Activist Pursues Claim That Port Illegally Funded Maersk Facility

A harbor area activist filed an appeal Friday in an attempt to revive a federal lawsuit alleging that the Port of Los Angeles misappropriated $1.2 billion in government funds to build a giant cargo terminal for the world’s largest shipping line.

Stanley D. Mosler of Rancho Palos Verdes is challenging decisions by U.S. District Judge S. James Otero, who dismissed the false-claims case in August, saying that Mosler no longer had an attorney and that he was unqualified as a layperson to handle a lawsuit on behalf of the United States.

A few weeks after the decision, Mosler hired a lawyer, Alan Gutman, but Otero refused to reinstate the case, saying it was too late.

Otero noted in his ruling that Mosler had been warned earlier that he should obtain counsel.

Mosler was represented for three years by attorney Milford Dahl, who bowed out in February 2005, saying the case would be too costly for him to pursue. Mosler then proceeded on his own, hoping to get the case to trial.

“The elusive quality in Judge Otero’s order is justice,” Mosler said. “The dismissal was not on the merits but because I could not afford to match the port’s spending in legal fees. I trust that the 9th Circuit Court of Appeals will rule that having money is not a necessary element to access our federal courts.”

Filed in March 2002, Mosler’s case alleged that port officials had engaged in a “bait-and-switch” maneuver when they shifted long-standing plans to relocate crude oil and other hazardous shipments to a man-made island that would be built away from populated areas to improve harbor safety.

Mosler said in his suit that port officials decided to turn the island into a massive container facility for Maersk Inc., leaving only 15 acres -- instead of hundreds of acres -- for petroleum and chemical terminals.

At issue was whether the port violated federal agreements to build the so-called energy island project and misappropriated $108.6 million in federal grants and nearly $1.1 billion in harbor revenue to construct what is now known as Pier 400, which was completed in 2004.

In their defense, port officials said the plans for an energy island changed because there was no market for oil and petroleum terminals. Tenants resisted the idea as too costly while crude oil and other hazardous shipments were declining.

Port officials also said that 15 of the more than 500 acres of the man-made island are still available for hazardous shipments. They also argued that the Army Corps of Engineers, which participated in the project, was told of the changes and signed modifications to the original plans.

A former corps commander in Los Angeles at the time has said, however, that he was unaware of the changes in the energy island project. A corps official also said the agency has not been able to find written records that show the port officially notified the corps of the shift in uses or that the corps OKd such changes.

After Otero dismissed the case, U.S. Department of Justice attorneys notified the court in late August that they were concerned that the lawsuit was not decided on the merits.

They stated in court papers that Mosler’s failure to obtain counsel did not extinguish the federal government’s right to intervene in the case in the future.

Because federal funds were allocated to the terminal project, the U.S. government has a right to recover damages should they be awarded in Mosler’s case. The Justice Department has yet to intervene.

dan.weikel@latimes.com