August 8, 2017 – The Rose, Harrison and Gilreath law firm located in Kill Devil Hills, along with Wallace and Graham located in Salisbury and two South Carolina law firms, filed a class action lawsuit against construction giant PCL on July 31, 2017 in Dare County Superior Court. The lawsuit arises out of the Outer Banks power outage that started on Thursday, July 27 and continued until Friday, August 4 when the power was restored.
We have recently learned that PCL has asked victims to send in an “Outer Banks Claim Questionnaire” to the company’s agent. While we commend PCL for offering to discuss the losses suffered by individuals and business owners, there are some serious concerns.
- Many business owners may not yet be aware of the full scope of their losses. For many businesses, it will take a financial or accounting expert to review historical and year-to-date revenues and other information to determine the scope of the loss. We do not know whether PCL will pay for the full loss based only on an estimate, although we hope they do for people making the claims.
- There may be long-term losses. Some are reporting cancellations for September and the rest of the year. There may be additional losses going forward, for example if disgruntled tourists do not return. The full extent of lost income, lost profit, lost opportunity and other damages should be reviewed. Even a small reduction in tourism could result in significant losses for the individual business down the line.
- The “Claim Questionnaire” requires claimants to give out personal information without any assurances of protection and confidentiality. The form does not say who PCL may show the information to or for what purposes. Privacy rights may be affected.
- The claim form does not limit how PCL may use the information. For example, if a business owner claims $10,000 in losses and PCL will not pay, PCL could try to use that information in a later lawsuit if the business owner realizes he actually has more than $10,000 in losses. Any description of loss provided in writing could become evidence down the road.
- Does PCL intend to demand that victims sign a release of claims? For example, if PCL intends to require a wide-ranging release, then if there are losses in the future, the claimant may not have a remedy. We advise against a broad release of claims, and we also believe the settlement should not be confidential. If the payment comes with a requirement it has to be confidential, then neighbors will not be able to compare their settlements and make sure they are treated fairly. If they do disclose their payment amount they risk having it yanked back.
- What is the time frame? The claim form does not provide any rules or requirements PCL will follow and no indication how soon PCL will pay claims. It says nothing about the criteria PCL is using or how it is accounting for different kinds of losses.
The bottom line is that we do not know what the rules are that PCL is working by since it has not posted them. And we don’t know if PCL will pay fairly because we have not heard what anyone has received yet. We advise affected victims to choose whatever route works best for them. As something that might help island residents who have claims, below is a common-sense checklist for people seeking to evaluate their loss:
Checklist for Claimants:
1. Did you account for all your total out-of-pocket loss? Add up all receipts, cancellations, refunds. Are all transactions and clients accounted for? Have any associates or employees incurred out-of-pocket loss on the business’s behalf that they need to be repaid?
2. Were there costs to rent or buy temporary generator? Some businesses bought portable generators. This cost should be considered.
3. Did you make sure to add in costs of lost or spoiled inventory, stock, food, perishables? Before you throw out stock, take photos. Note what was lost. Keep receipts for costs to replace stock and inventory.
4. Did you or your employees lose work, lose wages, tips, payments? Or on the flip side, did you have to pay workers overtime as you scrambled to handle the outage?
5. Will there be future lost income, revenues, profit? Now that outage ended, is there a dip in the business volume compared to years before for this time of year? What is your reasonable estimate of the business loss you will suffer down the road?
6. Lost goodwill — If hotel/house guest canceled, were they a return customer, will they come back next year? Risk of long-term decline in bookings? Did you cancel, forgive or refund to any customers as goodwill to keep them coming back – how much did you lose? Companies put a number on goodwill in annual reports. It might be something you can be compensated for.
7. Were there other losses based on what the business could have expected if guests had come or stayed? Example: lost orders at the hotel restaurant. Purchases from the gift shop. Referral fees where the vacation lessor also refers customers for charter boats, etc.
8. What rights are being given up by signing a settlement agreement or a release? Does PCL want a release signed? What does it cover? Does it include indemnification or hold harmless language? Are there potential future losses you are signing away?
9. Have you reviewed all your insurance coverages? Some businesses may have business interruption coverage, for instance. If business insurance will pay for some or all of the losses, they may want to have input? Has the carrier been put on notice? Do they have any subrogation rights? Do they need to approve the resolution with PCL?
10. Should you be paid for annoyance, inconvenience, worry, stress and other similar compensation? Does business owner have a personal claim for the stress and annoyance the outage caused him or his family, and is he signing it away?
11. Are there any vendors who may have claims against your business that need to be resolved? Example: Because guest canceled, homeowner canceled cleaning service. Because of outage, restaurant canceled contracted delivery from food supplier. Because of outage, your restaurant could not cater and event, and now they want a refund.
12. What are the tax implications of the settlement? Under the law and tax rules, some kinds of settlements are taxable; others may not be.
13. Is the settlement confidential? If it is, then you won’t be able to compare it with neighbors and this may make it harder to determine if everyone is treated fairly.
14. How does the offer to you compare to ones made to your friends and neighbors? Have you checked it with others and does it appear fair?
15. Should you keep the settlement open-ended? Does the settlement say you can make a future claim if some other unexpected loss occurs that traces back to the outage, and that you forgot to include in your claim now or did not know would happen?
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