attorney to execute any legal services agreement amendments necessitated by the approvals above. POLICY CONTEXT In accordance with the City Purchasing Policy, City Council approval is necessary for professional services agreements of more than $150,000. A Request for Proposals is also necessary at this approval threshold, but the requirement was supplanted by the current on-call list for legal services in the Righetti Hillside matter and was waived in the 1150 Laurel matter by submission and approval of a Specialized Services Justification form at the time of initial contracting with outside counsel. DISCUSSION Background Civica Law Group, APC In May 2025, after the commercial property at 1150 Laurel Lane had several years of code violations, substandard building conditions, and failure to make progress following the issuance of an extensive notice of violation and order to abate, the City Council made the decision to file, in the name of the City, a civil complaint seeking the appointment of Page 79 of 274 Item 6d a receiver to take control of the property. Due to the expected complexity of the matter, and the significant number of financial interest holders and liens against the property, compared to the receiverships for residential properties that in-house attorneys have petitioned for in recent years, outside counsel with extensive, relevant experience was contracted to take lead on the matter. The law firm chosen, Civica Law Group, APC, (“Civica”), almost immediately learned the matter was even more complex than anticipated with two separate pending lawsuits involving the property, a pending bankruptcy proceeding, and more than 18 lienholders with more than 40 lien s. The noticing alone to all these parties took several months longer than anticipated due to the need to negotiate subordination agreements and/or stipulations with various interest holders and due to difficulty in completing legal process service in some instances. The City’s Verified Complaint for Violation of Health & Safety Code and Receivership; Nuisance; Nuisance per se; and Unfair Business Practices was filed in October of 2025. Since then, Civica attorneys and staff have been navigating communicat ions and formal responses from the numerous defendants and interested parties. In March 2026, in order to keep the litigation moving forward, the City filed an ex parte application for consideration of the motion seeking appointment of a receiver. The order was granted by the court in June of 2026 but required several additional months of follow-up by Civica to obtain the actual signature of the Judge on the proposed order. This was finally signed in August 2026 and allowed the receiver to take possession of the property. Though the receiver has been appointed by the court, additional legal services support is still needed from Civica to reach a satisfactory conclusion to the matter. The current estimate for this continued support ranges from $34,000 to $48,000. Staff are recommending City Council approval of $50,000 due to the complex and repeatedly surprising nature of this litigation which several times has exceeded predictions as to cost. Looking forward, Civica expects the following work will be needed:  Monitor and review reports from the receiver  Prepare for and attend status conferences  Monitor for any motions filed in opposition to the receiver’s work  Prepare and file a cost recovery motion for the City’s recoverable costs and fees  Review and respond to any and all opposition to the receiver’s motion for discharge and final accounting Richards, Watson, & Gershon In April 2025, after several years of discussions with counsel for Righetti NC, LLC (“Righetti”) and an unsuccessful mediation regarding claims related to land subsidence events at Righetti Hill in 2019 and 2023, the City Council made the decision to file, in the name of the City, a civil complaint seeking to recover more than $871,000 spent repairing the hillside. To coordinate and retain necessary geotechnical experts and facilitate settlement discussions, outside counsel with extensive, relevant experience was contracted to take lead on the matter. The law firm chosen, Richards, Watson, & Gershon Page 80 of 274 Item 6d (“RWG”) has assisted City staff throughout the entire claims process. The City’s Complaint for Trespass, Nuisance, and Negligence was filed in April of 2025. On the same day the City’s Complaint was filed, Righetti filed a Verified Complaint for Damages and Declaratory Relief. In October 2025, the court ordered the two matters consolidated, with the City’s Complaint being the lead case. Since then, RWG attorneys and staff have been navigating communications and formal responses from the defendants and attempting to schedule another mediation. Looking forward, RWG expects the following work will be needed to get through to mediation:  Reviewing subpoenaed documents  Preparing an updated mediation brief  Deposing persons most knowledgeable  Attending mediation Previous Council or Advisory Body Action Civica Law Group, APC On May 5, 2025, the Construction Board of Appeals held a hearing for the appeal of the 1150 Laurel property owner contesting the validity of the notice of violation and order to abate. City Council then held a closed session on May 20, 2025, during which approval was granted to file the initial complaint in the name of the City. After that, the contract with Civica was increased by the City Manager on December 11, 2025, and then increased again by City Council on May 19, 2026. Richards, Watson, & Gershon The initial contract with RWG was increased by the City Manager on August 22, 202 4. After that, City Council held a closed session (April 1, 2025) during which approval was granted to file the initial complaint in the name of the City. Most recently, the RWG contract amount was increased by the City Council on October 21, 2025. Public Engagement Civica Law Group, APC When the various tenants at 1150 Laurel were forced to vacate their leased spaces due to the un-remediated hazardous conditions of the property, City Council and staff engaged in written and verbal communication with members of the public about the necessity of the action. There was also public comment at the May 2025 Construction Board of Appeals hearing. For the current item, public comment can be provided to the City Council through written Page 81 of 274 Item 6d correspondence prior to the meeting and through public testimony at the meeting. Richards, Watson, & Gershon For the current item, public comment can be provided to the City Council through written correspondence prior to the meeting and through public testimony at the meeting. ENVIRONMENTAL REVIEW The California Environmental Quality Act (“CEQA”) does not apply to the recommended actions in the 1150 Laurel matter, because the action does not constitute a “Project” under CEQA Guidelines Sec. 15378. In May 2015, City Council approved Vesting Tentative Tract Map No. 3063 (VTM #3063), creating 328 lots for Righetti’s property located at 3987 Orcutt Road in San Luis Obispo. The project was subject to an environmental impact report (EIR) conducted in 2009 for the Orcutt Area Specific Plan. Council Resolution No. 10154 (2010 Series) approved VTM #3063. FISCAL IMPACT Civica Law Group, APC Budgeted: No Budget Year: 2025-26 Funding Identified: Yes The Fire, City Attorney, and Community Development (“CDD”) departments reviewed their budgets for the current fiscal year to identify a funding source for the recommended $50,000 contract increase. While no source in the current year could be found, the Fire Department and City Budget Manager did identify the full funding amount as part of the budget carryover process from Fiscal Year 2025-26. Previous funding for this contract has come from City Attorney legal and other contract services, CDD Code Enforcement contract services, and CDD salary savings. Funding Sources Total Budget Available Current Funding Request Remaining Balance Annual Ongoing Cost General Fund $208,078 $50,000 $158,078 $0 State Federal Fees Other: Total $208,078 $50,000 $158,078 $0 Page 82 of 274 Item 6d Richards, Watson, & Gershon Budgeted: No Budget Year: 2026-27 Funding Identified: Yes The project account for the Righetti Hillside emergency repair (2001069) currently has a balance around $600,000 that is sufficient to cover the $50,000 increase being recommended to the not-to-exceed amount of the agreement with RWG. The previous $170,000 for the agreement came from the same project account. Funding Sources Total Budget Available Current Funding Request Remaining Balance Annual Ongoing Cost General Fund $600,000 $50,000 $550,000 $0 State Federal Fees Other: Total $600,000 $50,000 $550,000 $0 ALTERNATIVES 1. Approve a different not-to-exceed amount. If the amounts being requested at this time are deemed to be too high for one or both of these matters, lesser amounts could be selected. However, with the work currently forecast for each of them, approving a lesser amount now may just necessitate a return to City Council, after a relatively short amount of time, to request additional funding. 2. Decline to increase the contracts with Civica and RWG. The work to guide and monitor the 1150 Laurel receivership and to lead the Righetti Hillside cost-recovery litigation would then fall on in-house attorneys. With the other existing workload and priorities being managed in-house at this time, and the complexities involved in both matters, selection of this alternative would also require further direction from City Council as to which work efforts should be deprioritized. If no work efforts can be removed from or made lower priority in the City Attorney workload, then th is option is not recommended. Page 83 of 274 Page 84 of 274