Bar Owner Facing Suit Is Stranded by His Insurance

Cesar Valdez is no stranger to litigation over his bars.

Citing a string of at least 30 violent incidents within 12 months, San Fernando officials closed his Cesar’s Place bar at 2020 1st St. last year.

Now, violence--and a quirk in state insurance regulations--may force another of Valdez’s bars, La Milpa in Sylmar, to close.

Valdez is the defendant in a civil suit brought by the family of a patron who was shot and killed at La Milpa two years ago. And, to add to his problems, the insurance company he thought would pay for his defense has gone out of business.

“I was just an innocent bystander,” Valdez said. “I wasn’t even there when it happened. Now I’m about to be socked with thousands of dollars in legal fees; I can have a judgment against me, and I can lose my home and my business.”

Blamed Culture for Violence

Valdez drew criticism from Latino leaders last year when he blamed the violence at Cesar’s Place, including a beating with a pool cue and beer bottles, many fights and the death of a customer wandering into traffic, on violent strains in Latino cultures.

He blamed the death of Jose Lopez at La Milpa two years ago on “a crazy man with a gun.”

Valdez says he cannot afford the $25,000 that could be required for a defense in the wrongful-death action filed by Lopez’s family, much less the $500,000 sought in punitive damages. And his insurance company cannot help because it was forced into liquidation by the state of Illinois.

Valdez’s insurance carrier, Chicago-based Pinetop Insurance, was not a member of the California Insurance Guarantee Assn., an industry group created by state law in 1969 to pay claims for policyholders stranded by failed companies.

Pinetop did belong to CIGA’s Illinois counterpart, but that group does not honor claims from out-of-state policyholders, according to a spokesman for the Illinois Department of Insurance.

“How could the state allow them to sell insurance here?” asked Valdez. “The bottom line is that I’ve called everybody--the insurance commission, everybody --and all they can tell me is that I’m in a bind. Somewhere, there has to be an agency to prevent things like this from happening, to keep people like me from hanging out to dry.”

Apparently, there isn’t.

John Gates, executive director of the California Insurance Guarantee Assn., said certain insurance carriers, particularly those selling policies to individuals denied coverage by other companies, may legally operate in California without joining the association.

If those companies go under, Gates said, policyholders may be out of luck. “It’s one of those things brokers should explain to the insured.”

Valdez’s round of troubles started when a quarrel exploded in gunfire at La Milpa on Jan. 2, 1985. Jose Lopez pointed a gun at Jaime Gonzalez, who fatally shot Lopez and fled, Los Angeles police said. No charges were filed against Gonzalez because the shooting was deemed “a justifiable homicide,” according to Police Detective Al Ferrand.

Several months later, Lopez’s wife, Sylvia Q. Lopez, and his mother, Lydia Orellana, sued both Gonzalez and the La Milpa bar, contending that the bar failed to provide appropriate security for its customers.

Shoulder Own Fees

Valdez turned the suit over to Pinetop, which retained Demos P. Anangos, an attorney with the Century City firm of Federman, Gridley, Gradwohl & Flaherty.

Anangos learned of Pinetop’s demise last month, and told Valdez he would have to pay his own legal fees after a Feb. 20 motions hearing in the case.

“It’s unfortunate, but what can I say?” said Anangos. “My boss doesn’t like it when I work for free.” The Lopez family’s attorney, Louis Morelli, showed no sympathy. “La Milpa is a very, very precarious place to be,” he said.

“It’s not uncommon,” said Anangos. “If it was up to me personally, I wouldn’t allow a health carrier or an out-of-state company to sell a policy here and not belong to CIGA. But there’s a consequence to that, and that consequence is higher rates.”