Single or Multiple Claim (NC)shoke2013
Two different bridge collapses are “related claims” subject to a single per claim limit
A North Carolina district court, applying North Carolina law, found that two pedestrian bridge collapses were “related claims,” limiting Continental Casualty Company’s (“Continental”) liability to a $3 million per claim limit, rather than the aggregate $5 million policy limit.
Stewart Engineering, Inc. (“Stewart”) was contracted to provide structural engineering design services for two pedestrian bridges being built at Wake Technical Community College. Stewart designed both bridges, but Bridge 2 was designed before Bridge 1. Both bridges had the same engineer of record and project manager. Bridge 1 collapsed, killing one worker and injuring four others. The next day Bridge 2 collapsed, but resulted in no injuries. It was determined that the bridges collapsed because of the structural design in the glulam girders being severely notched at the end, which prevented end connections and because consultants and contractors “failed in their professional responsibility to share their knowledge with the structural engineer concerning the presence of the notches.”
Due to Bridge 1 and Bridge 2 collapsing, numerous claims were brought against Stewart (the “Bridge Claims”). Continental issued a liability policy to Stewart with $3 million per claim limits and aggregate limits of $5 million. Under the terms of the policy, Continental agreed to cover “wrongful acts” committed by Stewart. “Wrongful acts” are defined as “an error, omission, or other act that causes liability in the performance of professional services for others.” Under the policy definition, “related claims” are considered a single claim if they arise out of a single wrongful act or “multiple wrongful acts that are logically or causally connected by any common fact, situation, event, transaction, or decision.”
Continental sought summary judgment that the Bridge Claims were “related claims,” and therefore, Continental’s coverage obligations were limited to the single claim limit of $3 million. Stewart sought summary judgment that the Bridge Claims were not “related claims” and that Continental had a duty to defend Stewart in any underlying claims and litigation resulting from the bridge collapses.
The court concluded that the Bridge Claims were “related claims” and subject to the single claim limit of $3 million. The bridge collapses, and thus, the Bridge Claims, were the result of the same design failure by Stewart. Furthermore, even if the design failures were considered separate wrongful acts, the wrongful acts are “logically and causally connected because there are numerous common facts, circumstances, events, and decisions.” There was only one contract for the two bridges, both bridges had the same engineer of record and project manager, and both bridge collapse were the result of the same “miscommunication between Stewart Engineering’s Project Manager and its Project Engineer.” The court held that the different actors and decisions in design and construction of the bridges did not defeat the finding of relatedness.
Stewart argued that the policy language was ambiguous because it did not define “arising out of,” and it was unclear whether the “related claims” must arise “solely” out of the wrongful acts of the insured. The court rejected this argument and found that the focus of the “related claims” provision is whether the Bridge Claims arose out of a single act, or multiple wrongful acts logically or causally connected by “any common fact, situation, event, transaction, advice, or decision.” The court found that the policy language does not require the court to look at the actions or fault of third parties, but only Stewart’s wrongful acts, and whether those wrongful acts have a common factual nucleus. The court also rejected Stewart’s argument that the Bridge Claims were not “logically connected.” Wrongful acts are “logically connected” if there are shared facts, circumstances, and decisions. Under the Policy definition of “related claims,” wrongful acts can be related even if they “involve distinct acts, affect separate people, and occur at different times.”
Lastly, the court held that the $3 million limit per claim had been exhausted by the Bridge Claims and that Continental had no further duty to defend or indemnify Stewart for any underlying claims and litigation relating to the Bridge Claims. Stewart Eng’g, Inc. v. Continental Cas. Co., No. 5:15-CV-377-D (E.D.N.C. Mar. 20, 2018).