Lawyers Press Slide Claims Despite Ruling

A recent federal court ruling overturning flood insurance benefits for 14 Big Rock Mesa homeowners in Malibu will not affect other lawsuits seeking damages in the landslide-plagued area, attorneys said this week.

The 9th Circuit Court of Appeals on Friday ruled that landslides are not covered by the federal government’s flood insurance program. The ruling overturns an award of $2.3 million granted to the homeowners in May, 1987, by U.S. District Court Judge Andrew Hauk of Los Angeles.

Hauk ruled that although the federal flood insurance program specifically excludes coverage for losses due to earth movement, the heavy rainstorms in 1982 and 1983 helped to create a flood that activated a massive landslide.

Caltrans Agreement

That belief formed the core of numerous other lawsuits filed by Big Rock Mesa homeowners against their insurance companies, Los Angeles County and the California Department of Transportation. Last year, Caltrans agreed to pay at least $25 million and up to $75 million to settle more than 200 lawsuits brought by area property owners.

A bill authorizing funds for the Caltrans settlement is scheduled for a vote in the state Assembly this week. The bill was approved by the Senate in March.

Kenneth Chiate, an attorney who represented the homeowners in the Caltrans and federal insurance cases, said the recent federal court ruling is “totally unrelated” to the other lawsuits and would not affect them.

“If anything, it’s a more compelling reason to vigorously pursue the (Caltrans) settlement to make sure that the homeowners receive some compensation for their devastating losses,” Chiate said. “Their homes are completely worthless now, and the ruling takes away one less source of compensation.”

Chiate said he probably will appeal last week’s federal court decision to the U.S. Supreme Court, since it appears that the circuit court ruling is inconsistent with other federal court judgments. In 1985, the 11th Circuit Court of Appeals ruled that federal flood insurance covered damages caused when a major tropical storm in Florida triggered the destruction of one resident’s home.

Pending Lawsuits

Richard Norton, another attorney for Big Rock residents, said that several additional lawsuits against Los Angeles County are still pending. In October, 1985, A Los Angeles Superior Court judge ordered the county to pay $2 million to Margaret and August Hansch. The county has appealed that decision, and a ruling is due by the end of July.

Potential liability in the web of lawsuits against the state, county and various insurance agencies has been estimated between $200 million and $500 million.

The state is pursuing about 400 countersuits against some of the homeowners, their insurance companies, geologists and Big Rock developers.

In the Caltrans case, the homeowners contended that the transportation department was partly responsible for the massive 1983 landslide because of cuts made at the foot of the mesa to build Pacific Coast Highway in the 1920s.

In addition, the suits charge that Caltrans did not try to block the county’s approval of development in the area despite a 1959 state study that recommended no construction there.

Under the Caltrans settlement, the transportation department would pay $25 million, to be divided among the homeowners under the supervision of retired Los Angeles Superior Court Judge Joseph A. Wapner--better known today as the television star of “People’s Court.” If the property owners fail to receive at least $50 million in settlements from Los Angeles County, Caltrans would have to pay the difference.