It was a sad tale that Omahans by now know well: a fiber-optic cable installation and drilling project, a ruptured gas line, a disastrous explosion and fire.
M’s Pub in January 2016? For certain.
But it all happened once before in the metro area, in Elkhorn in April 2000.
That’s when a set of conditions similar to those that destroyed M’s in the Old Market burned down Gerst Custom Contracting on Veterans Drive.
Owner Mike Gerst said it took four years to get his business going again, including years of litigation and planning for litigation that ended with an out-of-court settlement that recovered only a portion of the $1.8 million in losses enumerated in his suit.
“I’d never sued anybody in my life, and I wound up suing almost everyone involved,” said Gerst, who said he eventually settled for an amount that was less than the $500,000 of losses his insurance failed to cover.
While large losses subject to lawsuits and insurance coverages vary widely, the Gerst Contracting case might demonstrate a rough template of what is ahead for those involved in the M’s Pub fire, which also destroyed apartments and the Nouvelle Eve boutique and damaged condos, a shop and another restaurant.
The lawsuit in the Gerst case against the fiber-optic contractor and others wasn’t filed until two years after the fire. While Gerst had insurance, he said it covered only part of what he lost — hence the suit against those believed to be responsible.
The suit went on for almost two years after it was filed, with the final dismissal order not coming until January 2004, or almost four years after the fire.
“It was an absolute horrible time, waiting for all of this to settle,” Gerst said.
It started out innocently enough, the day of April 11, 2000. Gerst, whose business had employed 50 people engaged in custom wallpapering, painting and remodeling, had arranged a business meeting in the conference room at his headquarters on Veterans Drive. The very instant he greeted his guest with a handshake, an explosion tore through the building.
No one was seriously injured, but the building was a loss, called by Elkhorn firefighters at the time one of the toughest blazes that department had battled in recent years.
Photographs from the day show enormous billows of thick black smoke. Occupants of nearby homes and buildings were evacuated to the nearby high school.
Gerst said there was fiber-optic drilling going on near the property that day — a crew from a company called Mid-America Contractors.
As in the M’s Pub case, the underground contractor was working for someone else, a company called Nebraska Communications Service, which, in turn, had been hired by Qwest Communications, the Denver-based telecom giant that was the owner and operator of the underground fiber-optic network.
The Gerst lawsuit filed in Douglas County District Court in March 2002 lays out a set of conditions similar to what is known about the M’s Pub fire, which broke out Jan. 9.
The Gerst suit says Mid-America’s drilling fractured sewer and natural gas lines. Natural gas entered the building via the broken sewer line, the suit says, igniting and catching fire inside.
That coordinates closely with what investigators have said so far about the M’s Pub fire.
In that case, a Minnesota underground contractor, North Central Service, was performing fiber-optic work in the Old Market. North Central was a contractor for a firm called Unite Private Networks, which was itself performing the work for telecom giant Verizon Communications.
So far, investigators for the Omaha Fire Department have said the fire was “gas fed” from the rupture in a natural gas line that broke during drilling related to the fiber-optic work.
Gerst said such accidents are 100 percent avoidable, and that his suit was the only redress he had in a battle of “fighting fire with fire.”
“The guy out there operating the machinery didn’t even seem to know anything had happened at the time,” Gerst said of the interval between the rupture of the gas line and the fire.
Legal tussles after such affairs are common. Gerst’s original lawsuit named telecom operator Qwest and contractors Mid-America and Nebraska Communications Service. The suit alleged negligent acts, such as failure to hire competent contractors, failure to supervise, and failure to adopt a safe work plan.
“Large property losses can end up in litigation, as the parties involved look for the responsible party or parties to pay for the damages,” said David Crowe, a senior vice president of claims with Boston-based Berkshire Hathaway Specialty Insurance, which offers a wide variety of business coverages.
Insurance almost always is a major factor in such matters. Oftentimes, the party responsible for the damage has insurance designed to cover mishaps, such as hitting a natural gas line.
In those cases, the insurance company for the aggrieved party will collect from the insurance company for the responsible party; if they disagree on how much, you can wind up with insurer-on-insurer courtroom action in the form of additional lawsuits.
None of the principals in the M’s Pub case appear to have filed lawsuits so far. Omaha attorney Woody Bradford, who said he is now the lawyer of record for the owners of M’s Pub, said his clients are “definitely considering all options.”
Bradford, of the firm Houghton, Bradford & Whitten, said some of his client’s actions will depend on those taken by the owner of the building that housed the pub, Omaha’s Mercer Management, whose Mercer family was instrumental in the development of the Old Market district. Mercer Management has not said what its plans are for litigation after the total loss of the building.
Back in Elkhorn, contractor Gerst has rebuilt his business. A new building was constructed on the same site within two years of the fire, although it took another few years to get all the business back. Gerst Custom is now back up to about 20 employees, Gerst said.
The other companies involved in the 2000 fire have their own varied tales. The phone number for Mid-America Contractors in Omaha listed in online business directories has been disconnected. Telephone messages left with the person listed as the company’s owner were not returned.
Qwest, the telecom formerly known as U.S. West, was bought in 2010 by CenturyLink, the Louisiana-based carrier serving customers in 36 states, including Nebraska. A company with a profit in 2004 of almost $1 billion, Qwest took the lead in negotiating the Elkhorn fire settlement, Gerst said.
“Once the mediation began, the smaller companies were excused,” he recalled.
Because the case was settled out of court, there’s no public record of what companies paid how much, and Gerst said he wasn’t familiar with the in-depth aspects of the mediation that were handled by his attorney.
Qwest's analog in the M's Pub case is New York-based telecom Verizon. Though Verizon says none of its people were on the job site when the fire happened, it was the project's main customer. Unite was engaged in a project to install fiber optic line that would, among other things, feed data to Verizon wireless antennas to be installed on light poles.
The largest U.S. wireless phone company, Verizon had an annual profit of $18.4 billion last year, on sales of $132 billion.
Subcontractor North Central hasn’t responded to multiple inquiries from The World-Herald. Unite has said it’s cooperating in the investigation.
There is one notable party that was not named in Gerst’s lawsuit: the Metropolitan Utilities District, the customer-owned natural gas system supplying the fuel to homes and businesses throughout the metro area, including M’s Pub.
Gerst said his side determined that MUD had properly marked the location of the gas lines, and that the fault was with the contractors, not the utility.
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Correction: An earlier version of this story misstated Verizon Communications' relationship to Unite Private Networks. Verizon is a customer of Unite, not a contractor.