KENNESAW - The city of Kennesaw has filed suit against its liability insurance carrier, seeking to recover the $800,000 that came from city coffers last year to settle a racial-discrimination lawsuit. But lawyers for the insurer, Georgia Interlocal Risk Management Agency, better known as GIRMA, insist the company has paid its maximum liability of $1 million and owes nothing more.

The federal racial-discrimination suit, filed by two Public Works employees and a third man who had quit the department, was settled last July for a total of $1.8 million. Under the deal, longtime employees Willie Smith and Stanley Mitchell each received $414,000, and Gary Redd, who quit after two years in Public Works, received $234,000. Buckley & Klein, the Atlanta-based law firm that represented the three men, was paid $737,000 under the settlement.

At issue in the dispute is whether the harassment that resulted in the settlement was a single act. The city says no, and that by refusing to pay more than $1 million toward the settlement, GIRMA "in bad faith engaged in unreasonable practices."

The insurer disagrees.

The city is being represented by Gregory Schultz, Henry Quillian III and Deborah Livesay of the firm Taylor English Duma, which is headquartered in the Galleria area.

The case has been assigned to Judge Kenneth O. Nix. No hearing date has been set.