To reuse or not to reuse.

Saturday, March 30, 2002

To reuse or not to reuse. That is the question and debate going on between Farmland Foods and its insurance companies.

The divergence between the perspectives of insurance companies and Farmland regarding the damage to the old plant caused by last July’s fire has been stalling their negotiations. And it is uncertain how Thursday’s court decision, which granted the city the authority to proceed with the demolition order, would influence the standstill.

The insurers contested the city’s demolition order, saying the assessment contains erroneous allegations.

Though the court upheld the demolition order, it granted the insurers that the order would have no factual or legal binding effect on any future coverage action under Farmland’s policies.

&uot;The plaintiffs will not be collaterally stopped by virtue of findings in the Order for Removal in any future actions,&uot; Broberg said.

The decision might have significance for the insurance companies. Despite failing in their attempt to block the demolition order, they successfully prevented Farmland from employing the city’s demolition order to support its claim of $86 million, which would cover the total loss of the plant.

&uot;We sought various alternatives for relief, and one of them was granted,&uot; said Paul Sween, attorney for the insurance companies. &uot;We are going to review the court decision with our clients.&uot;

The city stands on its position that the demolition order and negotiations over insurance payouts are separate issues.

&uot;The demolition of the plant has no adverse impact on any subsequent litigation between the insurance companies and Farmland Foods,&uot; City Attorney Steven Schwab said.

However, the city expects the decision will put pressure on both parties to move forward.

Starting Tuesday, Farmland will have 270 days to comply with the demolition order. The insurance settlement is a crucial factor as the company makes a decision on whether it will leave Albert Lea and clean up the old site, or if it will resume operations in a new site and let the city take responsibility for the cleanup.

Fire Chief Richard Sydnes reiterated that the demolition must take place for both safety and environmental reasons.

The insurance companies assert that less than 100,000 square-feet of the old facility require replacement out of 611,211 square-feet in total floor area of the plant.

&uot;I won’t dispute the investigation. But it depends on what you consider as fire damage,&uot; said Sydnes. &uot;We believe there is significant water and smoke damage, that makes it impossible to use the building as a food-processing plant.&uot;