Rhode Island Fire: Hunt for Deep Pockets Commences

Copyright, 2003 M&S Communications, Inc., publisher of InsuranceTimes. Reprinted from InsuranceTimes, March 18, 2003.

"The thing that is lacking is a really deep pocket."

With those words, Boston attorney James Harrington, of Robins, Kaplan, Miller &  Ciresi, surveyed the financial tragedy following the human tragedy of the Rhode Island nightclub fire that cost 100 lives and injured even more patrons.

Harrington says that none of the parties involved in the tragedy -- from the nightclub owners and rock band to the foam installation distributor or town of West Warwick -- is likely to be a source of the kind of funds needed to fairly compensate the many victims and families.

The blaze started moments after the rock band Great White began playing. Pyrotechnics caught soundproofing foam material surrounding the stage on fire. Fire officials said the building was engulfed within three minutes.

Harrington estimates that each victim will wind up with about $250,000 unless some unknown “deep” pocket emerges. At the same time, Harrington, with years of experience advising insurance companies in big claims including some from the World Trade Center attack, does not underestimate the creativity of attorneys to try to find a deep pocket.

In fact, the latest lawsuits targeted a giant beer company and radio station conglomerate. Anheuser-Busch, makers of Budweiser beer and a sponsor of the Feb. 20 concert, and Clear Channel Communications, which owns the local radio station, WHJY, which victims' attorneys contend helped promote the concert.

Both defendants have denied responsibility.

When all is said and done, however, Harrington believes that the “deepest pocket” may turn out to be the town of West Warwick, although its liability is capped at $ 4 million under its insurance policy.

Some critics have alleged that the town's fire inspections were lax in their failure to detect the foam, which experts say burns like gasoline and emits a dense, toxic smoke.

Harrington said that if the town's insurance policy covers the situation, he would recommend them paying their limits of $4 million into the court and let the court decide how to distribute it, if the court would permit such a move. That way, time and money otherwise spent on defense could be saved.

West Warwick is insured through the Rhode Island Interlocal Trust, an insurance fund set up by the state's municipalities.

Rhode Island lawyers estimate at least $1 billion worth of lawsuit claims will be filed in the coming months. But, like Harrington, they're not as confident that the pockets of those who may be responsible are deep enough to pay.

"The reality is that, at the end of the day, there's going to be a lot of tears," said Ronald Resmini, a Providence lawyer representing two of the dozens of people injured. "Probably more tears than money."

Civil lawyers could go after the manufacturers of the pyrotechnics or the soundproofing material that it ignited. Concert promoters, even the architects of the building are potential defendants, Decof said.

After a fire in 1977 swept through the Beverly Hills Supper Club in Southgate, KY., killing 165 people, General Electric paid $10 million to settle claims that it made faulty wiring in the building, though it never admitted liability. Settlements with companies involved in the building's operation and construction paid out about $50 million.

Lawsuits following a 1990 blaze that killed 87 at New York City's Happy Land Social Club were settled  for about $15 million.

Stanley Chesley, a Cincinnati lawyer who collected damages for relatives of some of the Beverly Hills Supper Club victims, has been asked by Rhode Island lawyers to help them investigate The Station fire .

"The fact that there is not enough available compensation does not mean you let this walk away," he said. "The only way you'll find a deterrent to the behavior and mistakes that allowed this to happen is to find someone culpable."

Meanwhile, the owners of the nightclub have been cited for allegedly failing to carry mandatory workers compensation insurance. State labor officials reported that The Station has not had the insurance since March 2000, when the club was bought by Michael and Jeffrey Derderian.

The labor department issued a complaint against the Derderians and their company, Derco LLC, and sent them a letter listing possible penalties: fines of between $500 and $1,000 per day for the time they did not have coverage.

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