Avenue Vine

Investigators have determined the cause of the fire was arson.

"This could be devastating," said Mike Fisher, of St. Helena-based wine industry consultant firm Motto Kryla Fisher. "You're going to lose your placement and it will ripple through the whole system. You're going to be taken off distributor's books, you're going to be taken off restaurant wine lists.

"With losing the library wines, wineries are going to lose their ability to give historic perspectives, which is going to have an effect on marketing wines going forward. This is not something that can be replaced. In most instances, these wines are unique and of a limited quantity.

"How are you going to build back your brand once you've been out of the market for a period of time? Just like a new brand, you might have to start over again."

Almost every affected winery, most of which were small, family-owned properties, will have to scramble to keep the market share they had worked so diligently to maintain.

The additional impacts of the fire are equally staggering:

* Vintners will be forced to compensate retail, restaurant and other customers, because so much of the wine lost in the blaze had already been allocated and was paid for.

* Many of the wineries were either underinsured or not insured at all.

* Entire vintages and library wines, some dating to the 1970s, were destroyed, or may have to be pulled off of the market because of possible damage, as decreed by the federal Alcohol and Tobacco Tax and Trade Bureau.

Winery owner Delia Viader lost all of her 2003 production, which included 6,000 cases worth $3.5 million.

"I'm trying to make it mean as little as possible and to have as little impact in the market as possible," said Viader. "I'm trying to protect the hard work every salesperson put in and mine the gap between the '02 and '04 vintages."

Viader said that she has been on the phone talking to her distributors, as well as banks, who are assisting her with a loan. She acknowledged that she had no insurance on her '03 wines. She placed the vintage in the Wine Central Warehouse only last month because there was no room at her Deer Park Road winery, as she is in the midst of building a cave extension.

"It's a big hit, there's no doubt about it," said Viader. "This is the time that you count on your friends -- and I have many -- and I think that will help us through."

Viader was one of about two dozen wineries in Napa Valley that lost at least some of their stock. Others are Saintsbury, Tres Sabores, ZD, Whitehall Lane, Long Meadow Ranch, Coho, Caldwell, Livingston, Saddleback, Venge-Rossini Ranch, von Strasser, Pavilion, Sinskey, Frazier, AJ Bianchini, Rutherford Grove, Signorello, Sherwin, Redmon, Marilyn and corporate-owned Beaulieu and Sterling.

Though it has previously been reported that Marilyn lost as many as 30,000 bottles, it turns out the winery with the unique Marilyn Monroe-themed labels only lost part of its limited 2002 and 2003 Velvet Collection vintages.

Nils Venge of Saddleback and Rossini Ranch, who has yet to assess his loss, believed to be his entire production of '01 and '02 cabernet, called the fire "cruel."

"There are hideous people out there," he said. "It's cruel. To be out of an entire vintage or two, with very high ratings (from critics), it's very devastating. People have been expecting the wine.

"You're out of people's scope for a while. It's going to be much harder to get back on the screen. ... Everybody will have to rehustle."

John Caldwell of Caldwell Vineyards went so far as to say, "We're out of the wine business for a year."

He says all of his '03 was destroyed and some '02, and "worse still, our historical wines from '98 to '01."

In all, Caldwell lost about 2,200 cases of the '03 at a retail value of $1 million. He said he was not fully covered.

"Sometimes you don't look closely at your insurance. You think you're covered. I thought we'd be covered, but unfortunately, there was some clause in there which put a limitation on location, which is going to be a negotiating thing, which will probably end up as a legal hassle."

Rob Sinskey of Sinskey Vineyards lost 6,000 cases, which represented 22 percent of his total production at a total cost of $2.5 million.

"Unfortunately, they were some of my favorite wines," he said, referring to single-vineyard pinot noir from '02 and '03 his "maiden voyage into Carneros cabernet from the Vandal Vineyard."

"(Losing) the high-end wines, that you use for your status wines, you lose market placement," he said. "These were wines that were well-received. You get some momentum going and all of a sudden the wine's not available."

Adding salt to the wound is the fact that Sinskey lost his pinots.

"Right now, with pinot noir being hot, it's too bad that was the primary variety."

Unfortunately, Sinskey had the wine in another warehouse until a few months ago, until that entity went bankrupt. However, vintners put the incident into perspective.

"No one died. We're not suffering the same issues that Katrina did to New Orleans," said Sinskey. "My winemaker put years of his life into it and we put our heart and soul into it, but no one died."

Said Caldwell: "I'm bullish about it. I think the insurance company will be fair. (And) we're officially starting again in '04. What are you going to do? We don't know how this is going to wash out. We'll call up our customers and say, 'we're out of business,' and we'll refund some clients. It's kind of an ugly little problem."

Viader, who also lost about 400 cases of her '00 and '01 wines, said, "This industry always makes you focus on the long term. If you're not able to focus on the long term, you won't be able to have much fun in this industry.

"It's not just the value, it's the disruption in the market that worried me more, and that doesn't have a dollar value. It's the presence of the brand in the marketplace. It's a fact of life that we don't control nature and can't control things like this. It could have been an earthquake and you have to be prepared.

"I'll look to '04 and '05 Šthe momentum is slowed, so you need to be very careful about your replacement. I will make sure that they don't (forget me)."

The Central Wines Vallejo warehouse fire may strike some legal parallels to the 2000 Frank-Rombauer Cellars fire on Larkmead Lane near Calistoga. About 20 mostly small winemakers lost about 84,000 cases in the three-day Calistoga fire, and more than three years of litigation produced a result that was for the most part settled out of court.
In the case of the Oct. 12 Vallejo fire, about 90 wineries leased space and officials have estimated as much as $100 million in property will have been destroyed.

"The parallels are striking," said Scott Snowden, a former Napa Superior Court judge who presided over the case. "I suspect the litigation will be different, of course, but the similarities will be striking."

Snowden, who recently retired from public life to become a private judge for the arbitration firm JAMS, said in 2003 the Rombauer case was "one of the most complex, high stakes cases ever seen in Napa County."

According to court records, some plaintiffs in the Rombauer case were at the same time defendants -- and vice versa -- and the actions of one salvage company trying to pawn off wine from the fire prompted a separate lawsuit in San Francisco. In 2001, a San Francisco judge forced Greer & Kirby, a salvage company, to stop selling wine culled from the ruins of the Rombauer fire. At the time it sold about 9,000 bottles to a North Beach import company as fresh-bottled wine.

A Napa jury in 2003 found a company called Miners & Pisani negligent for not warning Frank-Rombauer Cellars about potential hazards when it sold the winery a water heater. The financial settlement was negotiated out of court.

The first stage of the cases stemming from the Vallejo fire may involve insurance clients wrangling with their insurers about their coverage. Although investigators have determined the Vallejo fire was caused by arson, Central Wines may find itself sued over its warehouse policies, even if the arsonist is never caught. Given the multitude of wineries and clients storing wine, pasta and sugar at the Central Wines warehouse, Snowden said there could be a slew of individual claims.

"Certainly the substance of it would be different," he said. "In the Rombauer case there was some kind of problem with the water heater ... We don't even know how the fire started. The possibility of other litigation in the wake of it could begin. For instance, I could see someone suing because there wasn't enough security against arson."

There may also be some familiar faces involved.

Gerard Harney, a San Diego-based attorney who represented defendants in the Rombauer case, said he is being retained by Chubb Insurance, the company that insures several of the vintners who had property in the Vallejo fire.

Harney said he couldn't comment on potential civil lawsuits, but it was clear to him that the causes of the two fires are distinct.

"The only similarity I can make of it is that a lot of expensive wine was stored in both places," he said.

If there is a bevy of civil lawsuits, Harney reasoned they won't be filed soon.

Federal agents searched a home in Sausalito Wednesday that was linked to the owner of another wine storage business who is facing embezzlement charges.

Authorities are declining to comment on the specifics of the investigation, but have determined the fire last week at Wines Central was arson. The fire destroyed nearly $100 million worth of wine.

Authorities say wine entrepreneur Mark Anderson, owner of another storage facility, was at the warehouse on the day of the fire.

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