CITY COUNCIL WILL SETTLE SUIT FILED BY SECURITY FIRM.

Byline: Patrick McGreevy Daily News Staff Writer

The City Council agreed Wednesday to pay $460,000 to settle a lawsuit by a security firm headed by former Police Commissioner Enrique Hernandez Jr., but only on the condition that the company drop a libel claim against the city.

Council members rejected claims by Hernandez's Inter-Con Security Systems Inc. that it was libeled when the city's security director criticized its guarding of city facilities as ``terrible.''

The council directed the City Attorney's Office to ask Hernandez's firm to drop the libel claim from its $1 million lawsuit against the city in exchange for settlement of breach-of-contract claims made in the lawsuit.

``It's not settled at this moment,'' said Assistant City Attorney Gail Weingart.

Hernandez resigned as Police Commission president in 1995, a week after city security director Gonzelo Cureton issued a report alleging 100 problem incidents involving contract security service at city facilities by Hernandez's company.

At the time, Hernandez said he was quitting to protest the City Council's decision to overturn a reprimand of former police Chief Willie L. Williams.

Cureton alleged Inter-Con guards failed to show up at posts, showed up late or were asleep on the job, leaving city facilities unguarded. He said at the time that the performance of the firm was ``terrible.''

A city audit later found fault with actions of the firm and the city but said Hernandez's firm ``substantially complied'' with its city contract.

Hernandez's firm disputed Cureton's criticism and filed a $1 million lawsuit against the city, alleging Cureton libeled the firm and that the city had breached its contract by failing to adequately pay for Inter-Con's service guarding neighborhoods damaged by the Northridge Earthquake.

A divided City Council directed its attorneys to offer to settle the breach of contract claims but only if the libel claim is dropped.

Councilman Nate Holden said he voted alone against the settlement and was especially concerned that Hernandez's firm was trying to get damages for criticism Holden felt was legitimate.

``Hell no. He was not libeled. If you are going to handcuff every department head who says a guy is not keeping the terms and conditions of his contract . . . you will just tie the hands of city government.''

Meanwhile, a City Council panel refused Wednesday to award Inter-Con a share of a new, $10.6 million contract to guard facilities of the Department of Water and Power.

The Personnel Committee ordered the DWP to meet and negotiate with the union representing city security guards, which claims such a process was circumvented and that its workers can do the job better and for less cost.