The City of Weed settled a lawsuit brought by former RadioStar Studios owner Sylvia Massy Shivy for $415,000 late last month. Weed City Councilor Chuck Sutton was also named in the suit.

Late last month the City of Weed settled a lawsuit brought against both itself and Weed City Councilor Chuck Sutton by Sylvia Massy Shivy, former owner of RadioStar Studios on Main Street in Weed.

The settlement amount was $415,000, which includes forgiveness of a $15,000 loan made to Shivy by the city through the state’s Community Developmet Block Grant fund after the 2012 4&20 Blackbird Festival.

Weed City Manager Ron Stock said the city’s liability insurance will cover the settlement cost, but “our rates are likely to go up.”

The two-week trial was settled before going to the jury for deliberation.

Jim Wyatt, attorney for the City of Weed and Sutton, said that “as the trial progressed the city determined it was in the best interests of all concerned to reach a settlement with the plaintiff as opposed to allowing the court to determine her damages.”

Shivy’s attorney, Tim Stearns, said his client agreed to settle because the City of Weed had indicated it would not only appeal any “substantial award” but would also execute its right to pay Shivy over a period of years.

Promissory Estoppel

The litigation stemmed from Shivy’s claim that the City of Weed had agreed to allow her to fence off several blocks of Main Street in downtown Weed for her planned 4&20 Blackbird Festival in 2012. The fencing was intended to ensure that everyone who attended had to purchase a ticket.

The suit alleges that her plans for, and financial investment in the festival were predicated on the revenue the fencing and ticketing plan would allow her to generate.

According to the suit, two or three days before the festival was to occur Shivy was visited by Sutton, who told her it was “against the law” to fence the downtown area and that neither he nor the city would allow that to happen.

The specific cause of action in the lawsuit which addressed those allegations is called a promissory estoppel, according to attorney Stearns.

The website uslegal.com defines promissory estoppel a situation in which one party has relied on the promise of the other and it would be unfair not to enforce the agreement, even though there may not otherwise be an enforceable contract.

According to Stearns, “The city made a promise and she relied on that promise to her financial detriment.”

Stock said Shivy believed she “had the authority to close off Main Street to pedestrian traffic and the city believed it had granted approval to close the street only to vehicular traffic.

“The misunderstanding was unfortunate and we are pleased it was resolved. If we learned anything from this situation, we learned that we have to ask better questions of event planners to make certain that we understand clearly what they are asking for and that they understand clearly what we are willing to allow.”

Infliction of Emotional Distress

The lawsuit further alleges that Shivy believed that Sutton had the authority to “shut her down,” as she said he’d threatened, and that therefore she changed the fencing plans at the last minute.

Shivy claimed that, as a result of the last minute change, only a small number of tickets were sold although several thousand people attended the music festival. Because of this the festival turned out to be a “financial disaster,” the suit alleged, which resulted in Shivy suffering “severe financial and emotional harm and damage.”

The suit alleged that Shivy was subsequently threatened by creditors, that she lost credibility in the music production industry, and that ultimately she had to sell her real estate and equipment due to “very substantial economic losses.”

According to the lawsuit, Shivy suffered a nervous breakdown, incurred medical expenses, had to undergo counseling because of severe depression, and was unable to work.

These are the allegations which prompted the two other causes of action considered at the trial – Negligent Infliction of Emotional Distress against both Weed and Sutton, and Intentional Infliction of Emotional Distress against Sutton.

According to Stearns, these causes of action contend that Sutton’s conduct toward Shivy two or three days before the 2012 festival “was a causative factor in the plaintiff’s emotional distress.”

He said the first cause contends that Sutton acted with either intentional or with reckless disregard of the probability of emotional distress being caused by his actions.

The second cause contends that the City of Weed and Sutton “carelessly disregarded” the probability of emotional distress being caused by his actions, Stearns said.

When contacted, Sutton stated that he had “been advised to say ‘no comment’” on the case.

Actions disallowed

Two other causes of action in the original lawsuit were disallowed by presiding judge Siskiyou County Superior Court Justice Robert Davis before the case went to trial because government employees cannot be held liable for misrepresentation, Stearns said.

The lawsuit claimed that Sutton knew Shivy had “existing agreement and approvals” for the fencing and ticketing plan and that he acted “without actual, apparent, or ostensible authority as an agent of the City” when he told Shivy he would stop or shut down the festival.

According to Stearns, Shivy had economic relationships with third parties based on what she held to be agreements and approvals of the fencing and ticketing plans for the 2012 festival. When she acceded to what she thought was Sutton’s right to force a change in festival plans, the economic losses negatively impacted her ability to fulfill her agreements with those third parties.

Davis ruled that Sutton could not be tried for Intentional Interference with Prospective Economic Advantage, the cause of action in the lawsuit which addressed those allegations.

The judge also ruled that neither Weed City nor Chuck Sutton could be tried for Negligent Interference with Prospective Economic Advantage, the second cause of action pertaining to those specific allegations.

The elements of “Intentional Interference...,” according to the website justia.com, are as follows:

• An economic relationship existing between the plaintiff and a third party;

• A “potential future benefit” from the relationship;

• A defendant who knew of the relationship;

• An action by the defendant intended to disrupt the relationship;

• Wrongful conduct by the defendant, such as misrepresentation;

• Disruption of the relationship; and,

• Harm to the plaintiff caused by the defendant’s actions.

The elements of “Negligent Interference...,” according to justia.com, differ in that the defendant “knew or should have known” of the relationship and that it would be disrupted if reasonable care was not taken, and that the defendant “failed to act with reasonable care.”

A cause of action contending that Shivy’s civil rights had been violated was also thrown out before the trial began.