Mediation in Kleen Energy Case Underway

‘Hundreds of millions’ Sought in a deadly blast 

Lawyers from California, New York, and Georgia huddled with a Boston mediator Aug. 19 in an effort to move the massive Kleen Energy gas explosion litigation toward mediation.

The lawyers represent about 10 insurance companies who are attempting to hash out the priority of who pays, and for what types of injuries. Six men died on Feb. 7, 2010, natural gas explosion at an electric power generation plant under construction in Middletown. Scores of others were injured; some physically and emotionally, and others suffering post-traumatic stress disorder alone.

Middletown Superior Court Judge Robert Holzberg is, by all accounts, working hard to move the case toward mediation and to beat the disastrous result of his last big mediation effort. That case involves some 60 remaining potential trials targeting St. Francis Hospital and Medical Center for its alleged negligent supervision of pedophile doctor George Reardon.

Insurance coverage for the St. Francis case is now being determined by U.S. District Judge Mark Kravitz. His declaratory judgment could settle the legal rights of insurers holding general liability and professional liability policies.

Holzberg and Superior Court Judge Jonathan Silbert worked in vain to get the Reardon cases mediated, with the aid of a top Boston mediator from Commonwealth Mediation and Conciliation Inc. The St. Francis mediation was handled by Paul Finn, founder of that 20-mediator group, based in Brockton, Mass. He and the parties were unable to end three years of negotiation with successful mediation last winter, and over 90 cases lined up for separate trials.

Judges and lawyers hope to avoid this in the Kleen Energy case. Mediator Finn’s second-in-command, Brian Mone, is handling the current coverage mediation in Boston. Last week, a proposal was sent to the defendants’ insurers for a possible agreement, says Jeffrey Blueweiss, lead attorney for defendant O&G Industries, Inc. of Torrington, which was the main contractor on the Middletown project.

“I’m not optimistic and I’m not pessimistic. I think everybody’s going into this with good faith, and the mediation is something that all sides should explore and are willing to explore,” Blueweiss told The Law Tribune last week.

Discovery Stayed

So far, Judge Holzberg has stayed almost all discovery in the Kleen Energy case, sparing the defendants the expense of a swarm of plaintiffs’ lawyers building their case in detail.

The plant blew up as workers rushed to get home for Super Bowl Sunday. Federal laws were in the process of changing to outlaw the use of the flammable gas to clean out a plant’s piping. In this case, enough gas was used that day to heat a normal home for 25 years, according to one federal official reviewing the tragedy.

In late June, Holzberg met with the widows of men killed in the blast, injured victims and their lawyers, to explain how the litigation was proceeding, and why there had been delays.

“The judge wanted to get a feel for the people who were affected by this,” said M. Hatcher “Reese” Norris.

Norris represents Dyann B. Chepulis, the widow of pipefitter Peter Chepulis of Thomaston, who was killed in the blast. He also represents three other injured plaintiffs.

Hartford lawyer Richard “Rick” Kenny, of Kenny, O’Keefe & Usseglio, has clients in both the St. Francis litigation and in the Kleen Energy matter.

“Judge Holzberg learned wisely in the St. Francis cases that you need to have your ducks in line with respect to the defendants and insurance carriers, or you’re never going to settle anything,” he said.

According to New Haven lawyer Joel Faxon, of Stratton Faxon, “Liability couldn’t be more clear in the Kleen Energy case.”

The case is based on ordinary negligence on the part of contractor O&G, and several subcontractors.

Workers who are covered with a workers’ compensation policy are barred from suing their employers, Faxon noted, but not subcontractors. Many plaintiffs are expecting to recover from subcontractors who were not their employers.

Blueweiss said the coverage issues are legally quite complex. “In this particular situation, there was something called a CCIP — Contractor Controlled Insurance Program. A number of [subcontractor] defendants are also in that. And then the question is, does the CCIP insurance policy apply first, or is there another policy or policies that apply before the CCIP policy applies?”

John Pavano, of Pavano & van der Werff, has one of the most seriously injured plaintiffs. His client, 34-year-old pipefitter Bryan Hawley, was up on scaffolding in the courtyard area where the blast was concentrated. He suffered a broken hip and other serious injuries and was dragged from the wreckage on a sheet of plywood, to await rescue personnel. He continues regular treatment for post-traumatic stress disorder.

Pavano and his client met with Holzberg in June. “I thought it would be good for the judge to meet Bryan and for Bryan to meet the judge, and get his explanation of the process, which is stalled.”

Pavano didn’t blame Holzberg. “He’s a wonderful judge. He has gone far beyond the call of duty to keep the parties engaged, and to keep things moving in a positive direction. There are only a handful of judges like that, who really put their heart and soul into a mediation.”

In addition to the wrongful death cases and personal injury matters, several law firms are representing plaintiffs claiming lost wages alone, or cracked foundations from the blast.

Faxon said, “We have 32 property damage plaintiffs and will likely convert it to a class action if the cases don’t resolve at mediation.”

Marisa Bellair, a partner at New Haven’s Lynch, Traub Keefe & Errante, is working with name partner Steve Errante, representing Wallingford carpenter Lee Benjamin, who was 49 at the time of the blast.

“Globally we’re trying to mediate the cases. There are issues of who’s primary, and who kicks in secondarily, and so forth,” she said. “ But we’re hoping to get all of the cases starting mediation in early October.”

Kenny has never made a secret of his unhappiness with the breakdown of the St. Francis mediation and is glad the coverage issues are being addressed now. “We were told that a proposal was made by the mediator and that the insurance companies wanted a period of two weeks to review the proposal with their principals. At that point, they would get back to Judge Holzberg about that proposal.”

Blueweiss, the O&G defense counsel, said he knew the amount of the plaintiffs’ total claims, but declined to reveal that number. “I’m probably not at liberty to say one way or the other. Judge Holzberg put very strict rules in effect relative to the mediation.”

But he added, “A demand is just that – I’m really not concerned by what someone demands or not. It doesn’t change how I value a case.”

Faxon said the total amounts sought are “in the nine figures—hundreds of millions.” He added that the total coverage, in his estimation, “is also in the nine figures.”

Faxon’s partner, Michael Stratton, handled the first trial in the St. Francis litigation in Waterbury, at a time when over 90 cases were pending. On the eve of a jury verdict, the firm settled 30 of its clients’ cases for an undisclosed amount, reported to be around $17 million. In the next case, a St. Francis plaintiff won a jury verdict of $2.75 million, setting a benchmark jury verdict.

Incentive to Settle

One incentive for the Kleen Energy defendants to settle is the chance to avoid a high jury verdict, which could drive up subsequent settlement costs, Faxon noted. While he welcomed mediation, he also sounded happy about the prospect of a jury trial, and the chance to see what jurors would award.

James Bartolini, of Hartford’s RisCassi & Davis, is representing two decedents in the Kleen Energy matter, along with one survivor who was physically injured and suffered post-traumatic stress disorder. One of the state’s top trial lawyers, Bartolini said he sympathized with the challenges of comparing the coverage language of 20 different insurance policies and applying case-law principles to figure out which policies payout first. It’s more complicated, he said, than three-dimensional chess.

“The problems they are having, I believe, are based on good faith misunderstandings. One company thinks it’s at the front of the line for coverage, and then with advice from more specialized counsel, learns it is much less exposed. At the same time, someone in the back learns they’re way in front.”

The option always remains to have the coverage disputes settled with a judge’s declaratory judgment, as is happening in the St. Francis case, said Blueweiss.

“It would be difficult,” he said, “for a judge to try to wade through all these policies and the different cases that talk about ‘Well, if you have these provisions that are in conflict with each other, then such and such would take precedence, blah, blah.’ It’s not something most judges would be too anxious to get involved in.”

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