San Diego’s insurers are liable for all outside attorneys’ fees and part of a settlement in a reverse condemnation jury award that has escalated with interest to about $120 million, said City Attorney Michael Aguirre.
Aguirre lauded a ruling by the 9th U.S. Circuit Court of Appeals that found the city’s main insurance carrier, American International Group, must pay for all the city’s outside attorneys’ fees related to the largest jury award in the city’s history, $94.6 million, made to local developer and car dealer Roque De La Fuente in 2001.
The city has been trying for several years to get AIG to reimburse the city for outside legal help that has totaled about $4 million.
“This decision is a giant step forward for the city. It will enable us to resolve the Border Business Park cases by providing insurance funding for a vigorous defense and any settlement,” Aguirre said.
De La Fuente’s attorneys convinced a San Diego Superior Court jury that actions taken by the city in the 1990s caused his industrial park to lose tenants and decreased the value of the property.
The original award has since been reduced to $91.7 million, but with interest added now totals more than $120 million, said Kristine Wilkes, an attorney for Latham & Watkins, the firm the city hired to appeal its case.
The case was transferred to the state’s 4th District Court of Appeal in Riverside last year after an appellate panel could not be assembled in San Diego because of possible conflicts of interest on the part of local judges.
The recent federal ruling means the insurance companies are not only obligated to pay for all outside attorneys’ fees, but will be forced to fund all or part of any settlement in the case, Wilkes said.
If the case isn’t settled and any portion of the damages is upheld, AIG and other insurance companies will have to pay the money, Wilkes said.
“It’s a huge step forward for the city,” she said. “Now these lawsuits are the insurance companies’ problem, not the city’s problem.”
Mike Allen
