A former dealer of snowmobiles and ATVs in Helena prevailed in what seemed a major Montana Supreme Court opinion in a case against the state in November, but the legal and financial future of Elk Mountain Motorsports remains uncertain.
In particular, the dealership now faces a new lawsuit by the state that could consume any award it may have thought it was due.
“We really just enjoy selling stuff and being part of the community,” said Bob McWilliams, the owner of Elk Mountain, who said the business will do fine going forward. “We have a lot of customers that believe in us.”
The unanimous five-judge panel on Nov. 20 upheld an award of $198,749 to Elk Mountain for damages the dealership suffered from a breach of contract by the state Uninsured Employers’ Fund, administered by the Montana Department of Labor and Industry.
The suit arose after an Elk Mountain employee suffered a serious injury in 2004, and the Montana State Fund claimed — and courts ultimately agreed — that Elk Mountain had let its workers’ compensation insurance lapse.
The worker then filed a claim with the Uninsured Employers’ Fund, which has been paying his medical bills and lost wages ever since. After some difficulty recouping its costs from Elk Mountain, the fund worked out an arrangement for the dealership to pay those costs over time, according to the background of the case described in the high court opinion.
But the fund proposed a new arrangement in May 2010, which Elk Mountain rejected, according to the Supreme Court’s summation. The fund ultimately sent the case to a collection agency, and Elk Mountain sued the fund for breach of contract, citing lost profits, difficulty in acquiring loans and the straining of its relationship with snowmobile and ATV manufacturer Arctic Cat.
District Judge Dorothy McCarter awarded the dealership $198,749 for damages it suffered, and the high court upheld that order.
“I think they’ve seen a bit of vindication,” said Dave Gallik, a lawyer for Elk Mountain.
But Dec. 28, the Uninsured Employer Fund sued the dealership to recoup its costs — $ 160,000 and counting — it says it has paid out for the 2004 injury.
Under a contract signed in 2009, Elk Mountain has been paying the fund $1,034 a month toward those costs. But the fund says in the suit that Elk Mountain has yet to pay off the amount past due at the time of that contact, and new costs continue to accumulate.
A new payment arrangement should be made in light of the court award and its effect on Elk Mountain’s financial situation, the new state suit says.
The amounts in question could be substantial. The fund says it has already paid more than $110,000 in medical benefits for the injury, or an average of nearly $14,000 per year. That could amount to $194,000 in future medical benefits through the injured worker’s retirement age, along with $179,000 in future benefits for lost wages.
Gallik notes the court award to Elk Mountain is not “free money.” It’s related to specific damages already suffered — like $29,750 for a loan origination fee and $94,074 for unsold inventory.
He said Elk Mountain is more than willing to keep paying what it has agreed to, but can’t pay the fund all the money at once. He said that to stay in business, Elk Mountain has to stick to the business plan it now has in place.
That plan, McWilliams said Thursday, is long-term.
McWilliams, originally from Montana, said he moved from Las Vegas to the Helena area in 1999. He had been a supervisor in a large auto dealership in Las Vegas, and started out with seven vehicles on a lot near Sleeping Giant Lanes on Helena's east end.
He built the current dealership a bit to the east on Route 12, and started the Arctic Cat dealership in 2002.
But while the dealership was in collections during the wrangling with the state, its relationship with Arctic Cat fell apart and it had a ripple effect of other financial problems.
It was sued by one financer, settling on a long-term repayment plan in June 2011, and is still in court with a different lender.
Dec. 12, the dealership sued Arctic Cat Sales Inc., charging numerous actions that made the franchise relationship intolerable and caused financial losses.
Now, Elk Mountain deals almost exclusively in cars and trucks, though it is licensed to sell boats, RVs and used ATVs and snowmobiles.
With plenty of available floor space, McWilliams has also expanded into fishing gear, including plenty of fly-fishing equipment and outfitting gear. He and his half-dozen employees, most of whom have been working there for at least five years, also sell drift boats and other fishing-related watercraft, dubbing the store Cutthroat Creek. McWilliams figures it can fill a need on that side of town.
They also outfit fishing trips through one of the employees, a licensed guide.
McWilliams himself fished on the professional bass circuit for about four years, winning the event now known as the Las Vegas Open in 1999.
The vehicles are still the main moneymaker, and McWilliams said August was his best month for sales ever. September was his second-best.
He operates with a one-price system for cars, so there’s no negotiating, he said. Salesmen are paid by salary, not commission.
“We hope to be here a lot more years,” he said.