title
CLAIM AGAINST AIG INSURANCE COMPANY (B)
recommendation
The City Commission 1) approve the terms of the settlement agreement
that awards the City payment of a claim against AIG Insurance Company;
and 2) authorize the City Attorney to settle the claim on behalf of the
City.
explanation
In September 2004, Watson Construction Company provided the City notice of its intent to pursue a claim for damages against the City as a result of a moratorium the City enacted in 2001. The City immediately put National American Fire Insurance Company of Pittsburgh (AIG) on notice of Watson's intent to sue and request for damages.
In April, 2005, Watson filed a Second Amended Complaint alleging four civil rights counts, two counts of "takings" and a state tort count. The City forwarded the complaint to AIG and requested coverage under the City's policy with AIG. AIG denied coverage on several occasions.
On January 8, 2007, the City Attorney's office received authorization from the City Commission to retain special insurance counsel to file suit against AIG for wrongfully denying insurance coverage to the City. Prior to the filing of a lawsuit, the parties mediated the claim that resulted in a settlement agreement. The parties negotiated the settlement of $575,000. This amount reflects the approximate amount of money AIG would have paid in the defense of this case. It is the recommendation of outside counsel, the City Attorney's office and the Risk Management Department that the case be settled as described above.