Court rules on explosion settlement

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An insurer is exempt from paying court costs and settlements connected to lawsuits filed after a contractor ruptured a gas line and caused an April 2008 explosion in Oconomowoc, the Court of Appeals ruled Wednesday.

The court, in a decision written by Judges Lisa Neubauer, Paul Reilly and Mark Gundrum, ruled that Chartis Specialty Insurance Co., which insured Luxemburg-based Dorner Inc. against damage caused by chemical pollution, does not have to defend the contractor. The court also ruled Chartis does not have to pay half of a combined $1,531,761.80 in settlements or $283,073.94 in legal costs stemming from four lawsuits resulting from the explosion.

Acuity Insurance, which also covered Dorner, has to pay the full amount.

The court’s decision noted the plaintiffs in the lawsuits never claimed any harm was done by the gas that leaked out of the line after it was ruptured.

“The complaints allege significant property damage and personal injury due only to the explosion and fire,” according to the opinion, “not to contact with the escaped natural gas itself.”

Dorner employees hit a gas line while rebuilding Wisconsin Avenue, and that led to the leak and explosion. Two houses and First Baptist Church of Oconomowoc were leveled by the blast, and two We Energies employees were seriously injured.

The church’s insurance company, the injured workers and those who occupied the houses sued Dorner following the explosion. All of the plaintiffs settled, and the only lingering question in those cases was how the settlements would be paid out.

Waukesha County Judge J. Mac Davis ruled in May that both of Dorner’s insurers should have to split the settlements and court costs. But the appeals court disagreed and reversed Davis’ decision, saying Acuity has to pay Chartis the $141,486.08 that Chartis already paid toward legal costs.

It was not clear Wednesday whether Acuity would petition the state Supreme Court to review the case. Lance Grady, an attorney with Waukesha-based Grady, Hayes & Neary LLC representing Acuity, said Wednesday morning that he had not yet read the decision. Acuity did not return a call seeking comment before deadline Wednesday afternoon.

Mark Rattan, a Brookfield attorney with Litchfield Cavo LLP representing Chartis, did not immediately return a phone call Wednesday. A message left for Chartis’ parent company, American International Group Inc., was not returned.

As a result of the explosion, the Occupational Safety and Health Administration fined Dorner $4,200 for not safeguarding employees by protecting or removing underground pipes. At the time, the Wisconsin Department of Transportation acknowledged it did not review a company’s safety violations when qualifying it for a contract.

According to OSHA’s website, it has issued 17 citations against Dorner in the past 10 years. The company reached formal and informal settlements on 12 of those and was required to pay $71,522.50.

Following the explosion, First Baptist moved to the former Ixonia Town Hall. Calls to the church were not immediately returned Wednesday. Follow @eheisigWLJ