City Sues Insurers Over Keys Dispute

The city of Ventura sued two dozen insurance companies Monday, saying the insurers have refused to reimburse the city for expenses from a costly legal battle with homeowners of the Ventura Keys.

In the lawsuit, filed in Ventura County Superior Court, the city claims the insurers have refused to cover more than $1 million spent on legal fees so far.

The subdivision consists of 302 residential lots fronting the Ventura Harbor on man-made channels. Nearly one-third of the residents filed a lawsuit against the city and county after the City Council in 1991 levied assessments on homeowners to cover dredging costs.

The property owners allege that silt and debris have washed through the Arundell Barranca into the Keys, blocking their channels, the lawsuit said. It said the property owners are seeking $20 million from the city.

Ventura city leaders are close to reaching a settlement with homeowners and are reportedly drafting a formal agreement, said City Atty. Peter D. Bulens.

The city accuses the 24 insurance companies of acting in bad faith by failing to make reimbursements.

The suit said the city purchases annual liability and indemnity policies, which entitle the city to reimbursement of legal expenses, the lawsuit said.

But the insurance companies--including Admiral Insurance Co. and Aetna Insurance Co.--have refused to investigate claims by the city and either grant or deny coverage. Representatives of several of the insurance companies could not be reached for comment.