Court documents indicate that the McFarland Energy Co. has agreed to a settlement worth between $2.5 million and $8 million to the 21 people injured in a methane gas explosion and fire five years ago at the Ross Dress for Less store in the Park Labrea shopping center.
The exact amount of the settlement has been sealed by court order, but documents show that the two sides were working toward a compromise in the range of $2.5 million and $8 million. The agreement means that McFarland, the last of several defendants, paid the biggest settlement by far.
Spokesmen for the firm, which operates oil wells beneath the Fairfax District from a tree-hidden enclave behind the Farmers Market, declined to comment on the financial value of the agreement.
But Lawrence Hirst, vice president and general counsel, said that the Santa Fe Springs-based company had no responsibility for the blast and fire.
"The insurance companies got together and decided to settle. They had the authority to do that, but it was done without any acknowledgement of fault on the part of McFarland Energy, certainly," he said.
Court records show that the earlier settlements totalled about $850,000, including $500,000 from the May Co. stores and the Metropolitan Life Insurance Co., which owned the property at the time of the March 24, 1985, incident.
Attorneys for the victims then demanded $8,170,711 from McFarland, arguing that its operations, which included removing oil and reinjecting water and natural gas into fault-riddled underground formations, made it responsible.
CIGNA, McFarland's insurance carrier, then responded with a counteroffer of $2,530,000, the documents showed.
That offer was rejected in June, but continued negotiations yielded an agreement by October.
Russell Wollman, an attorney for McFarland, said expert testimony would have shown that the methane that seeped into the Ross store was caused by the degeneration of plant matter near the surface, thousands of feet above McFarland's oil and gas reserves.
"This evidence notwithstanding, McFarland has chosen, without admitting liability, that it would settle with the plaintiffs," he said.
But Matthew B. F. Biren, the attorney who brought the suit, said the result "represented an appropriate acknowledgement on the part of McFarland of its responsibility for the explosion, despite Mr. Wollman's protestations to the contrary."
Accusing McFarland of "grossly negligent conduct," Biren said the conditions that led to the 1985 blast continue today.
Recent incidents, such as the forced closure of a Wells Fargo bank branch on Fairfax Avenue because of a low-pressure methane leak, present "unequivocal evidence of the continuing danger," he said.
Hirst, however, said that the existence of shallow methane deposits is well known in the area, and that the 1985 explosion had more to do with changes in the underground water table than with McFarland's work thousands of feet lower.
"To the extent that he says we were grossly negligent or there's a continuing danger, he's clearly mistaken," Hirst said.
"In fact, we'd suggest that as a producer of oil and gas in the area we are actually helping to alleviate the problem, to the extent that we are producing in a controlled way, consistent with existing law and regulations," he said.