Ruling Backs L.A. in Equestrian Center Suit : Courts: An appellate panel rejects the former Griffith Park concessionaire’s claim that the city breached its contract.

A state Court of Appeal panel has unanimously ruled that the city of Los Angeles did not wrongly force a former operator of the Griffith Park equestrian center into bankruptcy in 1988, it was announced Tuesday by City Atty. James K. Hahn.

The Los Angeles Equestrian Center Inc., which ran the horse stables and riding facility from 1981 to 1988 under a concession agreement with the city, had filed a $200-million lawsuit accusing the city of breach of contract.

The dispute arose when the financially troubled LAEC Inc. asked the city’s Recreation and Parks Commission to approve its bankruptcy reorganization plan to sell 300 horse stalls to private parties and develop a 1,500-seat dinner theater at the equestrian facility.

Such proposals, LAEC contended, would make the company solvent in the long run, enabling it to pay its creditors and $500,000 in overdue concession fees owed the city. But the parks commission rejected the plan, saying that it was not financially realistic and that its adoption would alter the character of what should be a public facility for horse owners.

Soon thereafter, Gibraltar Savings and Loan Assn., a major creditor, foreclosed on LAEC. Gibraltar temporarily ran the equestrian center--located on a 72-acre parcel of city-owned parkland--until it assigned the concession to its current operator, also known as the Los Angeles Equestrian Center Inc.

In its lawsuit, LAEC contended that the city had a fiduciary and contractual duty to approve the bankruptcy reorganization plan. But the three-judge Court of Appeal panel rejected this reasoning in its decision announced Tuesday.