News

Neighbors accept $7M settlement

By Amanda McGregor
STAFF WRITER
Published: August 27, 2008

DANVERS — The Danversport community voted to accept a $7 million settlement from the co-owners of the paint factory that exploded in their neighborhood on Thanksgiving Eve 2006.

"As a group, it was pretty well unanimous that we go with the settlement," Riverside Street resident Ed Sanborn said after a closed meeting last night between the Danversport community and attorney Jan Schlichtmann of Beverly, who represented the Danversport Trust and helped reach the settlement. Sanborn estimated that roughly 120 people attended the meeting, held in Holten Richmond Middle School.

"This makes more sense than to fight," Schlichtmann said, "when there are little or no assets to get."

Pending court approval, the majority of the settlement — some $5.5 million — will go to insurance carriers who have already paid out more than $20 million in claims since the blast.

The other $1.5 million would be placed into a settlement fund to be divvied up — roughly $1 million to those affected by the plant explosion and $430,000 to the claimants' attorneys.

Theoretically, if the $1 million settlement were divided equally among just the 100 property owners and 12 businesses who belong to the trust, it would equate to about $9,000 each. The Danversport neighborhood group, Safe Area For Everyone, calculated that the average family lost four times that, $40,000.

"The feeling is probably some people deserve a little more than others, based on proximity to the blast, trauma and other factors," Sanborn said. He added that the individual payouts, regardless of their size, are likely to be inadequate.

"Is it enough? No, of course not," Sanborn said. "But it is what it is. It's reflective of the fact that the company didn't have enough insurance to cover all the damages that were done. You can't change that."

However, he and others said it's not about the money.

"It's about the neighborhood that truly got together and supported each other," Carolyn Dabose of Riverside Street said on her way out of the meeting.

But for all the suffering — material and emotional — the amount seems small, according to Bates Street resident Lori Ataya.

"That's such a small amount for such a horrible event," Ataya said as she left the school. "It's never going to be enough for everybody, and I worry that it could tear this neighborhood apart."

Dabose said people may assume insurance covered everything, but it's not true.

"None of us got a blank check from our insurance companies," said Dabose, whose house was rebuilt with the help of her nephew, Dr. Douglas Dailey. "I was nickeled-and-dimed all the way. What I resent is that you pay all your life for insurance on your home, but they don't want to pay out."

What's next?

The settlement must clear approval in probate and superior court before it is finalized, ideally by the end of 2008, according to Schlichtmann.

If that happens, people and businesses affected by the blast can file claims for a share of the money. The payouts will be determined by a three-member committee on the Danversport Trust, who will review the claims, led by trustee Rose Marie DiResta, the former principal of Riverside Elementary School in Danversport.

"It's piddling compared to what it could have been," Sanborn said, "but people know the process will be fair. I think we've been so transparent with what we're doing, and we're all part of the same neighborhood here, and we have trust in that three-person committee. Jan spent a lot of time talking about that (last night)."

Claims can be filed in the following areas: real property (houses, buildings); personal property (boats, cars); business loss; bodily injury or emotional distress; relocation damages; and "other extraordinary damages," according to the settlement papers.

The $1 million settlement will be broken down such that 10 percent that will go to the trust, 20 percent will be funneled toward claims related to emotional distress, and 70 percent for claims related to property damage, business loss or personal injury.

Residents have expressed concern that long-term health effects from the chemical blast that could arise in the future.

"The trust is a reserve," Schlichtmann said, "hopefully it will be used for future issues that may arise."

By accepting the settlement, the residents relinquish the right to pursue further legal action against the companies and their owners or heirs.

Who pays?

CAI Inc. of Georgetown and Arnel Co. of Danvers own the factory that exploded. If the settlement is approved, their three insurance companies will pay the settlement.

Arnel's liability insurer, XL Insurance Company, will pay $1 million; CAI's liability insurer, Colony Insurance Company, will pay $1 million, and CAI's excess insurer, Mt. Hawley Insurance Company, will pay $5 million.

Representatives from CAI and Arnel did not attend last night's meeting because it was a closed meeting between the trust and its attorneys only, Schlichtmann said.

Federal investigators concluded in May that the factory exploded after a CAI production manager forgot to shut off a steam heat valve on the evening of Nov. 21, 2006.

At 2:46 a.m. the next day, a cloud of vapors found an unknown ignition source and exploded. Incredibly, no one was killed or even severely injured, but more than 200 homes, 300 motor vehicles, 65 boats and 20 businesses were affected by the blast, according to estimates from the state fire marshal's report concerning the explosion.

It's not over, yet

Now, the trust is working to meet with the companies that supplied the chemicals to CAI and Arnel "to talk to us about their potential liability," according to Schlichtmann.

"That would be our Phase 2 in terms of another settlement," Sanborn said. "It does stand to good reason that these chemical companies have a responsibility to be sure the permits are in place and you're putting (chemicals) in good hands. They're supplying thousands and thousands of gallons at a time."

Alternately, Sanborn and other SAFE members are looking to legislation, crafted by state Rep. Ted Speliotis, D-Danvers, that would better train fire departments and inspectors. He is working on a letter-writing campaign to push the legislation.

"SAFE is not just about trying to cash in," Sanborn said. "We're trying to prevent this from happening again to other people or communities."

Schlichtmann called the settlement ground-breaking.

"Nothing like this has ever happened before," Schlictmann said outside the meeting last night. "Very few communities have suffered something this great. And now they've come together and built this totally transparent process."

Schlichtmann is the lawyer depicted by John Travolta in "A Civil Action."

"It's an honor to represent these folks," Schlictmann said. "They are inspiring in how they've come together to help each other. It really is a model for other communities."