Utah Power & Light Co. won an important round Friday in its suit to force insurance companies to repay $22 million that went to settle wrongful death claims from the 1984 Wilberg Mine disaster.
A ruling by U.S. District Judge David Sam moves UP&L a step closer to its goal of forcing payment by the insurance companies.On Dec. 19, 1984, a fire in the central Utah mine, owned by UP&L, killed 27 miners and company officials. Suits by the survivors were filed, then consolidated in one action in Fourth Judicial District Court.
Emery Mining Co., which managed the mine for UP&L, carried insurance coverage of $50.5 million. On March 6, 1987, UP&L informed all insurers of its intention to settle the suit for $22 million and later settled it.
UP&L agreed to pay nearly $12 million at the time and more than $10 million in future payments, for a total of $29,989,381.
The utility tried to get the insurers to reimburse it for the settlement, and they resisted. UP&L then filed suit against the insurers.
Recently, a federal magistrate ruled that a crucial defense raised by the insurance companies - questioning the reasonableness of the settlement - should go to trial because there is a factual dispute about it.
But Sam disagreed, overturning the magistrate. He issued a partial summary judgment in favor of UP&L.
"Utah Power notified all (insurance) carriers of the settlement, by letter dated March 19, 1987, and once again requested they fund it," the judge wrote.
"Utah Power alleges Federal (Federal Insurance Co., the primary insurer), consented and specifically stated it would not challenge the amount," Sam added.
In a March 12, 1987, letter, International Insurance Co., which had "umbrella" coverage to the amount of $10 million, "consented to the settlement amount and agreed to contribute its policy limit," the judge added.
"The remaining insurers made no objection to the settlement." These were Twin City Fire Insurance Co. and First State Insurance Co.
Sam granted the utility's motion for partial summary judgment, banning the insurance carriers from contesting the reasonability or refusing contribution to the settlement agreement.
UP&L lawyer Stephen B. Nebeker said this is not the end of the suit. Yet to be determined is whether UP&L was covered by the insurance. Trial on that and related issues is set for February.