WATER, LAND, & MONEY: Santa Barbara’s power hierarchy has always been dominated by two dueling deities — God and the law firm of Price, Postel & Parma — though not necessarily in that order. God is famous for having once said, “Let there be light.” But it was Price, Postel & Parma — better known as PPP — that decreed, “Let there be water.” When Moses struck his staff upon the rock to conjure forth H₂O, attorneys from PPP were reportedly on hand to secure the water rights. In California, land plus water has always equaled wealth and power. To a spectacular degree, PPP has successfully represented all sides of this equation. It may be true that PPP charges through the nose, usually dispatching three attorneys — one for each P — when one might do the trick. But as the firm’s clients will attest — and they include the very bluest of Santa Barbara blue bloods — that’s a small price to pay to remain in the driver’s seat of destiny.
Given this, I was stunned to learn the Montecito and Carpinteria water districts jointly sued PPP for $25 million late last month, claiming egregious legal malpractice in connection with recent construction work on the Ortega Reservoir, which is leaking like a sieve. While the charges are eye-popping, they’re almost beside the point. The mere fact they were filed is momentous enough. It’s like Moses suing Yahweh or the Twelve Apostles bringing Jesus up on charges. It was Francis Price — one of the three Ps — after all, who invented the Montecito Water District in 1922. Even today, Price’s fingerprints can be found on every drop of captive water throughout the South Coast. When downstream water users sued the City of Santa Barbara for erecting Gibraltar Dam back in the ’30s — claiming we stole waters that would have otherwise gone to them — it was the arch patrician Price who duly kicked their ass in court. When Santa Barbara’s political godfather, T.M. Storke, set out to build what would become Lake Cachuma — Gibraltar having proved insufficient to slake our great thirst — it was Price he turned to for help. To the extent that South Coast water agencies have existed at all, they served as institutional figments of PPP’s legal imagination. They dutifully did what PPP attorneys told them to do and paid handsomely to be so instructed. For decades, PPP attorney Bob Jones, known as “The Master of Moisture,” simultaneously represented three South Coast water agencies. If people worried about conflicts of interest, they had the good sense to shut up. In Jones’s honor, there’s a chair bearing his name — Jones’ Throne — at the Montecito Water District.
Times change. Shit happens. In this case, the two water districts spent $20 million to put a four-acre aluminum lid on top of the Ortega Reservoir in response to stricter federal safety requirements designed to prevent carcinogenic chemical reactions from taking place in our drinking-water supplies. After the lid was finally installed in 2007 — by Cushman Construction working in cahoots with the redoubtable engineering firm of Penfield & Smith — the two water agencies discovered the reservoir was leaking at a rate of 76 gallons a minute. Before construction, it leaked less than two gallons a minute. Given that the reservoir is perched above some exceedingly pricey real estate, the risk posed by soil saturation could not be ignored. Because PPP lawyers negotiated the construction contracts in the first place, they argued they should be given the litigation contract to sue Cushman and Penfield & Smith over the defects. The two water boards agreed.
Now they claim they were had. In their lawsuit, they allege that attorneys for PPP rejected early settlement offers, insisting upon a much more expensive course of litigation. Then, they claim, PPP bailed out at the last minute because they blew the case, missing essential and basic details that even an office intern would have caught. At the end, the two water districts charge they got left holding the bag, but not before PPP attorneys managed to churn about $1.2 million in excessive legal bills. To plug the leaking reservoir, the water agencies wanted a brand-new concrete lining. This would cost $8 million to $10 million. According to the lawsuit, PPP assured them that money was there. Cushman and Penfield & Smith, the water agencies were informed, had big fat insurance policies that could cover such repair costs.
Except, it turned out, they didn’t. In fact, the insurance money available was much, much less. PPP, having negotiated the initial $20-million contract, presumably should have known this. But according to the lawsuit, PPP attorneys only “discovered” this fact on the eve of trial during court-mandated settlement talks.
Confronted with this startling new information, the water agencies now contend they were pressured by their PPP advocates to accept a very bad deal, one that failed to address the mudslide safety concerns that PPP had previously trumpeted. Instead, the two agencies walked away with a $2.9-million settlement. To date, that money has paid for what the water agency directors refer to as “bubble-gum and band-aid” repairs to the reservoir. In other words, guys armed with industrial caulking guns have been hired to seal the reservoir’s concrete seams, a job requiring the reservoir to be shut down for months on end. Even after this fix, according to a Montecito Water District report, 20 leaks still remain, and the Ortega Reservoir is still seeping water, though at only half the rate it was before.
Not being a reservoir engineer, I don’t pretend to know how much water, if any, the districts’ complaint holds. PPP has hired a bona fide legal heavyweight, Chuck Horn, to defend them, and Horn assured me, with all the congenial muscle of a man with 350 attorneys in his firm, their claim is utterly without merit. He may be proved correct. But the mere fact of its filing is ground-shaking enough. I’m not sure where God currently ranks in Santa Barbara’s power hierarchy, but for the time being, I’m pretty sure he’s ahead of Price, Postel & Parma.