The wrongful-termination lawsuit
filed by Dan Carvin against Controller Laura Chick has ended with the City Council approving a $490,000 settlement. But the issue of private attorneys overbilling the city for legal services the very issue that led to Carvins firing by Chick in the first place is about to get a closer look and is long overdue. After months of stalling, first by Chick, then by City Attorney Rocky Delgadillo, the Bureau of State Audits is preparing to conduct a performance audit of Delgadillos office, which approved $30 million in fees to law firms in 2004. The audit, which Chick finally proposed to do, only to be thwarted at the last minute by Delgadillo, will examine how city contracts for legal services are awarded and monitored by Delgadillos staff. The Carvin lawsuit is not only ripe for such an audit, but is a prime example of how Chick and Delgadillo have put political ambitions ahead of the publics interest. Chick hired Carvin, a seasoned investigator previously with the Inspector Generals Office at the MTA, in 2002. She hired him to root out fraud and waste in city contracts, including law-firm billings, which have ballooned in recent years. When Carvin looked into legal bills in a costly public-works lawsuit handled by the politically connected firm of Brown, Winfield & Canzoneri, Delgadillos top litigators bristled and Chick fired him. Carvins employment lasted three months. His lawsuit lasted two years, and resulted in $530,000 in legal fees, mostly to the firm of Jackson & Lewis, which was recommended by one of the firms in the public-works lawsuit that caught Carvins interest. State auditors might want to know more about the selection of Jackson & Lewis and the oversight of its performance by top attorneys in Delgadillos office, who were at the heart of the public-works lawsuit, Carvins firing and the lawsuit that Carvin filed against the city. Delgadillo might have sensed a potential for clouded judgment. Assistant City Attorneys Christine McCall, Michael Claessens and Robert Cramer built a paper trail that Chick relied upon to fire Carvin, after Carvin inquired about the legal bills in a case of false claims allegations related to the Hyperion Wastewater Treatment Plant which McCall, Cramer and Claessens were handling. McCall had solicited feedback from the Brown Winfield attorneys whom Carvin wanted to question about their fees in the Hyperion lawsuit, which is just now headed to trial, and which has cost the city more than $6 million in legal fees. After McCall elicited comments that suggested Carvin was out of line, she sent an e-mail to her boss reassuring her that in the future, if Chick planned to question the handling of a lawsuit against the city, Laura would call Rocky. Chick and Delgadillo were allies when they came into office in 2001. But the political winds shifted. Chicks dogged pursuit of Mayor Jim Hahn and the whiff of corruption in City Hall coupled with news reports about political contributions from law firms that were feasting at the city trough forced a change in posture. When questions of law-firm billings followed the Fleishman-Hillard PR scandal last May, Chick stalled her audit of Delgadillos office, despite calls for reform by City Councilman Antonio Villaraigosa, a mayoral candidate, among others. In August, when State Senator Richard Alarcón, a former mayoral candidate, took the issue to the Joint Legislative Audit Committee in Sacramento, Delgadillo promised full cooperation with a city controller audit. Chick later withdrew her endorsement of Hahn, and she and Delgadillo ran for re-election as Delgadillo began to plot his run for attorney general. In January, Delgadillo, who along with Hahn has received hundreds of thousands of dollars in campaign contributions from law firms doing business with the city, issued a legal opinion that Chick has no authority under the City Charter to audit another elected official. Such authority, wrote Assistant City Attorney David Michaelson, who was quoting from a memo from Assistant Chief Deputy City Attorney Patricia Tubert to Chief Deputy City Attorney Terree Bowers, could lead to abuse of taxpayer dollars and biased auditing reports in the event the Controller and the elected office [she] was auditing were political foes or had differing political agendas. Chick responded by blasting Delgadillo publicly and by writing to the joint audit committee chair, Assemblywoman Nicole Parra, and complaining that Delgadillo had flip-flopped on the audit. Delgadillo, who claims he has reduced liability payouts by $50 million per year through the use of private lawyers, responded with his own letter to Parra accusing Chick of political grandstanding. Chicks political agenda crystallized in late January as she privately briefed all four of Hahns mayoral challengers on her audit findings and theories regarding the Fleishman-Hillard and pay-to-play allegations, leading to questions in City Hall about whether she used public resources to engage in private political activity. At the same time, Chick, along with Villaraigosa and council members Jack Weiss and Wendy Greuel, asked the City Council to fund a fraud investigation unit in the Controllers office. After the March 8 primary, Chick threw her support to Villaraigosa, who has hounded Delgadillo over attorney over billings. As Chick and Delgadillo re-aligned
themselves politically, attorney Edward Zappia of Jackson & Lewis was racking up legal fees in defending the Carvin case. Since the day he was fired in 2002, Carvin has been a living example of institutional resistance to oversight of private law firms. His original concern, that an attorney at Brown Winfield had spent a year lifting sealing orders on documents in the Hyperion case that were never reviewed, remains unexamined as that lawsuit goes to trial. His firing, which took place as his supervisor, former director of auditing James Armstrong was on vacation, was void of any careful inquiry about whether he had cause to question McCall, Cramer and Claessens about their oversight of Brown Winfield. Instead, Zappia engaged in scorched-earth tactics to keep a lid on the lawsuit and spare Chicks reputation along with the top litigators in Delgadillos office who during at least one hearing took over as Zappia sat mute. Court documents further show Zappia either resisting or delaying attempts by Carvins attorney Louis Cohen to depose Chick, McCall, Delgadillo and other key city employees. Last July, Zappia offered to drop counterclaims for sanctions if Carvin would drop the case and agree to seal discovery in the matter. When Los Angeles Judge Robert Hess denied a defense motion for summary judgment, Zappia went to the Court of Appeal in an ill-fated attempt to challenge the ruling. When Chick was finally deposed, her attempt to deny knowing that a campaign contributor had been a partner at Brown Winfield, and her inability to distinguish between an audit and investigation, discredited her as a witness and gave Carvins lawyer the upper hand. In agreeing to pay Carvin almost a half million dollars, the city has all but admitted Chick never should have fired him in the first place. In its defense of the case, with costs exceeding the actual settlement, it showed that it never had faith in the merits of the case; rather, that it was willing to sanction an effort to bully Carvin at public expense. And, that avoidance of public scrutiny was paramount. Chick has declined to comment on the Carvin case. Delgadillo maintains his office has done the city right. In responding to a public-records request from the Weekly
to disclose the attorneys fees the city has paid in the case, Deputy City Attorney Kristina Scott stated that the $490,000 settlement was less than 5 percent of Carvins original demand. Carvin denies that he ever asked for $10 million. In fact, his original demand, before the city spent $530,000 defending the case, was roughly equal to what the City Council recently approved. I blew a little breeze in the direction of attorney overbilling and everyone came unglued, Carvin said of his firing last Friday, adding that his primary concern was protecting taxpayer dollars and recovering his lost wages and damages incurred during his ordeal. At no time to my knowledge has anyone bothered to inquire into the issues I raised in the first place, he continued. From a taxpayer perspective, Ive found the city to be extremely arrogant in that regard. Chicks request for funding for an investigative unit remains before the City Council. At least one city official has suggested that her private meetings with the mayoral candidates could be subject to further review though Delgadillos office has shown no willingness to determine whether the controller used public resources to engage in political activity aimed at undermining Hahns chances of re-election. Carvin said he still has a bitter taste in his mouth, but that hed be interested in serving the city again. However, he isnt holding his breath waiting for an offer.