604 South Jefferson Ave, Saginaw, MI 48607

Fire loss subrogation claim settles for $800K

Plaintiff tests, knocks down defense’s causation theories

Via Lawyers’ Weekly — A fire loss subrogation claim for a Detroit grocery store has settled for $800,000.

To reach that result, Saginaw-based attorney Debra A. Freid had to find answers to a number of questions: How did a box left next to a water heater cause the fire? Why did it take nearly six hours for it to happen? And who was responsible?

Fried got into the case nearly three years after the accident occurred, and long after the carrier had paid the claim. The subrogation suit sought to tag the company hired to clean the grocery’s grease traps.

Plaintiff pursued intensive investigation to locate several former employees to testify in a fire loss subrogation claim.

She had to test and disprove every one of the fire origin theories put forth by the defense.

A Verdicts & Settlements report on Admiral Insurance Co. v. Kay Logic Inc. can be found here. The suit had been filed in Wayne County.

In the case, the 2009 fire caused $1.1 million in damage at Harbortown Foods, a Detroit grocery. Admiral, the store’s carrier, paid the loss but claimed that defendant Kay Logic was responsible for the accident.

Admiral theorized that one of Kay Logic’s employees was negligent when he used a water hose to clean Harbortown’s grease traps. The carrier asserted that the employee moved Harbortown’s backroom boxes around and put one too close to the water heater. The employee denied it.

Freid was called in as plaintiff’s counsel nearly three years after the fire, just before the statute of limitations for filing a negligence claim had expired.

But, she said, no one had deposed Harbortown’s employees early on in the matter, because Admiral had tried to resolve the issue without counsel.

And many of the employees working at Harbortown in 2009 weren’t there anymore, meaning Freid had to track them down.

“Some [employees] were identified via the investigators’ reports, but beyond that it was really hard to find them,” she said. “And beyond that, these employees didn’t have any skin in the game. After Harbortown suffered the fire loss, received the insurance money and rebuilt, the owner sold. … They didn’t really feel [the dispute] was any interest to them. We had difficulty with memory and cooperation.”

But once the depositions began, Freid found enough of a fact pattern to build a better case than what the original investigative report had presented.

For example, she said Harbortown had a method of organizing its boxes, and the Kay Logic employee — who routinely cleaned the store’s grease traps — moved them around to access the hose.

When he was errant with the hose, some of the boxes got wet, and he placed one of those boxes next to the water heater.

However, she said, the fire didn’t occur until approximately 11:36 p.m. that evening, nearly six hours after the employee left the property.

“The tricky thing was establishing why there was the delay,” Freid said.

But she and her experts did.

She said that when the water heater would cycle, the pilot flame would emerge from the unit. As the hours passed, the flame dried the adjacent wet box, eventually reaching the necessary temperature to ignite.

But the defense had numerous theories to counter Admiral’s.

“There was very little question, I thought, as to the site of the fire’s origin, i.e., this box at the base of this water heater, although they did try to come with other arguments,” Freid said.

So she had her experts test out each of the defense’s hypotheses, “because those are the types of things that distract jurors.”

For example, the defense claimed Harbortown’s employees were smoking in the backroom and that their cigarettes caused the fire.

Freid said she and her experts lit up an entire pack of cigarettes and put it in a box that holds empty bottles and a plastic liner, to see if the box would ignite. It did not.

The defendant also contended that a paper manual placed atop the heater caused the fire. Freid said that even though she established that the heater’s top was not the fire’s origin, her HVAC/plumbing expert still did a test.

She said he found an exemplar water heater comparable to the one Harbortown used in 2009 and ran temperature tests at the top of the unit. He found that the temperature would not reach the point where the paper would burn.

In addition, the defense claimed the wood ceiling caused the fire, as the vent pipe went through it, and that a fluorescent light malfunction could have been the cause.

Freid said that two of the defense’s experts did not agree to some extent on the fire’s cause, something that worked to the plaintiff’s advantage when she filed a motion to have all the defense’s asserted theories stricken.

Although the plaintiff accepted the $700,000 case evaluation, the defense rejected it. Shortly before trial, the case settled for $800,000.

Gregory A. Light, who represented Kay Logic, did not return a call seeking comment on the settlement.

Freid said that the biggest challenge in subrogation lawsuits is that insurance carriers typically call for them “late in the game.”

“So you have to redouble your efforts to get to the scene, which I did immediately, and talk with everybody whose name appears in any investigative documents that were already prepared,” she said.

Freid added that she advises counsel in similar situations to line up the best experts as soon as possible, and to not be afraid to go through exhaustive testing in order to disprove a defense theory.

“Basically, [the defense] came up with a number of things and said, ‘None can be eliminated,’” Freid said. “But we did eliminate them.”

Leave a comment

Freid, Gallagher, Taylor & Associates wants to reassure our clients that they remain our highest priority during this pandemic.  We are alert to the developing picture regarding this health crisis and have taken steps to make certain the health and safety of our clients and of our employees and their families come first as we continue to work for you.  Please know that, although we are working remotely, we are working every day to move forward for you.  Our office is equipped with technology that allows us to effectively and safely handle matters for our clients, while preserving privacy and securing data.  Our phones and email are staffed and we continue to aggressively push forward on behalf of our clients.  For new clients, please know that we are continuing to do consultations, free of charge, by telephone or videoconference.

We know that this is a particularly difficult time for our clients and we are thinking of you. Please stay safe and be well.