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CTA Acoustics settles with insurer over blast
Posted On 14 Jul 2008
A local manufacturer has finally settled with its insurer over damages caused by a fatal explosion at its north Corbin plant two years ago – and a former supplier wants to pry open the details of that settlment.
According to court documents, CTA Acoustics, Inc. has come to an agreement with Factory Mutual Global Insurance Company (FMG) for an undisclosed sum of money. CTA was insured through the company for up to $400 million and accused FMG of “deliberately calculating amount of loss in a way designed to deprive CTA of full benefits.”
Seven employees died and forty-three others were injured in Feb. 2003 when a malfunctioning oven on one of the factory’s production lines ignited built-up resin dust and caused an explosion to rip through portions of the plant. CTA designs and manufactures thermal and acoustical insulation products primarily for automotive industry.
CTA was seeking money from FMG for damage to the factory and for lost production costs. About a year after the blast, CTA filed suit in Laurel Circuit Court against FMG accusing the company of deliberately stalling the claim adjusting process, failing to communicate in a timely manner and violating Kentucky’s unfair claim settlement practices.
Court documents reveal that FMG offered CTA $60 million, and claimed the manufacturer was “consistently submitting exaggerated and excessive estimates” regarding loss and damages in order to use money from a settlement to build a new factory. FMG said CTA could repair its old facility and fix damaged machinery for less than it would cost to build a new facility and replace equipment.
Seven months after the explosion, CTA began production at a new state-of-the-art, 360,000-square-feet facility off the Corbin Bypass. It houses 11 new presses and seven new water jet systems and is actually two identical side-by-side factories preconfigured for company growth. CTA officials say the new factory cost $50 million to build.
CTA dropped all claims with FMG in late January. FMG had a counter-claim against CTA which was also dropped.
CTA and over 100 victims of the explosion are all part of a series of lawsuits against Borden Chemical, Inc. CTA claims a powdered resin it purchased from Borden called Durite, used during its manufacturing process, was defective and was partly to blame for the blast. Lawyers for Borden say CTA did not use proper maintenance procedures in its factory and is to blame for the blast.
The month of the explosion, the Kentucky Labor Cabinet had intended to cite the company for violations stemming from improper safety guards on machinery, but delayed that action due to the blast. The plant was cited for “serious” violations in 1989 and 1993, non-intentional conditions that could cause serious injury or death, but paid $5,600 to settle the violations.
Before the blast, the company had only had one complaint about safety violations filed with the Labor Cabinet.
A $100 million renovation project at the plant was underway at the time of the explosion, but was not considered a factor. Earlier this year, the U.S. Chemical Safety Board issued a report calling the explosion an “avoidable tragedy” and did blame CTA for not following proper maintenance and safety procedures.
In April, Borden asked CTA to produce terms of its settlement agreement with FMG but was rebuffed. On June 1, attorneys for Borden filed an official motion asking Laurel Circuit Judge Roderick Messer to force CTA to produce the terms of the settlement. No ruling has yet been made on the motion.
• In other action regarding CTA, the company has asked a Laurel Circuit Court Judge to allow it to reclaim use rights to the abandoned factory where the explosion occurred. Court documents allude to the possibility the company may demolish the building and use the land for other uses.
Borden Chemical has objected to the motion claiming that further site analysis may need to be done and that the property should remain dormant until all litigation is complete.
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