Long Beach Sues over Scooter Co. Contract

On February 24, the City of Long Beach filed a complaint seeking a declaratory judgment against Neutron Holdings, Inc. doing business as Lime, and Axis Surplus Insurance Company (Axis) for breach of contract. The two companies allegedly refused “to provide coverage for defense and indemnity for numerous claims and lawsuits pending in the Los Angeles County Superior Court.”  According to the complaint, Lime agreed to indemnify the City from injuries incurred while using the scooters.  

The complaint cites two similar lawsuits filed against the City in 2019: the Duardo lawsuit, and the Heard lawsuit. These cases involve plaintiffs who suffered accidental injuries after falling off of Lime scooters. Since the scooters are considered public property, there was due cause to sue the City. However, as part of contracts with the City, Lime and Axis are to be held liable in circumstances of injury. In both cases, the “City tendered the defense and indemnity” to Lime and Axis, but the tender was denied.

The City launched a shared e-scooter pilot program on July 2, 2018. According to the website, the program was designed to provide “the City’s residents and visitors with even more shared mobility options.” The program’s vendor requirements clearly state that vendors must “agree to indemnify, defend and hold harmless the City for all aspects of the program related to the vendor’s operation.” Since the vendors allegedly neglected to defend and indemnify the City, there was cause for a lawsuit.

In this case, the City seeks punitive damages and further relief as the court deems proper. The City has specifically laid out four causes of action: declaratory relief, breach of contract – duty to defend, breach of contract – duty to indemnify, and bad faith.