Port may sue insurer for $2M for Piney Point spill denial

Aug. 19--PORT MANATEE -- Attorneys representing Manatee County Port Authority have filed a $2 million complaint against a Chicago insurance company they say failed to pay the port for losses sustained from a toxic spill in 2011.

Filed in the 12th Judicial Circuit Court in Manatee County, the suit alleges that the Illinois Union Insurance Co. denied the port's claim in violation of the insurance policy. Port attorneys filed a claim with the court following the denial last year.

The insurance claim was made after the port sustained about $4.8 million

in losses when a dredge sludge containment enclosure ruptured in 2011, spilling waste and forcing workers to stop the Berth 12 dredging project.

The claim and suit are leftovers from the May 2011 breach of a gypsum stack and containment pond at the former Piney Point Phosphates facility adjacent to the port. The bermed, above-ground stack and pond ruptured and spilled about 170 million gallons of phosphate-tainted water into nearby Bishop Harbor.

At the time, the port was leasing the pond and using it as a receptacle for thousands of cubic yards of spoil dredged from the Berth 12 project. A slurry of sea water and sediment dredged from the sea floor was piped into the pond at the top of one of the towering stacks. The DEP has spent about $142 million cleaning up the spill.

As a result of the spill, the Florida Department of Environmental Protection ordered dredging work to halt. Court documents show that the delay forced the port to pay $3.28 million to contractor Great Lakes Dock & Dredge. The port's overall claim also includes more than $573,000 in legal fees, $778,000 in repair work and about $90,000 that went to cleaning mud out of drainage ditches after the spill.

After the port settled with Great Lakes in 2012, port officials said they would aggressively seek repayment from responsible parties, including property owner HRK Holdings. HRK has since successfully secured Chapter 11 bankruptcy protection and has been selling off portions of more than 500 acres it owns in the Piney Point area to raise funds to pay creditors.

The port authority filed a $12 million suit against HRK in 2012.

One month prior to the spill and work stoppage, the port purchased pollution liability insurance from Illinois Union to cover business interruptions and cleanup costs related to "a pollution condition" at the port, court papers show. The port made a claim for the policy's maximum coverage limit of $2 million.

George Isiminger, the port's environmental affairs director, declined to comment on the ongoing litigation. Court papers show that Isiminger has been the port's lead executive on the Illinois Union matter.

Illinois Union issued a final denial of that claim in June 2014. In the denial, attorneys representing the company stated that the pollution condition did not occur on port property. Because the event did not qualify under the policy as a covered pollution condition, business losses could not be claimed.

On Thursday, members of the Manatee County Port Authority will vote whether to authorize the authority's law firm, Lewis, Longman & Walker, to officially file the lawsuit with the court.

Matt M. Johnson, Herald business reporter, can be reached at 941-745-7027 or on Twitter @MattAtBradenton.

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