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Putnam County, Ill., School District's Lawsuit Deemed Legitimate

Posted on: Tuesday, 30 August 2005, 00:00 CDT

Aug. 26--HENNEPIN -- A judge cleared the way Thursday for the Putnam County School District to continue its lawsuit against its insurance carrier in a prolonged dispute over tornado damage done last year to Hopkins Elementary School in Granville.

Circuit Judge Kevin Galley rejected the Illinois School District Agency's arguments that the district's two-count suit should be dismissed.

Emphasizing a need for "moving the case forward" after hearing about children being bused to alternative locations, Galley also set a hearing for Sept. 29 on the key issue of whether the terms of coverage require the agency to pay full replacement costs on the building regardless of where the School Board might choose to rebuild.

"This is a very timely issue, because a lot of rebuilding plans are on hold until we get some guidance from the court," said Carrie Berger, a Chicago lawyer representing the district in the case in Putnam County Circuit Court.

Parts of Hopkins were demolished after the tornado that roared through the area in April 2004, while one section remains standing but unused. The district sued after months of negotiations failed to produce a settlement.

"We came (to court) as a last resort, frankly, because we've been unable to reach an agreement," Berger told Galley during a hearing attended by five School Board members and the district superintendent.

Michael Borree, a Chicago attorney for the agency, maintained that the district shouldn't be in court even now. Terms of the policy state that repair or rebuilding must be completed before payments can be received or legal action over coverage can be initiated, he said.

"We do not believe they are entitled to their day in court until such time as they (repair or rebuild)," he argued.

Borree also insisted that the agency should be exempt from requirements of the Illinois Insurance Code, because it's an intergovernmental association that doesn't fall under the definition of "insurance company." His arguments indirectly emphasized the point that the lawsuit is essentially against the approximately 180 other member districts.

In any claim, Borree noted, "All of the money comes out of the kitties of all of the other districts around the state."

Although Galley left open the possibility for Borree to raise the definition issue at a later date, he said, "The court is of the opinion that the statutory definition of 'company' is a broad and inclusive definition."

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Source: Journal Star

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