The organization that insures Falls Church asked a Fairfax County Circuit Court judge to declare that the agency is not responsible for paying hundreds of thousands of dollars in refund claims filed by customers of the city's water utility. The Virginia Municipal League Insurance Programs, through which Falls Church buys insurance, argues that the refund claims are exempt from coverage under the city's local government liability coverage.

Falls Church has been inundated with letters and lawsuits from dozens of its Fairfax County water customers, including the Fairfax County Board of Supervisors and School Board, requesting refunds for overcharges on their water bills. The requests point to a January ruling in Fairfax County Circuit Court that a portion of Falls Church's water fees for nonresidents amounted to an "unconstitutional, extra-territorial" tax.

Together, the requests total several hundred thousand dollars, which the city may be forced to pay from its $64 million budget if VML Insurance Programs wins its case and the courts rule that refunds must be paid.

Residents and businesses in eastern Fairfax County make up 92 percent of Falls Church's water customers. The city provides water to about 11,000 Falls Church residents and about 110,000 Fairfax County residents, according to court documents.

"We respectfully disagree with the VML Insurance Programs' claim that it is not liable for coverage of recent requests for a refund," said Falls Church City Manager Wyatt Shields.

In 2009, the municipal league tried to deny Falls Church insurance coverage for legal expenses in the original water lawsuit, but a judge ruled that the provider must pay, Shields noted.

Falls Church recently filed a lawsuit of its own to block lawsuits and refund requests from dozens of residents and businesses.

Officials at VML Insurance Programs, which provides coverage for more than 460 Virginia localities, declined to comment.

The city posted a new page on its Web site providing basic information about its water rates and legal battles. Officials said that while the city did not agree with the Fairfax County Circuit Court's decision, Falls Church has fully complied with the judge's ruling, which made no mention refunds to the city's nonresident customers.