SPS, Cano settle on wildfires

SPS, Cano settle on wildfires

24 January 2009

published by www.amarillo.com

USA — The legal smoke from the 2006 wildfires cleared a little more Friday with the announcement of a settlement between Southwestern Public Service and a Fort Worth-based oil company.

SPS had a claim in state court for about $1.8 million pending against Cano Petroleum for starting the Northern Fire on March 12, 2006, that damaged its distribution system.

“While terms of the settlement will not be disclosed, the result will be the dismissal of the case set for trial Feb. 23 in Carson County,” said Scott Sherwood, a Panhandle attorney representing Cano along with Fort Worth law firm Haynes and Boone.

SPS spokesman Wes Reeves said his company also would not make any statements about the settlement. At the time of the fire, the company claimed it lost more than 900 utility poles and other equipment in the blaze.

The conflict had spread to the Texas Public Utilities Commission where Cano filed a complaint alleging SPS was trying to recover money for the fire damage from both the oil company and ratepayers.

“This also disposes of the PUC action,” Sherwood said.

In the court case, SPS claimed a subsidiary of Cano was negligent in designing, building and maintaining the electrical system that powers the company’s well field on the 6666 Dixon Creek Ranch in Carson County.

Electricity jumped from an energized distribution line to a guy wire, causing “extremely hot, molten metal to fall to the ground,” according to a PUC filing by SPS. It alleges the metal lit the fire that would spread over Carson, Gray, Roberts, Hutchinson, Hemphill and Ochiltree counties.

“Cano disputes any liability,” Sherwood said.

Ultimately, the Northern Fire burned 479,549 acres and killed 12 people and hundreds of cattle.

In the past two months, Cano has also settled many other suits from the Northern Fire. The claims in 11 cases totaled more than $25 million, according to the company’s last quarterly earnings report to the Securities and Exchange Commission.

“We’ve paid significantly less than that,” Sherwood said. “We’ve settled all the property damage cases and portions of the death claims.”

The number of claims were actually far more than the number of cases reflect.

“Some had multiple, multiple claimants,” Sherwood said. “One had 40 to 50.”

Insurance payments went to fund some of the settlements.

Mid-Continent Casualty Co. gave Cano about $7.6 million in insurance payments, and Kel-Tex Electric, which Cano calls “a potentially responsible third party,” paid Cano $6 million for release from any claims resulting from the fire, according to Cano’s SEC filing.

All the $13.6 million paid to Cano was dedicated to paying lawsuit settlements.

There are two cases against Cano left unresolved in the Northern Fire.

Norma Valenzuela’s is one. She filed a lawsuit in Tarrant County, where Cano is based, for the wrongful death of four relatives in the fire. The suit asks for $4.4 million. The men were trapped by fire and burned in a car in Roberts County.

The case filed by the Tom and Anne Burnett Trust has also not been finalized. Cano won a judgment to dismiss a request for about $2.3 million for firefighting expenses, damage to property and attorney fees. That ruling is on appeal in the 7th Court of Appeals.

There also were lawsuits filed over the Southern Fire that burned in Donley, Gray Wheeler and Collingsworth counties. Greenbelt Electric Cooperative and landowner Dan Steed, were the defendants. A state fire marshal’s investigation determined that electric wires on Steed’s property touched each other in 50 to 60 mph winds and sparked the fire.

“All those have been settled,” said Stan McClendon, general manager of Greenbelt Electric.

McClendon said he didn’t know how many suits were filed.

“A lot of those were handled by the insurance company in a confidential manner,” he said.

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