Two years after raging floodwaters roiled much of southeastern San Diego, destroying scores of homes and sending thousands of people fleeing, the city has agreed to pay more than $6 million to insurance companies stuck paying property owners’ claims.
The settlement was approved in a closed session of the San Diego City Council late last year. It is scheduled to be confirmed in a public session next week.
“This action involves the resolution of 4 pending subrogation lawsuits against the city for amounts 17 insurance carriers paid to their insureds for damages arising out of the Jan. 22, 2024 rain event and flooding in the amount of $6,326,330.75,” the memo to council says.
It’s signed by assistant city attorney Jean Jordan, who worked four months last year while traveling on an around-the-world cruise.
The City Attorney’s Office did not respond to a request to comment Wednesday on the settlement recommendation, or on how insurers were being paid ahead of local flood victims. Council members did not issue any public statements about the proposed payout.
The settlement will be debated at the council meeting Tuesday.
The discussion comes as the city continues to litigate a spate of civil lawsuits filed by property owners and tenants, along with cross-complaints that city lawyers have filed against some of them.
“We are pleased to see the city take some responsibility for its part in the damage,” said Maria Severson, one of the attorneys representing dozens of flood victims, in an email. “With the insurance company claims behind them, the city must now focus on settlement to compensate the resident and business victims.”
Evan Walker, another lawyer representing plaintiffs, said the city’s proposed payment to insurance companies shows where its priorities lie, especially while flood victims continue to struggle with housing and routine finances.
“The city is ready, willing and able to pay multimillion dollars to billion-dollar insurance companies,” he said, “but so far, not a cent to the flood victims, their own residents, who they are still fighting in court.”
Jerry Hernandez’s Southcrest home was destroyed in the floods, and he ended up moving to Mission Valley to start over. He lost everything to the floodwaters — clothing, furniture, his car — and says recovery has left him $10,000 to $15,000 in debt.
“That’s not right; they should be settling with us,” he said of the city, adding that its agreement with insurers just makes the emotional and financial struggle of the last two years “hurt more.”
Early on Jan. 22, 2024, a persistent drenching hung over parts of San Diego County, sending millions of gallons of rain into an overwhelmed flood-control system.
The worst of the damage was reported along Chollas Creek communities like Shelltown, Barrio Logan and Southcrest, where terrified residents were sent scrambling to rooftops to escape the rising tide of floodwater.
Two bodies later found in Santee were being investigated as flood-related, along with a fatal crash in Lemon Grove.
Days later, The San Diego Union-Tribune reported that city storm drains and other prevention systems had long been neglected by city officials despite years of warnings that the area was badly vulnerable to flooding, among them at least one prior lawsuit and payout.
“Age, combined with deferred maintenance due to historic underfunding of the storm drain system, poses a risk of flooding and catastrophic failure,” city officials wrote in a report that was published just before the flood.
In the last two years, the city has performed more regular maintenance on channel segments impacted by the 2024 floods, but recent city records show that nearly half of all its channel segments and infrastructure haven’t been maintained in at least 15 years.
The $6.3 million payment to 17 different insurers will come from the city’s public liability fund, a self-insurance program managed by the Risk Management Department. In the past two years, the department’s budget has climbed from $14.9 million to $20.4 million.
The memo from the City Attorney’s Office to the City Council does not say how much each insurer will get from the settlement.
It’s frustrating to see insurance companies paid before flood victims, said community advocate Clariza Marin.
“You’re putting these corporate interests before the individuals, and that’s where it’s a slap in the face,” she said. “You still have people … living in their trailer because they can’t finish their house.”
The settlement also comes as the city struggles with a $100 million budget deficit for 2027 that remains to be solved.
Officials did not respond to questions Wednesday about how much San Diego has paid in claims in recent years.
But a 2024 analysis by The San Diego Union-Tribune found almost $200 million was paid to people claiming serious damages at the hands of the city between 2019 and 2024. In total, the city paid $193 million in legal payouts over those five years, records showed.
Those claims did not include hundreds of thousands of dollars or more in other claims approved without City Council approval. Under San Diego governance practices, the Mayor’s Office is permitted to pay up to $50,000 to resolve legal disputes without a council vote.
But the legal claims filed in the wake of the January 2024 flooding could far surpass the damages routinely paid out by the city.
The city is self-insured but also participates in a shared-risk pool called PRISM, or Public Risk Innovation, Solutions and Management.
San Diego pays almost $50 million a year to PRISM to protect against catastrophic damage claims — but it is not clear whether the shared-risk pool would pay for flood damages, given the policy’s numerous exclusions.
So far, the city is defending separate lawsuits filed by nearly 2,000 plaintiffs seeking what could be hundreds of millions of dollars in damages. A trial date is set for later this year.
The city has so far resisted paying any damages and responded in part by filing cross-complaints against a number of flood victims and property owners. It accuses the landowners of contributing to the damages by failing to properly maintain their properties.
The insurers scheduled to share the $6.3 million are Palomar Specialty; Palomar Express and Surplus; Allied World Assurance; State Farm Mutual Automobile; Tokio Marine Kiln Holdings; Federated Mutual; Allstate; Allstate Northbrook Indemnity; Esurance Property and Casualty; Encompass; Integon National; Integon Preferred; National General; Insurance Co. of the West; Mercury; California Automobile; and Certain Underwriters of Lloyd’s London.