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The $675,000 question: Is settlement with former police chief what some assume it is?

Much ado, and rightfully so, has been made of the Manteca City Council’s unanimous decision to settle a claim with departed Police Chief Jodie Estarziau.

The debate — or more appropriately in more than a few instances the borderline indignant rants — center around two issues: The fact Estarziau received $675,000 and the fact she was removed from her job.

There are people who are stunned — or disappointed — that Estarziau didn’t receive more. If you are a Manteca taxpayer or rely on municipal services you have skin in the game. Why would you be disappointed that Estarziau did not receive a $6,750,000 settlement instead? It wouldn’t devastate whoever you believe should be punished for her departure but instead would inflict pain on 86,000 people.

As to the fact Estarziau was awarded any money at all is not a clear sign that the city is at fault to the degree that many believe it to be.

Years ago I was inane enough to run for the Western Placer United School District Board as a 19-year-old and ended up winning.

One of the decisions trustees faced when I was on my first year on the board in 1975 was whether to pay or reject an $8,000 claim parents of a Lincoln High senior had filed against the district.

They had been informed in November that their son was not going to graduate the following June. The reason was simple. Not only was he not doing most of the school work assigned him over the previous 14 months but he was out of school more often than not despite there being no health issues or other extenuating circumstances.

The parents filed a claim for loss of consortium saying not being able to see their son receive a diploma at a formal graduation had created marital stress.

The board was advised to pay the claim. I argued against it. It seemed clear to me that the law was on our side. The parents had been repeatedly warned and their son counseled — verbally and in writing — of the consequences of his inaction. I managed to convince a majority to vote with me and reject the advice of county counsel who had conferred with our insurance carrier.

Two weeks later we had a special meeting specifically for a closed session to revisit our rejection of the claim.

Attending was a representative of the insurance company.

What he said was simple, and to the point.

The insurance firm’s lawyers agreed the claim was completely baseless. They said there was an extremely high likelihood the school district would prevail when they went to court. But there was a rub.

If the case went to court, the insurance company estimated it would cost $12,000 to defend the district. Again, they had little doubt that they would prevail. However, if they settled for $8,000 the insurance company would save $4,000.

I responded by pointing out that if the district settled claims that were completely without merit then we’d be encouraging others to file claims on shaky grounds as well. The insurance company rep agreed the trend did tend to embolden people to seek claims and on the surface his firm was less than thrilled with the trend. He added they didn’t simply blanket agree or pay all claims in the amount being asked, or at a reduced rate. They also reject claims based on their calculations the court would dismiss something outright and other circumstances such as whether the claimant had retained a lawyer and even if the legal counsel was likely being paid solely on a percentage of what he secured for a client.

He added he agreed in principle with the board’s decision to reject the claim. And if the board reaffirmed that is what they wanted to do, the insurance company would represent the district to the fullest and had no doubt they would prevail in court.

What would happen next, he said, was his company would likely refuse to renew the district’s insurance coverage. And when the district was searching for a replacement firm, other insurers would research the district’s past exposure that would include the court case. Based on “best practices” established by the insurance industry, they would put two and two together and conclude the district went against their insurer’s advice and rejected the claim. The district, he said, was likely to find a replacement insurer but would pay much higher premiums.

We never did find out if that was the case.

On the vote to reconsider rejecting the claim, I came out on the losing end 4-1.

The decisions leading to the Estarziau settlement on both sides were based on cold calculations that had minimal connection to whether the city had somehow walked all over her rights or committed atrocities when it came to how they handled the personnel matter.

The city likely weighed the cost of heading to court and the odds of convincing a jury they were in the right. At the same time Estarziau and her attorneys made the same calculations but from their perspective.

Both sides also were aware that the city’s insurance carrier would be on the hook for part of the settlement and a good share of the legal costs if it went to court.

In this case the insurance carrier is paying $350,000 and is out little or no legal costs given the legal work to the point of settlement came in at or below the city’s $50,000 deductible.

Add the $50,000 on top of the $375,000 of the city’s share of the $675,000 settlement and Manteca taxpayers are out $425,000.

You or I may not like how the system works, but it’s all about calculated exposure to financial hits.

If you can read anything into the settlement it’s that the claimant’s side figured there wasn’t the potential for enough of a big pay day to head to court and that the city and their insurance carrier figured it cost less to settle than to pile on legal costs and possibly risk paying more in court or spending more on legal costs to win than what the settlement is costing.

As for whether it was “just” for Estarziau to be removed from her job, keep in mind that is entirely different than whether the city followed the law or previous practices in what led up to their “mutual separation.”

Even though we are an “at-will” employment state for those not covered by contracts, lawmakers and the courts have made it clear not following legal regulations and past practices is a miscue that can have financial consequences.

The real concerns for taxpayers going forward are two-fold. First, it is whether city management has learned anything from the process on the right way as well as the California way to terminate an employee. The two aren’t interchangeable concepts.

Second, is when the city hires a member of the senior management it is clearly stated they are an at-will employee and no language contradicts that in the contract they are offered.

All indications are City Manager Miranda Lutzow on new senior management hires has made sure that it is spelled out they are at-will hires.

And while you might think a senior management team member for the city should have a guarantee of some sort to keep their job until they retire unless they commit a major discretion, would you as a citizen want such a lifetime employment guarantee?

You might be enthralled about someone that has gotten the boot recently from 1001 West Center Street, but that should carry no weight.

The reason we have elections every two years is to have a council direct overall city policy that is implemented by a city manager who is in charge of overseeing the day-to-day city municipal operations that they can hire and fire.

If the general direction of the city is not going the way the council has outlined, the city manager should not have their hands tied by senior management team members that are deemed not to be onboard.

The concerns Estarziau’s lawyer raised are disconcerting if they are indeed on the money. But what is more disturbing is the fact it appears previous city managers gave senior management team members extra protection against having to be accountable to legitimate policy directives by conferring on them special status that did not make them at will employees.


To contact Dennis Wyatt, email