Trial Date Set in Macpherson Oil Lawsuit

The multimillion-dollar that Macpherson Oil Co. brought against the city of Hermosa Beach over an oil-drilling project will go to trial on Jan. 18, 2012, Los Angeles Superior Court Judge Joanne O'Donnell decided in a status conference Tuesday.

Macpherson is seeking about $700 million in damages, arguing that the city illegally broke an agreement signed in 1992 to allow the company to drill for oil in Hermosa.

Last month, O'Donnell asked lawyers for both sides in the dispute to submit briefs estimating how long a trial would last, she said.

Macpherson lawyers indicated that the trial would not extend beyond 20 days, and that it would take additional depositions for company experts discussing damages and geology.

Michael Jenkins, the city’s attorney, said the trial could last longer than that  because of the multiple witnesses the city would call to testify. It could need as long as eight months to prepare, he said.

“We have assembled a highly qualified and experienced team of lawyers and expert consultants to vigorously defend the city’s right to protect the health and safety of the community without having to face the threat of huge judgments that could affect the city’s financial future,” said Mayor Peter Tucker in a statement Tuesday.

The lawsuit, which was filed in 1998, stems from a dispute over the lease agreement for drilling between the Santa Monica-based Macpherson Co. and the city.

The agreement allowed Macpherson to drill for oil at a maintenance yard near City Hall. But in 1995, before the company started the project, Hermosa Beach voters passed Proposition E, which banned oil and gas drilling within the city limits.

Hermosa Beach withdrew from the agreement in 1998 following the City Council's decision to deny drilling permits in compliance with Prop. E. The oil company then sued the city for breach of contract.

O’Donnell found that the city was in breach of contract in February 2008 and ruled that a jury should decide whether Macpherson should be awarded damages.

The city then went to the 2nd District Court of Appeals to request that the case  be dismissed.

The petition by the city was denied by justices in February 2010, after which the panel said the oil company's drilling application could only be denied by a jury "if there was substantial evidence ... after the lease was executed of health and safety risks associated with the project." 

“As we have seen the damage from last year’s disastrous oil spill in the Gulf of Mexico and how other oil and gas operations in urban areas have harmed people and property, it becomes increasingly clear our predecessors on the City Council acted with foresight when they denied Macpherson Oil Co.’s permits," Tucker said.

City News Service contributed to this report.

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