FLUOR ENTERPRISES FAILED
TO MONITOR AND MAINTAIN LIQUID PROPANE IN FEMA TRAILERS. ITS INSURER AND NOT THE SUBCONTRACTOR MUST
PAY FOR THE PROPERTY DAMAGE AND DEATHS DURING KATRINA
This case involves an insurance-coverage
dispute. Fluor Enterprises, Inc. (“Fluor”) contracted with the Federal
Emergency Management Agency (“FEMA”) to manage the delivery and installation of
FEMA trailers following Hurricanes Katrina and Rita. Fluor subcontracted with
MMR Constructors, Inc. (“MMR”) to haul and install the trailers. As part of the
agreement between Fluor and MMR, MMR agreed to indemnify Fluor for any injuries
arising, directly or indirectly, out of the parties’ contract itself or out of
MMR’s acts or omissions. As relevant here, Fluor insured its liabilities
through Westchester Fire Insurance Co. (“Westchester”) and MMR insured its
liabilities through Liberty Mutual Insurance Co. (“Liberty”).
A
flash fire occurred in one of the trailers that MMR had hauled and installed,
injuring the trailer’s inhabitant and killing her friend. The fire was caused in part by the failure of
the trailer’s liquid-propane (“LP”) detector to alarm. The injured parties sued
Fluor, MMR, and their insurers. Those suits settled. Now, in this case, Liberty
seeks reimbursement for its settlement payments from Westchester, arguing that
MMR was not responsible for any of the injuries. The issue before us is whether
MMR was required, as part of its contract with Fluor, to test the LP detector
and whether its failure to do so was a but-for cause of the injuries.
Following
a bench trial, the district court concluded that MMR was under no such
obligation. Consequently, the district court determined that MMR was under no
obligation to indemnify Fluor, defeating coverage, and that Fluor was not
covered under an additional-insured provision contained in MMR’s insurance
policies with Liberty. We conclude that MMR was not obligated to test any
trailer’s LP detector and the record supports the conclusion that Fluor did not
in fact direct MMR to do so with respect to the particular trailer in which the
fire occurred. Accordingly, the Fifth Circuit Court of Appeals AFFIRMED the
judgment of the district court.
Alarming Failure
FEMA
trailers have alarms that warn of dangerous propane levels, but the alarms work
only if they are properly installed and maintained.
John
and Linda Meyer had every reason to believe their fortunes were going to
improve in 2006. At the beginning of that year, the couple had just moved back
onto their property in Slidell after a three-month evacuation, and they were
making a go of the family business after a rough 2005. The couple's motorcycle-
and boat-painting business went bankrupt that year, and their mobile home was
torn from its pilings and destroyed by Hurricane Katrina. The couple survived
the storm but were left with no place to call home.
For
a few weeks after Katrina, the Meyers rented a room in Pearl River, 50 miles
from Slidell. When FEMA offered the pair a trailer for their Ulloa Road lot,
they accepted. The Forest River brand Palomino unit that was delivered to the
Meyers in December was smaller than their former home, but the unit had pop-out
sides, which added to the interior space. Most of all, it was a place, however
temporary, that John and Linda could call home.
Unfortunately,
the Meyers' luck ran out on the morning of April 12, four months after they
moved in. At around 9:30 a.m., as John was getting ready for work, propane
fumes that had accumulated in the trailer ignited. The flash-fire explosion
seared almost half of John's body, covering him with second- and third-degree
burns. Linda, lying almost completely under a blanket nearby, survived the
blast with second-degree burns to her hand only. The couple escaped from the
burning trailer through the pop-out section. Severely injured, John was flown
to a burn center in Baton Rouge while Linda was treated at a Slidell hospital
and released.
John
survived the explosive fire but succumbed less than a week later to deeper
injury. In addition to burning more than 40 percent of his body, the blast
overwhelmed his heart, kidneys and liver. Six days after the explosion, he died
of organ failure in Baton Rouge.
Investigators
from the St. Tammany Fire District and the Louisiana Liquefied Petroleum Gas
Commission (LPGC) arrived the day of the explosion to look into the incident.
Despite the damage to the trailer's stove during the blast and ensuing fire,
LPGC inspectors discovered from the remains that two of the stove's top burners
had been open at the time of the explosion.
Why
the burners in the Meyers' unit were open but possibly not lit is unclear. In
his investigation report, LPGC Inspector Terry McLain speculated that Meyer
might have tried to light the burners for impromptu heating as he headed to the
bathroom on that chilly spring morning and the burners didn't catch.
Investigators concluded that Meyer likely emerged from the bathroom and lit a
cigarette, igniting the accumulated fumes.
McLain's
preliminary tests on the remains of the trailer included a standard diagnostic
to find, if possible, any leaks or problems with the propane system that might
have contributed to the incident. Once he isolated the stovetop burners and ran
a pressure check, he determined that "the LP gas system had no significant
leak."
In
the weeks leading up to the fire, though, John and Linda had reported some
problems with their trailer. They began to notice a foul smell in the unit —
something like rotten food. They assumed that onions or garlic on the counter
were responsible for the odor, but in retrospect, it might have been LP gas.
Odorless
and colorless, propane is mixed with a malodorant — a noxious chemical additive
— for safety purposes before it is sold. The rotting food odor that the Meyers
encountered before the blast was likely the sulfurous smell of propane leaking
somewhere in the unit. Although the proximate cause of the fatal blast was the
open stove burners, that lingering smell might have been the only warning the couple
had that their trailer was at risk.
It
shouldn't have been. Since 1996, every travel trailer, RV and camper in the
U.S. that uses propane has been required to have a propane detector, and the
trailers issued by FEMA were no exception. Although some trailers given to
people with disabilities were outfitted with electric appliances, most had some
form of propane appliances. Propane detectors, therefore, were mandatory. Not
only do stoves and heaters utilize the gas, but water heaters and even
refrigerators in travel trailers run on LP.
Although
FEMA trailers that use LP gas are required to have a propane detector
installed, it appears that few, if any, gas-related fires and explosions in
FEMA trailers were preceded by a detector alert. The alarm in the Meyers'
trailer, for instance, did not sound before the blast, despite the highly
explosive levels of the fumes in their Palomino.
In
an earlier January trailer explosion in Harvey, propane fumes ignited, sending
two contract workers to the hospital. No alarm sounded before that blast,
either. In many subsequent propane-related fires and explosions in Louisiana,
propane alarms did not warn occupants, according to McLain.
David
Buddingh, marketing director for MTI Industries, which manufactures the
Safe-T-Alert hydrocarbon detectors used in the Meyers' unit and many other FEMA
trailers, says propane detectors are required by industry code to trigger an
alarm at 25 percent of the lowest explosive level of gas accumulation — long
before substantial risk exists. "There's got to be at least four times
more gas [than detection threshold] for it to be even explosive," Buddingh
says.
When
asked about the apparent lack of a detector alert before some trailer
explosions, Buddingh says, "There's no reason for them not to perform as
expected, if installed correctly, unless the power supply is not connected to
it."
Electricity
is crucial to the proper functioning of a propane alarm. Unlike smoke
detectors, the electronic components of a propane alarm can't run on an internal
battery. "They suck too much power," says Buddingh, "so they
would drain a 9-volt battery literally in days."
To solve this problem,
propane alarms in recreational vehicles are wired to the 12-volt,
direct-current battery that powers the unit and makes it livable when regular
household current is not accessible. "[Propane alarms] run typically off
the battery of the trailer," Buddingh says.
Proper
charging and maintenance of the battery and 12-volt system, therefore, are
essential to its safe operation. If the battery charge is weak, or if the
battery is not correctly installed, the propane alarm will not work. The user
manual for MTI's propane alarm notes that the detector "will operate
normally down to 8 [volts] DC" and will sound a "malfunction alert"
if the battery charge gets too low. Without proper electrical setup, however,
the propane alarm is useless.
Most
FEMA trailers eventually were hooked up to household-type power, such as
110-volt AC, but the standard 12-volt battery system still is necessary for a
trailer to function safely and properly. Contractors may not have fully
understood this aspect of travel trailers. FEMA's "Statement of Work"
regarding travel-trailer maintenance calls for "certified mechanics with
expertise in heating and air conditioning (HVAC), refrigeration, range,
electrical, and/or plumbing." FEMA did not require RV-certified
technicians, who would have known about potential travel-trailer hazards, to
install or service the units. Furthermore, FEMA's travel-trailer installation
specifications, posted to its Web site on Dec. 21, 2005, do not mention the
12-volt systems that are vital to the trailer's proper use.
Trailer
occupants might not notice a flawed or malfunctioning 12-volt system if their
units still had power through a 110-volt connection. Lights, microwave ovens
and electric appliances still would work on the household circuits, but without
a functional battery, auxiliary components such as the propane alarm would not.
Moreover, an improperly installed electrical system could eventually overload
the trailer's power converter and pose a fire risk of its own, but unless
trailer occupants or service contractors knew about the idiosyncrasies of
trailer electrical systems, such inappropriate installations may have gone unnoticed.
Along
with the rotten smell, the Meyers had discovered another problem with their
trailer. Shortly before the fire, the couple reported problems with the
lighting in the unit. Fluor Inc., the prime contractor charged with maintaining
the unit, sent technicians to work on the problem. The nature of that problem
may never be known because the trailer sustained massive damage in the
explosion and fire.
In
the course of investigating the explosion and fire in the Meyers' trailer, LPGC
inspectors found out more than just the cause of the blast. In reviewing
propane service records for the Meyers' unit, they found that Fluor Inc. had
not performed a legally required pressure test of the trailer's propane system
when it was initially installed.
In
reviewing records for recent propane-related servicing of the Meyers' unit,
Inspector McLain discovered that California-based Fluor lacked proper permits
and certifications to work on propane in the state of Louisiana. In addition,
Fluor could not produce documentation to prove that the Meyers' unit had been
correctly installed and tested, as required under Louisiana law. This led to
charges against Fluor [see "Up in Flames," News & Views, Dec. 11,
2007] and resulted in the LPGC mandating that all FEMA-issued trailers be
retroactively tested for safety.
The
remains of the Meyer trailer sit in a secure FEMA lot near Baton Rouge,
awaiting tests of its own. Linda Meyer is suing several of the manufacturers
connected with the trailer in which her husband was fatally burned and the
contractors responsible for its proper upkeep. Named in the suit are the
companies behind the trailer and its propane-related components as well as
Fluor Enterprises and its wholly owned subsidiary, subcontractor Del-Jen. Todd
Hebert, one of Linda Meyer's attorneys, says her lawsuit is proceeding.
The
burned-out shell of the trailer has been preserved as evidence, and Hebert
currently is setting up testing of the stove, alarms and propane components of
the unit. "We are in the process of getting every [defendant's] testing
protocol" to evaluate each trailer system, he says. "Propane
detectors will be one of the appliances tested."
But
the tests, like many other investigations into FEMA trailer fires, may only
lead to more questions. Chris Kaufman, chief of administration for the St.
Tammany Fire Department's First District and the former chief of fire
prevention, says the Meyers' trailer was virtually destroyed in the explosion
and fire. During the initial investigation, Kaufman called in several trailer
component manufacturers to examine the wreckage in the hope of learning more
about the cause of the blast.
"There
was some on-site testing that was conducted with the presence of everyone
involved," he says. The test results, along with the Palomino itself, were
handed over to FEMA. The propane detector was tested, too, because "there
was no indication that it sounded off prior to the explosion," Kaufman
says.
Whether
those 2006 tests or the 2008 testing done for the lawsuit will reveal what
happened that April morning in Slidell remains an open question. Although many
travel trailers have burned very quickly, with some units reportedly reduced to
ashes in less than 10 minutes, the Meyers' trailer was nearly destroyed by the
force of the blast, not as a result of the fire. Some systems may be intact
enough to provide more clues about the explosion.
Attorney
Hebert says he anticipates the Meyer lawsuit will go to trial this year.