L.A. Tries to Recoup Some of Money Paid in Toxic-Waste Case

Hoping to recover millions of dollars spent to settle a landmark environmental case, the Los Angeles City Council has decided to hire an outside law firm to collect money from insurance companies that decades ago had policies indemnifying the city and departments.

The council’s action, approved Tuesday, stems from the pending $45.7-million settlement of the nation’s largest offshore chemical contamination case. The case involves the sewer-system dumping--from the 1950s through the 1970s--of the pesticide DDT and the industrial toxin PCB into coastal waters, most notably along the Palos Verdes Peninsula.

Last year, Los Angeles and more than 150 Southland cities and special districts agreed to settle the lawsuit, originally brought against several chemical companies by the National Oceanic and Atmospheric Administration, the Department of Interior and three state agencies.

But now, after setting aside an undisclosed amount to settle the case, the city of Los Angeles is hoping that some or all of its payment can be recovered by going after insurance companies that once had policies covering the city and the departments of airports, harbor and water and power.

The legal maneuver was recommended by the city attorney’s office.

In a report to the council, Deputy City Atty. Keith Pritsker urged that lawmakers agree to hire the Riverside law firm of Hartley and Mazarei in an effort to recover much of the city’s share of the settlement, which has not been disclosed pending final action on the case.

“The city has already paid millions of dollars as its portion of the settlement . . . We now have the opportunity to recover much of that money as well as defense costs from insurance companies that have, in the past, agreed to defend and indemnify the city,” said Pritsker, the city’s lead attorney in the case.

Pritsker noted that while the city has been self-insured for many years, the contamination alleged in the case goes back as far as 1940 when Los Angeles and its departments were insured by outside companies.

Pritsker recommended that the city hire the outside law firm because Hartley and Mazarei had established “an impressive track record of negotiating settlements with insurance carriers” representing other parties to the lawsuit. In all, he said, 29 Orange County cities involved in the case had recovered a total of $1.6 million from insurance companies.

That success, Pritsker said, suggests that Los Angeles should also hire the firm. Under terms approved by the council, the firm was retained for $10,000 and will be paid 20% of whatever it recovers for the city.

Pritsker declined to reveal the city’s share of the settlement because the consent decree to resolve the case has been appealed by two companies--including the now-closed Montrose Chemical Corp. of Torrance--that refused to share in the agreement. Until the appeal is resolved, he said, the city will not reveal its share of the settlement because to do so could jeopardize its stake in the agreement.

Pritsker said it is unclear how many insurance companies might be contacted about paying the city under policies that were in place years ago. “It’s possible that there may be dozens of insurance policies out there, but we won’t know until we look,” he said.