DWP, homeowners can’t come to terms on broken water main settlements

When a 62-inch water pipe burst and sent hundreds of thousands of gallons of water pouring into Studio City last fall, Department of Water and Power officials knew they would have to compensate homeowners and businesses for the damage.

But almost eight months later, what many hoped would be a straightforward process has turned into anything but.

Some residents say the city is dragging its feet and treating distraught homeowners “like criminals.” City officials, for their part, say claims filed by some residents have generated red flags.

“We have folks seeking recovery for a $95,000 diamond ring allegedly washed off a kitchen counter,” said Joe Brajevich, assistant general counsel for the DWP. “A $16,000 patio set, $15,000 curtains. One individual seeks $200,000 for personal items which with limited exception have no supportive documentation. The city attorney’s office takes its responsibility seriously and is going to make sure that the claims that get paid out have legal and factual merit.”

The dispute reflects, in part, what can happen when a city-caused accident occurs in a well-heeled area, where homeowners have valuable property at stake and the resources to fight for what they think is due them. In some cases, what city officials want to pay and what residents think they are owed is very different.

After the water main broke, for example, the DWP arranged for displaced homeowners to stay at the Oakwood corporate apartments. But some residents refused to live there and instead rented homes elsewhere in the Valley — with rents in some cases topping $5,000 a month. Residents want those payments reimbursed.

“These are multimillion-dollar homes that are flooding out, and they don’t know how to deal with it,” said Michael Yaghoubi, who is paying $6,500 a month to rent a home and furniture while he waits for his home to be fixed.

The dispute is now coming to a head.

Last week, several angry residents testified at a hearing that the DWP and the city attorney’s office, far from apologizing for the havoc and promptly paying their costs, has been forcing them to come up with receipts for every item and refusing to pay even clearly justified claims.

“We are just so stunned by the way we have been treated,” Naghmeh Sefaradi said. “We lost our home overnight. It has been amazing to me. The coldness…nobody has done anything to help us out.”

City Councilman Paul Koretz, who represents the area where the flood occurred, said he has been “embarrassed” by the city’s actions and said he found it “shocking” how his constituents had been treated by the department.

Some people still have not received anything, he said. Others, including an elderly couple, felt they were forced into accepting settlements worth far less than their losses because they were tired of fighting.

Koretz said he had not reviewed every claim in detail, but said that he felt the city had “dealt with some folks with a lack of sensitivity. And I think they may be demanding more in terms of documentation than I think is realistic.”

“We’ve devastated some of these folks,” he added. “I think we have to be more reasonable.”

The issue is coming to the council at a bad time for the utility. The council has been at odds with the DWP over transferring money to the city’s general fund.

Officials also learned last week that a team of outside engineers and scientists had concluded that the city’s own lawn-watering restrictions may have been a prime factor in causing last year’s rash of blowouts by creating excessive pressure fluctuations in aging pipes.

Officials stress that most of the claims from the water main breaks have been settled.

After the rupture under Coldwater Canyon Boulevard, 108 families and businesses filed claims, 41 claims were from homeowners, 23 from businesses and 44 from insurance companies that had paid out damages and now want to be reimbursed by the DWP. The agency has settled 25 claims with homeowners, officials said.

City officials say they have no evidence that homeowners are trying to defraud the city with bogus claims. But they said some of the claims seem either exorbitant or lacking in proper documentation. Officials say residents need to understand that the city must determine whether claims are fair, adding that in some cases, there will be disagreements between what residents want and what officials believe taxpayers owe them.

For all the claims that officials are questioning, there are others that have been paid without incident. Several homeowners have already received checks worth between $50,000 and $85,000 for property damage from the water flow. Those claims were quickly deemed to be appropriate.

Most of the other major ruptures that occurred last year generated many fewer residential claims, officials say, because most pipes run under streets, generally limiting damage to city property when they rupture.

After listening to the homeowner complaints, Councilwoman Jan Perry stepped in with a proposal: Koretz should convene a meeting in which everyone tries to come to a resolution.

Perry said she was confident a solution could be found. She’s been around City Hall a long time, she added, and has seen a lot of disasters.

jessica.garrison@latimes.com