Earthquake suit settled



SCRANTON - A lawsuit has been settled involving an earthquake insurance claim filed by Honesdale Volunteer Ambulance Corp. with its insurance carrier.

Terms of the settlement were not disclosed Friday. The case had been scheduled to go to trial Monday before U.S. District Judge Malachy Mannion in Scranton.

The now-defunct ambulance company claimed aftershocks from a 2010 earthquake in Canada caused damage to its building at 364 12th Street. American Alternate Insurance Corp. (AAIC) denied the ambulance's claim saying the damage at the building was caused by neglect and not covered in the policy.

The ambulance filed a federal lawsuit claiming bad faith and breach of contract.

According to paperwork:

The controversy arose after a magnitude-five earthquake happened in Quebec and caused aftershocks in Honesdale.

Honesdale EMS' insurance policy excluded coverage for "earth movement" but covered earthquake damage and had an "earthquake deductible" totaling $57,910.

The ambulance company argued the earthquake caused damage to the building and should be covered under the insurance policy.

AAIC argued the damage to the building existed prior to the earthquake, was caused by erosion and settlement and not covered under the policy.

The earth movement exclusion in the policy states that any "sinking, rising, shifting, freezing, thawing, erosion, compaction or expansion of the earth, including mine subsidence" is not covered.

Building settlement also is not covered.

Mannion wrote, "However, 'earthquake' damage is explicitly noted to be covered in the text of the exclusion.

"There is no dispute that the building suffered damage on account of earth movement. The question is whether that movement was erosion and settlement, excluded under the policy, or (an) earthquake."

The structure is a two- to three-story unreinforced masonry building.

It sits near the Lackawaxen River and some of its lateral support was taken when the riverbed was widened by the Army Corps of Engineers.

A 2005 inspection uncovered settling and cracking in the floor of the basement, cracking in the west gable wall and separation of the concrete floor in the building's ambulance garage.

In 2008 AAIC determined the replacement cost of the building had nearly doubled and strongly recommended that the ambulance company increase the limit on its policy.

On the day of the earthquake workers at the EMS building reported they felt the building shaking and hearing squeaking noises from the wall.

They evacuated and, once outside, found issues with the building they claim were preexistent.

The damage included cracks in the masonry, loose bricks on window arches and a window being dislodged and appearing to be falling into the building.

The building was condemned that day after a preliminary inspection.