City Has Yet To File An Insurance Claim For Power Plant Loss

By Gordon HopkinsAfter a year and nine months since the company that purchased thousands of dollars of machinery from Fairbury’s defunct municipal power plant left town without paying, the city still has not filed an insurance claim for the loss.When asked why, Fairbury Mayor Spencer Brown said, “It is something that we will look at. Getting through the legal process was the priority.”Lawsuit In 2022, the City of Fairbury contracted with Texas-based Industrial Engineering Solutions (IES) LLC to purchase several large machines from the power plant no longer in use, such as generators, turbines and condensers. The City of Fairbury filed the lawsuit on September 29, 2023, contending IES removed the equipment from the now-defunct power plant but left town without paying the full, agreed-upon amount. On July 15, 2024, in Jefferson County District Court, the City of Fairbury was granted a default judgment of $144,000. However, it is not known if the city will ever see any of the money. IES and persons involved with the company have been sued in the past. FJN has spoken with some of those plaintiffs, who indicate they have never received their money back.In addition, the city is facing a number of expenses that will not be covered by the judgment.Most notably is the cost of remediating asbestos within the power plant building. According to local workers hired by IES to remove the machines from the power plant, they were instructed to cut up insulation that was later learned to contain asbestos. The result left the building contaminated with friable (crumbly and likely to release airborne fibers) asbestos to such as extent that the NDEE (Nebraska Department of Environment and Energy) ordered that no one enter the building without a respirator. The cost of remediating the asbestos in the power plant is unknown at this time. The city has not begun remediation. When asked if an estimate was ever obtained, the mayor responded, “We have never got (sic) anything formal.”When asked why the city did not ask for punitive damages when filing the lawsuit, Fairbury City Attorney Kurth Brashear responded, “I’m not going to comment on any legal strategies, thinking, or approaches, all of which are privileged. For your general information, however, punitive damages are unconstitutional in Nebraska.”Nebraska is one of four states that generally prohibits punitive damages.Insurance Policies Held by the CityOn August 23, 2023, FJN asked the mayor if city had an insurance policy that could cover the legal expenses of a lawsuit and a court ordered payment. The mayor responded, “I have not looked into that.”Nearly a year later, on August 13, 2024, FJN asked if an insurance claim was ever filed by the city. The mayor responded, “Not to my knowledge.”Insurance Policy Provided by IESAlong with the contract with IES, signed in 2002, was a document indicating IES had a policy with Evanston Insurance Company, a division of Markel Insurance Group LLC, covering a policy period from May 18, 2022 until May 18, 2023.According to the “Commercial General Liability Coverage Part Declarations,” the coverage limits are: General Aggregate Limit: $2,000,000 Personal and Advertising Injury Limit: $1,000,000 (Any one person or organization) Each Occurrence Limit: $1,000,000 Damage to Premises Rented to You Limit: $100,000 (Any one premises) Medical Expenses Limit: $5,000 (Any one person)The “Contractor’s Pollution Liability Supplemental Declarations” coverage limits are: Each Contractor’s Pollution Condition Limit: $5,000,000 Each Transportation Pollution Condition Limit: $5,000,000 Each Non-Owned Disposal Site Pollution Condition Limit: $5,000,000 Each Crisis Management and Emergency Response Limit: $5,000,000 Defense Expenses Aggregate Limit: $1,000,000On July 14, 2023, FJN asked the mayor if a claim had ever been file with Evanston. The mayor responded, “What would I ask them to cover?”When asked if IES had done any damage, the mayor said, “I couldn’t accurately answer that without an inspection by someone qualified to do it.”As reported previously by FJN, an Asbestos Management Inspector conducted an asbestos inspection survey of the power plant. A report was sent to the city on February 23, 2023.There is also a question as to the validity of the Markel/Evanston policy. People with IES provided the city with false names. The address on the contract with the city was also not valid.FJN reached out to Markel and asked of the policy was real.Aaron Gissler, Manager of Markel’s Special Investigation Unit (SIU), answered, “Thank you for bringing this incident to our attention Per Markel policy we can only release and/or discuss policy matters directly with the insured or their representatives.”When asked if the city had checked into the policy, Mayor Brown said, “Staff is looking into it.”When asked what the city will do if the policy turned out to be fake, the mayor said, “I will consult with our attorneys.”

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