Zoeller Withheld Key Information In State Fair Stage Collapse Settlement

An AP story today uncovers key information that Attorney General Greg Zoeller withheld from the public and the victims seeking compensation for losses and injuries suffered during last year's tragic stage rigging collapse at the Indiana State Fair. The Indiana General Assembly agreed to appropriate $6 million in additional payouts to the victims and their families beyond the $5 million permitted under the state's tort claims act for a single event. After the appropriation was signed into law, Zoeller announced a deal that required victims to agree to settle up claims they had against Mid-America Sound Corp., the company responsible for setting up and maintaining the stage rigging that collapsed during a Sugarland concert when high winds from an approaching storm reached the fairgrounds just minutes before the concert was to begin, and Thomas Engineering, the company responsible for designing and manufacturing the stage rigging, in order to receive the additional settlement payments from the state. The two companies agreed to chip in an additional $7.2 million into the settlement pot. What Zoeller didn't tell the public or the victims and their attorneys was that Mid-America had threatened to hold the state liable under an indemnification clause it slipped into invoices it sent to the State Fair Director Cindy Hoye, who approved their payment, after the stage collapse occurred.

Invoices signed by fair executive director Cindy Hoye in the months after the collapse include an "indemnification" clause that requires the fair to assume all responsibility for any judgments, fines, injuries and loss of life resulting from use of the equipment and to hold the companies harmless.

Fair spokeswoman Stephanie McFarland referred questions about the invoices to the attorney general's office Tuesday.

Attorneys for Mid-America claim the invoices constitute binding contracts, a contention the state disputes. But after the state had already paid $5 million, and with lawmakers prepared to provide $6 million more, Zoeller decided it was better not to test that argument in court.

Zoeller's point man on the fair settlement, Larry Hopkins, told The Associated Press the plan tying the additional state money to the settlement offer from the two companies was the best way to avoid years of wrangling in court while protecting the state from a potentially massive judgment.

"The idea would be that if these claimants sued Mid-America and they succeeded in winning the lawsuit and there was a judgment, that potentially the state then is on the hook for that, even though we would fight it as vigorously as we could," Hopkins said. "Part of our mission with that new legislation was to try and deal with that indemnification claim and extinguish it."

First of all, I can't believe that Hoye didn't have an attorney looking over closely any documents she was sent by Mid-America in light of the tragedy and the looming liability the state already faced from the victims and their families before she signed off on it. More shocking is Zoeller's decision to essentially reward Mid-America for what I would argue was a fraud on its part. The company should be barred from ever doing business with the state of Indiana again for pulling such a deceitful act. When a business signs a contract with the state, the terms of the contract can only be modified if agreed upon and signed by both parties. A business simply cannot tack on an indemnification clause in its invoices that wasn't included in the contract it signed with the state to shift its liability to the state, particularly when you consider the fact that the state's liability was already limited under state law by the tort claims act. Hoye could not have unilaterally increased the state's liability, even if she had intended to do so.   

Zoeller was able to obtain settlements from 51 of the 62 claimants. At least three estates representing three of the women who died when the stage collapsed are not among those who settled. Their attorney has filed a lawsuit in Marion County objecting to the terms of the settlement being offered by Zoeller because they believe they have a right under the Indiana Constitution to pursue separate claims against Mid-America and Thomas Engineering. Apparently, Zoeller's office told Sen. Luke Kenley about Mid-America's threat to hold the state responsible for its liability when the General Assembly was debating the additional $6 million appropriation, but other lawmakers who sponsored the appropriation were not told that information by Zoeller's office according to the AP story. Rep. Ed. DeLaney complained that Zoeller's office was picking winners and losers. "There is a fundamental unfairness here," he said Tuesday. "Every other player is exposed to pay the limits of its insurance policy and its assets."

UPDATE: The Indiana Law Blog's Marcia Oddi has a damning analysis of the Attorney General's position here based on her long-time experience in state contracting.