Insurance Suit for Dam Breach Ruled Premature

     ST. LOUIS (CN) – A federal judge dismissed a Missouri utility’s breach of contract claim against its insurer for withholding about $31.3 million in benefits to help cover damages related to the 2005 Taum Sauk reservoir collapse.




     Union Electric dba AmerenUE’s hydroelectric plant on the reservoir had suffered a catastrophic breach in the early hours of Dec. 14, 2005, that sent more than a billion gallons of water rushing into Johnson Shut-Ins State Park. The waters washed away the house of the park’s caretaker and injured a family of five, but nobody was killed.
     Ameren settled with the state, which accused the utility of failing to repair faulty safety instruments at the reservoir, and agreed to pay $177 million.
     The power giant claims it has suffered more than $197.5 million in losses, including $51 million to clean up the popular Johnson Shut-Ins, in connection to the breach, but that Energy Insurance Mutual has only paid $68.7 million on a $100 million policy.
     Seeking to recoup the difference, Ameren filed suit against the insurer in St. Louis federal court.
     Energy Insurance challenged the lawsuit on two grounds: choice of venue and failure to exhaust mediation remedies.
     U.S. District Judge Carol Jackson agreed and threw out the lawsuit on Jan. 10. Jackson found that Ameren’s policy with Energy Mutual requires arbitration before any lawsuit could be filed and that any lawsuit must originate in New York federal court.
     An Ameren spokesman declined to comment on what the utility company will do next to recover the funds.
Johnson Shut-Ins, a state park 85 miles south of St. Louis, finally reopened in 2008 after the damages from the breach were repaired.

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