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September 27, 1999 02:00 AM

PIRELLI WILL PAY $17+ MILLION TO BOY IN LIABILITY SETTLEMENT

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    TAMPA, Fla.—In an out-of-court settlement, Pirelli Tire North America Inc.'s insurance company has agreed to pay $17.7 million to a young boy whose parents were killed in an accident blamed on a faulty tire. Spread out over the next 30 years, the payment to Matthew Jensen for the death of his mother, Virginia, follows a jury verdict four years earlier in which the tire company, then called Pirelli Armstrong Tire Corp., was found liable for the accident and assessed $6.5 million for the death of Matthew's father, Alwin.

    Pirelli had appealed that verdict, but the Second District Court of Appeal affirmed the judgment without opinion.

    The $17.7 million award, in addition to the $6.5 million award for Alwin Jensen's death, brings Matthew Jensen's total compensation to $24.2 million.

    Attorney Hugh N. Smith handled both cases for the boy, who was 4 years old at the time of the accident in December 1993. For tactical reasons, Mr. Smith filed the lawsuit over Mr. Jensen's death in the Florida Circuit Court for Hillsborough County. Following the jury's 1995 verdict, the lawyer then pursued the case concerning Mrs. Jensen in Federal District Court for the Middle District of Florida. A settlement was approved Sept. 17 by Federal District Magistrate Thomas T. Wilson.

    Mr. Smith, a partner in the Tampa law firm of Smith & Fuller P.A., said he sought redress in two separate courts "thinking it may increase the value for the plaintiff if looked at separately rather than collectively, and the jurisdiction in this case allowed us to that."

    According to the "structured settlement," which will provide for Matthew Jensen through a series of annuity contracts, his adoptive parents will receive $3,000 per month until he is 18. He will receive additional funds for tuition, college and living expenses. Between the ages of 25 and 40, Matthew will receive $20,000 per month until he reaches age 40, when he will receive an additional payment of $9 million.

    Asked why Pirelli agreed to the settlement, Mr. Smith said, "It was the prudent thing to do," because the tire company had been found liable for the accident by the state court jury, and that finding then applied in the federal case, as well. A Pirelli spokesman did not return a phone call by Tire Business press time.

    The accident occurred as the family was returning from a day's outing at Florida's Disney World amusement park. According to the lawsuit, the tire on the 1985 GMC van failed due to a tread separation. As Mr. Jensen attempted to move off Interstate 4, the van began to spin, ``tripped off the side of the road and, ultimately, rolled over four times,'' Mr. Smith said.

    Matthew was strapped in his car seat, but his mother was killed instantly in the crash and his father died two hours later.

    Originally, the tire had been driven for less than 5,000 miles, then was taken out of service and kept as a spare. Mr. Smith said it was not worn out, had virtually new tread on it, and had been installed on the van only three days before the accident.

    The jury in the 1995 case concluded the tire failed because its steel belts were rusted and had caused the tread to separate. It said Pirelli should have warned consumers about the dangers of worn or damaged tires.

    ``The fact that steel belts rust has been known to the industry ever since the advent of steel-belted radials,'' Mr. Smith said.

    Ironically, for 20 years until about 1986, he had served as outside counsel for the B.F. Goodrich Co., and defended the tire maker in tire liability cases.

    For the Jensen case, he enlisted corroborating testimony about the cause of the tire failure from ``expert witness'' Rex Grogan of Edinburgh, Scotland, whom Mr. Smith said had worked for some 30 years with Dunlop in Great Britain.

    Mr. Smith called the jury's verdict and the recent settlement ``large—you don't find very many like that,'' yet fair.

    ``If you're a parent, it's terribly frightening to think of a young boy in an accident such as this....''

    Matthew Jensen, now 10, lives with adoptive parents in New York.

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    Do you have an opinion about this story? Do you have some thoughts you'd like to share with our readers? Tire Business would love to hear from you. Email your letter to Editor Don Detore at [email protected].

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