Ontario Can Seek Monetary Loss In Suit Over Airport Against LA, Judge Rules

RIVERSIDE—(July 16) The original intention of the arrangement forged between Ontario and Los Angeles for the operation and management of Ontario Airport as expressed in the language of the joint powers agreement the two municipalities entered into 48 years ago provides the basis for not only the continuation of the lawsuit filed by the smaller city two years ago to regain control of the airport but to recover hundreds of millions or even billions of dollars in damages, Riverside Superior Court Judge Gloria Connor Trask ruled on July 15.
The once cordial relations between Los Angeles and Ontario have deteriorated in the last seven years over declining passenger traffic at Ontario Airport, resulting in the above-referenced lawsuit being heard in Trask’s courtroom.
In 1967, when Ontario Airport had a flea-infested gravel parking lot and fewer than 200,000 passengers passing through its gates annually, it entered into a joint powers authority pact with Los Angeles to have the megalopolis run the airport and use its control over gate positions at Los Angeles International Airport to induce airlines to fly into and out of Ontario. Indeed, Los Angeles’s management of Ontario Airport, later handed off to its corporate division, Los Angeles World Airports, led to prosperity for what became the Inland Empire’s premier commercial aerodrome.
Los Angeles did away with Ontario airport’s obsolete northeast-to-southwest runway, greatly improved its existing east-west runway by lengthening it into the largest such facility in Southern California, built another east-west runway, paved the parking lot, erected a modern control tower, and constructed a world class concourse and two ultra-modern terminals. In 1985, after all of the criteria in the original joint powers authority agreement were met, the Ontario City Council, with Mayor Robert Ellingwood absent, voted to deed the airport to Los Angeles for no consideration. By 2007 passenger traffic zoomed to 7.2 million.
With the recession that hit the nation, state and region in 2007, however, ridership at Ontario Airport dropped off precipitously and continued to steadily decline for the next six years, reaching a low of 3.9 million in 2013. By 2010, Ontario officials had lost patience with the situation and, led by Ontario Councilman Alan Wapner, have conducted a vitriolic campaign charging Los Angeles, which in 2007 initiated a billion dollar modernization program at Los Angeles International Airport, with neglecting Ontario Airport and purposefully mismanaging it as a ploy to increase ridership into Los Angeles International Airport.
One focus of that campaign was to convince Los Angeles to simply deed Ontario Airport back to the city whose name it bears. Los Angeles resisted that and in 2013 Ontario filed suit against Los Angeles, using the high-powered law firm of Sheppard Mullin Richter and Hampton. The suit was filed in Riverside County to prevent one side from effectuating a jurisdictional advantage over the other.
On balance until this week, Trask’s rulings more often than not seemed to go Los Angeles’s way. Ontario cited five tenets in its suit: the entire deal was invalid in that the joint powers agreement was flawed and unenforceable; the transfer of the airport to Los Angeles in 1985 was illegal because it had not entailed a full vote of the city’s electorate; Los Angeles had breached its contract with Ontario contained in the joint powers agreement; L.A. further breached the fiduciary duty it has toward Ontario; and Los Angeles breached the code of good faith and fair dealing by its action.
In February Trask ruled that Ontario’s efforts to have the 1967 joint powers authority agreement invalidated and the 1985 agreement giving Los Angeles the airport declared void had come too late and were barred by the statute of limitations even if the agreement and the transfer were flawed on legal or procedural grounds. In one swoop, two-fifths of the case was thrown out. More recently Trask ruled that Los Angeles would not need to produce a large number of internal documents Ontario had requested which its lawyers said would prove Los Angeles’s mismanagement of Ontario Airport.
On Wednesday, however, Trask made a rare ruling in Ontario’s favor, denying Los Angeles’s motion to bar Ontario from seeking monetary damages and presenting expert testimony on the economic loss to the region when the case goes to trial on August 17.
According to Ontario, Los Angeles’s deliberate mismanagement of Ontario Airport has resulted in the loss of at least $1.6 billion to the local economy and perhaps as much as $4 billion.
Trask ruled that Ontario should at least get the chance to present evidence to that effect.
The $1.6 billion to $4 billion loss Ontario claims relates to lost business, business closures, and failures in the private sector. Moreover, according to the city’s bean counters, the city of Ontario alone has suffered a $69 million loss/reduction in tax revenue because of the contractions at the airport.
Los Angeles maintains the drop in passenger numbers at Ontario was a function of the national, state and local economic downturn that began in 2007 and persisted until 2013 along with reactions by many airlines to the national financial malaise, which included diverting flights away from airports servings smaller population areas like Ontario toward major population centers, such as Los Angeles. Los Angeles says it had no control over those airlines’ decisions.
In its motion, Los Angeles sought to whittle down further the basis upon which Ontario could proceed against it. But Trask referenced verbiage in the 1967 joint-powers agreement, which posits that “the economy of Ontario will benefit from the expansion and development of the Ontario airport” in ruling that Ontario should be allowed to demonstrate, if it can, that Los Angeles engaged in action that prevented the benefit and expansion from occurring.

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