A couple who owns a home in north Cannon Beach may sue the city after a burst water line caused approximately $12,000 worth of exterior damage to their residence in January, and the city’s insurance company, Salem-based Citycounty Insurance Services, declined to cover it.

But Douglas and Karen Hadley — whose West Seventh Street property was flooded with water and debris when a city-owned PVC pipe ruptured in January — have a tough financial decision to make.

Filing a tort claim against the city of Cannon Beach will require them to spend thousands of dollars on soils experts, hydrologists, industrial engineers and other well-paid professionals to assess the quality of the broken pipe and the conditions around it, Douglas Hadley said.

If their homeowners insurance can cover at least some of the damage, it may actually be cheaper for the Hadleys to just pay for the remaining repairs themselves than to take the city to court.

Right now, “we couldn’t afford to get the money together to make our case,” Hadley said.

When a city’s insurance company denies a claim, “that can leave a property owner in a lurch,” said Christian Zupancic, the Hadleys’ Seaside attorney. CIS insures many cities and counties in Oregon, and if the company declines coverage, “usually these folks who have property damage, they have to figure it out on their own as to how to cover the damage.”

Though Zupancic said he does not know why CIS denied the Hadleys’ claim, he said that, in general, insurance companies will determine that their client did not cause active harm or behave negligently and, therefore, is not liable for damages.

For people like the Hadleys to prove the city is at fault, “there’s usually a lot of experts involved,” making it prohibitively expensive to fight the city, Zupancic said.

Kim Laramy, communications consultant for CIS, said the investigation is ongoing, so the company would not comment on the Hadleys’ case.

The trouble began when a pipe that runs uphill from the Ash Street pump station to the north reservoir suddenly broke on the evening of Jan. 7. Within 10 minutes, the reservoir’s 30,000 gallons of water emptied onto Ash, Seventh and Larch streets, according to Public Works Director Dan Grassick. At least 100 homes were without water service until around 2 a.m. Jan. 8, when the public works crew had replaced that section of pipe.

The Hadleys’ house didn’t suffer interior damage, but the deluge that flowed under and around it mangled a fence, damaged a brick walkway, undermined a retaining wall, broke some skirting and separated four support posts from the floor joists. The house has started to sag and settle. The garden was washed out, and the yard is a gravelly ruin.

The Hadleys hired a building contractor and a landscape contractor to estimate the cost of the physical damage alone. Their combined estimate of $12,000 doesn’t include Douglas Hadley’s travel expenses — he had to fly out from their home in Charlevoix, Mich., and rent a car in Oregon — nor does it include the thousands lost because the couple cannot rent out the house.

Though the Hadleys’ homeowners insurance may cover about $6,000 worth of structural damage, like the compromised posts, that “still leaves a lot of other damage” the couple would have to pay out of pocket, said Douglas Hadley. “We don’t have the cash for that. We don’t have cash sitting around for that purpose.”

The Hadleys may return to Cannon Beach in April to clean up their yard. For now, they are still hoping that either CIS or the city has a change of heart so the major repairs to the property can get underway.

“We have to get it done so we can get it back onto the rental market,” Douglas Hadley said.

Both he and Zupancic said that Cannon Beach’s city staff has been great to work with.

Zupancic, in particular, said that “considering the difficulty of the situation, I really am grateful to the city of Cannon Beach, and to CIS, for talking to me and for trying to work it out with me. They’ve been, by and large, cooperative, given the constraints that they’re operating under.”

Though City Attorney Tammy Herdener has said that CIS may not want to involve the city, Douglas Hadley wishes the city could openly communicate with him about the incident and its aftermath.

“It just seems so odd to me. I mean, come on, if something fails in my neighbor’s yard, and my house receives damage, it seems to me the neighbor fixes it, period. I don’t see why the city doesn’t think that way,” he said. “It’s very disappointing.”

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