Judge Rules Santa Monica Will Have to Try Insurance Dispute Case in OC

Lawsuit form an a desk

Photo: Getty Images

LOS ANGELES (CNS) - The city of Santa Monica, which sued multiple insurance companies for allegedly breaching contracts to fully pay defense costs and indemnify the city for millions of dollars in expenses related to lawsuits brought by young victims of sexual abuse by a Police Activities League volunteer who later committed suicide, will have to litigate its case in Orange County, a judge ruled.

During a hearing Monday, Los Angeles Superior Court Judge Lia Martin granted a motion by one of the defendants, Lexington Insurance Co., for a change of venue. Orange County was chosen because it was one of the nearest neutral counties to Los Angeles County and a place where the company is less likely to suffer potential juror bias as a non-local defendant.

In their court papers, Lexington Insurance attorneys argued that the company is a ``surplus lines carrier'' that is not admitted to do business in California, but only delivers policies and collects premiums through brokers retained by a policyholder.

Surplus lines insurance is a special type of insurance that covers unique risks. It fills a gap in the standard market by covering things that most companies can't or won't insure.

Lawyers for the city of Santa Monica urged the judge to keep the case in Los Angeles County.

``In reality, Lexington is no stranger to California or Los Angeles,'' the city's lawyers stated in their court papers. ``Lexington is in the business of surplus lines insurance. And Lexington does more of that business in California than in any other state or territory ... and Lexington does a significant amount of that business in Los Angeles County.''

Although only Lexington Insurance brought the motion, the entire case will be transferred along with the other defendants: Insurance Co. of the West, the Insurance Co. of the State of Pennsylvania, Axis Surplus Insurance Co., Arch Specialty Insurance Co. and TIG Insurance Co.

Since the fall of 2018, the city has faced dozens of claims and lawsuits brought by over 100 participants in the PAL alleging that they were sexually abused by the late Eric Uller, the suit filed last Sept. 30 states.  

Uller killed himself in November 2018 after being charged with molesting four boys.

Each of the insurers had and still has an obligation defend and/or indemnify the city against the Uller lawsuits, but none have fully done so, the suit alleges.

``Left without the defendants' assistance, the city has been, and continues to be, wrongfully forced to spend over $100 million dollars of its own much needed resources in defending against and resolving claims in the ... litigation,'' the suit states.

The city is asking a judge to order the insurers to honor their alleged obligations to the city as well as a declaration of the rights, duties and liabilities of the parties with respect to the litigation.

The city also seeks damages and other relief ``for the harm caused by the defendants' breaches of their contractual and other obligations, including punitive damages in an amount to deter similar bad faith behavior by the defendants in the future,'' the suit states.

Sponsored Content

Sponsored Content