Are Hermosa Beach Residents' First Amendment Rights at Risk?

E&B Natural Resources to project opponents:  Tell the Truth

Hermosa Beach, February 6, 2014 - E&B Natural Resources Management, Corp., (E&B) a California-based oil and natural gas development company urges Hermosa Beach residents to be wary of anonymous flyers and falsified-Photoshopped photos about the Maintenance Yard Oil Recovery proposal.

“Recently, a rash of anonymous flyers and Photoshopped pictures were circulated in Hermosa Beach. It is obvious that the publishers of these materials know that they are not telling the truth; otherwise they would put their name on the documents. Instead, they are littering the city with rubbish, both in the physical sense of wasting paper and in the intellectual sense of telling lies,” said Steve Layton, President of E&B.

E&B is proposing an oil production project at the city’s maintenance yard at 6th Street and Valley Drive. This proposal resulted from a settlement the city entered into in 2012 to end a 14-year legal dispute over another proposed oil production project. As part of the settlement, Hermosa Beach voters will decide if the city-wide ban on oil drilling should be modified to permit E&B’s proposed project to move forward.

If this item had already been scheduled for the ballot, these flyers would be illegal according to California law. This deceptive campaign by cowards, who are afraid to put their name on the flyers, is simply a malicious effort to mislead supporters in order to disparage E&B and impact an upcoming election.

EB is concerned that widespread circulation of false information disseminated via flyers could make its way on the Internet, email and other new media.  Unfortunately, existing local and state campaign laws might not be able to stop this troubling campaign of lies. Misinformation campaigns, such as false flyers are simply aimed at creating doubt in the minds of voters.  E&B intends to provide the voters with the facts they need to make sure they are able to cast a meaningful ballot

About the Project:

The Hermosa Beach Resource Recovery Project is a proposal to access previously developed and tapped oil resources offshore of Hermosa Beach from a single, onshore location by utilizing new, environmentally safe and tested directional drilling technology.  A project application has been filed as the next step in the process agreed upon by the City of Hermosa Beach and E&B which now enables the city to begin its public review process, including preparation of an Environmental Impact Report (EIR), review by various state and regional agencies on air and water quality, safety, noise, traffic and numerous operational elements, as well as local voter approval. For more project information, see https://ebnr-hermosa.com/eb-community/who-is-eb-natural-resources

About E&B Natural Resources:

E&B Natural Resources Management Corporation is a Bakersfield, California based independent oil and gas company. Employing a balanced approach of mature field revitalization, acquisitions, and exploration, E&B now produces approximately 8,000 boepd from 25+ oil and gas fields located in California, Louisiana, Kansas, Wyoming, and Texas. With over 300 dedicated employees focused on all areas of growth and production, E&B is one of the largest privately owned oil and gas companies in California and is a recognized leader within the exploration and production industry. For more information, visit https://ebnr-hermosa.com/eb-community/who-is-eb-natural-resources  or  www.ebresources.com

Contact:  Eric W. Rose (805) 624-0572 or eric@ekapr.com

Can Hermosa Beach Permanently Terminate the 35 Year Oil Drilling Lease After A No Vote?

Is The Oil Lease From 1992 Even Valid? 

Why Are 2 Measures Going to Be on the Ballot?  

1)  Yes or No On Drilling & 2) Where The Oil Money Goes? 

E&B Can Put Oil Drilling On The Ballot Several Times Over The Next 35 Years 

NoBPinHB apologizes for making a mistake & falsely accusing E&B of being involved in the Huntington Beach oil rig accident

NoBPinHB would like to apologize for making a mistake & falsely accusing E&B Natural Resources of being involved in the oil derrick accident dated October 14, 2013.  We have retracted the article headlined "E&B Natural Resources Huntington Beach Oil Rig Collapses" and regret any misinformation reported.  We made this error reviewing public legal documents associated with South Coast Oil Corp and E&B.  It was an honest mistake! 

NoBPinHB always strives to ensure that all of the information presented on this web site is accurate.  Should there be any other errors or inaccuracies please contact us directly to ensure immediate correction.  

An oil derrick in Huntington Beach buckled and was tipping over Monday afternoon, prompting evacuations in an apartment building and a home, authorities said. The derrick was threatening homes near 1st Street and Pacific Coast Highway. It was reported about 1:30 p.m., said Huntington Beach Fire Capt. Bob Culhane. The derrick reportedly began buckling during routine maintenance. Officials were using a crane to stabilize the derrick. Additional details were not immediately released. This story is developing. Refresh this page for updates.

Videos From Oil EIR Scoping Meeting on July 24

The Environmental Impact Report (EIR) process has begun for the E&B oil production project proposed to be located in Hermosa Beach. This project is ultimately to be voted up or down by Hermosa voters sometime in the year 2014. The vote is to be had as a result of a settlement agreement made between the city and Macpherson Oil that supposedly ended the lawsuit brought against the city by the Macpherson Oil company as a result of the city’s ban on oil drilling that was voted by the people.

On Wednesday evening, July 24, an EIR “scoping” meeting, as part of the EIR process for E&B’s proposed oil-drilling, was held in Hermosa’s Community Center Theater with several hundred participants hearing a presentation of the EIR process, and then adding their “scope” of the EIR comments.

The city made a video recording and also a transcript of that meeting. You may now view the video on the city’s website. It is listed in the website’s video archives as the “E&B EIR Scoping Meeting Parts 1, Part 2, Part 3.   Or use this link to go directly to the video archive page:  or browse to https://www.hermosabch.org/ and then click on “agendas / minutes/videos” on the left side of the home page to arrive at the video-archive page. View the video titled Part 1 first as the three video parts may be displayed in reverse order.

The Hermosa Beach video servers are really bad so don't be surprise if your video viewing is choppy.  There are a lot of people interested in the topic and viewing the video.  Please be patient.  Sometimes the video works better using the browsers Firefox and Explorer.  Chrome does not work well.

You have until Monday, Aug. 12, to submit additional comments regarding concerns you desire to be included in the “scope” of the EIR. Submit those comments to the city by email (krobertson@hermosabch.org) or hand deliver them to Ken Robertson, Director of Community Development, city of Hermosa Beach.

We will be going through this video over the next few weeks and will publish highlights below. 

Class Action Lawsuit Against the City of Hermosa Beach?

Homes For Sale on  Zillow.com MLS in Hermosa Beach Over 30 Days

The City of Hermosa Beach better have a their legal defense budget ready because real estate values in South Hermosa are not appreciating like the rest of the market.  Homes are not selling like the rest of the community as buyers continue to question the likelihood of oil drilling in their neighborhood.  Obviously, no one wants to live near the noise and potential safety and health hazard. This map above shows you the number of homes in Hermosa Beach that have been on the market over 30 days as of April 2013.  You wonder why know one wants to buy in South Hermosa Beach and if oil drilling passes their could be masses loses?

This is why the City of Hermosa Beach and the City Council will be liable for entering into a 3rd party settlement agreement with another oil company and not settling the Macpherson lawsuit separately.  Oil was and currently is banned within the City and the City Council failed to honor this law.  If the City had settled the lawsuit with Macpherson and then brought oil drilling to a public vote this would not be an issue.  However, they entered into an illegal settlement agreement with E&B Natural resources thereby ignoring all the laws that were currently in place banning drilling.

This is why the settlement is illegal and each member of the City Council should be held personally liable and a class action lawsuit is not out of the question. Listen to all the hypocrisy, lies, deception and intimidation in this video.  Several real estate brokers are concerned that real estate in South Hermosa Beach is going to be depressed as long as the oil drilling issue not resolved.

Here is a national map of all the class action lawsuits related to oil and gas drilling.

Hany Fangary Ask For Public Meetings & Hermosa Beach City Council Needs to Get Involved

Hany Fangary suggests that the City Council get involved with the scoping, approach, election, timeline and RFP's for the proposed oil drilling project.  It has been over one year since the settlement was signed and there hasn't been any meaningful public discussion.  RFP's should be held as a public meeting.  

Hermosa Beach Oil Drilling Municipal Code Law

5.56. 000E adopted June 25, 1985

Ord 85-803, adopted June 25, 1985 provides for the establishment of an oil code. Such oil code is on file and available in the office of the City Clerk.

5.56. 010 Oil drilling unlawful.

The drilling, boring or otherwise sinking of an oil or gas well, or oil or gas wells, or the maintenance, pumping or operation of any oil well or oil wells or gas well or gas wells in the city is declared to be a nuisance and is to be unlawful. It is unlawful for any person to drill, bore or otherwise sink or maintain, pump or operate or cause to be drilled, bored or otherwise sunk, or maintained, pumped or operated, or to aid in the drilling, boring or otherwise sinking, or maintaining, pumping or operating of any gas or oil well or wells for the purpose of procuring oil, gas or other hydrocarbon substances within any portion of the city. It is unlawful for any person to commence the construction or to construct or maintain any derrick, or any oil well apparatus in the city for the purpose of drilling for or maintaining any oil or gas well in the city; except, however, the oil wells now constructed or under construction or in actual operation in the city. (Ord. 95-1139 § 2, 1995; prior code § 21-10)

City Council Hypocrisy, Lies, Deception & Intimidation

Video of Hermosa Beach City Council Lies, Deception & Intimidation on Oil Deal

1)  Turn up the volume for City Attorney Michael Jenkins asks for $150,000 from City Manager Steve Burrell appropriation to defend Hermosa Beach for a trial that never happened.  Shouldn't this be investigated and itemized? 

2)  Listen to the entire City Council avoid the public outreach to inform the public of their settlement.  This was held on the day the settlement was announced before the opposition was unleashed.  Michael Divirgilio avoids getting involved with the outreach program because he wants Jeff Duclos to do it.  Listen to Jeff Duclos avoid getting involved with the public forum to discuss the settlement.  There has NOT BEEN ONE PUBLIC to discuss the settlement or ask questions to the City in over a year.  

3)  Listen to the hypocrisy of Michael Divirgilio and Kit Bobko try to intimidate the City Treasurer about doing an RFP when he received 19 proposals.   The oil settlement was the largest deal in the history of the City and the deal was negotiated and personally sourced by Bobko and Divirgilio.  This is hypocrisy at its finest.  

4)  Turn up the volume for George Schmeltzer who rips the City Council a new one for hiding information.  

The Hermosa Beach Oil Settlement Agreement is Not Legal

Why has no one on the City Council read the Macpherson mock jury trial documents or transcript?  The threat of bankruptcy was the basis for was for a $17.5M settlement and extortion vote and no one has read the documents?

Before you read this you should review the contract agreement comments. In a properly negotiated & compromised settlement agreement, "neither party should be happy"with the outcome.  In this settlement agreement Hermosa Beach tax paying residents lost while the lawyers, City Council and oil won regardless of the outcome of the vote.  Here are some very important questions for our proud elected officials: Council Member Patrick (Kit) Bobko, Hermosa Beach City Attorney Michael Jenkins and Michael Divirgilio.

Drilling Down Article 

1)  If there was such a real likelihood that Macpherson Oil would win a court award for HUNDREDS OF MILLIONS OF DOLLARS ($750 million,), then why did Macpherson Oil settle for a mere $30 Million or 4% of his asking price?   Did Macpherson believe that, even if they won the jury trial, they would likely receive substantially less than $30M, or probably even NOTHING (see below)?  

2)  Was the 1995 “STOP OIL” ELECTION FLAWED because the “City Attorney (Jenkins) Impartial Analysis” in the election pamphlet failed to advise/warn voters of the real possibility of a Breach of Contract lawsuit to recover POTENTIAL LOST PROFITS? Were Hermosa Beach voters properly informed about the potential consequences, including tremendous financial liability, of the Proposition E vote in 1995? What law firm was providing City Attorney services to Hermosa Beach during this decade/period of time? Weren’t Bobko and Jenkins both employees of this same law firm - Bobko's current employer RWG Municipal Law Firm (of which he is now a Partner)?

3) Until 2001, Hermosa Beach City Attorney services were being provided by (Bobko’s & Jenkin’s) RWG Municipal Law Firm, represented by RWG Employee Michael Jenkins. From 2001 and onward, Michael Jenkins law firm began providing City attorney services to the City, including providing oversight services on the law firms defending the City from the MacPhersson lawsuit.  After the MacPherson lawsuit was filed, why didn’t RWG admit there had been and omission/error, and advise the City to hold a new election? (The 1995 measure passed by a mere 565 votes). Why didn’t Jenkins (after he/his law firm began providing City Attorney services to Hermosa)? Why didn’t Bobko (after being elected to the City Council)? 

4)  Could damages even be awarded to MacPherson by a jury (under directions provided by the presiding judge) due to failure of Macpherson Oil to make reasonable efforts to “mitigate damages” over the past 15+ years, as required under California law, by insisting on a new vote with a new proper City Attorney Impartial Analysis?  Did Macpherson sue because he could NEVER meet the TERMS & CONDITIONS of the LEASE imposed by the Coastal & State Lands Commission?  Did Hermosa Beach trial lawyers including Michael Jenkins purposely ignore evidence that could have won or minimized damages?  

5) Because of Bobko's associations with RWG Municipal Law Firm and Michael Jenkins, did Councilmen Bobko have a “CONFLICT OF INTEREST” in negotiating and voting on the settlement agreement? Shouldn’t Bobko have RECUSED himself, as required under California law from all such activities.  Has Bobko violated the Brown Act?  

6)  Are these the reasons the Settlement Agreement was negotiated by Bobko in secret, and voted upon behind closed doors without public participation? Was Bobko just protecting the reputation of this law firm, and his friend Jenkins, to the detriment of the City? Why was the settlement agreement not discussed in public BEFORE City Officials signed the contract with a new 3rd party E&B before the scheduled jury trial in April of 2012? Don't neighbors heavily impacted deserve "a say" in that their property and lives could be heavily impacted? - That seems to be normal business practice with Tattoo parlors or new bars, etc

7) Is this the reason that this behind the closed doors settlement includes a requirement that the 1995 "Stop Oil  election be held again"?  By wiping out all City reserve funds if not passed. Are there also other implications with regard to attorney "errors and omissions"insurance and possible reimbursement to the City for its approximately $4M in legal defense costs?

Continue to read a list of more questions that need answers.

How Can Hermosa Beach Pay For The $17.5M Settlement?

Hermosa Beach Self Storage Worth Approx. $7M ($180K Annual Tax Revenue)

City Yard in Hermosa Beach Worth Approx. $15M ($0 Tax Revenue).  Are we just giving E&B a $15M property? Here is why it might be more expensive to vote yes.  $3.5M loan repayment + $15M Property for voting Yes = $18.5M vs 17.5M for Voting No.  

Noble Park in Hermosa Beach Worth Approx. $20M ($0 Tax Revenue)

Hermosa Beach Breezeway Lot Worth Approx. $1.5M+  ($12K Tax Revenue)

Old Prospect Ave School Building Lot Worth Approx. $800K (No Tax Revenue)

Public Parking Facility Worth Approx. $20M ($360K Annual Revenue)

The biggest question that voters need to understand when going to the polls is how is Hermosa Beach going to pay for the $17.5M upon a "No" vote.  There has been some speculation that the vote might not happen until 2013 or 2014 which doesn't surprise me.  In the contract, it states that E&B can ask the city to put the measure on the ballot at any time and the city has 6 months to do it.  When do you think it will be in the best interest of E&B to put the measure on the ballot?  

I think Hermosa Beach should be financially prepared for another recession and have the cash in the bank or a bond measure approved to pay for $17.5M NOW!  Current macroeconomic headlines could easily affect our ability to finance a bond offering or sell real estate in the coming years:  1)  inflated bond market, 2) massive U.S. government debt and 3) European Union debt restructuring recession.  Its been over 4 years since the 2008 financial crisis and you never know when the next downward cycle will hit our economy.  

The City of Hermosa Beach has plenty of liquid and semi-liquid assets that it can use to cover the costs.  There is no need to do a parcel tax or an assessment on residents.  There is no need to believe the oil propaganda and rumors about the going bankrupt over the oil settlement.  We can afford to pay it and it won't affect our budgets or our valuable schools.  The City owns a lot of valuable property and the last time I checked we are not in the "property management" business.  The City has a number of assets that do not generate any tax revenue for the city and should be considered for sale.  

The City of Hermosa Beach likely owns over $100+ million in real estate assets and has over $25+ million in working capital in the bank available to pay for the settlement.  The City also has the ability to get a $10M "Judgement Bond" from the State of California at 3% and service loan which will cost the city $300,000 per year which is nothing out of the budget.  Why not also float another bond for $7.5M as well since boring money is so cheap these days.  So there are lots of ways we can solve the problem of paying for the settlement if we have to.   

The Storage facility was purchased by the City years ago for around $4M.  Its likely worth about $7M today if you put 14 multifamily units on the lot and zone if for residential purposes.   It generates $180K per year for a property the city paid $4M.  Is rent revenue worth the annual yield for tax payers?  The City is not in the property management business and thus we should sell it.  See lease agreement. 

The City Public Works Yard on 6th Street has 8-10 employees and unfortunately they would have to relocate if oil drilling came into town.  The city could outsource the public works functions to a private company which would save money on employee salaries and pensions, etc.  This lot is likely worth $10M  zoned as commercial and might be close to $15M as residential.  17-20 multifamily units could likely fit onto this lot if a developer buy it.  Also, has the city has not factored into the E&B Oil drilling deal that the we are practically giving E&B oil a $15M property.  So in reality, it might be cheaper to pay the $17.5M and vote NO vs paying $3M+ giving a $15M property to E&B for voting Yes. 

The City owns 13 parks some of them are more useful than others.  I am not proposing to go around the City to sell parks but if you compare a price per square foot and the lack of tax revenue to the city.  Noble Park is probably the most valuable asset we have that could be sold.  The Beach House next door to this large lot pays Hermosa Beach $800,000 per year in bed tax revenue.  I know there are a lot of people that use the park to walk their dogs but that is a debate for a separate discussion.  However, most people would not let their kids play in the grass because of the amount of dog waste.  You might be able to classify this as one of the most valuable dog walking park in the U.S.  It might be worth $25M depending on the zoning. 

The Fat Face Fenner's breezeway is likely worth $1.5M.  Currently the city leases the above air space for $1K per month for the right to have a restaurant above the walkway space.  $12K per year is not a lot that is worth $1.5.   I don't know many people who currently use the walkway and don't know how much value it has to lower pier any longer.   A full scale Fat Face Fenner's restaurant might make sense here if constructed from the ground up. 

The Old Prospect School is next to the Fort Lots of Fun park might be worth $800K.  It has been a storage facility for old city lights for years and does not serve as a tax generator for the City. 

The City of Hermosa Beach has parking garage which it shares revenue with LA County on a 50/50 split.  What is a property like this worth that generates $300,000 per year?  Could it be worth $20M and is it worth it to sell half of our stake for $10M?  Again we are not in the property management business and it might be in our best interest to divest this property.  See LA County agreement & annual parking structure revenue / expense financial statement. 

As you can see, we have lots of choices of assets that the City can sell.  Its up to the citizens to come up with a plan to sell one or a few smaller parcels because we know our officials wont take the initiative.  Just look at what Redondo Beach City Council is doing to their residents if you need any proof.  Real estate has recovered from the 2008 lows and it looks like another good time to sell some assets.  I hope this makes everyone more comfortable about voting "NO". 

This is work in progress and we would like your feedback on our theoretical pricing.  If you have commercial real estate experience please contact us or comment below.  Please check back frequently for changes.  I apologize for any errors.  

Settlement Agreement Comments

Below is a draft of our settlement agreement comments we are compiling from residents.  We welcome your comments so please email us with your comment structured similar to below.  If you want to read the full 45 page agreement you can download it on the HermosaBCH.org or at Google Docs.

Recitals, Page 1, A
Macpherson also obtained all of the necessary Permits to Construct for the Oil Project from the South Coast Air Quality Management District In November 1995 the residents of the City passed City Measure E an initiative measure that banned oil drilling in the City. 
Comment- South Coast Air Quality Permit ran out or cancelled March 30, 2000. 

Recitals, Page 1, A
In early 1998 and notwithstanding the passage of Measure E the California Coastal Commission authorized issuance of Coastal Development Permit No 29E86 to Macpherson far the Oil Project subject to conditions
Comment - Coastal Developmental Permit No. 29E86 never issued. 

Recitals, Page 2, D
Substantial revenue stream to be generated for City and the Hermosa Beach School District as a result of the payment to City and School District of royalties in association with the production of oil and gas reserves by E&B
Comment - How can School benefit from tidelands trust?

Definitions, Page 3, 2.10
School Lease means the lease between Macpherson and the Hermosa Beach School District
Comment - No lease on School property found. Where is this?

The Closing, Page 4, 3.2
Confidentiality Agreement previously signed on behalf of each of the Parties on February 17 2012
Comment -  Where is a copy of this?

Macpherson's Obligations At Closing: Page 5, 4.1 

1031 exchange as provided in Article X hereof all of Macpherson the School Lease and any other leases releases set forth in paragraph VI
Comments - Like-kind exchange, what's Macpherson doing here?  What other leases are involved in this agreement?

E&B's Obligations At Closing: Page 5, 4.3a 
Said assignment reserves to Macpherson from E B and its successors and assigns an overriding royalty of 1.5% of one hundred 100% of gross hydrocarbon production but otherwise
Comment - Macpherson keeps part of this going here.

E&B's Obligations At Closing: Page 6, 4.3c 

constitutes the E&B Loan of $17,500,000

Comment - Note this loan and how it's to be repaid by the city.

E&B's Obligations At Closing: Page 6, 4.4b 
Upon issuance of the drilling permit or in the event the City cannot issue the drilling permit as the sole result of action or inaction undertaken by and under the control of E&B (including without limitation) the failure of the California Coast Commission to issue a coast development permit. immediately

thereafter forgive $14,000,000 of the E&B Loan

Comment - Failure to meet conditions and most of loan is forgiven?  Where does the fact we are giving E&B a $15M property factor into the cost?  Total costs is more like $18.5M and more cheaper to vote no. 

City's Obligations Following Closing: Page 7, 4.6a 

Place on the ballot at a special municipal election in a manner that comports with all applicable law within six 6 months of a request to do so by E&B
Comment - Within 6 months call election!!!! "....notwithstanding inconsistent change in City's Municipal Code." ????

City's Obligations Following Closing: Page 7, 4.6b 

Vacate and make the City maintenance yard available for the construction of the Project as when and in the manner and subject to the conditions provided for in the Lease and repay Three Million Five Hundred Thousand Dollars of the E&B Loan through a deduction of royalties equal to 1.5% of gross proceeds. 
Comment - Vacate and make the City maintenance yard available? And where in the world is the city going to put it. Steve Burrell could never find another location for it, here or in Redondo Beach. Let's get real. this is an important issue.  This property is worth $15M and we are paying them $3M on top?  Total deal looks like $18.5M to vote yes.  

City's Obligations Following Closing: Page 8, 4.6d 

Grant as reasonably required by E&B all necessary rights of way 
easements franchises and other rights as necessary for subsurface pipelines < and other facilities and appurtenances in order for E&B to drill for produce market transport and sell all oil and gas produced from the subject lease 
Comment - Whoa Ho! Check out this demand. Dig up the streets or the greenbelt? And where will it terminate in Redondo Beach or AES?

City's Obligations Following Closing: Page 9, 5.4 

The parties recognize that Macpherson is materially changing its legal position and rights and property holdings in reliance upon the final and binding effect of this Agreement and any rescission of this Agreement would be a wholly inadequate remedy for Macpherson because rescission cannot possibly return to Macpherson the legal position and rights it held prior to the consummation of this Agreement
Comment - We need an attorney to explain this paragraph. It's legalese is convoluted.

Mutual Releases: Page 9, 6.1 

Effective upon the successful completion of the Closing in accordance with the conditions described in paragraph 3
Comment - What are these conditions in 3.3 

Mutual Releases: Page 10, 6.1 

the City hereby fully and finally waives releases and  permanently discharges Macpherson and its respective partners officers employees agents representatives and attorneys the Releases from any claims arising under the Lease any continuation extension amendment restatement or replacement of the Lease
Comment - Whoa Ho! What's this? What about compensation due the city for the past  Environmental reports, attorneys fees due the city, etc?

Mutual Releases: Page 10, 6.4 

Except as may be provided in this Agreement each of the Parties waives any and all claims for the recovery of any costs expenses or fees including attorney fees associated with the matters and claims released in this Agreement
Comment - Attorneys fees from earlier court cases? Have they been paid?

Defense of Litigation:  Page 11, VII
In the event that one or more lawsuits are filed challenging this Agreement and/or the actions implementing or contemplated by this Agreement the Parties to the extent named as parties defendant in the lawsuit will cooperate in good faith in the defense of the litigation and shall initially bear their respective attorneys fees and costs With the exception of a lawsuit challenging the approval of this Agreement itself should the Ballot Measure described in paragraph 46a pass E&B shall indemnify the City for all attorneys fees and costs incurred by City in the defense of litigation encompassed by this paragraph and also for any attorney fees and costs awarded to a plaintiff against City if any in such litigation
Comment - Does this mean the city can collect attorney fees if sued for this agreement?

Representations & Warranties:  Page 11, 8.1c
They acknowledge that the Stinnett Well has been plugged and abandoned and agree that Csity inability to convey the Stinnett Well to E B shall not constitute a breach of this Agreement or the Lease. 
Comment - Dave Lucero, what was the result of your looking into this well on the City's Yard?

Representations &Warranties:  Page 12, 8.2c

The force majeure provisions in paragraph 30 of the Lease apply and have applied during the pendency of the Action and the CUP remains valid. 

Comment - CUP is for a "Conditional" Use Permit. The  Use Permit itself was never issued, or was it? Wasn't the Fire Code in doubt?  In the CUP it states, "All CUP required studies and reports must be submitted to the City and approved before permit issuance."

Representations &Warranties By All Parties  Page 12, 8.3a
The Parties have received all corporate and other approvals necessary to enter into this Agreement on their behalf and that the persons signing this Agreement on their behalf are fully authorized to commit and bind the Parties to each and all of the commitments terms and conditions hereof and to release the claims described herein and that all documents and instruments relating thereto are or upon execution and delivery will be valid and binding obligations enforceable
Comment - Not so! The California Coastal Commission issued "approval with a long list of conditions" but never issued a "Permit" for Macpherson to drill in Hermosa Beach. So how does this affect this Settlement Agreement? Is Macpherson claiming to have abided by all the requirements of 15 b. of Lease No. 2 (it has with the City), i.e. "The Lessee shall also apply for and obtain all necessary permits from the City of Hermosa Beach...The Lessee shall also be responsible, at its sole expense, for alI necessary permits and approvals to be obtained from the California Coastal Commission...."
Representations &Warranties By All Parties  Page 12, 8.3d
The Parties have prior to the execution of this Agreement obtained the advice of independent legal counsel of their own selection regarding the substance of this Agreement and the claims released herein
Comment - Was the advice "independent"?
Representations &Warranties By All Parties  Page 13, 9.2
This Agreement and the Confidentiality Agreement discussed in Paragraphs 32 and 3 are an integrated contract and sets forth the entire agreement between the Parties hereto with respect to the subject matter contained herein 

Comment - If the Confidentiality Agreement is part of this, please, let's have a look at it.

Representations &Warranties By All Parties  Page 13, 9.5
This Agreement shall be binding upon and inure to the benefit of each of the Parties and their respective representatives partners officers employees agents heirs devisees successors and assigns
Comment - How about to the benefit of the people of Hermosa Beach?

(stay tuned more to come)

Recovery of Damages in Lawsuit

The previous page on Macpherson Lawsuit Issues raises 2 important questions/issues: Over the past 15+ years . . .

Michael Jenkins of RWG Law Firm's Impartial Analysis of Proposition E

1) Why hasn’t MacPherson (or his attorneys) at any time raised these election issues (the basis of the lawsuit) and at least requested (if not insisted) that the election be held again, this time with the requisite information/warning to the voters of the significant detrimental financial impact on the City.

2) Why hasn't City Management, City Attorney, or the various law firms representing the Hermosa Beach raised this issue and least requested (if not insisted) that the City Council rule that the election should be held again?  This time with the requisite information/warning to the voters of the significant detrimental financial impact on the City.

3) Could damages even have been awarded TO MACPHERSON by a jury (under directions provided by the presiding judge) due to failure of Macpherson Oil to make reasonable efforts to mitigate damages over the past 15+ years, as required under California law, by NOTIFYING CITY OFFICIALS THAT THE ELECTION WAS FLAWED AND insisting on a new vote with a new proper City Attorney Impartial Analysis?

Macpherson Lawsuit Issues

The Macpherson Lawsuit is probably the most serious and important detrimental issue facing Hermosa Beach. While investigating this issue, Hermosa Residents and attorneys have examined various documents, and discovered what they believe is a serious flaw in the 1995 election PROPOSITION E, the “STOP OIL DRILLING” voter initiative.

The most significant part of the claim for damages by MacPherson in his lawsuit is his claim for “lost profits” in the hundred of Millions of dollars. This claim is based on a fundamental tenet/principal of law that damages for “Breach of Contract” entitles the injured party to claim lost profits.

However, in the Voter pamplet/booklet provided to the voter for this election, the “Impartial Analysis of Proposition E” prepared the City Attorney Michael Jenkins RWG Law Firm made no mention whatsoever of this potential, if not highly probable, consequential detrimental impact on the City should this measure be passed (read below). Had this consequence of the passage of this measure been presented to the voters, there could have been a substantial difference in the number of registered voters voting, as well as the election results.

“Beginning in April 1994 the Hermosa Beach Stop Oil Coalition began a campaign to qualify a ballot initiative to end the Macpherson project and to reinstate the comprehensive prohibition on oil drilling in the City by deleting from the Municipal Code the two exceptions from the ban that had been approved in 1984.  (Hermosa Beach Mun.Code, § 21-10, subds. (a) & (b).)  The measure, Proposition E, appeared on the November 1995 ballot.”  (Stop Oil I, supra, 86 Cal.App.4th at pp. 543-544.) 

“The ‘Impartial Analysis of Proposition E’ by the Hermosa Beach City Attorney circulated to all voters explained, ‘The effect of this measure, if adopted, would be to amend the Municipal Code to prohibit oil and gas exploration, drilling and production on these two sites [the two sites then excepted from the citywide prohibition], and eliminate from the Code the authority to use these sites as a potential source of oil and gas revenue for the restricted purposes stated in the Code. [¶] The City has leased the City maintenance yard site to a private entity for oil and gas exploration and production activities which have not yet commenced.   All permits necessary for this project have not been issued and have been delayed by pending litigation.   If Proposition E is adopted, the law is not clear exactly how the measure would affect the project proposed by the lease.’   The ballot arguments in favor of and against Proposition E focused on the potential environmental risks and economic benefits of the Macpherson project on the City Yard Site."  

Proposition E passed by a narrow margin of only 565 votes.

1) Why hasn’t MacPherson (or his attorneys) at any time raised these election issues (the basis of the lawsuit) and at least requested (if not insisted) that the election be held again, this time with the requisite information/warning to the voters of the significant detrimental financial impact on the City.

2) Why hasn't City Management, City Attorney, or the various law firms representing the Hermosa Beach raised this issue and least requested (if not insisted) that the City Council rule that the election should be held again?  This time with the requisite information/warning to the voters of the significant detrimental financial impact on the City.

3) Could damages even have been awarded TO MACPHERSON by a jury (under directions provided by the presiding judge) due to failure of Macpherson Oil to make reasonable efforts to mitigate damages over the past 15+ years, as required under California law, by NOTIFYING CITY OFFICIALS THAT THE ELECTION WAS FLAWED AND insisting on a new vote with a new proper City Attorney Impartial Analysis?

With regard to issue 1: 
“A party cannot recover for loss which he could have avoided or mitigated through his reasonable efforts.” Clearly, MacPherson will likely have a difficult time explaining he should be entitled to any damages due the fact that Macpherson made no effort to call for a new election this time with the proper impartial analysis containing warnings of potentially disastrous ramifications for the City.

With regard to issue 2: 
This raises the distinct possibility that the City may well be entitled to damages from the law firms representing the City to recoup its legal costs which have soared in to the Millions of dollars which could have likely been avoided had this issue been raised.

As a general rule, the objective of contract damages is to insure that the aggrieved or injured party should receive what he or she expected from the bargain. To the extent that an award of money can do so, the aggrieved party should be placed in the same position as though the contract had been fully performed. This is what is known as protecting the expectation interest of the parties. (Rest.2d §344(a))

Loss of Profits
Loss of profits, present or future, as an element of special or consequential damages, may be recovered for a breach of contract if; 1) The loss is the direct and natural consequence of the breach, 2) It is reasonably probable that the profits would have been earned except for the breach, and 3) The amount of loss can be shown with reasonable certainty.

An injured party may recover for a breach of contract the amount which will compensate the party "for all the detriment proximately caused by the breach, or which, in the ordinary course of things, would be likely to result from the breach." (Cal.Civ.Code §3300.)

Limitations on Damages
There are several limitations on awarding damages to make the non breaching party whole: A party cannot recover for loss which he could have avoided or mitigated through his reasonable efforts. (Rockingham Cty. v. Luten Bridge Co. 35 F.2d 301 (4th Cir. 1929); Rest.2d §350)
Read more about recovery of damages in lawsuit. 

Macpherson Settlement Agreement

Don Macpherson Picture from SF Gate

Macpherson Oil Settlement Agreement (Google Docs)

Is it rather suspicious that the city of Hermosa Beach posted the full 45 page agreement over the weekend and suddenly takes it down this week?   Many people are looking for it and its ridiculous that the city would take it down.   Is it because they need to amend the agreement or are they becoming embarrassed.  Again, more transparency is needed.  We have a lot of smart people in this town and its very important that every dissects every aspect of this agreement.  If you want to know why the agreement may not be legal or want to hear comments from residents on the Macpherson see the previous two links.

See Also:
Macpherson Lawsuit Issues