Countywide : Forum of Cities Planned on ‘Deep’ Liability Costs

In 1980, an intoxicated motorist driving 50 m.p.h. in a residential 25-m.p.h. zone crashed his vehicle into a parked car in Laguna Beach. The passenger, Nathan Blue, was left a paraplegic. The driver was not insured, but the city was.

Laguna Beach City Manager Ken Frank said the 5-year-old case that will come to trial later this month is an example of how California cities are affected by legal precedents that have paved the way for an increasing number of liability claims against cities.

Those claims have resulted in higher insurance premiums--increases ranging from 200% to 1,000% for Orange County municipalities in the past year, said Bob Dunek, executive director of the Orange County Division of the League of California Cities.

At a meeting Thursday in Anaheim, the league will present an informational program on “deep pocket” lawsuits--or the idea that a wealthier defendant, such as a government agency, should pay most of the expenses, even if a second party involved is found to be more at fault.

In the Laguna Beach case, for example, Blue claimed the city was accountable because the street’s curvature was unsafe, Dunek said. If Laguna Beach, for example, is found to be 10% at fault and the driver is found to be 90% at fault, under legal doctrine, the city may end up paying the majority of the award because the driver can’t afford it, he explained.

Because of cases such as Blue’s, Laguna Beach saw its insurance premium skyrocket last December from $36,604 to $150,622, said Ross Oliver, a consultant with the Orange County Cities Risk Management Authority. Laguna Beach is one of 12 cities in the authority whose insurance with Mead Reinsurance Corp. of Ohio was canceled last year, Oliver said.

The 11 current authority members --Cypress, Irvine, Laguna Beach, La Palma, Los Alamitos, Orange, San Clemente, Stanton, Tustin, Westminster and Yorba Linda--all saw their rates increase with their new carrier. Laguna Beach, San Clemente and Stanton also had their deductibles increased from $100,000 to $250,000 per case, Oliver said.

Tickets for the dinner-program at the Anaheim Stadium Club, 2000 S. State College Blvd., are $12.50 with reservations, $14 at the door.