Millcreek’s legal fees mount in flooding fight

Nov. 17--The flooding dispute between Millcreek Township and one of its wealthiest residents features a torrent of rising legal fees.

Since 2005, the township has paid its lawyers $1,014,470 to handle a series of legal cases involving the Angela Cres Trust, whose trustee is Laurel Hirt.

She is a granddaughter of H.O. Hirt, the late co-founder of Erie Insurance Group, and she inherited $14.5 million from her mother, Audrey Hirt, who died in 2009. H.O. Hirt's descendants are worth a total of more than $1 billion, mostly in company stock.

The Millcreek legal cases are connected to the flooding dispute, in which the township unsuccessfully sued to condemn about 800 feet of a drainage ditch on the 42 acres of trust-owned property where Laurel Hirt, 55, lives in the 5800 block of Sterrettania Road. The property is just northeast of the intersection of Heidler and Sterrettania roads in southwestern Millcreek.

The township said the dredging and straightening of the ditch would alleviate flooding of houses in the area during heavy rains. The trust refused to grant the township an easement for the ditch, which empties into Walnut Creek. The rejection led the township to sue for condemnation.

Of the more than $1 million the township has paid its lawyers, about $856,726 has gone to the township's outside counsel in the flooding dispute, the Erie law firm of MacDonald, Illig, Jones & Britton, according to information the township provided to the Erie Times-News in response to a Right-to-Know Law request.

The other $157,745, the township said, has gone to the township's solicitor, Evan Adair, and is in addition to the $67,226 the township pays Adair in an annual salary. Adair reached an agreement with the township to get paid separately for representing the township in certain large cases, such as those involving the Cres Trust.

The township's legal costs in the Cres Trust cases could grow significantly.

The amount that Millcreek has spent is on top of the $3.4 million that the Cres Trust is seeking from the township. The trust wants that much to recover the legal fees the trust said it has already paid its lawyers to defeat the eminent domain suit, which the township filed in Erie County Court in 2005.

Tired of flooding

The township is contesting the fee request. But even if the township wins the fee-recovery case, the more than $1 million in legal fees it has spent to date over the Cres Trust cases far exceed the cost of the dredging and ditch-straightening plan, known as the Heidler Road Channel Improvement Project.

The project would have cost $156,000 in 2000, shortly after the township proposed it, according to a report Hill Engineering Inc., of North East, completed for the township in December 2006. The report, part of court records, said the township sees the dredging project as the least expensive and most environmentally sound way to alleviate flooding, which some homeowners have blamed on the development of new subdivisions.

The township, the report said, rejected an alternative in which it would have installed drainage pipes along Sterrettania Road to carry rainwater to Walnut Creek. The township found that plan unworkable because of environmental issues and cost -- about $2.6 million, according to the report.

The township also might be unable to get state permits to install the pipes, Millcreek Supervisor Brian McGrath said in an interview last week. He said the township still considers the dredging and straightening project the best plan to fix the flooding.

"We don't want to spend money on court costs and legal fees, but we have to do something to help the people who are impacted," McGrath said.

The township's insurance carrier has not covered the more than $1 million in fees, and the township -- whose annual budget is $26.4 million, including a $4 million fund balance -- is still exploring whether insurance would cover any fees that might be payable to the Cres Trust, McGrath said.

The legal fees are already too high for resident Mike Roesch, whose house at 5505 Deerfield Drive, north of Heidler Road and near the southwestern border of the Cres Trust property, has flooded during heavy rains, including a storm in late June.

Instead of spending money on legal fees, the township's three supervisors should have installed drainage pipes "down the highway, and there wouldn't be a problem," Roesch said. "It is beyond me that this has gone this far."

"They knew the economic might Ms. Hirt had, and she stuck to her guns," Roesch said. "You have to give her credit for that."

Roesch said he wants the flooding fixed, so he no longer has to clean up rainwater from his basement and watch his backyard flood from water that cannot flow to Walnut Creek.

"Every time it pours, I get worried," he said. "I can't wait until winter so the ground freezes and the water can't soak through."

The lawyers for Hirt and the Cres Trust have declined to comment. In a letter she wrote to her neighbors in late 2011, Hirt faulted the township for not installing storm sewers along Sterrettania and Heidler roads -- a project she said would comply with stormwater management rules and prevent flooding of her and the neighbors' property.

"I am not 'the enemy' in this situation," Hirt wrote.

Fighting over fees

The township lost its eminent domain case in 2009 before then-Erie County Judge Michael E. Dunlavey, who ruled the township's condemnation request was too broad.

Pennsylvania law allows condemnation to widen an existing watercourse but not to create a new watercourse. Dunlavey said the township would have created about 500 feet of new channel as part of the dredging and straightening project.

The township's unsuccessful appeals of Dunlavey's ruling ended in 2012.

The Cres Trust in October filed the request for $3.4 million in fees, and Senior Erie County Judge John A. Bozza has scheduled a hearing for Dec. 17. State law allows a property owner who defeats a municipality in an eminent domain case to recover fees from the municipality.

The township's lead lawyer on the case, Mark Shaw, who specializes in environmental law for the MacDonald, Illig firm, has until Dec. 3 to file a brief opposing the fee request. Shaw declined to comment on his strategy, but he is expected to argue, based on court records, that the trust is not entitled to recover legal fees or, if it is entitled, the $3.4 million request is too high.

Regarding the $856,726 in fees his firm has received, Shaw said they are for "a variety of matters related to Laurel Hirt."

About $177,000 of the fees, Shaw said, are directly connected to the eminent domain suit, known as a declaration of taking, which the township filed against the Cres Trust. He said the other fees are related to actions the trust filed against the township.

Those actions are a successful appeal the trust filed in 2006 before the state Environmental Hearing Board in a dispute over a permit for the dredging project; a 2006 suit the trust filed in Erie County Court, asking a judge to order the township to stop what the trust claimed is the township's diversion of rainwater onto the trust property; and a 2012 civil summons the trust filed in Erie County Court against the township and its three supervisors over claims involving the Sunshine Act, or the state's open-meetings law.

The trust has yet to file a full-blown suit in the Sunshine Act case, so that docket reflects little activity. The filings and arguments in the Environmental Hearing Board case were extensive, as are the filings and arguments in the 2006 suit, which is pending.

The 2006 case -- in which the trust wants the township to stop what it claims is the intentional flooding of its property -- is intertwined with the eminent domain case. The trust in the 2006 case is claiming the township "has diverted stormwater onto the trust property in retaliation, among other things, for the trust's refusal to give an easement to Millcreek," according to court records.

The township is denying those claims. In its court filings, it is arguing that the trust in 2009 "represented that the trust would grant an easement for the township's then intended drainage improvement project" in exchange for the trust not having to submit a stormwater management plan for development of its property.

The township is claiming it sued for condemnation only after the trust refused to grant an easement for the ditch.

Unusual resources

Evan Adair, the township's solicitor, filed the court document detailing those defenses in the 2006 case. In an interview last week, he, like Shaw, said the bulk of his work in the Cres Trust cases has been defending the township against actions the trust filed. The township said it did not have a case-by-case itemization of Adair's $157,745 in legal fees.

Adair also said the eminent domain case has lasted so long because the trust, through Hirt, objected to the township's request to condemn the property.

Such objections rarely occur in eminent domain cases. The dispute is usually over how much the municipality will compensate the property owner for taking land for public benefit -- in this case, to reduce flooding, a worthy objective for Millcreek Township, Adair said.

"It's a frustrating ordeal," said Adair, who lives in Millcreek. "I am mindful of the costs. I live here."

He said the eminent domain case would have turned out differently if not for Hirt's financial resources. The budgetary limits for most landowners in eminent domain cases "do not apply here," Adair said.

One of the Cres Trust's lawyers, Herbert Bass, of Philadelphia, who specializes in eminent domain cases, commented in court on the unique nature of the dispute.

"Your Honor, this is not your typical condemnation case," Bass told Judge Dunlavey at a hearing in April 2009. "Most condemnations are not challenged by the landowner, for a variety of reasons, one of which is that landowners often don't have the money to stage a major challenge to condemnation.

"It's a very expensive process."

ED PALATTELLA can be reached at 870-1813 or by e-mail. Follow him on Twitter at twitter.com/ETNpalattella.

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