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Court denies petition for rehearing of island case

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HELENA — The Montana Supreme Court has denied a real estate tycoon’s appeal to rehear a case disputing a $12 million Flathead County ruling that resulted from construction on Shelter Island in Flathead Lake. 

The court on April 14 denied a petition for rehearing filed by attorneys for Donald Abbey, who purchased Shelter Island near Rollins in 2001 and renovated the property into a luxury property that has sat on the market for years at a significantly reduced $59.5 million asking price. A real estate listing for the home claims the 32,000 square-foot building is the “largest private home in Montana” with 7,000 feet of lakeside frontage. Abbey wanted to dispute a March ruling by the court that would allow an insurer involved in the case to intervene. 

“The opinion tells Montana insurers that it is now okay to reject their defense obligations, because if they do not like the result, they can intervene at the very end and challenge various aspects of the case, including the settlement decisions made by the insured because of the insurer’s breach,” Abbey’s attorneys wrote. “Such a result is not supported by Montana law or that of other jurisdictions that have considered this precise issue. Petitioner respectfully requests the Court rehear this matter and reconsider its opinion.” 

The high court’s opinion overturned a 2014 Flathead County case that granted Abbey’s company $12 million. The justices noted it’s difficult to discern what exactly happened in the dispute because of the parties in the case not agreeing on the facts of the case, but court documents say the island was purchased by Donald Abbey, under the name Abbey/Land LLC. The corporation fell into dispute with contractors who were working on the massive home, and Abbey formed another corporation, Glacier Construction Partners LLC to complete construction. Abbey signed documents for both Abbey/Land and Glacier Construction Partners to enter into a contract to complete construction. 

Glacier Construction Partners entered a $1.4 million contract with Interstate Mechanical, Inc. for the design and installation of plumbing and heating-cooling systems in the home. The cost ballooned by more than $1 million and the two companies entered arbitration in 2009 so Interstate could recover payments for its work. 

In September 2009, Glacier and Abbey Land filed action against Interstate Mechanical and other businesses involved in the construction project. Glacier asked for counterclaims in the case and was successful in Flathead County District Court in January 2011, for the amount of $400,000. In September 2011, Abbey Land amended its complaint, and named its sister entity Glacier Construction as a defendant, when the company had previously been a plaintiff. Glacier Construction then tendered claims to its general liability insurer, James River in regards to Abbey Land. 

The insurance company refused to provide coverage. 

In 2013, Glacier Construction and Abbey/Land settled between themselves. The agreement required Glacier to confess to a $12 million judgment in favor of Abbey/Land and to assign to Abbey/Land all its rights against various insurers, including James River. 

James River asked to intervene in the settlement “to contest the reasonableness of the confession as it is the result of impermissible collusion between plaintiff Abbey/Land LLC and Defendant Glacier, who are both owned by Donald G. Abbey.” 

The high court said that request was reasonable. 

“We remand and direct the District Court to enter an order allowing James River Insurance Company to intervene in order to raise the issue of reasonableness of the confessed judgment and whether it was the product of collusion,” Justice Mike McGrath wrote in the ruling. 

Abbey Land and James River are both litigants in a separate ongoing Lake County District Court case at this time. 

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