An error in your favor 

Six years after an Easter Sunday accident left their then-5-year-old son with permanent cognitive delays, Shellie and Jason Johnson of Dillon might soon receive significant payments from American Insurance Co. However, judgment in the case rests upon a disputed policy held by neither the victims, the driver, nor even the presumed owner of the vehicle.

Court records state that on March 31, 2002, Michelle Ries struck and injured Nathaniel Johnson while the boy rode a bike next to his family. The Johnsons won a $400,000 settlement from Ries in 2007, but the sum fell short of covering the family’s long-term medical expenses. Yet, by a strange twist of fate, the vehicle involved—a red 1989 Chevy Suburban—technically remained on a policy from the vehicle’s previous owner due to a paperwork mistake by the policyholder’s insurance agent.

Now U.S. District Court Magistrate Jeremiah Lynch must decide whether to retroactively fix that error or to award the Johnsons upward of $2 million under the terms of the policy.

Robert Phillips, an attorney with American Insurance, argues that “if the shoe were on the other foot”—in other words, if the victims wanted a contract mistake adjusted—the court would probably grant that request.

“This may be a harsh result,” Phillips says, “but if contract law states this must be reformed, then that is the result.”

Attorney for the plaintiffs Anna Hughes-Malmberg counters that the situation isn’t that simple.

About five months before the accident, Frank Reuling, owner of the Ladder Canyon Ranch in Twin Bridges, agreed to sell the Suburban for $1,400 to employee Wayne Deans, who then allowed Ries to use it. At the time of the accident, though, the sum remained unpaid, the title un-transferred and Reuling’s insurance agent somehow removed the wrong 1989 Suburban from the ranch’s commercial policy.

Now, the Johnsons assert Reuling still owned the Suburban when Ries struck their son, and they want American Insurance to pay up under that (perhaps accidentally) valid policy. “The defendants have tried to dodge liability with various defenses,” Hughes-Malmberg says.

Lynch offered no word during Sept. 3 oral arguments on when he would rule.
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