Multiple bridge collapses constitute “Related Claims” under professional liability policy

The Fourth Circuit, applying North Carolina law, affirmed summary judgment in favor of an insurer and held that the collapse of two bridges designed by the insured was subject to a policy’s $3 million per claim liability limit because the claims were “related claims” that arose from the same design failure.

The insured, Stewart Engineering, Inc. (“Stewart”), purchased a professional liability policy that obligated the insurer to defend and indemnify Stewart against claims arising from Stewart’s wrongful acts.  This policy included a limit of $3 million per claim and $5 million aggregate limit.  Per the policy, the insurer was to consider all “Related Claims” to be a single claim subject to the $3 million limit.

In February 2013, Stewart contracted to design two new bridges (“Bridge 1” and “Bridge 2”).  After construction of the bridges began, Bridge 1 collapsed, killing one construction worker and injuring others.  Bridge 2 collapsed less than 24 hours later, causing no injuries or fatalities.  Stewart’s insurer defended and indemnified Stewart against claims arising out of the Bridge 1 collapse.

The dispute was whether the claims arising out of the collapse of Bridge 2 were related—as defined by the policy—to the Bridge 1 claims, and thus, whether the insurer was required to continue to defend and indemnify Stewart up to the $5 million aggregate limit.  The district court concluded that the Bridge 2 claims were related to the Bridge 1 claims under the plain language of the policy.

On appeal, the Fourth Circuit held that the claims were related because the alleged wrongful acts out of which the Bridge 1 and Bridge 2 claims arose were logically connected by multiple common facts.  For example, Stewart executed a single contract for the design of both bridges and the same design flaw caused the collapse of both bridges.  Therefore, the Bridge 2 claims were “related” to the Bridge 1 claims.  Because the insurer had already indemnified Stewart up to the $3 million per claim limit, the insurer had no further obligation to defend or indemnify Stewart against the remaining Bridge 2 claims.  Stewart Eng’r, Inc. v. Cont’l Cas. Co., 2018 U.S. App. LEXIS 31521 (4th Cir. Nov. 7, 2018).