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Two years later, M’s Pub fire has sparked at least 15 lawsuits now winding their way through legal maze

January 22, 2018

It is two years later, and the lawsuits have kept coming in the aftermath of the M’s Pub fire.

Nothing material has been decided in cases filed by the property owners in the months after the January 2016 blaze that burned out the historic building, seriously hurting or killing no one but causing millions of dollars in damage.

Just last year at least seven new lawsuits were filed, bringing the total to at least 15.

The filers include building owners, occupants, people who say they were injured and insurance companies.

A common thread: Filers say the Metropolitan Utilities District is to blame for not marking — or improperly marking — underground natural gas lines in the Old Market where a fiber-optic contractor was drilling beneath the streets and sidewalks. The contractor hit a gas line, sparking the fire.

All of the filers cite negligence by the companies involved in the drilling.

MUD, the Omaha-based and ratepayer-owned natural gas utility, says it is not to blame.

“MUD is confident the judicial process will show the district acted appropriately,” a spokeswoman told The World-Herald last week.

The drilling parties have also said it wasn’t their fault.

But when drill bit met gas line, M’s Pub went up in flames — a total loss. (The restaurant rebuilt and reopened late last year.) Adjacent buildings were damaged.

And while most people easily understand what happens when someone’s machinery damages their property, the case is a good illustration of just how tangled a web civil litigation can be.

Part of that web is simply that of time. The clock can seem to move very slowly, but it is important to remember how many people are involved: more than a dozen aggrieved parties, multiple defendants and dozens of lawyers.

“It is a complex case,” said Patrick Borchers, a law professor at Creighton University whose specialties include civil litigation. “Frankly, I am surprised they are this far along.”

What follows is a rundown of the cases filed so far that have come to the attention of The World-Herald, and what might be at stake.

The first to file

The first to file lawsuits in Douglas County District Court included those whose damages were the most immediate, filing their complaints in 2016. They were:

» Mercer Management, the Omaha real-estate developer that owned the building at 1102 Howard St. housing M’s Pub.

» The owners of M’s Pub, the popular restaurant and bar in the historic building renovated by Mercer.

» Nouvelle Eve, an apparel shop at 1102 Howard St. that was damaged.

» The condominium owners in the 420 S. 11th St. building that was rendered uninhabitable.

» Old Market Niche, a furniture shop at 1105 Howard St. that was damaged.

The suits have been consolidated for now as the attorneys for both sides sort through and trade documents and take the sworn testimony of witnesses, a process known as discovery. They are consolidated, and only for that purpose, because the claims arise from the same incident. Not surprisingly, the claims in the initial suits are similar, and in most cases, identical.

The aggrieved parties say a company based in Minnesota called North Central Service had been hired to install fiber-optic cable, the underground conduit responsible for fast Internet and other telecom-related applications. Further, the suits say, North Central had been hired by a Kansas City company called Unite Private Networks to oversee the project; Unite, in turn, had been hired by telecom giant Verizon.

The lawsuits say MUD and all three drilling parties are to blame for the pipe rupture and fire. Some of the complaints also name the City of Omaha as a defendant, saying parking in the Old Market should have been restricted in the vicinity of the drilling, along with other allegations of negligence.

Reckonings of precise financial losses are not enumerated in the lawsuits, reserved for findings at trial. The Mercer Management suit says losses surpass $7 million.

For now, these cases are moving along through normal stages. Aggrieved parties in such cases can ask defendants to turn over any relevant documents, such as emails, memos or work orders. All of these are exhaustively examined by both sides in preparation for any one of them being brought up during a trial. Expert witnesses are being lined up and prepared for questioning by the other side. It all takes hours a day for months at a time, said law professor Borchers.

Omaha attorney Ed Pohren, representing the Nouvelle Eve shop, said things are moving along, with depositions taken, including one from an MUD employee responsible for locating and marking underground lines prior to excavation.

“Other MUD locators will be deposed later this month,” Pohren said, referring to the sworn testimony of a witness under questioning by an attorney.

As for the City of Omaha, it has filed a motion to be dismissed from the matter, saying in court documents it plans to later submit a brief as to why. The judge in the case has not ruled on that motion.

“It will continue for a few more months,” predicted Dennis Mullin, representing Old Market Niche, speaking of the depositions and document examination.

Seeking subrogation

These are insurance companies who have sued in Douglas County District Court, and the fancy term “subrogation” is very important to them. It means that when you are hurt and someone else might be at fault, the insurance companies plan on suing that someone else for the amounts they paid you for your losses.

“Basically, the insurance companies are assuming any rights you might have had,” said Jeffrey Baill, the attorney with the Minneapolis law firm Yost & Baill who founded the National Association of Subrogation Professionals. “They are filing claims to get their money back.”

In this case, that means the Old Market drilling parties and MUD.

» In 2016, State Farm sued MUD, Verizon, Unite Private and North Central in Douglas County District Court, claiming it had paid about $7 million in insurance proceeds to injured Old Market property owners. They included the condo association and the White Crane Gallery, an art shop. State Farm said the defendants failed to exercise a reasonable standard of care and were negligent and responsible for the losses.

» Last year, the Iowa insurer United Fire & Casualty filed a similar lawsuit against the same parties. United Fire says it paid about $36,000 in damages incurred by its policyholder, the Old Market fashion boutique All About Me located across the street from the Mercer Building housing M’s Pub.

» Columbia National, a Missouri insurer, says in its suit filed this year in Douglas County District Court it has paid about $2.6 million in policy benefits on property owned by Mercer Management related to the fire. It names the drilling parties as responsible.

» Travelers Casualty also sued last year, along with two other insurers, saying Old Market businesses they insured such as Stokes Bar & Grill and the Tea Smith suffered losses of more than $1.5 million. Again, the drilling parties were named as defendants.

The others claiming injury

A few other suits were filed last year, all in Douglas County District Court and naming the drilling parties and MUD:

» An Omaha man claims to have lost about $2,000 in personal property in the M’s Pub fire.

» Men’s clothing store McLovin, in the Old Market, says it has lost about $113,000, including business lost to interruptions caused by the fire and aftermath.

» A suit filed by a party legally known as JHD claims $153,000 in losses; the address given in the lawsuit corresponds to Billy Frogg’s Grill & Bar in the Old Market.

» The association representing condo owners at 420 S. 11th St., adjacent to M’s Pub, sued MUD and the drilling parties last year, saying it will cost $6.5 million to restore the condo building that was destroyed in the blaze.

» Also last year, a suit was filed by a customer who was shopping at the Nouvelle Eve boutique when the explosion happened. The suit says the customer was hit by flying glass.

» This year, the City of Omaha sued MUD, saying the utility was at fault and owes about $104,000 in municipal cleanup costs related to the fire.

What’s next

For one, no more lawsuits involving MUD. As a political subdivision, legal claims for injuries must be filed within two years of the precipitating event. That expired early this month.

In any case, legal experts say it will all end one day in trials or out-of-court settlements. Odds are for negotiated settlements, probably with the aid of a mediator, or a legal referee agreed to by both sides who assists in coming up with a fair, final number.

“I would be shocked if most of this ever reaches a trial,” said law professor Borchers.

Subrogation expert Baill agrees, saying more than 90 percent of subrogation disputes get resolved.

Con Keating concurs. He is one of Nebraska’s most experienced mediators, a veteran trial lawyer who is now exclusively mediating disputes.

“Good lawyers are realistic about their expectations,” Keating said. He said that the facts now being discovered will lead attorneys on both sides to a sober assessment of the strengths and weaknesses of their cases. “The prime factor in mediation is that it saves a lot of time, which means both parties save a lot of money.”

As for the money, there is a cap on what MUD might have to pay. State law says political subdivision injury claims are capped at $5 million per incident.

It will be up to a judge to decide just how many incidents arose, legally speaking, from the one event: the fire at M’s Pub.

russell.hubbard@owh.com; 402-444-3197