‘Deep Pockets’ Suit Costs City $9 Million : Huntington Beach Accepts Settlement in Case of Youth Hit by Car at Crosswalk

In a case that may fuel the “deep pockets” controversy about huge jury awards and settlements in civil lawsuits, the City of Huntington Beach agreed Monday to pay a 22-year-old man up to $9 million over the next 30 years for brain damage he suffered when a car struck him at an allegedly unsafe intersection.

Phil Harbin Jr. was 17 in 1981 when he was struck by a car driven by another 17-year-old. At the time, both sides in the case agreed, Harbin was walking in a marked crosswalk at the corner of Warner Avenue and Nichols Street. After pulling out of a coma and slowly regaining use of his arms and legs, Harbin is still undergoing therapy at a rehabilitative center in Austin, Tex.

“He tests out with a good IQ but his ability to process data and distinguish things like right and wrong has been severely impaired,” said Wylie A. Aitken, the Santa Ana lawyer who represents Harbin.

Scheduled for Trial

Neal Moore, the Long Beach attorney who represented the City of Huntington Beach in the case, said the city reluctantly went along with the large settlement after a jury two weeks ago found the city liable. The settlement came Monday just before the issue of damages was scheduled to go to trial.

“It’s another example of ‘deep pockets,’ ” Moore said Monday. “ ‘Deep pockets’ strikes again.”

“Deep pockets” is the phrase lawyers use to describe how plaintiffs in civil lawsuits can sue multiple defendants and end up forcing the only defendant with money--or insurance coverage--to pay for a huge jury award or settlement.

Moore said Huntington Beach will share the cost of Monday’s agreement with insurers, but he said he did not know what each one would pay.

He said the city was “left holding the bag” after the insurer for the driver who struck Harbin settled for the $300,000 limit on the youth’s policy shortly after Harbin’s lawsuit was filed.

Defense lawyers and insurance firms have been attempting to amend state law to limit deep pockets settlements and jury awards.

That action is opposed strongly by plaintiff’s lawyers, including Aitken, who argue that the large awards are necessary both as a deterrent to bad conduct and as a means of financing the costly care needed by victims such as Harbin.

Moore said the city should not have been held liable for Harbin’s injuries because the driver who struck him “was clearly at fault. . . . She passed several cars stopped at the crosswalk and knocked him down. . . . The street is a 45 m.p.h. street.”

History of Complaints

But Aitken said city documents clearly showed a history of complaints from parents of schoolchildren about safety problems at the intersection and include engineers’ reports indicating that the complaints had merit. The city records also showed that a signal was supposed to be placed on the corner, but anticipated federal grants never materialized to pay for it.

The corner is now posted with a stop sign.

Aitken said there is a private religious school at the same intersection, but the street is not marked as a school zone, so cars don’t slow down when approaching the area.

“There’s a public school a few blocks away, and that is posted as a school zone,” Aitken said.

Moore said the city never considered the intersection to be a school-crossing site despite the presence of the private school. “The city saw that there were some problems there, but nothing like what was claimed during the trial on the liability issue,” he said.

Under terms of Monday’s settlement, Harbin will receive a lump-sum payment of $800,000. He will also receive payments in staggered amounts from three annuities. One annuity will pay him $10,000 per month for two years, compounded with a 3% interest rate. Another will give him $3,165 per month for life, also compounded at 3% per year. The remaining annuity will pay Harbin periodic lump sums in staggered amounts, starting with $50,000 and then increasing every five years until the figure reaches $300,000 annually.

Aitken estimated the current cash value of the settlement to be $1.9 million, with a value over 30 years of about $9 million.