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GRGID sues insurance company after two years of waiting

by Sharon Carter

Officials at the Gardnerville Ranchos General Improvement District say 29 months is long enough to wait for an insurance company to pay a claim.

In Oct. 30, 1996, the district filed a claim against a contractor’s insurance policy. After more than two years of waiting, the district’s attorney, Michael Rowe, filed a lawsuit in Douglas County District Court demanding that Las Vegas-based Harris Insurance Service and the National American Insurance Co. of Chandler, Okla., honor a policy it issued to the now-defunct contracting firm, Ron Holcomb and Sons, Inc., of Reno, and reimburse the district for the $18,667 it paid to finish the project.

According to court documents, the bond, which guaranteed the timely completion of the $158,000 Glenwood Drive waterline project, including labor and materials expenses, was posted by the firm when it contracted with the district in 1995 to the replace the waterline.

Bob Spellberg, the GRGID’s general manager, said Monday the contractor had personnel problems which caused the project to take 60 days longer than expected.

“The district had to babysit the project, incurring $18,667.57 in additional engineering expenses, leak repairs, patching pavement and paving costs,” Spellberg said. “Then the contractor went bankrupt.

“We’re attempting to recoup fees that happened after the fact, but the insurance company kept putting us off.”

State law requires projects that cost $35,000 or more carry such insurance when public funds are involved.

“We’ve paid everybody; now it’s our turn to get paid back,” he said. “We depend on these (insurance) companies for that very reason – to protect the district and make sure jobs get done.”

Spellberg said the district had heard from the insurance company only twice since filing the claim – once in November 1996 acknowledging the claim and asking for documents, and then in January 1997, when the company’s claims attorney asked for duplicates of the same documents, saying the first ones were illegible. Both times the district supplied the information requested.

“We sent a letter of demand, but they didn’t respond,” Spellberg said. “So we filed the lawsuit.”

In the lawsuit, the GRGID claims National American and Harris have “neglected, refused and failed” to take any action on the claim.

Claiming the companies’ representations were fraudulent, the district is suing for breaches of contract and good faith and fair dealing.

As well as asking for the $18,667.57 and interest that has accrued since January 1996, the district asks the court to make an example of the companies by awarding punitive damages, as well as provable general and special damages, attorney fees and court costs.

The district’s attorney, Michael Rowe, said Monday he has been contacted by insurance adjusters for Harris and National American since filing the lawsuit. He said the adjusters made a token offer of $5,000 to settle the district’s claim.

“The matter will have to be presented to the (GRGID) trustees, but this is likely to go further,” Rowe said.

Jim Smith, a specialist in insurance matters in the Nevada Attorney General’s office, said Tuesday he will look into the situation.