RIVERSIDE—(January 22) The city of Ontario’s efforts to wrest control of Ontario International Airport back from the city of Los Angeles by legal means suffered two serious setbacks this week when the judge hearing Ontario’s lawsuit ruled the agreements Ontario entered into with Los Angeles in 1967 and 1985 to give the larger city first operating control over and then ownership of the airport were legal and binding.
In pursuing its lawsuit against Los Angeles, Ontario has contended those agreements, which have been honored at this point for 48 years and 30 years, were improperly entered into and therefore not binding. The court’s tentative ruling entered this week shoots down that legal theory.
After five years of declining ridership at Ontario Airport, the city of Ontario in 2013 sued Los Angeles in an effort to undo the terms of a joint operating agreement for the airport forged between the two cities in 1967 and Ontario’s deeding of the airport to the megalopolis to the west in 1985, after performance criteria specified in the original agreement calling for such a transfer were met. Ontario, alleging Los Angeles had mismanaged the airport through neglect, sought a ruling forcing Los Angeles to give up ownership of the aerodrome and return authority over its management back to Ontario.
The lawsuit was put on hold in late 2013, while the two cities were to seek a negotiated settlement of the differences that divide them, but no suitable terms could be worked out. Substantial disputes remained apparent between the two parties over the amount of compensation Los Angeles wanted to receive for renouncing interest in the airport. In the 48 years Los Angeles had managed the airport, over $500 million in improvements had been made to the facility, paid for by revenues generated at both Ontario and Los Angeles International Airports, Federal Aviation Administration grants, and proceeds from bonds issued by the city of Los Angeles at the direction of the corporate entity controlled by Los Angeles which runs its airport division, known as Los Angeles World Airports, or the acronym LAWA.
Quietly, so as to not publicly contradict its official position that the airport grounds are a public benefit property and thus of no sales value, the city of Ontario privately tendered a $250 million offer to Los Angeles World Airports for transfer of the airport’s title and operational control. That offer included Ontario assuming $75 million of the outstanding bond debt obligations for past improvements to the airport, $125 million in future passenger facility charges to be realized at the airport and $50 million cash.
Los Angeles World Airports officials scoffed at the $250 million figure, pointing to the $560 million in improvements made to the airport since 1967
With the failure of that temporary truce, the parties headed back to court, with Los Angeles again put in the position of having to fend off the claims by Ontario’s law firm, Washington, D.C.-based Sheppard Mullin Richter & Hampton, that there are grounds to terminate the long existing agreements Los Angeles and Ontario have been abiding by for 48 years and 30 years, respectively.
In September, lawyers for Los Angeles filed a motion to dispense with crucial elements of the suit, based on the statute of limitations pertaining to rescission and reformation, which holds that any contesting of the original joint operating agreement or the airport title transfer had to be made within four years of their official ratification by the city councils for Ontario and Los Angeles. That point was subject to considerable briefing after the September motion was filed, as the judge hearing the case, Riverside Superior Court Judge Gloria Connor Trask, delayed her ruling with regard to the validity of the joint powers agreement and the title transfer, as Ontario was making the rather noteworthy argument, essentially, that its elected officials had overstepped their authority in transferring the airport’s ownership to Los Angeles. According to Ontario attorney Andre Cronthall, Los Angeles has referred to the 1985 action to transfer title as a sale. The sale of such a significant public property, Cronthall asserted, could only take place pursuant to a vote of the public and not be effectuated by a mere vote of the city council.
This week, Trask entered a tentative decision which stated, “The court upholds that the 1967 Joint Powers Agreement complied with applicable statutes and was lawful.” And further, Trask found, Ontario had both the power and authority to transfer ownership of Ontario Airport to Los Angeles, as it did in 1985. That transfer was voidable, she said, but only if an entity followed the proper procedure in a timely manner, that is, within the four-year statute of limitations applicable to such agreements.
The Sentinel reached Ontario’s attorney, Andre Cronthall, shortly after Trask’s tentative decision was made available.
He said Trask had seriously entertained his argument that the sale of the airport on a 4-0 vote of the Ontario City Council in 1985 was improperly done and should have been subject to a vote of Ontario residents. “Judge Trask recognized the proper procedure had not been followed in the effort to transfer, or as Los Angles says, sell, the airport. She acknowledge in her ruling the right to void the sale. She just ruled against us on statute of limitations grounds.”
Cronthall said the two motions Trask has ruled upon did not extend to the three issues remaining in the suit which have yet to be litigated and which entail a claim for damages. Ontario’s legal effort to reclaim the airport and have the Ontario International Airport Authority, which was created in 2012 as a joint powers authority involving Ontario and the county of San Bernardino, assume management and control of the airport remains intact, he said. “We are disappointed in Judge Trask’s decision and are looking forward to being heard before she enters her final decision on those two issues,” Cronthall said. “We disagree with the rulings, as stated. We are looking forward to litigating our claims that Ontario has deliberately mismanaged the airport, breached its fiduciary duty and violated the terms of the joint powers agreement.”
The Ontario International Airport Authority, through its president, Ontario City Councilman Alan Wapner, reacted to Trask’s ruling by stating, “Although we are disappointed by the court’s decision barring two claims within its complaint, we are pleased that a jury will have the opportunity to consider Ontario’s three other claims for L.A.’s breach of its contractual and fiduciary duties when the lawsuit goes to trial this spring.”
The real gravamen of the case has yet to be heard, Wapner asserted, and he referenced Trask’s specific language that “The motions do not seek to resolve, and thus the court does not determine at this time, whether Los Angeles, LAWA, or the [Los Angeles Airport] Board breached the terms of their agreements. Those issues remain to be adjudicated.” As such, Wapner said, “Ontario looks forward to its day in court and for Los Angeles to be held accountable for its inexcusable neglect of its obligations to promote air service development at Ontario. At trial, Ontario will seek damages and an injunction to regain control of the airport. While Ontario continues to vigorously prepare for trial, we also will consider whether to appeal the court’s decision.”
Cronthall told the Sentinel he believed an appeal of the case is inevitable, no matter how the case is hashed out in Trask’s court. He said he anticipates Los Angeles will appeal the case if the matter is adjudicated in Ontario’s favor, just as, he said, Ontario will not capitulate if it loses at the Riverside County Superior Court level.
“Whatever Judge Trask ends up doing, there is a good likelihood the court of appeal will end up ruling on most, if not all, of the issues being tried,” Cronthall said.
Under Los Angeles’s management of Ontario International, the airport prospered, with its ridership increasing from less than 200,000 in 1967 to 7.2 million in 2007. Over that forty year period, Los Angeles made substantial improvements to the airport, including paving its gravel parking lot, laying down a second, entirely new east-to-west runway over its obsolete northeast-to-southwest runway, modernizing its existing east-to-west runway, including the widening of taxiways and the addition of storm drains, modernizing its control tower, and constructing two ultra-modern terminals at a cost of $270 million, augmented with a world class concourse.
With the economic downturn of 2007, however, air travel in general declined and over the next six years ridership at Ontario International shrunk to just over four million per year. Meanwhile, Los Angeles, which had embarked on a modernization effort at Los Angeles International Airport in 2006, continued with that effort. Passenger traffic into Los Angeles zoomed to astronomical levels, leading to the perception that Ontario was being given short shrift by Los Angeles. In 2011, Ontario began a campaign to take back ownership and control over the airport. and that campaign has grown ever more vitriolic.
Los Angeles World Airport officials have hunkered down in the face of the lawsuit and the accompanying campaign being carried out by the city of Ontario to convince the public that Ontario deserves to reassert ownership over the airport. In response to Trask’s tentative ruling, Maria Tesoro, Los Angeles World Airports’ public affairs director for Ontario International Airport, told the Sentinel, ““Los Angeles World Airports is satisfied with the decision. We will continue the path of working with local entities and our airline partners towards the long-term success of LA/Ontario International Airport.”