Shelter Island owner keeps suit alive

Don Abbey may be playing hard to get.

Or at least hard to serve.

The insurance company that Abbey is suing over alleged defects in his home’s construction is seeking more information from Abbey, who won a $12 million judgment against the firm. James River insurance company said in recent legal filings in Flathead County district court that it has repeatedly sought to serve Abbey, but is unable to serve him.

Abbey and his Abbey Land Co. won the record judgment in Flathead County in 2012. He won the judgment by suing his own construction company, Glacier Construction Partners, over alleged defects in the construction of his high-end estate on Shelter Island on Flathead Lake. Abbey and Timberland Construction of Whitefish began construction on the home around 2001. The home is listed for sale at $59.5 million. When that business relationship soured with Timberland, Abbey started Glacier Construction to finish the project. After a water system allegedly failed on the home, Abbey and Glacier Construction sued the mechanical engineer on the project. Soon after, Abbey’s own firm, Glacier Construction, was moved from plaintiff to defendant in the case.

Abbey won a judgment in the case in Flathead County district court, but a federal court in Oregon tossed the case out, saying Abbey “actively and brazenly” colluded with his own construction company to drive up the insurance damages.

After the Flathead County judgment was handed down, James River insurance appealed to the Montana Supreme Court to be allowed to intervene in the case. The high court agreed, and says the insurance company has the right to question the reasonableness and possibilities of collusion in the case.

James River is now seeking information from Abbey on the case, but is being stymied, the company says in county court filings.

James River is seeking to discover documents relating to Abbey’s business relationship with Whitefish attorney Terry Trieweiler. The insurance company alleges that Trieweiler was fired by Abbey because Trieweiler would not sign the $12 million judgment. The attorney who replaced Trieweiler was paid on a contingency basis, court documents say.

James River also seeks information from Abbey’s financial expert that he hired to assess damages. That expert said Abbey was entitled to damages of lost rent of $300,000 a month.

According to court documents, accountant Paul Pederson says the damages due to Abbey Land LLC came from four areas: direct costs; future costs; loss of property and loss of use of Shelter Island.

Pederson said in California District Court filings, direct costs on the Shelter Island project were over $1.5 million; future cost damages of the water system are approximately $406,000; loss of property damages resulting from construction defects are $3.7 million; and loss of use of Shelter Island, including “reasonable rental value,” is over $9.875 million, for a total of damages over the construction project totaling $15.5 million.

Pederson based his loss-of-use damages partly on the Shelter Island property renting for over $300,000 a month, including interest, from October 2009 to March 2012.

U.S. District Court documents show that the costs incurred by Abbey Land LLC on the Shelter Island project were $47.9 million, including:

Land         $1.76 million

Docks         $776,289

Main house         $33.1 million

Boat House         $4.4 million

Power/generator building         $439,000

Management costs         $274,000

James River claims that an arbitrator set the damage amount at $414,000.

Abbey sought summary judgment in the case in September. He alleges that James River is entitled only to contest the reasonableness and the good faith of judgment that was handed down — not discovery. But James River now says that it cannot contest the reasonableness or possibility of collusion without discovery.

James River attorney Robert Baldwin alleges that moving Glacier Construction to defendant was done solely to increase the insurance coverage.

Abbey fought Flathead County over his tax bill last year.

In fact, Abbey has protested the taxes on his Shelter Island home the last two years, according to a county official.

Abbey last year sought to have the valuation on his lakefront property reduced by about $31 million. His tax bill was $367,000.36.

With the average Montanan property owner paying 1 percent to 1.85 percent taxes, Abbey’s taxes are at .08 percent, well below the state average.

The state tax appeal board in Helena heard arguments from Abbey and his attorneys whether the state properly assessed Abbey’s home and other structures on Shelter Island.  

The state says the 24,000-square-foot, three-story home and other improvements on the island, such as a 5,000-square-foot boathouse and apartments, are worth $41.8 million, and the state is basing property taxes on that value.

A Missoula appraiser hired by Abbey said the home and other structures should be taxed at a value of $9.8 million.

The state tax board denied Abbey’s appeal.