- Associated Press - Tuesday, May 19, 2015

MISSOULA, Mont. (AP) - First Interstate Bank and its insurer are suing each other over who has to pay a defunct Missoula logging company a $24.5 million verdict upheld by a state judge in April.

Kelly Logging Inc. went out of business after the bank seized stimulus money from its checking account to repay a loan that was not in default and then refused the company further credit. The company sued First Interstate Bank, and a jury awarded a verdict and punitive damages of nearly $17 million.

First Interstate appealed and lost, with Missoula District Judge Ed McLean tacking on $7.5 million for attorneys’ fees. The bank then sued Columbia Casualty for the entire $24.5 million when the insurer refused to pay, the Missoulian (https://bit.ly/1c2mqu4) reported.

First Interstate argued it did not accept a $5 million settlement offer from Kelly because the bank believed its $10 million policy also covered punitive awards.

Columbia Casualty’s countersuit said First Interstate Bank’s policy doesn’t cover “deliberate fraudulent” acts. It goes on to say that the original jury in Kelly’s lawsuit against First Interstate found “substantial evidence that First Interstate acted with malice, trickery or deceit and not by accident,” and that the bank unilaterally and intentionally offset funds and terminated Kelly’s line of credit.

The bank also is seeking punitive damages from its insurance company and both sides are seeking attorneys’ fees.

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Information from: Missoulian, https://www.missoulian.com

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