$18 Million Settlement for Phila. House Fire Victims (The Legal Intelligencer)
August 18, 2010

Zack Needles
The Legal Intelligencer

A Philadelphia house fire that killed two and seriously injured a third has resulted in a settlement of more than $18 million with the building's landlord and the manufacturer of the portable electric heater believed to have caused the blaze.

The $18,275,000 accord, reached Monday, appears to be the largest to be reached in a Pennsylvania trial court so far this year and the fourth largest to be reached in a Pennsylvania trial court in the past five years.

In Joseph v. Lakewood Engineering and Manufacturing Co. , a rowhouse on Wister Street in the Ogontz section of Philadelphia caught fire at about 9 a.m. on Jan. 20, 2006, according to the plaintiffs' mediation memorandum.

After discovering the fire, 23-year-old Shereece Joseph took her 7-month-old brother Malachi Monroe and placed him on the front porch before running back into the house to try to save her 3-year-old brother Mikael Monroe and 9-month-old daughter Rhayanna Binns, the plaintiffs said.

Joseph and Mikael died in the fire, while Rhayanna suffered disfiguring burns to most of her body and a brain injury caused by lack of oxygen, according to the plaintiffs.

The plaintiffs alleged that the fire had been caused by a defective rotary switch on a Sun 1 model radiant portable electric heater manufactured by defendants Lakewood.

According to the plaintiffs, that model heater had been recalled by the Consumer Product Safety Commission for a separate defect in 2004 but during the recall Lakewood sent a letter to the CPSC saying it had discovered that rotary "switches on the returned heaters showed signs of overheating ... within the normal expected operating range."

According to the plaintiffs, Robert Miller, Lakewood's corporate designee, testified that the company did find an overheating defect in the Sun 1 heater's rotary switch during the product's recall.

The plaintiffs said the switch on the heater involved in the fire was never recovered but the wires that had led to the switch showed signs of "arcing," or divots caused by extreme heat.

The plaintiffs said the switch on one of the Sun 1 heaters provided by Lakewood for testing during the litigation showed signs of overheating due to electrical malfunctions.In addition, the plaintiffs said, the remains of the heater recovered in the fire as well as the heater provided by Lakewood showed evidence that the product's high temperature limit control — a safety device designed to cut off power if the heater's temperature rises dangerously — had been designed with a heat threshold that was too low, causing it to be activated repeatedly and to eventually sustain a brittle fracture — one that occurs without any deformation of the surrounding material.

Lakewood, in its own mediation statement, said its materials and fire science expert, Scott Barnhill, determined that repeated use of a high temperature limit switch would not cause it to fail, nor would a brittle fracture.

Lakewood also said that Larry Sacco, its electrical engineering expert, said there was no material in the switch body that could have started the fire.

Instead, according to Lakewood, Philadelphia Fire Marshal Bordes Ramseur concluded in his report that the fire had been caused by combustibles placed too close to the heater.

But the plaintiffs said Ramseur testified during a deposition that he had never considered the possibility of a defect in the heater.

Lakewood alleged that the fire had started because the heater had been placed near clothes that had been hung over furniture to dry.

The plaintiffs, however, said there was no evidence to support that claim.

Lakewood was represented by James W. Ozog of Wiedner & McAuliffe in Chicago and J. Michael Kunsch of Sweeney & Sheehan in Philadelphia.

Ozog said the case was "vigorously contested and Lakewood was prepared to disprove all of the plaintiffs' allegations."

"This settlement was paid because of the horrendous injuries and losses suffered by the Joseph family," he added. "It would have been extremely difficult to convince a jury to set aside their emotions and compassions given the injuries presented by the plaintiffs."

According to the plaintiffs, Rhayanna is currently 5, but her mental abilities are that of a 12- to 20-month-old.

She has undergone 20 surgeries, mostly related to her burns, and will require constant care for the rest of her life, the plaintiffs said.

The plaintiffs' life care planning expert, Terri Paterson, estimated the cost of Rhayanna's future medical care at between $13.7 million and $17.2 million.

The plaintiffs also retained Dr. Wayne Ross, a forensic pathologist, who concluded that both Joseph and Mikael would have experienced severe conscious pain and suffering for several minutes before they died.

Meanwhile, Malachi has suffered emotional distress due to the loss of his brother and sister and the guilt of being the only one who escaped the fire without sustaining a physical injury, the plaintiffs said.

According to the plaintiffs' attorney, Daniel J. Mann of Feldman Shepherd Wohlgelerntner Tanner Weinstock & Dodig in Philadelphia, the plaintiffs also brought a claim against Jacqueline Gordon, the landlord of the building, based on the fire marshal's report that the house contained no smoke detectors.

Mann said Gordon settled out of the case "very early on in the litigation" for $25,000, the limits of her homeowners' insurance coverage.

Mann, who tried the case with his partners Alan M. Feldman and Daniel S. Weinstock, said Lakewood went bankrupt during the litigation and the plaintiffs had to have the U.S. Bankruptcy Court lift the stay to allow the case to proceed.

On Monday, following a day-long mediation with Judge Diane M. Welsh of JAMS, Lakewood agreed to settle for $18.25 million.

Mann said Lakewood's policy limits were $21 million, so the plaintiffs would be able to collect the total amount of the settlement.

Mann said he believes the parties were able to reach a settlement because the defense recognized "there were real liability issues for the manufacturer in this case."

According to Mann, it has yet to be determined how the nearly $18.3 million will be divided between James A. Francis, the administrator of Joseph's estate, and Michelle Joseph, who is the legal guardian of Rhayanna, the administratrix of Mikael's estate and mother of Malachi.