Aurora County back in court with insurer

Talk about it

Aurora County is in court again this week defending itself against a lawsuit by an insurer.

A Davison County jury decided in August 2010 that Aurora County’s liability insurance provider was not responsible to pay a family that had won a previous decision against the county. In that decision, a judge found the Thompson family had lost its farm due to a cap on the number of dairy cattle the county imposed in 1998.

The judge in that earlier case ruled that the cap amounted to “inverse condemnation” — a taking or damaging of private property without just compensation.

Thompson Farms’ lawsuit sought $5.6 million in damages when it was filed, and the determination of a damage amount now hangs in the balance as Aurora County and the South Dakota Public Assurance Alliance battle over who should pay.

After the August 2010 jury decision ordering the county to pay, the county appealed to the state Supreme Court.

The Supreme Court reversed the decision in August and ordered a new trial based on Judge Sean O’Brien’s decision at the circuit court level to exclude pre-contract communications from evidence.

At issue in the Alliance’s suit against the county is the timing of the county’s notification to the Alliance about the Thompson Farms litigation. The Alliance claims it was informed too late, and it therefore shouldn’t have to cover damages resulting from the case.

The disputed pre-contract communications covered “zoning issues, including communications that could be interpreted as having disclosed the Thompson Farms zoning dispute,” according to the Supreme Court ruling.

Wednesday, during the second day of a new trial in Mitchell on the Alliance’s lawsuit against the county, several witnesses testified regarding the documents the Supreme Court said should be allowed this time around.

The defense and prosecution debated whether some communications from the Alliance showed the company knew of the Thompson lawsuit, which was threatened in 2001 and brought forth in 2002.

The Alliance pitched its insurance policy to the Aurora County Commission in February 2001, after Thompson Farms’ attorney, former South Dakota attorney general Mark Meierhenry, sent a letter in January 2001 threatening a lawsuit. The county and the Alliance reached an agreement March 1, 2001, which included zoning coverage, according to the now-admissible documents.

The underwriter for the policy, Ladene Bachtell, testified Wednesday and said she was never aware of any pending lawsuit regarding a zoning issue prior to the policy taking effect. She also testified she had no knowledge of Meierhenry’s letter threatening a lawsuit.

“Once I saw the letter, I was flabbergasted,” she said in court.

She did say that during the Feb. 6, 2001, Aurora County Commission meeting, the commission mentioned it might have a zoning issue. Bachtell said she told the commission to report it to its previous insurance carrier, because the Alliance would not cover known or reported claims existing prior to the Alliance’s coverage of the county.

Bachtell said the commission explained it might have “a potential zoning issue with a feedlot” but never mentioned Thompson Farms.

The county claimed an Alliance file note from Feb. 13, 2001, regarding the setup of Aurora County’s coverage states the pending claim for zoning would be covered.

The trial resumes today and closing arguments are expected Friday morning.

Tags: aurora county, news, courts, zoning, updates, agriculture, dairy, cattle