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City Resolves Lawsuit Against Insurer

March 5, 2019
Wetzel Chronicle

The City of New Martinsville has successfully resolved a lawsuit against its insurer, Liberty Mutual Insurance Company, according to a news release issued by New Martinsville's attorney, Carolyn Flannery.

The release states that under the settlement agreement, Liberty will pay more than $15 million to the city, and the money will be used to reimburse Monongahela Power, for monies it paid for the replacement of a part at the citys hydroelectric plant.

Monongahela Power is a purchaser of power generated by the city.

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According to the statement issued by Flannery, the City of New Martinsville "will move closer towards meeting a condition in its energy purchase agreement with Monongahela Power that would enable it to potentially receive additional revenue from its generation of electricity at the facility. Monongahela Power will then credit the amount back to its customers through future rate proceedings."

New Martinsville filed the lawsuit against Liberty Mutual in June 2017 after claiming Liberty Mutual Insurance Company failed to honor its obligations with respect to a loss occurring at the hydroelectric plant, located at the Hannibal Locks and Dam.

New Martinsville sought a potential $20 million in damages from Liberty Mutual.

The city claimed that on July 10, 2014, the plant's operators heard "an extremely loud metal fracturing sound followed almost immediately by excessive vibration levels emanating from Unit 1." The city then discovered that several of the bolts and nuts connecting the rubber hub to the turbine shaft were either broken or disengaged.

Other damages to Unit 1 were discovered and repairs were then undertaken "at substantial expense," the lawsuit filed by the city had claimed. The city claimed the unit was non-operational for more than two and a half years, costing the city potential sales from electricity that the unit would have produced.

The city argued that its policy with Liberty Mutual provides "business interruption" coverage, and that it promptly provided Liberty with notice of the July 10, 2014 incident. It claimed Liberty had refused to accept the claim and has, "as a practical matter, denied coverage for the losses sustained by Unit 1 and for any related losses."

New Martinsville had brought suit against Liberty in the United States District Court for the Northern District of West Virginia.



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