Judge tells sinkhole lawyers to settle taxpayers' claims

The state district judge presiding over year-old lawsuits seeking reimbursement of state and parish costs from the Bayou Corne-area sinkhole urged Texas Brine Co. and its insurers Monday to turn their attention away from internal battles over coverage and focus on settling the primary legal claims seeking to recover taxpayer dollars.

Judge Guy Holdridge, of the 23rd Judicial District, told a courtroom of more than two dozen lawyers from Texas Brine Co., its insurers, and state and Assumption Parish government that he has dealt with similar cases in the past involving multiple insurers and millions of dollars in claims and that the sheriff’s and Police Jury’s claims, in particular, are worth just several hundred thousand dollars each.

“My frustration is why are we working and kneading me up as a judge over these small claims, and I’m having to deal with 1,000 New Orleans lawyers. I don’t know why we are doing this,” Holdridge said at the Assumption Parish Courthouse in Napoleonville.

Lawyers and parish officials filled the attorneys’ desks in front of the judge, the jury box and at least two rows of seating for the general public in the old high-ceiling courtroom within sight of Bayou Lafourche.

Holdridge’s comments came near the end of an hour-and-a-half proceeding that included a 45-minute break where Texas Brine and the insurance attorneys met behind closed doors in the nearby Police Jury chambers to discuss new settlement offers from the state and parish governments but did not emerge with a deal.

Holdridge pressed for settlement one day after the swampland sinkhole had one of its periodic burps. The first since March, the burp happened about 11 a.m. Sunday and released a sheen of oily material akin to diesel fuel onto the surface of the lake-like sinkhole, causing a diesel smell near the hole.

John Boudreaux, director of the parish Office of Homeland Security and Emergency Preparedness, said Monday that the burp followed a period of increasing seismic activity last week, though overall, officials say the longer trend has been increasing stability under the sinkhole first discovered Aug. 3, 2012.

Boudreaux said there was no odor Monday.

Scientists have blamed the sinkhole on the failure of a Texas Brine-operated salt dome cavern deep underground, but Texas Brine has blamed, in court papers, current and former partners in the cavern and companies that drilled an oil well near the cavern.

The parish and sheriff have received reimbursement from Texas Brine and its insurers and, in court Monday, Texas Brine attorney James Garner held up a new $90,000 insurance check for the sheriff and a $68,000 insurance check for the Police Jury.

But the parish and sheriff each claim to be owed more than $300,000 and want their continuing expenses covered. The state, which is still responding to the sinkhole, has spent more than $14 million.

Though the parish and state suits were filed to seek reimbursement of those costs, the current battle is over which of Texas Brine’s insurers should pay and whether any have policy exclusions that allow them to avoid the cost.

The hearing Monday centered around claims from Liberty Insurance Underwriters Inc., which filed a separate federal suit in Texas in October asking a judge to declare the company does not have to pay on its $50 million policy because of various exclusions.

They include whether the sinkhole, which unleashed methane gas and, for a time, oil, was a pollution event, which the company says is among its exclusions. Liberty’s pleadings contend that when Texas Brine used some of its $25 million pollution insurance policy, it was the same as acknowledging that the sinkhole was a pollution event. Texas Brine has disputed that conclusion.

“There is a big concern that if Liberty is successful in their exclusions, whatever they are claiming, that all of the other insurance from the general liability side stops,” Sheriff Mike Waguespack said in an interview after the hearing Monday.

Texas Brine says it has $201 million in general liability insurance from nine different companies, including Liberty, plus another $25 million for pollution. The coverage is set up in “layers” so as each policy is spent, the next one starts paying. Other policies don’t start until the one before it is exhausted.

Texas Brine says in court filings that it has spent $80 million in insurance coverage. In a motion before Holdridge Monday, Texas Brine asked him to declare that Texas Brine’s other policies are exhausted and it is Liberty’s turn.

“We’re at a road block,” Texas Brine attorney Garner told Holdridge. “We have $125 million in insurance being held up by Liberty.”

Judy Barrasso, an attorney for Liberty, pointed out that in addition to the coverage questions, there are multiple defendants besides Texas Brine whom Liberty does not insure. She said Texas Brine is not conceding 100 percent liability for the sinkhole.

“And we agreed with that and so we say, ‘Where are the other defendants? Why is no one else sitting down to talk to us to resolve this claim?’ ” Barrasso asked.

She told Holdridge a mediation is planned later this week but she did not know if all parties would attend.

Under questioning from Holdridge, Sue LaPorte, an attorney for Occidental Chemical Corp., which owns the land where the sinkhole and failed cavern are located, said that company did not plan to attend the mediation and did not yet have a position on Occidental’s liability in the incident. She said Texas Brine and Occidental are in arbitration.

Holdridge did not rule Monday but set another hearing for Sept. 11. He said he could move up the date, however.

Sonny Cranch, a spokesman for Texas Brine, said in a later statement that the company “is financially prepared to complete” the sinkhole response and will continue to work with its insurers.