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By Connie Leinbach
Attorneys for PCL Constructors filed a motion Sept. 12 in the U.S. District Court of Eastern North Carolina to dismiss all class-action lawsuits stemming from the weeklong power outage in July.
The motion says a lawsuit filed July 31 by Wallace & Graham of Salisbury on behalf of six plaintiffs should be dismissed because of the “Economic Loss Rule,” as set forth in a 1927 U.S. Supreme Court case, which says plaintiffs must show injury to person or property and not for “purely economic loss.”
The motion, filed by Rodney Pettey, a Raleigh attorney for PCL, is against the six plaintiffs “individually and as representatives of a class of those similarly situated.”
If this motion is granted it would kick all of the class-action lawsuits out of court, said Robert Zaytoun, a Raleigh lawyer whose firm also has filed a class-action lawsuit.
The plaintiffs have not shown that PCL was “reckless and negligent,” nor that they suffered personal or property damage, says the memorandum of law filed with Pettey’s dismissal motion.
When contacted Thursday (Sept. 21), Pettey’s law firm said they could not comment on the case. No court date has yet been set.
The power outage occurred July 27 to Aug. 3 when crews rebuilding the Bonner Bridge dropped a steel casing into the ground damaging the main electric transmission lines feeding Hatteras and Ocracoke islands causing a blackout.
While both islands were partially powered by portable generators during the week-long repair, Hyde and Dare counties issued a mandatory evacuation of all visitors during the high tourist season because the generators could only power the needs of residents.
Although the cables were restored Aug. 3 and visitors were allowed back to both islands Aug. 4, in the uncertainty of how long the repair would take, many vacationers canceled their vacations in the weeks afterwards.
“The impact to the island is catastrophic,” said Bob Chestnut, co-owner of Ride the Wind Surf Shop. “You take our little island economy at X million dollars a year and we just lost a big chunk of our cash flow, and you can’t recover cash flow.”
Pettey’s memo says there are no allegations that “PCL consciously, intentionally, knowingly, or deliberately disregarded or were indifferent to the rights and safety of others.” There are no allegations that PCL defendants acted “with a wicked purpose,” and any contention that PCL was “grossly negligent is not a statutory basis for punitive damages,” the motion says.
Punitive damages are the keys to winning class-action lawsuits, said Zaytoun and Steve Lacy, Zaytoun’s co-counsel from Pamlico County, both of whom visited Ocracoke Sept. 7 to meet with islanders interested in joining in a class-action lawsuit against PCL.
“We believe this is premature,” Zaytoun said in a later interview about this motion to dismiss because he said the eight lawsuits—some filed in state and some filed in federal courts–will first need to be consolidated in the Eastern N.C. federal district court No. 1. “It’s early and we were surprised to see the motion filed.”
He said the Economic Loss Rule does not apply in North Carolina unless there was a contract between the plaintiff and defendant.
“This should not have happened,” Zaytoun said about the damaging of the electric cables, and the state may share responsibility if they had people on the bridge to supervise.
“We don’t know the degree of negligence or how aggravated it was,” he said. “There is no accident if they knew the power line was there. Why did this happen?”
North Carolina Dept. of Transportation contracted with PCL to build the bridge.
“NCDOT has the duty to supervise them,” Lacy said. “The question is, where was (the supervisor)?”
The standard in North Carolina for awarding punitive damages is “willful and wanton” misconduct, Pettey’s motion says, and that’s what the class-action lawyers are trying to discover.
“The threat of punitive damages will make (PCL) settle,” Zaytoun said.
Zaytoun said North Carolina law allows for recovery of the intangibles of “stress and inconvenience. If we show (PCL was) reckless, (the claimants) could get triple what they lost.”
Since the outage, PCL set up claim forms on their company website and Facebook for anyone—vacationers, businesses and employees—on which to compile their losses during the time the island was closed and beyond.
Hyde County Manager Bill Rich said in a recent interview that PCL has already processed 600 claims from individuals and businesses impacted by the week-long power outage in July.
“No one’s complained,” he said. “They got what they wanted.”
He did not know the amounts of these settlements.
Rich had called a community meeting Aug. 4 to tell islanders that PCL wanted to “settle this peacefully” and that the community should work together and with the county to get compensation.
The county had created its own claim form, and though they initially asked islanders to send these claim forms to them and they would forward the forms to PCL, the county has since said islanders should send claim forms directly to PCL.
In addition to personal and business losses, nonprofits could also be affected. The island will also lose a substantial amount of money collected through the Occupancy Tax and may be entitled to compensation. Each year, Occupancy Tax revenues, which amount to about $450,000 per year, are distributed in grants to island nonprofits.
But if claimants ask for a specific amount, will PCL deduct the overhead costs involved with these losses, and did they sign a release before receiving a check? Zaytoun asked.
“They’re not going to pay you your gross profits,” Chestnut said about individual claims to PCL. But Janille Turner, co-owner of Ocracoke Oyster Co., said they should do so “regardless of what you had to spend to get that profit” because businesses would still have to pay taxes on any remuneration they receive.
Turner, who had a restaurant on Mon Louis Island on the Alabama coast and lived through the BP oil spill in 2010 before returning to Ocracoke in 2011, said she’s still waiting for payment in the two class-action lawsuits she joined as a result of the BP spill.
“In class-action lawsuits, lawyers charge for everything—every piece of paper, every stamp,” she said. “These costs are not included in your percentage. So they will still get 75 percent.”
Judy Eifert, co-owner of Dajio Restaurant, said some of her employees have received compensation from 10 days of lost wages, and they signed waivers before receiving their checks.
As are several other island businesses, Eifert is still weighing her claim options and thinks island business owners should not “just jump.”
“People should get what they deserve,” she said. “They’re (PCL) trying to settle as much as they can as fast as they can. People should really research what they lost because there probably are hidden costs they’re not realizing.”
John Giagu, owner of Island Golf Carts, said that although he hasn’t yet filed a claim or taken other action, he said he would be OK with PCL deducting “a reasonable percentage.”
Another business owner, who declined to be identified and who lost thousands of dollars each day during the outage, is also weighing the options, but trying to choose how best to proceed is adding to her stress.
“I just want what I lost,” she said.
Turner did receive compensation from BP in much the same set up as PCL is doing with this outage. She, along with some islanders, is seeking compensation through a public insurance adjuster, Rob Izzo of Southern Loss Consultants, Inc., who visited the island on Aug. 20, and, in two meetings sponsored by the OCBA, talked about how his profession works as a go-between with insurance companies.
One island hotel owner who declined to be identified and who said his business lost “a significant amount” from the outage and its aftermath, said he doesn’t think there’s a right or wrong answer about how to get compensation.
“It’s whatever anyone’s comfortable with,” he said.
Also, noting that there are concerns that the PCL claim form “is a trap,” lawyers with James Scott Farrin of Durham have scheduled a free public meeting at noon on Monday (Sept. 25) in the Berkley Manor, and again at 7 p.m. in Buxton at the Inn on Pamlico Sound, 49684 Highway 12.
Several island businesses have received packets from them including a spiral bound booklet and a sample PCL claim form with their annotated comments.
Gary Jackson, a spokesman for the law firm, said his company has not filed a class-action suit but knows people have a lot of questions and will talk to islanders about individual law suits.