Supreme court denies $12 million judgement

The Montana Supreme Court has overturned a  $12 million judgment that a Lake County landowner won by suing his own construction company.

Don Abbey is the owner of Shelter Island on Flathead Lake. When he had a falling out with his Whitefish contractor, Brendon Retz, during the construction of a multimillion-dollar estate on Shelter Island on Flathead Lake, Abbey formed his own construction firm, Glacier Construction Partners LLC. Abbey was the sole member of the limited liability company and signed contracts on behalf of the firm, court documents show. Glacier Construction entered into a $1.4 million contract with Interstate Mechanical Inc. for that company to provide design and engineering services for a wastewater plumbing system.

The system, according to court documents, failed, and polluted the Shelter Island home’s water system. Abbey Land LLC and Glacier Construction sued Interstate Mechanical for damages. Then Abbey changed his lawsuit to show Glacier Construction as a defendant. He won a $12 million judgment against his insurance company, James River Insurance, in March of 2014 in Flathead County. The judgment was the largest ever in Flathead County.

Shelter Island is a 24-acre private island on the west side of Flathead Lake near Rollins. The property sits on about 13.5 acres of the island.  

In 2009, disputes arose between Glacier Construction and Interstate. In July 2009 Interstate initiated an arbitration to recover payments that it claimed it was owed by Abbey. Glacier asserted counterclaims and in January 2011 Glacier won an arbitration award of just over $400,000. When Abbey moved his firm, Glacier Construction, to defendant status, Glacier Construction then tendered the Abbey Land claims to its insurer, James River Insurance.

In May 2013 Glacier Construction and Abbey Land settled the Flathead County action between themselves. The settlement required Glacier Construction to confess to a $12 million judgment in favor of Abbey Land, and to assign all of its rights against various insurers, including James River, to Abbey.

James River Insurance had sought in 2013 to intervene in Flathead County to challenge the settlement between Abbey Land and Glacier Construction. James River Insurance questioned the reasonableness of the $12 million claim, and requested to contest it in district court, saying that the $12 million settlement was the result of collusion between Abbey and his construction firm.

Flathead County district court never ruled on the insurance’s company’s motion to intervene and the judge did not rule on the reasonableness of the confessed judgment between Abbey and Glacier Construction. 

The Montana Supreme Court, with Mike McGrath writing the majority opinion, said that an insurer is entitled to have the district court make a determination of the reasonableness of a settlement entered by the insured party.

Abbey, a California real estate developer, has sought to sell the Shelter Island property. He has it listed for sale at $44.8 million.

Abbey has also fought the state of Montana over his tax bill.

He appealed and recently lost his case before the Montana Tax Appeal Board.

Abbey had appealed to the Montana Tax Appeal Board last fall to have the taxable value on his mansion on Shelter Island reduced by $32 million. The Montana Department of Revenue had valued the house and other buildings at $41.8 million. Abbey had sought to have the value for the home and improvements valued at $9.8 million, based on his own independent appraisal. For the 2012 tax year the Department of Revenue appraised the property at $55.3 million and the land at $3.7 million. 

The 2014 Lake County property taxes owed on the property are $367,696. 

In March the Montana Tax Appeal Board ruled in favor of the Montana Department of Revenue’s appraisal. 

According to the Department of Revenue’s report, the home is one of the finest in Montana. Its walls are made of custom two-feet-thick stone blocks. The home features custom windows and light fixtures, African mahogany paneling and cabinets, Italian plaster ceilings, floors of imported Vietnamese marble, a roof of blue Virginia slate with copper trim and floors made of limestone tile.

Its stone and copper exterior spans 19,452 square feet. The main home has five bedrooms and eight bathrooms.