Oh, That Other Monorail

Forget last week's wreck. The 1962 line's owners are still litigating insurance for a 2004 fire.

As Seattle Monorail Services (SMS) began to assess and repair the damage from its latest mishap—a two-train sideswipe collision over Fifth Avenue—lawyers were scheduled to submit final arguments Friday, Dec. 9, in a lawsuit to collect a much-needed insurance payment from a previous accident. So far, the court has agreed with SMS on a key and contractually arcane point about the May 31, 2004, fire that disabled the system for a year: that is, the electric trains are structures, too. They might (usually) zip back and forth between Seattle Center and Westlake Center downtown, but they stay permanently attached to the rail and system structure—therefore are a part of it, a federal judge has ruled.

At stake for the monorail, according to U.S. District Court records, is $4.3 million in insurance claims—a loss figure about $1.5 million more than what has previously been reported as a result of the Memorial Day 2004 fire on the elevated tracks near Seattle Center. It's money that SMS could use now that it faces additional repair costs from the more recent crash this past Nov. 26. Track design and driver error contributed to that metal-grinding, glass-breaking accident involving the Red and Blue trains, although no one was seriously hurt. The trains are out of service for weeks at least, and officials are still totaling damages.

In last year's fire, eight riders were hurt or suffered smoke inhalation, and more than 150 evacuated the stranded Blue Train. They were helped down ladders or transferred to the Red Train. Both trains are refurbished relics from the 1962 Seattle World's Fair. The fire was attributed to electrical arcing of the drive system that ignited the Blue Train's undercarriage. After City Hall guaranteed a $2.5 million loan so the private operator could get going again, the Red Train, damaged by smoke, returned to limited service a year ago. Two-train service resumed last May.

According to Tom Albro, one of the owners of the monorail, the company's insurer, Affiliated FM of Rhode Island, has paid less than a quarter of the $4 million fire claim. Derrick Fluhrer, a claims adjuster for the insurance company, says AFM has reimbursed the monorail $609,000 for property damage and $316,000 for business-income loss. The 0.9-mile system, including trains, rails, and stations, was covered for up to $17.9 million in losses, according to the policy, which has been held by Affiliated since 2002. SMS officials recently told reporters they have a new insurance carrier with coverage up to $10 million.

Affiliated contends it does not have to pay the full fire-loss claim because the trains are not "structures" and therefore aren't covered under the wording of the contract. The policy includes a clause governing payment of general costs and business interruption suffered as a result of "demolition, construction, repair, replacement or use of building or structures" related to the incident and to enforcement actions following. SMS says a good portion of costs and delays were incurred as a result of necessary safety enforcement by the state Department of Transportation.

The insurer contends that some costs were not the result of enforcement action and that the trains weren't covered anyway, based on contract language. Though the policy fails to define buildings or structures, Associated says "trains" clearly fall outside any such definition. SMS argues that the trains, being permanently attached to the tracks for 43 years, are part of the system's overall structure. In fact, if the trains were removed, coverage of them would have stopped during that time, the parties agree. John Tatarsky, an Affiliated underwriter, says in a court declaration: "A train is not a 'building or structure,' and in my 26 years in the insurance industry . . . I have never heard of anyone, insured or insurer, treating a train as a structure." An attorney for Affiliated did not return a call for comment.

In a brief filed by SMS's attorneys, the company acerbically notes that Affiliated says "it is possible that the trains could be removed from the tracks. So could the new green roof which sits on the federal courthouse." SMS maintains the trains are comparable to the elevators on the Space Needle—wheels on rails, possibly removable cars, but nonetheless elemental to the structure. SMS attorney James Murray chose not to comment further.

In a Sept. 23 partial summary judgment, U.S. District Judge Marsha Pechman agreed that a train can be a house, too—sort of. She decided the trains "are 'structures' for purposes of the insurance agreement." And even if it is ambiguous, the court, based on case law, would still have to rule in the monorail's favor, she said. The two sides are now locked in a dispute over the main remaining issue—whether the repairs and delays were, in fact, caused by the state's enforcement action. Once arguments are made Friday, the court should issue a second partial summary judgment within 30 days, says an official familiar with the case. At the moment, "SMS is in the driver's seat" to finally collect or negotiate a satisfactory settlement, the official says.


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