San Juan Capistrano seeks insurance company payment for legal fees in the city’s lawsuit over equestrian center

May 07-- May 7--San Juan Capistrano is suing an insurance company, seeking reimbursement for $1.6 million the city spent to settle a lawsuit over water contamination at the Rancho Mission Viejo Riding Park.

Along with looking to recoup the cost of the city's legal fees spent defending itself in court, the lawsuit also seeks an unspecified amount of money to cover parts of the settlement that required the city to prevent contamination from happening in the future.

In the lawsuit recently filed with the Orange County Superior Court, San Juan Capistrano alleges that Tokio Marine Specialty Insurance Company has only paid the city about 25 percent of the $2.3 million the city spent in legal fees on the equestrian center settlement. The city is arguing that its policy with the insurance company covers all associated legal fees.

Tokio Marine Specialty Insurance Company officials could not be reached for comment, but in the company's letters to the city sent in January, July and October of last year, the company said it is paying the city the rates "that we would pay counsel selected by us to defend a similar claim."

For months, however, the company didn't provide any billing guidelines or object to how much the city paid its legal firm to defend the case, the city said in its complaint.

The company also refused to pay invoices submitted by an environmental consultant hired to support the city in its case, saying in its letters that the city's policy only covers investigating or remedying existing contamination. The consultant's work -- such as planning new water and sewer lines and getting permits -- didn't qualify as such, the company argues.

Orange County Coastkeeper sued the city and Blenheim Facility Management, which operates the Rancho Mission Viejo Riding Park, in 2017 alleging contaminants such as horse feces had been discharged from the equestrian center property into the San Juan Creek without a permit.

The city and the center's operator settled the case in September, with the city paying $1.9 million toward Coastkeeper's legal fees and $1 million toward improving the San Juan Watershed.

The city and Blenheim Facility Management also agreed to build an underground storage tank and make other improvements to stop wastewater from flowing into the San Juan Creek. That spending on improving the riding park is also what the city is looking to also have reimbursed by Tokio Marine.

The company in its letter said those projects are preventative, which is not what an insurance police would cover.

The city is also seeking punitive damage, saying Tokio Marine had tried to change attorneys representing San Juan Capistrano just before the settlement. The company had also held up the settlement for weeks, the city argues in the suit. The insurance company's actions caused significant damages, including extra legal fees, to the city, the lawsuit says.

The city has also sued Blenheim, arguing the operating agreement between the management company and the city indemnifies the city from any lawsuit, including the suit brought by Coastkeeper.

"My client regards the city's lawsuit to be without merit as to my client, and we intend to defend the case," attorney Wayne Call, representing Blenheim, said.

The city has spent more than $5 million on its defense of the Coastkeeper's lawsuit, its lawsuit against the insurance company and on the work called for under the settlement.

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