The city of Fairhope filed a complaint Sept. 22 against Alabama Municipal Insurance Corporation, its former insurer, for legal fees stemming from a previous complaint against the city in 2013.

According to Mayor Tim Kant, Fairhope is seeking outstanding defense costs, prejudgment interest and related costs it says it had to pay because of AMIC’s refusal to cover the city in its defense against a suit from plaintiff Charles K. Breland in 2013.

The complaint alleges AMIC had no justification for refusing to defend the city against the suit and that the company’s refusal amounts to a breach of contract. According to online court records, a pretrial conference on the matter has been scheduled for March 14, 2016.

The complaint also alleges AMIC’s refusal to defend the city was committed “with fraud, malice, oppression or wantonness” and the city is entitled to recover damages.

“Basically we had to file this so we didn’t lose our claim for some fees,” Kant said. “This is related to the Breland case.”

(Photo/Baldwin County Commission) Charles Breland filed suit against the city of Fairhope in 2013 over development restrictions on his 65-acre parcel in Battles Wharf.

(Photo/Baldwin County Commission) Charles Breland filed suit against the city of Fairhope in 2013 over development restrictions on his 65-acre parcel in Battles Wharf.

In 2014 the city settled a similar lawsuit with AMIC over the reimbursement of attorney fees charged to litigate a rejected retail development at the “Dyas Triangle” property between State Highway 104, U.S. Route 98 and Veterans Drive. The dispute began when the Dyas family sued the city in 2008 after the Fairhope Planning Commission rejected its plans for a 54,000-square-foot shopping center on the property.

Similarly, Breland’s 2013 complaint alleged the city drafted a series of ordinances in order to stop his development activities at a 65-acre property in Battles Wharf. In June 2014, the Baldwin County Circuit Court dismissed Breland’s complaint. According to court documents, Breland filed an appeal to the Alabama Supreme Court the following month.

“We had liability insurance with AMIC at the time and they refused to pay for our defense,” Kant explained. “We’ve been trying to negotiate some dollar amounts. We had to file this suit to protect ourselves.”

Fairhope is represented in the complaint by Hand Arendall attorneys John Mark Hart, Joseph Lamar Cowan II and William Bradley Smith. This week, Smith said the city is seeking defense costs related to a case he says the city won.

“We are simply asking AMIC to live up to the policy the city had at the time,” Smith said. “We are saying, just like anyone with an insurance policy, ‘we paid the premiums, now you live up to your end of the deal.’”

On Nov. 13 AMIC filed a response, denying its role as the city’s insurer at all times relevant to the Breland case. AMIC also denies it was required to provide any defense or coverage for the city under its policy. Further, AMIC filed a counterclaim seeking a judgment declaring it was not obligated to defend or indemnify the city in the Breland case.

According to the counterclaim, the city was insured under an AMIC policy until Jan. 9, 2011. Afterward, it was insured by the Charter Oaks Fire Insurance Company, also known as Travelers Insurance Company.

AMIC’s counterclaim states that Travelers should be responsible for legal fees in this case, saying “if any insurer is liable to the city of Fairhope for the damages it sustained in defense of the underlying litigation it is Travelers as Travelers’ policy of insurance was the only one in force at the time of the occurrence that forms the basis of the underlying litigation.”

The complaint stems from a legal battle that has been ongoing for years, Kant said. In 1999, Breland purchased 65 acres in the Battles Wharf community, south of Fairhope and outside of its corporate limits. Breland’s complaint alleged the city of Fairhope repeatedly acted to deny Breland the ability to develop the land between 2002 and 2012.

AMIC’s counterclaim argues that both AMIC and Travelers policies covered the city during the span of time. While denying the alleged acts in the Breland case took place while Fairhope held an AMIC policy, the insurer claims it paid half of the city’s attorneys’ fees in defense of the litigation while Travelers has paid “only a small portion of the defense costs incurred by the city of Fairhope.”

The counterclaim says if AMIC is found responsible for legal fees related to Breland, Travelers should be held equally responsible. It also says if AMIC is held solely responsible for the full defense costs, Travelers will be “unjustly enriched by escaping their obligations under their policy of insurance with the city of Fairhope.”

In the previous case over the Dyas property, AMIC sued Fairhope and Kant in 2010, claiming it was not responsible for legal fees associated with the legal battle. The city countersued with legal action handled by attorneys from Hand Arendall, saying AMIC had breached its contract with the city.

In November 2014 the city reached a settlement agreement with AMIC related to the Dyas litigation. According to the settlement terms, AMIC was held responsible for approximately $1.1 million in legal fees while the city was responsible for $500,000.