Bozeman insurer balks on landfill coverage, suit says

Source:, March 4, 2015
By: Eric Dietrich

The city of Bozeman — facing three lawsuits filed over gases leaking from its closed Story Mill Landfill — may not have legal fees and potential damage awards covered by its municipal insurance, according to a fourth lawsuit filed in Helena.
The suit, filed Dec. 15 by the Montana Municipal Interlocal Authority, asks a Lewis and Clark County District Court judge to clarify who is on the hook for costs associated with the landfill lawsuits after a group of insurance companies allegedly refused to honor their contract with Bozeman.

The MMIA is a cooperative between Montana cities and towns that provides pooled insurance to its members, including Bozeman. According to its initial complaint, Bozeman and other Montana cities had purchased pollution-related liability coverage beginning in 2006 from the Pennsylvania-based XL Insurance Co. and associated corporate entities, renewing policies in 2009 and 2012.
However, after homeowners in the Bridger Creek Phase 3 subdivision, adjacent to the Bozeman landfill site, presented the city with damage claims last year, XL denied a request to cover attorney fees and damage awards resulting from litigation associated with the landfill, according to MMIA.

The landfill site was included on paperwork submitted to XL, and XL personnel both audited the landfill during a 2009 visit to Montana and requested groundwater testing data related to Bozeman’s landfills, MMIA argues.
“Neither Bozeman nor MMIA ever received a response from the XL Defendants informing them that the Story Mill Road landfill was not covered,” its attorney writes.
XL’s “refusal to honor their insurance contracts,” MMIA adds, creates uncertainty for other Montana towns and cities with pollution liability coverage through the company.
Bozeman is also listed as a defendant on the lawsuit because MMIA has asked presiding judge Jeffrey Sherlock to find MMIA isn’t liable for covering potential damages stemming from the suit under the coverage it provides the city. As of this week, neither the city nor the insurance companies had filed response motions, according to court staff.
In 2012, a Lewis and Clark district judge ordered Bozeman to repay $3 million to MMIA and re-insurer Government Entities Mutual Inc. for the costs of a judgment against the city stemming from a suit over whether it had undermined developer Mike Delaney’s plans to purchase the 85-acre Mandeville farm site.
In that case, the insurance entities argued successfully that intentional, wrongful acts by public officials were excluded from coverage over the city’s insurance policy.
Bozeman City Manager Chris Kukulski was traveling for work and unavailable to comment on the suit Wednesday. Calls to MMIA’s attorney and XL’s Colorado office were not returned.


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