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City Sues Insurance Companies Over Child Molestation Claim Expenses

Bob Kronovetrealty
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By Jorge Casuso

October 1, 2021 -- The City of Santa Monica on Thursday sued half a dozen insurance companies who allegedly failed to help pay the more than $100 million in expenses related to child molestation claims against the City.

The expenses include settlements totalling $97.5 million paid to victims who alleged they were sexually abused by former City employee Eric Uller while participating in the Santa Monica Police Activities League (PAL) program more than two decades ago.

The lawsuit filed in Los Angeles Superior Court claims the defendants have all failed to fully meet their obligation to defend and/or indemnify the city against the lawsuits, according to City News Service.

“Left without the defendants’ assistance, the city has been, and continues to be, wrongfully forced to spend over $100 million dollars of its own much needed resources in defending against and resolving claims," the suit states.

The defendants in he lawsuit are the Insurance Co. of the State of Pennsylvania, Insurance Co. of the West, Lexington Insurance Co., Axis Surplus Insurance Co., Arch Specialty Insurance Co. and TIG Insurance Co.

The lawsuit asks the judge to order the companies to meet their obligatiions and seeks damages and other relief for the "harm caused" by breachig their contracts with the City.

The amount should be enough to "deter similar bad faith behavior by the defendants in the future,” the suit states.

The legal expenses were incurred by the City over the past three years, and the settlements were paid after the City's revenues were hit by the coronavirus shutdown that forced massive layoffs and butget cuts.

The first round of settlements with some two dozen individuals totalled $42.6 million and was approved by the City Council on March 10, 2020, three days before the City Manager proclaimed a local emergency ("Santa Monica to Pay $42.6 Million to Alleged Victims of Sexual Abuse," March 10, 2020).

The second was approved by the Council on August 24, 2021 and paid $54.9 million to 61 individuals ("Council Votes to Pay Alleged Child Molestation Victims Another $54.9 Million," August 25, 2021).

The settlement calls for the City to transfer money from its general fund into a qualified settlement fund, City officials said.

The funds are then allocated to the 61 alleged victims as determined by a retired Superior Court Judge retained by the plaintiffs’ counsel as a "third-party neutral to perform this allocation."

The 87 total cases filed against the City are among the most stemming from child molestation charges against a single municipal employee, said Dave Ring, a pioneer in sexual abuse litigation who represented most of the plaintiffs.

Uller -- a systems analyst for the Information Services Department who worked in the Public Safety building -- committed suicide in November 2018, three weeks after his arrest ("Uller Found Dead in Apparent Suicide," November 15, 2018).

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