Liability questions linger overseas after Cover-All collapse

Sunday, July 11, 2010

by SUSAN MANN

A Russian dairy farmer is seeking a $1.5 million settlement after his two Cover-All buildings collapsed due to heavy snow loads but the company that now owns some of the former pre-engineered building manufacturer’s assets says its not liable.

Norseman Group Ltd. bought some of the assets of Cover-All Building Systems, including the buildings and the company name. The deal was finalized in June. But “they’re two different companies,” says Mark Mascotto, Norseman vice president of marketing.

“We don’t want people to confuse Cover-All with Norseman,” he adds.

Norseman paid $14 million for the Cover-All assets, Mascotto says. A total of 10 companies were bidding for the assets.

But Norseman can’t take on the liabilities of the former Cover-All company, he explains. “It was a different company. They weren’t our designs. We didn’t manufacture those products,” he says.

It would be like asking car manufacturer General Motors to take on Chrysler’s problems, he explains. “They just can’t.”

Former Cover-All dealer Aleks Jatsoun of Russia told Better Farming by e-mail that one Cover-All Titan-model building owned by Poliekt Podgornov collapsed March 12, 2009, while the other failure happened on Jan. 30, 2010. They were located in Yaroslavl Region, located 250 kilometres northeast of Moscow in the heart of central Russia.

There weren’t any people or cows in the buildings, which were 110 feet by 440 feet, at the time of either collapse. Podgornov is one of Russia’s top 10 dairy farmers. He owns more than 4,000 cows and produces 60,000 to 70,000 kilograms of milk daily. He was planning to use the buildings for a dairy farm academy, a training centre for young people interested in dairy farming, Jatsoun explains.

Podgornov requested the metal used in the buildings be tested and samples were sent to a Russian certified lab in Yaroslavl. Jatsoun claims test results showed the metal was weaker than what was declared by Cover-All in its documents. Metal dimensions and components were also different. Some pipes were smaller than those shown in Cover-All’s drawings and documents.
 
A Cover-All representative also collected samples from the farm that were sent to the Imperial College Laboratory in the United Kingdom on March 19. Jatsoun says neither he nor Podgornov received the results of those tests.

To obtain compensation, Podgornov filed a claim with Jatsoun’s company, EuroAgro. EuroAgro forwarded the claim to Cover-All’s court-appointed receiver, PricewaterhouseCoopers Inc. Cover-All went into receivership earlier this spring.

Jatsoun says his sales plummeted after the two collapses “as Mr.Podgornov’s farms are famous and everybody watched what happened there.” He says EuroAgro remains in operation “in order to help our customer, Mr. Podgornov.”

He says neither his company nor Podgornov received the safety notices issued by Cover-All earlier this year warning about the Titans’ susceptibility to collapse from heavy snow or strong winds.

Once the receiver told him that Norseman had acquired Cover-All’s assets Jatsoun approached that new owner with the claim. He says he has not received a response.

Mascotto says Norseman plans to try providing support to customers and dealers “in terms of possible fixes for their buildings because we have the best access to the information now than anybody else.”

One of the reasons Cover-All went into receivership was because “they had several design issues with some of their buildings that created quite a liability or risk for the company and they decided it was too much for them to handle,” he explains.

Cover-All was facing a number of legal challenges in different parts of the world, including the United States where a practice facility owned by the Dallas Cowboys football team collapsed injuring several people.

Mascotto says Norseman isn’t responsible for the lawsuits launched against Cover-All “because we didn’t buy the company. We just bought some of the assets, including the manufacturing plant.”

Norseman plans to build its own fabric covered buildings. It will look at some of the Cover-All designs “and redesign them, if possible, to be better buildings,” Mascotto says. But the company won’t be selling the same pre-engineered buildings as Cover-All.

Norseman is doing a ground-up redesign of some of the Cover-All models. Some models will be discontinued, including the majority of the Titan line. “We are looking at one part of that line but it’s going through a ground-up redesign to see if it’s reasonable to start producing a version of it again,” he says.

The company also plans to have dealers in Ontario sell its product line. “A number of the previous Cover-All dealers will be working with us in the Ontario market,” Mascotto says. “We’re very aggressively going back into that market.”

In the meantime, Jatsoun says his company may consider pursuing the claim with Cover-All’s former owner: U.S.-based Audax Group. BF