Insurer says no on BHSI

Feb. 21--The city of Clovis' insurance carrier is refusing to pay any cash to three companies claiming they lost more than $176,000 in its failed Beauty Health and Science Innovations investment.

Travelers Senior Technical Specialist Kenneth Chance cited several reasons for denying claims filed by Clovis attorney Michael Garrett on behalf of roofer Mike Urioste, Norris Electric and Snelling Employment. Among the reasons cited in a letter dated Feb. 13:

-- The companies failed to file notice within the 90-day time limit.

-- The Clovis City Commission hasn't waived immunity under the Tort Claims Act.

-- All three companies contracted directly with BHSI, not the city.

The decision sets up the possibility of a lawsuit. Garrett said Thursday he still needs to consult with his clients and see if they want to file suit.

The city paid $1.8 million to BHSI and its CEO Brian Sperber in December 2011 to start a cosmetics plant and create up to 350 new jobs. Instead, Sperber locked the doors on the operation about seven months later without producing any product and has paid only minimal amounts on the city loans.

In his letter, Chance said tort notices filed by Garrett were based on a Nov. 5 independent investigation paid for by the city. That investigation, the Underwood Report, determined city officials made numerous errors in proceeding to loan money to Sperber.

"The facts show that the claimants were aware of BHSI's financial problems sometime in 2012," Chance said. "While they didn't have details, we believe that the 90-day time limit (to file notice) was triggered long before November of 2013."

Chance also said none of the companies negotiated or contracted with the city to perform work at the BHSI plant.

"While Travelers and the City both are sympathetic to the plight of your clients," the letter states, "Travelers policy covers claims for which the City would be legally liable. In this case, there is no legal liability and we cannot make any payments."

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