Insurer Says It’s Not Liable for Judgments in Police Suit

An insurance company for the city of Torrance says it does not believe that it is liable for a $5.5-million civil judgment awarded last month against the Torrance Police Department and six of its officers.

The position of Protective National Insurance Co., announced to the city in a letter last week, could leave Torrance’s treasury vulnerable to the entire judgment.

The insurance company said it will not provide coverage because the Police Department’s actions were intentional, not accidental.

Torrance officials said that they are disturbed by the letter, a copy of which was obtained by The Times, but that they consider it merely a preliminary posture in what could become a protracted legal struggle.

“It was a surprise,” said City Atty. Kenneth Nelson. “It didn’t please us a lot.”

Nelson said Torrance’s lawyers will meet with insurance company representatives later this month in an attempt to persuade them to pay the $5.5 million to John Rastello of San Pedro. If Protective National refuses to pay, Torrance might sue the company, Nelson said.

A Los Angeles Superior Court jury awarded the damages Sept. 8 against the city, Police Chief Donald Nash and five officers after finding that the department covered up for off-duty Sgt. Rollo Green after he was involved in a traffic collision that killed Rastello’s 19-year-old son, Kelly.

The jury also awarded $375,000 in damages against Green, who had been drinking before he made an illegal left turn in front of Kelly Rastello. And the jury ordered Nash, Green and four other officers to pay $82,500 in punitive damages.

Protective National is not responsible for the punitive damages or the judgment against Green, city officials have said.

‘Intentional Acts’

In the Sept. 27 letter to the city, National Vice President J. G. Gaffigan implies that Protective National will not pay the bulk of the judgment against the city, either.

Gaffigan’s letter says the jury verdict was based on a finding that the Police Department and the officers had committed intentional acts that damaged Rastello.

The letter says the city is only insured for accidents.

Gaffigan wrote that the company “will not indemnify the city or any of the officers involved for intentional acts.” Gaffigan did not return several phone calls Thursday.

Nelson said the city’s insurance policy shows that it should be covered for the loss. “I think (Protective National) is completely misinterpreting what went on in the trial and what their coverage provides,” Nelson said.

The city attorney, however, declined to discuss specifics of the case, saying he is not an expert in insurance law. The city will hire a private law firm that specializes in insurance to take charge of the dispute with Protective National, Nelson said.

City officials have not said publicly that they want to dispose of the case by having the insurance company pay. But Nelson said Thursday that he would be delighted if Protective National pays the $5.5 million. “It doesn’t cost us anything and we get rid of a nasty thing,” Nelson said.

Lengthy Appeals

Nelson said the insurance company may want to provide coverage only if it can negotiate a substantially lower payment with Rastello and his lawyers. In exchange for taking less money, Rastello would be spared legal appeals that could drag on for years, the city attorney said.

But Rastello and his lawyers, Browne Greene and Brian Panish, have shown no inclination to settle for less than the entire $5.5 million. The attorneys have said the city also owes them $3 million in attorneys’ fees.

In the Sept. 27 letter, Protective National urges the city to pursue all avenues of appeal.

Lawyers for the city and the Rastello family will return to Superior Court on Oct. 31, where Judge Abby Soven is expected to hear a flurry of motions. The city will ask Soven either to overturn the verdict, reduce the amount of damages or order a new trial.

But Soven rejected most defense motions during the seven-week trial and gave no indication that she was dissatisfied with the verdict.

If the judge rejects the city’s motions, its next recourse would be to the state Court of Appeal. Protective National said in its letter that it is prepared to obtain the bond that the city must post to appeal the case.

The case could drag on for years, with appeals reaching all the way to the U.S. Supreme Court, Nelson said.

A $5.5-million loss would be devastating to the city’s finances.

Although Torrance has its own insurance reserves of nearly $10 million, that money is only enough to cover routine claims, based on the city’s past history, said Finance Director Mary Giordano.

“For us to come up with that sort of money would be extremely difficult,” Giordano said.

Giordano said she would not speculate on whether the city would have to cut programs or alter services to pay a $5.5-million debt.