May 2004 – Iowa Court Rules for Propane Surviviors

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Associated Press. Ryan J. Foley. May 12, 2004.

Iowa Court Rules for Propane Surviviors

DES MOINES, Iowa -- The Iowa Supreme Court ruled Wednesday a business that owns and manages a propane retailer can be sued over a deadly 1999 gas explosion. Both sides in the case said they expected a settlement.

The state's high court ruling capped years of litigation stemming from a Labor Day blast that leveled a house in Richland, Iowa, killing seven and injuring six. Propane gas leaking from a line behind the home ignited, causing the explosion.

Survivors and estates of those killed sued eight companies they blamed for the explosion and reached settlements with each. Victims say the explosion could have been avoided if companies had better safety procedures in place to warn consumers about propane's dangers.

A lower court judge had dismissed the Farmers Cooperative Association from the lawsuit, saying it could not be sued because it was the manager of a limited liability corporation -- a business structure that provides protection from personal liabilities like a corporation and the tax advantages of a partnership.

The Iowa Supreme Court disagreed, noting state law does not give managers of an LLC immunity from lawsuits when they injure others.

The association owns and manages Double Circle, a retailer that delivered the propane to the home.

"This is just a big milestone for us," said Bev Gartner, 50, of Iowa City, who was among the worst burned in the blast. "Hopefully, this will change the way big companies operate. They will be more diligent as to the rulings and inspections they put onto people beneath them."

The court ordered a new trial to determine whether the association's conduct caused harm, but both sides said a settlement is imminent.

The victims' lead attorney, Don Beattie, said 19 plaintiffs would split $3 million from the association's insurance company and agree to end the litigation.