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Business Insurance. : NEW ORLEANS-Business owners on the New Orleans Riverwalk are looking to owners and insurers of the M/V Bright Field to make up lost holiday profits and pay for damages caused when the freighter lost control on the Mississippi River and rammed into the popular shopping area earlier this month.
"It's going to be a monumental claim," said Joseph M. Bruno, an attorney with Bruno & Bruno in New Orleans, which is representing plaintiffs in one of the suits. "Not in the usual case of fear and fright and personal injury. This case will be the business interruption. This time of year is their bread and butter."
At least three lawsuits were filed last week as investigators from the U.S. Coast Guard and National Transportation Safety Board were trying to determine why the Liberian-registered ship carrying 61,600 tons of corn lost its ability to steer and crashed into the wharf Dec. 14.
The ship ripped into the 182,000-square-foot shopping area owned by The Rouse Co. and came to rest between the Flamingo Casino gambling boat and the Nieuw Amsterdam cruise ship. At least 116 people were injured, including some who were evacuating the gambling boat and cruise ship as the Bright Field headed for the wharf. No fatalities were reported as of late last week.
An NTSB inquiry last week focused on language problems between the river pilot and the Bright Field's Chinese-speaking crew as a possible contributor to the accident. The pilot, Ted Davisson, testified that the crew was nonchalant about responding to his orders as the ship veered out of control. The captain of the vessel, however, later testified that he had declined to follow some of the pilot's commands immediately because he felt it would have put the cruise ship at risk.
At least nine stores suffered significant damage when the ship rammed the wharf, and a parking garage for residents of One River Place condominiums was damaged, according to New Orleans Mayor Marc H. Morial's office. A section of about 40 rooms at the New Orleans Hilton Riverside Hotel collapsed, according to a statement released by the hotel.
Although only a small number of stores were damaged, business interruption claims are expected from many of the mall's 120 stores and restaurants, because the entire development was closed after the accident and remained closed late last week.
Property owners were not releasing damage estimates last week, but sources in New Orleans have said they think the Hilton and One River Place each sustained about $9 million in damages, while it will cost about $5 million to repair the shattered wharf.
"It could have been much worse," said Robert Martin, risk manager for the City of New Orleans. "That big ship stopped about 50 feet from the gambling boat. It could have been a catastrophe."
Mayor Morial said it is a "Christmas miracle" that "no one was killed or severely injured in this accident."
The ship remained at the wharf late last week, held in place by tugs and helping support the mall structure that hung above the river. A 15-foot hole was ripped into the ship's bow, and twisted mini-blinds dangled from its prow.
Two lawsuits seeking class certification were filed in state and federal court in New Orleans. The suits were filed on behalf of Riverwalk business owners and anyone who suffered injuries as a result of the accident. The suits seek undetermined amounts for property damage, business interruption and personal injury.
Defendants in both suits are COSCO (H.K.) Shipping Co. Ltd., Clearsky Shipping Corp. and/or Cordiality Shipping Corp. S.A. All are foreign corporations identified as having ownership or other interests in the Bright Field. The defendant corporations also are listed as employers of the master and crew, though it is unclear from the lawsuit exactly who employed them.
An attorney close to the case said the original filings named the wrong liability insurer for the ship but would be amended to name the correct underwriter, West of England Ship Owners Insurance Services Ltd., a London-based protection and indemnity association.
The suit filed in state court names Mr. Davisson and Dixie Machine Welding & Metal Works Inc. of New Orleans. The machine shop is believed to have performed repairs on the ship.
A third suit was filed in U.S. District Court against the ship's owners by residents of One River Place.
West of England provides the ship's owners with scoverage for personal injury, property damage and business interruption exposures, according to Michael Kelleher, claims director at the club. The P&I club's limit for 1996 is $20 billion.
Mr. Kelleher declined to reveal the coverage's deductible but did say it was very small. "The deductibles in P&I are habitually modest."
Hull coverage is written for undetermined limits by The Ming An Insurance Co. (H.K.) Ltd., a Hong Kong-based insurer.
It appears only a small amount of the cargo of corn was lost, according to William E. O'Neil of the New Orleans law firm of O'Neil & Eichin, which represents owners of the cargo.
He said the entire shipment, bound for a Japanese port, was valued at about $7 million. The corn, owned by several Japanese interests, whom Mr. O'Neil declined to name, is insured by Tokyo-based insurers Sumitomo Marine & Fire Insurance Co. Ltd. and The Nippon Fire & Marine Insurance Co. Ltd., according to Mr. O'Neil.
Clearsky filed proceedings in U.S. District Court in New Orleans last Wednesday seeking to limit its liability to the value of the vessel.
Maritime law limits a shipowner's liability to the amount of the value of the vessel and its cargo if it is found that the owner had no awareness of negligence that led to damages.
Liability is not limited if it is found the owner knew or should have known about negligence that leads to damages.
"Limitations are successful one in a hundred times; they are very, very rare," said Michael Delesdernier, a New Orleans attorney who filed the suit on behalf of One River Place.
Estimates of the value of the vessel have ranged from about $10 million to $17.5 million.
When the ship plowed into the wharf, the damage affected several property owners.
The wharf on which the Riverwalk and the Hilton Hotel is built is owned by the Port of New Orleans, according to a spokesman at the authority.
He said the port authority has $20 million in property coverage placed by Aon Risk Services with Lloyd's of London syndicates managed by QBE Underwriting Agency Ltd. Excess property insurance with limits of $600 million to $700 million is written by Protection Mutual Insurance Co. to cover the 25 miles of wharf along the river.
The Port of New Orleans' liability limits reach $51 million, with the first $1 million written by Lloyd's syndicates and the remainder by American Home Assurance Co. in New York, the spokesman said. The liability coverage carries a $100,000 deductible.
The spokesman said he believes the port authority is not "liable in any way whatsoever,9 for the accident. "We are victims in this."
The port authority has contractual agreements that call for property owners on the wharf to accept responsibility for any repairs to their property, he added.
The Rouse Co., based in Columbia, Md., owns the Riverwalk complex of 120 shops and restaurants that was damaged in the accident. The company would not speculate on what it will cost to repair damage to the complex but indicated that adequate insurance is in place to cover the loss.
"The company maintains comprehensive (casualty) and business interruption insurance at all its properties, including Riverwalk, and therefore does not anticipate any financial issues in terms of rebuilding the project nor any adverse impact on the company's operating income," said Anthony W. Deering, president and CEO of The Rouse Co., in a statement released last week.
Hilton Hotels Corp. would not estimate the cost for repairs to the 1,600-room hotel, which remained open after the accident.
Hilton also owns the Flamingo Casino riverboat, which was not damaged.
The hotel chain estimated there were about 650 customers and crew on board and about 30 sustained minor injuries during the evacuation.
The accident will mean river safety in the area likely will get a closer look, but some observers say that much of the initial controversy over the danger of operating on this part of the Mississippi River was overblown.
"There will always be a concern when you mix people with machinery," said the port authority spokesman. "There's no doubt that the river can be a very dangerous place to work."
However, he added: "This is the most heavily trafficked river in the world," and mixing passenger boats and commercial ships is nothing new. I don't know if there will be any kind of movement to limit it. I'm sure there will a lot of rhetoric coming out of it."
Sarah Goddard contributed to this report.
Business Insurance -- 12-23-96
[12-30-96 at 16:14 EST, Copyright 1996, Crain Communications]
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