Salem couple sues over gas pipeline blast

Aug. 24--A Westmoreland County couple whose property was ground zero for the April 29 natural gas line explosion that seared more than a third of their 150-acre cattle farm, destroyed buildings and a home, severely burning a tenant, has filed a federal lawsuit against their insurer.

Randy and Wendy Gillis of Salem allege in the lawsuit against Columbus, Ohio,-based State Automobile Mutual Insurance Co. in U.S. District Court in Pittsburgh that they continue to suffer financially from the blast, including "damage to the rental property in excess of the coverage limits; property damage to the crops, fields and land; investigation costs and cost related to crop destruction, lost earnings."

Although State Automobile has paid the Gillises $185,700 to date, it "is less than the policy limits and less than the amount of the claim," the lawsuit states.

Documents filed with the lawsuit show the couple had $595,130 in property and building coverage on the family farm, which has produced crops and pastured cows since the 1930s.

The Gillises allege the insurer is violating state insurance laws by seeking reimbursement of its payments from Spectra Energy Corp., the company that operates the interstate transmission pipeline, before the Gillises have been fully reimbursed for their losses.

"It is well settled under Pennsylvania law that, regardless of the language in an insurance policy, a subrogation lien or interest cannot arise or attach until the insured has received the settlement proceeds or damage award and ... has been made whole," attorney Gretchen E. Moore of the Pittsburgh law firm Strassburger McKenna Gutnick & Gefsky alleges in the lawsuit.

Moore attached to the seven-page lawsuit several letters of correspondence between the Gillises and State Automobile objecting to the insurer's actions.

"There is no good-faith basis for State Auto to assert a subrogation interest until the Gillis Family has been made whole for those damages. In point of fact, your client has not agreed to pay the limits of its policy for the (James) Baker residence," states a July 22 letter from Moore to the insurance company's attorney, Mark Mullen of Philadelphia.

James Baker, who rented the home from the Gillises, is still recovering from the severe burns he suffered in the explosion.

"The issue here is that State Automobile shouldn't be getting their money before the Gillises are made whole," Moore said Tuesday.

Phone calls to State Automobile and Mullen seeking comment on the lawsuit were not returned.

However, in the correspondence attached to the lawsuit Mullen states that State Automobile is doing nothing illegal and is supported by recent case law.

"Spectra Energy has sufficient liability insurance and assets to make both the insured and the insurer whole so the made whole doctrine has no application," Mullen wrote Moore on Aug. 8.

The Gillises are seeking a judgment that State Automobile cannot receive any reimbursement until the Gillises "have been made whole," a permanent injunction barring any such reimbursement to State Automobile, and punitive damages, interest and attorneys fees.

Ali Fogarty, deputy press secretary with the state Department of Insurance, said such disputes are rare.

"Our department doesn't receive many complaints of that nature, but it isn't uncommon for companies to pursue remuneration from a third party if the company believes they are liable for the claims," Fogarty said.

"However, if a consumer believes they're caught in the middle of the situation and aren't being made whole, we encourage them to file a complaint with our department and our consumer services team will see what options are available," she said.

Federal inspectors believe corrosion on the ruptured line contributed to the explosion. Their investigation is ongoing.

Paul Peirce is a Tribune-Review staff writer.

___

(c)2016 Tribune-Review (Greensburg, Pa.)

Visit Tribune-Review (Greensburg, Pa.) at www.triblive.com

Distributed by Tribune Content Agency, LLC.