Central Oregonian

County settles with insurance company for $548,937

Settlement brings an end to an issue that began in 2003

Jason Chaney

November 12, 2012

Last month, the Crook County Court signed a settlement agreement that finally concluded litigation that originated more than nine years ago.

Crook County must pay Argonaut Insurance Company, their former insurance carrier, $548,937.66 during the next three years. The settlement prevents them from having to pay a judgment of up to $1.8 million.

“The settlement agreement provides that liability by both Argonaut Insurance Company and the County is expressly denied,” Crook County Counsel Pro Tem Jeff Wilson wrote in a letter addressed to the Central Oregonian.

The events that ultimately led to the recently-settled litigation originated in 2003, when Prineville developer Dave Molony applied for a development permit to build a home on one of his 17 lots in the Highland subdivision in Juniper Canyon. The Crook County Planning Commission denied the application on the basis that the property in question lacked public access. The only access was a 50-foot-wide strip of land that separated the Highland subdivision from the neighboring Juniper Heights subdivision to the east.

The planning commission decision prompted Molony to file a declaratory judgment in Crook County Circuit Court in 2004. A judge ruled in his favor, saying that the strip of land was in fact a road, however the legal dispute delayed potential land sales during the housing boom of that time.

Molony, feeling he lost a considerable amount of money in potential real estate sales, filed another lawsuit against Crook County in federal court. In 2009, a jury awarded Molony a $1.1 million judgment. The County appealed the decision, but the Court of Appeals upheld the initial decision.

Following the failed appeal, Argonaut then paid Molony the judgment amount, along with additional costs and fees incurred during the lawsuit and subsequent appeal process.

Then, in 2011, Argonaut filed a lawsuit against Crook County, alleging that the claim was not a covered loss. They consequently sought reimbursement of the approximately $1.8 million they paid to Molony.

Regarding the decision to settle, Wilson said that the court may have eventually ruled in favor of Crook County, but the possibility of an adverse decision determined their course of action.

“Under the circumstances, the County Court decided to settle and avoid the risk of Argonaut recovering the entire $1.8 million,” he said. “By settling now, Argonaut’s lawsuit will be dismissed, and the County’s total payment represents less than one third of the amount paid to Molony and demanded by Argonaut Insurance.”

Crook County no longer utilizes the services of Argonaut. Members of the Crook County Court declined to comment on the settlement.