FLUOR ENTERPRISES FAILED TO MONITOR AND MAINTAIN LIQUID PROPANE IN FEMA TRAILERS. ITS INSURER AND NOT THE SUBCONTRACTOR MUST PAY FOR THE PROPERTY DAMAGE AND DEATHS DURING KATRINA

FLUOR ENTERPRISES FAILED TO MONITOR AND MAINTAIN LIQUID PROPANE IN FEMA TRAILERS.  ITS INSURER AND NOT THE SUBCONTRACTOR MUST PAY FOR THE PROPERTY DAMAGE AND DEATHS DURING KATRINA

 This case involves an insurance-coverage dispute. Fluor Enterprises, Inc. (“Fluor”) contracted with the Federal Emergency Management Agency (“FEMA”) to manage the delivery and installation of FEMA trailers following Hurricanes Katrina and Rita. Fluor subcontracted with MMR Constructors, Inc. (“MMR”) to haul and install the trailers. As part of the agreement between Fluor and MMR, MMR agreed to indemnify Fluor for any injuries arising, directly or indirectly, out of the parties’ contract itself or out of MMR’s acts or omissions. As relevant here, Fluor insured its liabilities through Westchester Fire Insurance Co. (“Westchester”) and MMR insured its liabilities through Liberty Mutual Insurance Co. (“Liberty”). 

A flash fire occurred in one of the trailers that MMR had hauled and installed, injuring the trailer’s inhabitant and killing her friend.  The fire was caused in part by the failure of the trailer’s liquid-propane (“LP”) detector to alarm. The injured parties sued Fluor, MMR, and their insurers. Those suits settled. Now, in this case, Liberty seeks reimbursement for its settlement payments from Westchester, arguing that MMR was not responsible for any of the injuries. The issue before us is whether MMR was required, as part of its contract with Fluor, to test the LP detector and whether its failure to do so was a but-for cause of the injuries. 

Following a bench trial, the district court concluded that MMR was under no such obligation. Consequently, the district court determined that MMR was under no obligation to indemnify Fluor, defeating coverage, and that Fluor was not covered under an additional-insured provision contained in MMR’s insurance policies with Liberty. We conclude that MMR was not obligated to test any trailer’s LP detector and the record supports the conclusion that Fluor did not in fact direct MMR to do so with respect to the particular trailer in which the fire occurred. Accordingly, the Fifth Circuit Court of Appeals AFFIRMED the judgment of the district court.

Alarming Failure 

FEMA trailers have alarms that warn of dangerous propane levels, but the alarms work only if they are properly installed and maintained.

John and Linda Meyer had every reason to believe their fortunes were going to improve in 2006. At the beginning of that year, the couple had just moved back onto their property in Slidell after a three-month evacuation, and they were making a go of the family business after a rough 2005. The couple's motorcycle- and boat-painting business went bankrupt that year, and their mobile home was torn from its pilings and destroyed by Hurricane Katrina. The couple survived the storm but were left with no place to call home. 

For a few weeks after Katrina, the Meyers rented a room in Pearl River, 50 miles from Slidell. When FEMA offered the pair a trailer for their Ulloa Road lot, they accepted. The Forest River brand Palomino unit that was delivered to the Meyers in December was smaller than their former home, but the unit had pop-out sides, which added to the interior space. Most of all, it was a place, however temporary, that John and Linda could call home. 

Unfortunately, the Meyers' luck ran out on the morning of April 12, four months after they moved in. At around 9:30 a.m., as John was getting ready for work, propane fumes that had accumulated in the trailer ignited. The flash-fire explosion seared almost half of John's body, covering him with second- and third-degree burns. Linda, lying almost completely under a blanket nearby, survived the blast with second-degree burns to her hand only. The couple escaped from the burning trailer through the pop-out section. Severely injured, John was flown to a burn center in Baton Rouge while Linda was treated at a Slidell hospital and released. 

John survived the explosive fire but succumbed less than a week later to deeper injury. In addition to burning more than 40 percent of his body, the blast overwhelmed his heart, kidneys and liver. Six days after the explosion, he died of organ failure in Baton Rouge. 

Investigators from the St. Tammany Fire District and the Louisiana Liquefied Petroleum Gas Commission (LPGC) arrived the day of the explosion to look into the incident. Despite the damage to the trailer's stove during the blast and ensuing fire, LPGC inspectors discovered from the remains that two of the stove's top burners had been open at the time of the explosion. 

Why the burners in the Meyers' unit were open but possibly not lit is unclear. In his investigation report, LPGC Inspector Terry McLain speculated that Meyer might have tried to light the burners for impromptu heating as he headed to the bathroom on that chilly spring morning and the burners didn't catch. Investigators concluded that Meyer likely emerged from the bathroom and lit a cigarette, igniting the accumulated fumes. 

McLain's preliminary tests on the remains of the trailer included a standard diagnostic to find, if possible, any leaks or problems with the propane system that might have contributed to the incident. Once he isolated the stovetop burners and ran a pressure check, he determined that "the LP gas system had no significant leak." 

In the weeks leading up to the fire, though, John and Linda had reported some problems with their trailer. They began to notice a foul smell in the unit — something like rotten food. They assumed that onions or garlic on the counter were responsible for the odor, but in retrospect, it might have been LP gas.

Odorless and colorless, propane is mixed with a malodorant — a noxious chemical additive — for safety purposes before it is sold. The rotting food odor that the Meyers encountered before the blast was likely the sulfurous smell of propane leaking somewhere in the unit. Although the proximate cause of the fatal blast was the open stove burners, that lingering smell might have been the only warning the couple had that their trailer was at risk. 

It shouldn't have been. Since 1996, every travel trailer, RV and camper in the U.S. that uses propane has been required to have a propane detector, and the trailers issued by FEMA were no exception. Although some trailers given to people with disabilities were outfitted with electric appliances, most had some form of propane appliances. Propane detectors, therefore, were mandatory. Not only do stoves and heaters utilize the gas, but water heaters and even refrigerators in travel trailers run on LP. 

Although FEMA trailers that use LP gas are required to have a propane detector installed, it appears that few, if any, gas-related fires and explosions in FEMA trailers were preceded by a detector alert. The alarm in the Meyers' trailer, for instance, did not sound before the blast, despite the highly explosive levels of the fumes in their Palomino. 

In an earlier January trailer explosion in Harvey, propane fumes ignited, sending two contract workers to the hospital. No alarm sounded before that blast, either. In many subsequent propane-related fires and explosions in Louisiana, propane alarms did not warn occupants, according to McLain. 

David Buddingh, marketing director for MTI Industries, which manufactures the Safe-T-Alert hydrocarbon detectors used in the Meyers' unit and many other FEMA trailers, says propane detectors are required by industry code to trigger an alarm at 25 percent of the lowest explosive level of gas accumulation — long before substantial risk exists. "There's got to be at least four times more gas [than detection threshold] for it to be even explosive," Buddingh says.

When asked about the apparent lack of a detector alert before some trailer explosions, Buddingh says, "There's no reason for them not to perform as expected, if installed correctly, unless the power supply is not connected to it."

Electricity is crucial to the proper functioning of a propane alarm. Unlike smoke detectors, the electronic components of a propane alarm can't run on an internal battery. "They suck too much power," says Buddingh, "so they would drain a 9-volt battery literally in days." 

To solve this problem, propane alarms in recreational vehicles are wired to the 12-volt, direct-current battery that powers the unit and makes it livable when regular household current is not accessible. "[Propane alarms] run typically off the battery of the trailer," Buddingh says. 

Proper charging and maintenance of the battery and 12-volt system, therefore, are essential to its safe operation. If the battery charge is weak, or if the battery is not correctly installed, the propane alarm will not work. The user manual for MTI's propane alarm notes that the detector "will operate normally down to 8 [volts] DC" and will sound a "malfunction alert" if the battery charge gets too low. Without proper electrical setup, however, the propane alarm is useless.

Most FEMA trailers eventually were hooked up to household-type power, such as 110-volt AC, but the standard 12-volt battery system still is necessary for a trailer to function safely and properly. Contractors may not have fully understood this aspect of travel trailers. FEMA's "Statement of Work" regarding travel-trailer maintenance calls for "certified mechanics with expertise in heating and air conditioning (HVAC), refrigeration, range, electrical, and/or plumbing." FEMA did not require RV-certified technicians, who would have known about potential travel-trailer hazards, to install or service the units. Furthermore, FEMA's travel-trailer installation specifications, posted to its Web site on Dec. 21, 2005, do not mention the 12-volt systems that are vital to the trailer's proper use. 

Trailer occupants might not notice a flawed or malfunctioning 12-volt system if their units still had power through a 110-volt connection. Lights, microwave ovens and electric appliances still would work on the household circuits, but without a functional battery, auxiliary components such as the propane alarm would not. Moreover, an improperly installed electrical system could eventually overload the trailer's power converter and pose a fire risk of its own, but unless trailer occupants or service contractors knew about the idiosyncrasies of trailer electrical systems, such inappropriate installations may have gone unnoticed.

Along with the rotten smell, the Meyers had discovered another problem with their trailer. Shortly before the fire, the couple reported problems with the lighting in the unit. Fluor Inc., the prime contractor charged with maintaining the unit, sent technicians to work on the problem. The nature of that problem may never be known because the trailer sustained massive damage in the explosion and fire. 

In the course of investigating the explosion and fire in the Meyers' trailer, LPGC inspectors found out more than just the cause of the blast. In reviewing propane service records for the Meyers' unit, they found that Fluor Inc. had not performed a legally required pressure test of the trailer's propane system when it was initially installed. 

In reviewing records for recent propane-related servicing of the Meyers' unit, Inspector McLain discovered that California-based Fluor lacked proper permits and certifications to work on propane in the state of Louisiana. In addition, Fluor could not produce documentation to prove that the Meyers' unit had been correctly installed and tested, as required under Louisiana law. This led to charges against Fluor [see "Up in Flames," News & Views, Dec. 11, 2007] and resulted in the LPGC mandating that all FEMA-issued trailers be retroactively tested for safety. 

The remains of the Meyer trailer sit in a secure FEMA lot near Baton Rouge, awaiting tests of its own. Linda Meyer is suing several of the manufacturers connected with the trailer in which her husband was fatally burned and the contractors responsible for its proper upkeep. Named in the suit are the companies behind the trailer and its propane-related components as well as Fluor Enterprises and its wholly owned subsidiary, subcontractor Del-Jen. Todd Hebert, one of Linda Meyer's attorneys, says her lawsuit is proceeding.

The burned-out shell of the trailer has been preserved as evidence, and Hebert currently is setting up testing of the stove, alarms and propane components of the unit. "We are in the process of getting every [defendant's] testing protocol" to evaluate each trailer system, he says. "Propane detectors will be one of the appliances tested." 

But the tests, like many other investigations into FEMA trailer fires, may only lead to more questions. Chris Kaufman, chief of administration for the St. Tammany Fire Department's First District and the former chief of fire prevention, says the Meyers' trailer was virtually destroyed in the explosion and fire. During the initial investigation, Kaufman called in several trailer component manufacturers to examine the wreckage in the hope of learning more about the cause of the blast. 

"There was some on-site testing that was conducted with the presence of everyone involved," he says. The test results, along with the Palomino itself, were handed over to FEMA. The propane detector was tested, too, because "there was no indication that it sounded off prior to the explosion," Kaufman says. 

Whether those 2006 tests or the 2008 testing done for the lawsuit will reveal what happened that April morning in Slidell remains an open question. Although many travel trailers have burned very quickly, with some units reportedly reduced to ashes in less than 10 minutes, the Meyers' trailer was nearly destroyed by the force of the blast, not as a result of the fire. Some systems may be intact enough to provide more clues about the explosion.

Attorney Hebert says he anticipates the Meyer lawsuit will go to trial this year.