Taxi Firm Buys New Insurance Under Fire

Five South Bay cities and Los Angeles County have demanded proof of insurance from a fledgling taxicab company that a competitor charged is inadequately insured.

Officials in El Segundo, Lomita, Manhattan Beach, Redondo Beach, Torrance and the county said they asked for the information after being told that American Transportation Enterprises--owner of AM/PM Yellow Cab and Manhattan Cab--carried insurance from an unlicensed firm.

In response to the complaints, the cab operator this week shifted most of its coverage to a licensed insurer, according to company General Manager Siroos Moatazedi. City officials said they are checking the new policies to make sure that cab patrons will be adequately protected.

Questions about the insurance were raised last week by Steven Kirby, lawyer for the rival Wilmington Cab Co., which operates South Bay Yellow Cab and United Checker Cab.

Moatazedi contends that the insurance complaints are the latest ploy by Wilmington Cab to crush his 2-year-old firm.

Operates 40 Cabs

Moatazedi joined other veteran independent cab operators two years ago to form Gardena-based American Transportation, or Amtrans, which now operates 40 cabs in the South Bay and southeast sections of the county. It also runs five Amtrans Airport Shuttle vans carrying passengers to and from Los Angeles International Airport.

Wilmington Cab co-owner Mitchell Rouse said his family has been in the local cab business for 50 years. The family owns a part of Wilmington and L.A. Taxi Co., which together operate nearly 500 cabs, he said. Rouse is also president of Supershuttle International, which operates 450 airport vans in Los Angeles and three other metropolitan areas.

“They are trying desperately to put us out of business,” Amtrans Vice President Tooraj Moradi said.

Counters Rouse: “He would like to characterize this as your classic David and Goliath story. . . . I call it cheating. If I have to buy insurance at high rates, why doesn’t he?”

The established firm and the newcomer have fought three times in court in recent months.

In December, Wilmington won an injunction from Torrance Superior Court Commissioner Abraham Gorenfeld that barred Amtrans from using the names Checker Cab and Yellow Cab of South Bay. Gorenfeld said the public could be “confused and deceived” because those terms were too much like Wilmington’s business names, United Checker Cab and South Bay Yellow Cab.

Last month, Gorenfeld again sided with Rouse and ordered Amtrans not to send its new airport vans outside the southeast cities where it is licensed.

But Gorenfeld agreed with the new firm that it should not have to repaint its vans, despite Supershuttle’s contention that Amtrans had stolen its distinctive blue and gold color scheme.

Amtrans won another round Wednesday when Torrance Superior Court Judge Frank Baffa ordered Wilmington to keep its cabs out of El Segundo, Cerritos and Bellflower, where it is not licensed to operate. Amtrans presented evidence that Wilmington cabs picked up riders illegally in the three cities.

The insurance matter came up last week, when Kirby complained to the five cities. Cities require cab companies to be insured for as much as $1 million per accident so riders will be protected. The taxicab companies are usually required to extend their coverage to protect cities in the event that they also are sued.

Amtrans had filed certificates with the local cities showing that AM/PM and Manhattan Cab were protected by Insurance Corp. of America of Boca Raton, Fla. But that company is not licensed to do business in the state and, last August, the state Department of Insurance ordered the company to stop selling policies here.

FBI Investigation

An investigation by the FBI showed that the insurance company was a “paper shell,” according to the state attorney general’s office.

In a telephone interview, an official for the company said the firm is legitimate and has paid claims for taxi companies and other policy holders.

Moatazedi said the insurance firm paid more than $60,000 in claims on behalf of his company. He said he became aware of the company’s problems only after buying policies for AM/PM and Manhattan Cab.

Now he will try to get a refund for the two months remaining on the policies, Moatazedi said, and is insuring his cabs with Industrial Indemnity, a state-licensed firm.

Kirby of Wilmington Cab criticized the rival company for continuing to distribute insurance certificates from the Florida-based company months after learning that it was not supposed to sell insurance in California.

Moatazedi said he believed that his insurance was valid because it was purchased in June, two months before the state Department of Insurance ordered the company out of the state. He said he paid about $3,500 a year per cab for the coverage. Other companies charge up to $10,000, he said.

Bargain Basement Rates

A state insurance official, who asked not to be named, said insurance buyers should always be suspicious when policies can be obtained for such bargain basement rates.

The county’s Business License Commission will hold a hearing May 4 to determine whether Amtrans is properly insured.

David Numrich, a risk analyst for the county, said he rejected Insurance Corp. of America coverage for the five cabs Amtrans operates in unincorporated areas, such as Marina del Rey. The cab company then presented certificates of insurance from Industrial Indemnity, but the cabs named in the policy are not the same ones licensed for operation there, Numrich said.

The Business License Commission will have to resolve the matter, Numrich said.

Officials in the five South Bay cities said they will need a few days to rule on Amtrans’ insurance. Industrial Indemnity is a reputable firm, but city officials said they need the time to make sure that all cabs are covered to the limits specified in their city codes.