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October 23, 2008

$7M explosion settlement gets final approval

By Julie Manganis

DANVERS — A judge yesterday gave final approval to a $7 million settlement of claims stemming from the massive 2006 Danversport explosion.

The signature by Lawrence Superior Court Judge Thomas Murtagh, who also approved the creation of a class action in the case, paves the way for the release of funds to residents and business owners affected by the Thanksgiving eve blast at the CAI and Arnel Co. plant.

Claims have already started coming in and will be accepted through the end of November. A three-member panel led by Rose Marie DiResta, the former principal of Riverside Elementary School in Danvers, will then decide how much each person will receive. DiResta is trustee of the Danversport Trust.

Anyone who was affected by the explosion is now legally considered part of the class action and may file a claim, even if they did not join the trust.

"We're really pleased that it went through," said Donna Joyce, a board member of the Danversport Trust, which worked with well-known environmental lawyer Jan Schlichtmann to negotiate the settlement.

Joyce was one of nine members of the trust and the group Safe Area For Everyone (SAFE) who attended yesterday's hearing. DiResta was also present.

The rest of the courtroom gallery was packed with some two dozen lawyers, who mainly represented insurance companies and business owners. The parties were involved in a total of 16 separate lawsuits filed in courts all over eastern Massachusetts, in addition to the efforts by the trust to obtain compensation.

The two firms carried a total of $7 million in insurance. Three insurance companies will pay out the settlement.

Where the money's going

Approximately $1 million will go toward the residents and business owners in the area around the plant. Of that, $700,000 will be used to compensate residents for property damages and personal injuries that were not paid for by insurance, another $200,000 will go toward emotional distress claims by residents, and the remaining $100,000 will be set aside by the trust for improvements to the neighborhood.

Most of the money, $5.5 million, will go to the property owners' insurance companies. Lawyers for the class, including Schlichtmann, will receive a total of $428,750, including $368,750 in fees and expenses of $60,000 to be split among the three lawyers.

Lawyer Peter Lagorio, who represented the group of businesses and property owners who filed suit, said their insurance companies paid out between $20 million and $25 million, meaning they will recover 20 to 25 cents on the dollar.

The payments to residents are expected to be in line with that amount, roughly one-fifth of what they paid out of pocket.

Paul Needham, a lawyer for CAI, called the settlement "a compromise by everybody."

The settlement also preserves the right of the class action members, including the trust, to pursue legal action against other businesses that could be held liable for damages, including chemical suppliers.

Schlichtmann said yesterday that he is preparing to notify those chemical companies that he would like to engage in negotiations with them.

The class has another year to identify potentially responsible "third parties" before the statute of limitations runs out in the case.

'Closure'

The approval comes one month before the second anniversary of the explosion, which occurred shortly before 3 a.m. on Nov. 22, 2006.

A federal Chemical Safety Board investigation concluded that a production manager had left a steam heat valve on before leaving the evening before the blast.

Hours later, at 2:46 a.m., vapors inside the plant ignited, causing the blast. While no one was killed or seriously injured, more than 200 homes, 300 cars, 65 boats and 20 businesses were damaged or destroyed.

Joyce acknowledged that she wishes there could have been more money involved.

"I personally feel a sense of closure," she said, but added that she knows many of her neighbors are frustrated at how little they will receive.

"It totally destroyed a neighborhood," Joyce said. "We came together as a neighborhood, which was a positive, and we're trying to keep things as positive as possible."

Schlichtmann told the judge that the settlement was the result of "very hard-fought negotiations," including two full days of mediation and several months of "highly adversarial" discussions.

But in the end, Schlichtmann said the outcome was "very satisfactory."

"It was inclusive, it was transparent," Schlichtmann said. "It was really the active involvement of all of these individuals not fighting but working together. Everybody can take pride in this and how it was done. It was done the right way."

There was one potential procedural problem yesterday, after the lawyers realized that the judge had not, as they assumed, given preliminary approval to the settlement last month.

The final agreement made reference to Murtagh preliminarily approving the settlement on Sept. 21.

"Did I ever act on this?" said the judge, who had not.

After being told that there had been no opposition to the proposed settlement, that 900 notices had been mailed out and four newspaper legal notices had been published, he agreed to retroactively approve the preliminary agreement, then signed the final agreement.

Part of one case was not settled yesterday, a lawsuit brought by the owner of property where a gas station was located.

Property owner Thomas Lamoly filed a suit against Concord Oil Co. Inc. alleging that the company had not maintained insurance as required in the lease. That case will return to the docket.

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