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The city has agreed to pay $240,000 in a tentative out-of-court settlement of a civil rights lawsuit by a Kuwaiti-born Honolulu man over his 2003 arrest under the state’s emergency mental health law.

Attorney Eric Seitz contended his client, Mansour Arekat, was arrested after he unjustly came under suspicion of being a terrorist. The settlement is subject to City Council approval.

Seitz said he would get $190,000 for fees and costs and his client would get $50,000.

The city and Honolulu police officers denied any wrongdoing or that the arrest was based on suspicion that Arekat was involved in terrorism.

A federal jury cleared the city and police of any liability in 2006, but last year the U.S. 9th Circuit Court of Appeals set aside the jury’s verdict. In its 2-1 decision, the appeals court found that the officers were liable for violating Arekat’s federal civil rights.

The decision sent the case back for a retrial to determine how much money the city would have to pay Arekat for damages and cleared the way for Seitz to collect his attorney fees and costs, which he had estimated would be in the hundreds of thousands of dollars.

Arekat, 45, owner of Arekat Pacific Security, a Honolulu security firm, declined to comment and referred questions to Seitz, who said he was satisfied and his client happy with the agreement.

Arekat is a naturalized U.S. citizen who served in the Army from 1987 to 1990.

City Deputy Corporation Counsel D. Scott Dodd said the tentative settlement was an "economic decision."

He said the chances of the U.S. Supreme Court overturning the appeals court ruling were "fairly low."

The appeals court ruling placed the city in a "difficult position," Dodd said, and continuing to defend the city would incur more attorney fees for the officers as well as Seitz.

"It’s frustrating because we did win (at trial), and then to have to be forced into this position, it’s disappointing," he said.

City attorneys will recommend approval of the settlement proposal to the City Council in executive session on Thursday, Dodd said.

Arekat was arrested Dec. 15, 2003, by the police specialized services SWAT team. He was taken to his office, where police confiscated three registered firearms, and then to the Queen’s Medical Center for a mental examination.

He was arrested under the state law that allows authorities to take into custody a person who is "imminently dangerous to self or others, or is gravely disabled or is obviously ill."

He was examined and released about seven or eight hours after his arrest, according to Seitz.

Arekat was never charged with any crime and his firearms, which he kept for his business, were later returned to him.

Seitz maintained during the trial that officer Letha DeCaires, who authorized the arrest, suspected that Arekat might be a terrorist because he came from the Middle East and a former employee told her Arekat was associated with terrorism.

Seitz said the former worker reported that Arekat kept model airplanes at his apartment that resembled the airliners in the Sept. 11, 2001, attacks.

On the witness stand, DeCaires denied that terrorist suspicions were a reason for the arrest, Dodd said.

Arekat’s lawsuit was against officers DeCaires, Mike Miranda and Raymond Ancheta, two members of the SWAT team involved in the arrest.

DeCaires’ attorney, Jay Suemori, declined to comment.

Ancheta’s attorney, Cary Tanaka, said his client was in an administrative role with the SWAT team. While he’s responsible for decisions, he believes he acted appropriately, Tanaka said.

"We felt they did nothing wrong," Tanaka said.

He said the lawsuit against the officers will be dropped before the city pays the proposed settlement.

"He’s just relieved the case has been resolved," Tanaka said. "He’s happy with the resolution."

Miranda’s lawyer, Lyle Hosoda, said his client went along with the settlement because there is no finding that he or any of the officers did anything wrong.

"I’m sure he’s relieved it’s over, because nobody likes a lawsuit hanging over them," Hosoda said about his client. "But I don’t think he was happy with the way it was resolved. I think he doesn’t agree with the 9th Circuit taking the case out of the hands of the jury."

Hosoda added, "He was doing everything he was trained to do."

Seitz said he sought a higher amount, but agreed to the $240,000 because the case would have dragged on and collecting money from the officers would open "a can of worms."

The majority of the appeals court’s 2-1 decision ruled that the evidence was "insufficient" for a reasonable jury to conclude that the police had "probable cause" or a legal basis for the arrest under the mental health statute.

Last month, the appeals court refused to convene a larger 11-member panel to rehear the case.