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City Seeks to Recoup Nearly $100 Million in Sex Abuse Settlement Costs

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By Jorge Casuso

January 9, 2022 -- The City of Santa Monica is seeking to recover nearly $100 million it used from its General Fund to settle sex abuse cases involving former employee Eric Uller, according to financial statements from the City.

Of the total $107,325,000 paid to settle the cases filed by 105 plaintiffs, only $8,929,768 has been covered by insurance, according to the City's financial statements for the 2020-21 fiscal year.

The settlements stem from lawsuits alleging that Uller -- a systems analyst working in the Public Safety building -- sexually abused the plaintiffs between the late 1980s and early 2000s while volunteering at the City's Police Activities League (PAL).

One insurance company, ACCEL, paid the City $11 million in exchange for a release from any future liability in the case. Of that amount, the City paid $2,233,911 to cover its required contribution.

The only other insurance payment was made by the Santa Monica Police Activities League's (PAL) insurer, Riverside, which paid $163,679 "to reimburse select defense costs," according to notes to the City's Basic Financial Statements.

That leaves the City on the hook so far for $98,395,232 in payments made with taxpayer dollars to settle one of the largest sex abuse cases against a city employee in the nation's history.

To recoup "at least some and potentially a substantial portion of the settlement funds," the City in September 2021 initiated a coverage action against six of its insurers "alleging breach of contract and bad faith," according to the statements.

Court documents show that in May 2022, the City filed lawsuits in Orange County Superior Court against the six insurers -- Arch Specialty Insurance Company, Axis Surplus Insurance Company, Insurance Company of the West, Lexington Insurance Company, the Insurance Company of the State of Pennsylvania and TIG Insurance Company

It also filed a lawsuit against SM-PAL after seeking "contractual and equitable indemnification" in an action filed in September 2021.

The City has declined to discuss the cases, saying the litigation is active.

But sources familiar with the lawsuits say the issue is whether the joint settlements with the plaintiffs have separate deductibles under the insurance policies, as the City contends, or whether the deductibles apply to each of the 105 individual settlements.

The cases are expected to take between three and five years to decide, according to those familiar with the proceedings.

Meanwhile, more than 70 alleged victims have filed new claims against the City, according to an attorney familiar with the filings ("More Sex Abuse Cases Against the City Filed as Deadline Looms," December 20, 2022).

If the City settles the cases, as expected, its payments would likely require the further use of General Fund money, which pays for municipal services and capital projects.

The first settlements totaling $42.6 million were reached with 24 plaintiffs in March 2020. All but one -- a young girl allegedly abused by a probationer performing community service at PAL -- involved Uller ("Santa Monica to Pay $42.6 Million to Alleged Victims of Sexual Abuse," March 10, 2020).

After the original settlements, an additional 20 plaintiffs sued the City and SM-PAL and were paid a total of $9,825,000, according to the financial statements.

In December 2021, the City paid an another $54.9 million to an additional 61 claimants ("Council Votes to Pay Alleged Child Molestation Victims Another $54.9 Million," August 25, 2021).

Most of Uller's alleged victims were Latino boys between the ages of 12 and 15 from the Pico Neighborhood, according to Dave Ring, who represented most of the plaintiffs in the second settlement. The youngest was eight.

Uller committed suicide three weeks after he was arrested by LA County Sheriffs ("Uller Found Dead in Apparent Suicide," November 15, 2018).

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