$5-Million Payoff in San Clemente Landslide Approved

Negotiators for San Clemente agreed Friday to pay $5 million to 87 people whose homes were destroyed or damaged in a spectacular 1983 landslide.

The settlement will provide from $50,000 to $300,000 for all but two of the 47 homes involved in the slide, which homeowners allege was caused by a leaking city water main.

The deal will provide added money to homeowners who have already collected an estimated $3 million in insurance, said Patrick E. Catalano, representing the homeowners.

The agreement reached before Orange County Superior Judge Robert A. Knox is contingent on approval by the homeowners and the San Clemente City Council, but Catalano described this as a technicality.

“Right now, we have an agreement that is final. I have the approval of my clients, and City Council approval is more or less a rubber stamp,” Catalano said.

None of the $5 million will come from city coffers. All will be paid by the city’s liability insurers, led by the Mead Reinsurance Co.

The insurers paid the money into escrow last July in a settlement with the homeowners that was kept secret by court order. On Friday, the city, as the client of the insurance companies, tentatively approved the agreement.

Whether or not the city agreed, the insurers planned on paying anyway, according to William J. Caplan, lawyer for San Clemente. “The insurance people have taken the position that they can pay money to settle the case, even if the city says ‘Don’t pay.’ ” Caplan said. “The insurance carriers are paying the money over the city’s objection.”

The city strongly objected to the settlement because there are no funds provided for repair of the slope in Verde Canyon that gave way on Dec. 30, 1983.

“We didn’t (want to) approve payment of the money without the repair of the slope,” Caplan said. “With $5 million being paid out, it seems like a portion of that money should go to repair the slide.”

But because the insurers have decided to pay anyway, the city decided to approve the deal because it now provides greater legal protection to city taxpayers, Caplan said.

By joining in the deal, the city will get signed documents releasing it from all liability in the slide, he said.

Seven other people in two homes affected by the slide were not represented by Catalano and have yet to settle claims with the city. But the vast majority of the litigation over the slide ended Friday.

One home was destroyed in the slide, and four remain vacant after they were ordered evacuated as unsafe.

An 83-year-old woman, Meda Carpenter, was in her house as it slid 40 feet down the Verde Canyon slope. She was not seriously injured.

The ocean-view homes were valued at $200,000 to $500,000 before the slide.

Homeowners immediately claimed that a broken water main was responsible for the slide. The allegation that the city failed to properly maintain water lines was contained in Catalano’s lawsuit.

The city maintained that it was not negligent nor at fault. City lawyers alleged that it was the overwatering of lawns by several homeowners that contributed to the slide.

The site of the earth movement was later discovered to have been an ancient landslide.

The complex lawsuit reached the apparent settlement under the auspices of Judge Knox. He held 14 separate conferences before the deal was worked out. The settlement will save a trial that one attorney estimated would have taken “months and months.”

Catalano praised the judge’s work in resolving the case, saying such litigation normally takes five years to get to trial or settlement.

Other claims stemming from the slide are pending against insurance firms. Catalano has filed several, claiming insurers failed to make reasonable efforts to pay off their policyholders.