Aurora Co. faces exposure to lawsuit

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PLANKINTON — A jury has found that Aurora County is not entitled to coverage by its liability insurer for damages from a pending lawsuit that could cost the county millions of dollars.

The liability insurer, the South Dakota Public Assurance Alliance, filed a lawsuit against Aurora County in July 2009 saying the county didn’t alert the Alliance soon enough to a lawsuit against the county from Thompson Farms. The Alliance claimed the county failed to honor a contract provision that requires the county to report any incident that could result in a claim.

The county did not alert the Alliance to the Thompson litigation until March 2009, a month after a judge ruled the county’s controversial cap on dairy-cow numbers in 1998 strained the Thompson family’s finances so much they had to sell their farm. The judge in that case ordered a separate trial — which has not yet occurred — to determine the amount of damages owed to the Thompsons.

The Thompson Farms lawsuit was filed in April 2002 and sought $5.6 million in damages, said Roy Wise, an Aberdeen lawyer representing the Alliance.

In the Alliance’s suit against the county, Davison County jurors found Aug. 27 that Aurora County failed to provide timely notice of the lawsuit to the Alliance; that the Alliance is not liable to provide coverage because of a misrepresentation or omission by the county; and that the zoning dispute with Thompson Farms was a known loss in progress when the county requested coverage, according to court documents.

“Any one of those, if the jury had found in our favor, would have been sufficient to deny coverage, and the jury found in our favor on all three issues,” said Wise, the lawyer for the Alliance. “I’m confident that the jury was right, and I’m confident there is no coverage.”

The case was moved to Davison County to ensure an impartial jury, Wise said, adding taxpayers in Aurora County had a stake in the outcome.

John Steele, the state’s attorney who regularly works with the Aurora County Commission, deferred comment Friday to Roger Tellinghuisen, another lawyer representing the county in the insurer suit. Last year, Steele told The Daily Republic that the county had insurance from a company other than the Alliance in 1998 when the cap on dairy-cow numbers was enacted. For that reason, he said, the county initially assumed it was not covered by the Alliance for any damages.

“We didn’t know we needed to notice (the alliance) earlier,” Steele said in a December interview, “because we read in the plaintiffs’ paperwork that they claimed to have been injured in 1998.”

Despite the recent jury finding against the county, the question of who’s liable for damages may still not be settled.

Brad Gordon, one of the Spearfish lawyers representing Aurora County in the insurer suit, filed a motion for a mistrial dated Sept. 2, alleging that the jury did not render a verdict before it ended its service.

He also filed an alternative motion for judgment or an order for a new trial, alleging the Alliance failed to provide sufficient evidence or testimony to sustain a verdict that the Alliance was prejudiced by the county’s delayed notice. Gordon also claims that instructions regarding two statements of fact to be determined by the jury were incorrect.

Gordon said the jury answered three forms on statements of fact provided by the plaintiff, but the plaintiff did not provide a general verdict form as required by state law.

“Because one was not provided to them, they did not fill it out or return it,” Gordon said.

A hearing is set for Tuesday in Mitchell on the two motions. If Circuit Judge Sean O’Brien denies the motions, Gordon said, he does not know if the county will formally appeal the verdict.

“We have to wait until the judge rules until we advise our client as to whether they want to appeal or not,” Gordon said.

While the litigation with the Alliance has proceeded, a new trial to determine damages owed to Thompson Farms has been on hold.

Mark Meierhenry, a Sioux Falls attorney representing Thompson Farms, said he will file a motion with Circuit Judge Bruce Anderson to lift the stay regardless of whether the county decides to appeal Judge O’Brien’s decision in the insurer case.

“The other side can fight it,” Meierhenry said of the county and the question of who must pay the damages.

Meierhenry said he will suggest setting a trial date on damages for next spring, thus giving both sides time to prepare. He added, however, that there’s a good possibility a settlement will be reached.

The Thompson Farms case stems from Aurora County’s 1998 enactment of a zoning ordinance that capped the number of animals allowed at animal-feeding operations. Prior to the enactment of the ordinance, Thompson Farms had embarked on a plan to increase the size of its dairy.

According to Meierhenry, the ordinance prevented the Thompsons from following through on the expansion plans for which they had invested millions of dollars. As a result of their inability to complete the expansion or recoup their investment, the Thompsons sold their farm in 2001.

Last year, Circuit Judge Anderson issued a 35-page decision that said the county committed “substantive due process violations and inverse condemnation” against the Thompsons. Inverse condemnation occurs when a government takes or damages private property without paying just compensation for it.

Steele, the Aurora County state’s attorney, said that if the county is forced to pay the damages, it would be a “burden on taxpayers.”

“If and when a settlement was made with Mr. Meierhenry and his clients,” Steele said, “someone would have to be explaining to the taxpayers how it’s going to be paid for.”

Tags: our towns, aurora county, south dakota publis assurance alliance, thompson farms, roy wise, davison county, john steele, brad gordon, sean obrien, bruce anderson, mark meierhenry, news