Insurer Drops Santa Barbara Fire Legal Claim

Farmers Insurance announced Tuesday that it is withdrawing from a $120-million legal claim filed by a group of 11 insurance companies against government agencies and, potentially, private landowners stemming from last year’s massive Santa Barbara fire.

The action, following similar withdrawals by five of the insurance firms, threw the forward progress of the controversial legal claim into question.

“It seems to me that it’s imploded pretty much, though I can’t speak for the attorneys or for the other companies,” said John Millen, director of media relations for Farmers.

The coalition recently filed a notice of its intent to sue county, state and federal agencies, charging that they contributed to the fire by failing to trim weeds and chaparral. Attorneys had said the suit might also be filed against 50 property owners whose land was scorched--and who were insured by firms that are not part of the coalition.

On Monday, Allstate Insurance, the largest potential litigant, dropped out of the case. The firm, which has distributed $39 million in connection with the June, 1990, blaze, said that criticism from residents, government officials and local media had fostered “a PR nightmare.” Farmers, which has paid $24 million to its Santa Barbara policy holders, was the second-largest litigant.

“All the commotion has distracted from the primary issue,” Millen said. “We will devote our energies to building public pressure on federal, state and local officials to re-establish brush management programs to avoid a similar disaster in the future.”

The four smaller firms that have dropped out of the legal action are Southern California Auto Club, Cal Casualty, Safeco and USAA. An attorney for the remaining firms, Cal Insurance Group, Crum & Forster, Great American, Prudential and Sequoia, did not return calls seeking comment.