Fairhope's liability insurance carrier sued the city and Mayor Tim Kant last month, alleging that some claims in the two-year-old “Dyas triangle” lawsuit are not covered by the Alabama Municipal Insurance Corp. policy, and that the company is not obligated to defend the case.

The case was filed July 7 in Baldwin County Circuit Court, but Councilman Rick Kingrea, the council’s legal liaison, said he only learned about the lawsuit last week.

“I just didn’t know anything about it and I was wondering where do we stand on that,” Kingrea asked at Monday’s City Council meeting.

City Attorney Marion “Tut” Wynne said the city had until Aug. 27 to file an answer to the complaint.

“We will be ready to respond at that time,” Wynne said. “We’re going to try and set up a meeting with officials of AMIC in Montgomery and talk with them. We have what we feel are strong positions (in the case).”

Wynne said that Caine O’Rear of the Mobile-based Hand Arendall law firm, which is representing the city in the Dyas litigation, would assist in responding to the AMIC lawsuit.

The Dyas case was filed in April 2008 by members of the Dyas family, claiming the city and Kant thwarted their efforts to develop property at the intersection of U.S. 98 and Veterans Drive, while allowing development of a similar mixed-used project nearby. A jury trial in the case is scheduled for February in federal court in Mobile.

Assigned to Circuit Judge James H. Reid, the AMIC lawsuit is seeking a declaratory judgment that a number of claims in the case are not covered by the insurance policy, and that the insurance company is not obligated to defend the city and Kant in the case.

Specifically, the lawsuit asks the court to delcare that the plaintiffs “amended complaint which alleges breach of contract, violation of due process, violation of equal protection, inverse condemnation, negligence, misrepresentation, conspiracy and requests compensatory, punitive damages, and a variety of equitable relief are excluded from coverage under the AMIC policy.”

The complaint also asks the court to declare that “AMIC is not obligated to defend, indemnify or expend any sums on behalf of the City of Fairhope and/or Mayor Timothy M. Kant for any damages arising out of the incident(s) described in the lawsuit filed by the Dyases.”

The city’s insurance carrier is represented by Scott Speagle of the Montgomery-based Webster, Henry, Lyons, White, Bradwell and Black law firm.

Speagle said he could not comment about the lawsuit, including answering any questions about why the lawsuit was filed after AMIC had been providing funds to defend the city and Kant in the case since several months after the case was filed in April 2008.

As reported in the Courier last week, AMIC has been paying Hand Arendall attorneys approximately $165 per hour for defense of the case, while the city has been paying the difference up to O’Rear’s rate of $300 per hour and another attorney’s rate of up to $240 per hour.

The city has paid the Hand Arendall firm $472,454 for fees in the case, according to information provided by the city in July.

During an interview with the Courier last week, Kant said AMIC took several months after the Dyas lawsuit was filed, deciding whether it would defend the lawsuit.

“I think something slipped through the crack here,” Council President Lonnie Mixon said at Monday’s council meeting. “Supposedly every lawsuit that gets filed, a copy of that is supposed to go to Councilman Kingrea. We passed a resolution quite a while back that he’s to be informed of every lawsuit, so the council will be advised of what’s going on.”

Kingrea said he would not have learned about the lawsuit unless a member of his firm had not been doing some independent research regarding local court cases filed in Baldwin County.

During the Courier’s interview Friday with the mayor, the newspaper asked whether any new cases had been filed against or by the city. Kant provided some information on new and pending litigation but did not mention the AMIC lawsuit.