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MEMORANDUM <br /> <br />Item # 5.2. <br /> <br />TO: <br /> <br />FROM: <br /> <br />DATE: <br /> <br />SUBJECT: <br /> <br />Mayor and Council <br /> <br />Lori Johnson, Finance Director <br /> <br />August 26, 2002 <br /> <br />Consider Bengston Sewer Backup Payment Request <br /> <br />On July 15, 2002 Ross and Kay Bengston came to Open Mike requesting the City pay for <br />damage done to their house as a result of a backup in the City's sewer line. Detailed <br />information was presented to the Council in preparation for that meeting so I have not <br />attached it this memo. If you would like an extra copy, please let me know. At that time the <br />City Council requested that staff research this issue and report back to them with any new <br />information. <br /> <br />Insurance Ad}uster Randy Loebrick and I discussed this claim following the July 15, 2002 City <br />Council meeting. It was agreed that he would again look at the claim and try to work with the <br />Bengstons to get additional information that may change the facts of the claim. Attached is a <br />letter from Mr. Loebrick, dated August 5, 2002, in which he again denies the claim to the <br />Bengstons. No new information was brought forth during his follow-up investigation. Mr. <br />Loebrick states in his letter "after carefully reviewing all of the facts of this claim, I am still <br />denying any liability or negligence on a part of the City of Elk River for causing the damages <br />to your basement." <br /> <br />The Council asked staff to research if making payment to the Bengstons would in any way <br />jeopardize our insurance policy. In fact, a payment will not jeopardize the city's insurance <br />policy; however, it will definitely set a precedent for future claims that are denied by the city's <br />insurance company. 1 am unaware of any past payment made by the city to a claimant when <br />the insurance company has denied a claim. It is certainly within the Council's discretion to <br />pay the Bengstons for the damage done to their house. However, prior to taking any action to <br />make payment, I would suggest that the Council review the facts of the incident and also <br />consider the implications this may have on future claims. <br /> <br />This is an unfortunate situation and the city, of course, is sympathetic to the Bengstons and <br />the damage that has occurred to their house. As we discussed earlier, the city has procedures <br />in place to keep the sewer lines clean and to respond quickly when sewer backups are <br /> <br /> <br />