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ConstructionRisk.com Report
http://www.ConstructionRisk.com
Vol. 7, No. 1, February 05
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Inside
This Issue:
• Summary
Judgment against Plaintiff who Failed to Provide Factual Support that
she could Meet Burden of Proof of Negligent Design
• Design
Professionals Not Subject to Liability under Title III of the ADA and
Washington’s Law against Discrimination
• Project Manager
Required by Fiduciary Duty to Owner to agree to Settlement with a
Supplier Contrary to its Own Interest.
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ARTICLE 1
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Summary
Judgment against Plaintiff who Failed to Provide Factual Support that
she could Meet Burden of Proof of Negligent Design
By:
Kent Holland
When a
bicyclist crossing a small bridge, slid on loose gravel, hit and flipped
over a guard rail, and suffered injuries when she fell about twenty feet
into a dry creek bed, she sued the local county as well as all engineers
who had anything to do with the design and construction of the bridge.
The trial court granted, and the appellate court affirmed,
motions for summary judgment against the plaintiff because she
failed to provide factual support sufficient to establish that she would
be able to satisfy her evidentiary burden of proof at a trial.
In the case of Boland v.
West Feliciana Parish, (2003 CA 1297, Docket No. 17,142, June 25,
2004), the court stated that
Louisiana
courts have adopted a duty-risk analysis in determining whether to
impose liability for negligence. A
plaintiff must prove the following five elements: (1) the defendant had
a duty to meet a specific standard of care; (2) the defendant failed to
meet the standard of care; (3) the defendant’s failure to meet the
standard was the cause-in-fact of the plaintiff’s injuries; (4) the
defendant’s failure to meet the standard of care was a legal cause of
the injuries; and (5) the extent of actual damages.
Duty, says the court, is a question of law, and the legal
question of the existence of a duty is appropriately decided by a court
through summary judgment rather than by a jury at trial where there is
not factual dispute and no credibility determinations required to be
made. Plaintiff’s claims
against the engineer (Decoteau) were based on his position as a
consulting engineer before
and during construction of the bridge.
She asserted that the West Feliciana Parish (hereinafter referred
to as “county”) used his plans for the bridge and sought his advice
during construction. Decoteau,
however, claimed he had a very limited role, advising the county only on
specific aspects of the bridge project, including reviewing bridge plans
prepared by another engineer, helping the county obtain a third
construction bid, and providing load limit calculations on the bridge
after it was built. He
supported his position with affidavits and deposition testimony of
himself and others. He said
he did no measurements of guard rail heights or other aspects of the
bridge not affecting load limits. Further,
he stated the county didn’t ask him to do anything concerning
construction other than a structural examination to determine load
limits after construction was completed.
In view of the pleadings, affidavits and depositions, the
appellate court agreed with the trial court that the plaintiff did not
establish that any of the engineer’s duties affected the bridge
conditions that allegedly caused her accident.
For this reason, summary judgment was appropriately granted, said
the court.
The court next reviewed whether summary judgment was
appropriately granted to the county.
The county argued that the plaintiff had failed to present
sufficient factual support to establish the bridge was defective due to
a condition that created an unreasonable risk of harm and that the
parish knew of the risk. Her
primary contentions concerning hazardous conditions involved the surface
material and the height of the guard rails.
She claimed that the crushed limestone aggregate presented an
uneven and unstable surface that caused her bike to skid, and the county
should have overlaid the material with a hard surface.
She also claimed the railing was too low, in part because of
design error and in part because of a build-up of gravel next to it.
As support for the county’s claim that the bridge surface and
railings were not defective and that the county had no knowledge of
risk, the county submitted excerpts of several depositions, meeting
minutes, AASHTO standards, and two affidavits by a professional
engineer. Evidence presented showed that the constructed railing height
satisfied the AASHTO standards, even if the county is correct that the
standards don’t apply to this small road and bridge. Affidavits and
deposition testimony of a professional engineer stated that the crushed
limestone aggregate surface was not unstable and that it was suitable
for this type of bridge in this type of service.
Based on the evidence, the court concluded that the plaintiff
failed present factual support that the bridge was defective due to a
condition that crated an unreasonable risk of harm and that the county
had actual or constructive knowledge of any risk associated with it.
Moreover, found the court, an affidavit submitted by a
professional engineer on behalf of the plaintiff stated that it was the
plaintiff’s attempt to make a “sharp corrective turn” to stop her
skid that “flipped the bicycle over toward the railing and created the
centrifugal force sufficient to carry her over it, not the skid or some
fulcrum effect created by the height of the railing itself and contact
with it.” For these
reasons, the court affirmed summary judgment in favor of both the
engineer and the county.
Comment:
This case demonstrates the importance of aggressively pursuing
motions for summary judgment based upon facts that can be discovered
prior to trail. In this
case, the court determined that since the plaintiff had failed to
present a sufficient factual and legal case for a jury to find the
defendants liable, it would be inappropriate for the court to do
anything but grant summary judgment for the defendants.
Without regard or reference to the facts of this particular case
(of which I have no personal knowledge), it’s encouraging to see
decisions where judges exercise their judicial discernment to terminate
litigation against parties where the pre-trial pleadings and evidence do
not substantiate including the parties in the lawsuits.
Not every accident is the result of someone else’s negligence.
Some accidents just happen – without fault.
That’s unfortunate – but it’s a fact of life.
Tort reform is badly needed on the federal and state level to
correct our legal system that seems to encourage plaintiff attorneys and
their clients to turn every accident in to a tort (negligence) claim
against others (preferably others who have large insurance policies).
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ARTICLE #2
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Design
Professionals Not Subject to Liability under Title III of the ADA and
Washington’s Law against Discrimination
By:
Bruce Marvin and Beth Andrus
The
Federal District Court
for the Western District of Washington has recently held that Title III
of the Americans with Disabilities Act (ADA) and
Washington
’s Law Against Discrimination (WLAD) do not provide a statutory basis
for direct or third party claims against design professionals.
Generally, Title III of the
ADA
prohibits discrimination against the disabled with regard to access to
places of public accommodation. It
provides: “No individual
shall be discriminated against on the basis of disability in the full
and equal enjoyment of goods, services, facilities, privileges, or
accommodations of any place of public accommodation by any person who
owns, leases (or leases to), or operates a place of public
accommodation. 42 U.S.C.
12182(a).
Types of discrimination expressly prohibited by Title III include
the design and construction of facilities that are not readily
accessible and usable by individuals with disabilities.
42 U.S.C. 12183(a)(1).
Courts interpreting WLAD generally apply the same analysis used
to interpret federal antidiscrimination laws.
Accordingly, prohibitions against discrimination on the basis of
disabilities in WLAD are subject to the same analysis applicable to
ADA
.
In Marshall v. Cafaro, Co.,
a disability rights group sued a mall owner for violation of Title III.
In response to this lawsuit, the Owner filed third party
complaints against various design professionals and contractors who had
worked on expansion of the mall over the previous 10 years.
Among other things, the Owner asserted third party claims against
one of the mall’s architects, including breach of contract,
professional negligence, and statutory and common law indemnification
and contribution.
With regard to the statutory claims, the Owner alleged that the
Architect’s design failed to conform to
ADA
requirements and, therefore, the Architect should be held liable for any
damages the Owner might incur as a result of the plaintiff’s
ADA
and WLAD claims.
The Architect responded with a general denial of all liability
based on the fact that the Architect’s design satisfied all
ADA
requirements in effect at the time of construction.
When the Owner refused to voluntarily dismiss its claims, the
Architet filed a motion for summary judgment, arguing that the Owner had
failed to state a cognizable claim under Title III of the
ADA
or WLAD. The Architect also
argued that the Owner’s contract, tort, indemnification and
contribution claims were barred by the applicable statutes of limitation
and by
Washington
’s six year statute of repose for construction-related claims.
The District Court granted summary judgment and dismissed the
Architect from the case. Rejecting
the Owner’s Title III contribution claim, the Court cited to Lonberg
v. Sanborn, 259 F.3d 1029, am. 271 F.2d 953 ((9 th Cir. 2001), in
which the Ninth Circuit refused to extend Title III liability to
designers and contractors responsible for construction of building that
failed to conform with the ADA. In
doing so, the Ninth Circuit found that the “general” rule set forth
in 42 U.S.C. 12182(a), which specifically limited Title III liability to
persons “who own [], lease [] …,, or operate [] a place of public
accommodation” clearly established Congress’s intent to restrict
ADA
liability to owners, lessors and operators of public facilities.
Although noting that Lonberg did not specifically address
contribution claims, the District Court found that the Ninth Circuit’s
holding that architects were not within the scope of parties subject to
Title III liability was persuasive.
Accordingly, it concluded that the Owner had failed to meet its
burden of establishing that there was an implied right of contribution
available against architects under Title III.
The court, therefore, dismissed the claim.
Because the WLAD is subject to the same legal analysis as the
ADA
, the District Court held that the Owner’s contribution claim under
WLAD failed for the same reasons that its
ADA
claim failed.
Conclusion.
All design professionals have a professional and ethical
obligation to design structures that comply with the applicable laws and
building codes, including the
ADA
. While Marshall and Lonberg
stand for the proposition that Title III does not provide a statutory
cause of action against design professionals, failure to comply with the
ADA may still result in liability for malpractice or breach of contract
(claims the Marshall court did not have to address because they were
barred by the applicable statutes of limitation and the six year statute
of repose).
About the authors: Bruce
Marvin and Beth Andrus are attorneys with the law firm of Skellenger
Bender, P.S.,
1301 Fifth Ave., Suite 3401
,
Seattle
,
WA
98101
. They may be reached at bmarvin@skellengerbender.com
and bandrus@skellengerbender.com.
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ARTICLE #2
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Project
Manager Required by Fiduciary Duty to Owner to agree to Settlement with
a Supplier Contrary to its Own Interest.
By:
Kent Holland
Under the
terms of a project management agreement making the project manager the
owner’s agent for dispute resolution of supplier claims was required
to agree to a dispute settlement between the project owner and
construction contractor that was adverse to the project manager’s own
interests.
Kvaerner
U.S.
, Inc. (“Kavaerner”) was responsible, pursuant to its project
management agreement (“PMA”) with IPSCO Steel, Inc. to recommend
contracts for IPSCO to award to various subcontractors and suppliers,
and to “be IPSCO’s agent for the purpose of administering Supplier
Contracts and managing and coordinating Suppliers’ Work.”
In connection with liens and disputes, the PMA further provided
that Kvaerner was “to protect IPSCO’s interests at all times.”
Under the PMA, Kavaerner expressly warranted that the
“Aggregate Cost” of the project would not exceed a Guaranteed
Maximum Price (“GMP”) of $182 million an that it would reimburse
IPSCO for any costs in excess of that amount.
On the other hand, if the Aggregate Cost was below the GMP,
Kavaerner was to share the savings on a 50-50 basis.
Another aspect of the PMA required Kavaerner to serve as
IPSCO’s litigation manager to resolve anticipated disputes that might
arise with suppliers within the GMP. One final component of the PMA
important to this decision was a requirement that IPSCO provide a $20
million professional liability insurance policy to cover Kvaerner, the
subconsultants and design professionals.
This policy was issued by Liberty Mutual Insurance Company and
was a typical claims-made policy whereby defense costs erode the policy
limit.
IPSCO awarded the design and construction contract to Blaine
Construction Corporation (“Blaine”) pursuant to Kvaerner’s
recommendation.
Blaine
abandoned the project, says the court, less than a year into its work
due to design errors in its work which caused significant delays and
disruptions. As a result of
that abandonment of the work, IPSCO and Kvaerner entered into a written
agreement reinforcing the agency relationship and specifying how any
money recovered from
Blaine
would be paid to IPSCO and applied against the Aggregate Cost under the
PMA. The court states that
“IPSCO and Kavaerner agreed Kvaerner would pursue recovery from
Blaine, Liberty Mutual and Marsh for damages resulting from
Blaine
’s conduct.”
In response to the suit brought against it by Kvaerner and IPSCO
in the federal district court in
Pennsylvania
,
Blaine
demanded defense and coverage from Liberty Mutual.
Liberty Mutual denied coverage on the basis that it allegedly had
not received proper notice that
Blaine
was an insured under the policy.
Blaine
then filed suit against Liberty Mutual and Marsh, asserting that Marsh
had issued an “advice of insurance” three years earlier assuring
Blaine
that it was covered by the Liberty Mutual policy.
A settlement was entered into between Blaine and IPSCO/Kavaerner
whereby the parties agreed to submit the question of Blaine’s
liability to an arbitration panel and stipulated that if Blaine were
found liable, a $26 million judgment would be entered against Blaine,
but that because of Blaine’s “empty pockets,” IPSCO and Kavaerner
would satisfy the judgment by looking solely to Blaine’s insurers.
While all this was pending, IPSCO filed suit against Kvaerner in
federal court in
Alabama
, demanding over $60 million in cost overruns, including damages from
Blaine
’s abandonment of the project. Since
Kvaerner was insured under the $20 million Liberty Mutual policy, its
defense costs in the
Alabama
suit ($5million) were paid for by that policy, thereby reducing the
coverage available to pay in the
Pennsylvania
litigation, if
Blaine
were eventually found liable and if
Blaine
prevailed in its coverage dispute with Liberty Mutual.
Liberty Mutual entered into a settlement agreement with IPSCO and
Blaine while the arbitration was still pending.
Kavaerner apparently declined to join the settlement discussions,
says the court. By the terms
of the settlement, IPSCO and Kvaerner would release all claims against
Blaine
and
Blaine
would release all coverage claims against Liberty Mutual, in payment of
$6 million by Liberty Mutual. IPSCO
then sent the settlement agreement to Kvaerner with the following
transmittal language: “Pursuant to the PMA, IPSCO hereby directs
Kvaerner, as its agent, to confirm in the space provided below that
Kvaerner consents to the enclosed settlement agreement insofar as any
such consent might be required from Kvaerner.”
Kvaerner refused to sign the settlement agreement because it
believed the $6 million settlement was not sufficient in view of the $26
million judgment that had been previously agreed to against
Blaine
. IPSCO then filed a motion
with the
Pennsylvania
federal district court asking it to approve the settlement and dismiss
all the claims, except those against Marsh which were resolved by a
separate settlement agreement.
The district court concluded that Kvaerner couldn’t
unilaterally veto the settlement because, under the terms of the PMA, it
was required to “protect IPSCO’s interests” in any litigation with
project suppliers. The
district court held that Kvaerner had a fiduciary duty to act for
IPSCO’s benefit, that IPSCO had the right to control dispute
resolution, and that Kvaerner was contractually obligated to follow
IPSCO’s instructions. And
Kvaerner was barred by its PMA from putting its owner financial
interests ahead of those of IPSCO.
On appeal, the U.S. Third Circuit Court of Appeals affirmed the
district court decision. Of
vital significance to the appellate court’s decision was its finding
that although the PMA gave “primary responsibility” for resolving
disputes to Kvaerner, it reserves final settlement approval to IPSCO –
thereby retaining the right to control settlement of disputes.
The court found that “Kvaerner, as IPSCO’s agent and pursuant
to its agreement to protect IPSCO’s interests was required to do
IPSCO’s bidding, which included Kvaerner’s consenting to the two
settlements…. As IPSCO’s agent, Kvaerner owed IPSCO a duty of
loyalty…. That duty of loyalty required Kvaerner to protect IPSCO’s
best interests. Once IPSCO
made it known that it had reached a settlement with Liberty Mutual and
Marsh, Kvaerner was under a duty to effectuate IPSCO’s wishes and
consent to settlements…. Kvaerner’s
duty of loyalty surmounted what could be considered as a conflict of
interest.”
The conflict of interest referred by the court was explained as
being the interest that Kvaerner had in ensuring that funds remained
available under the Liberty Mutual policy to continue paying for
Kvaerner’s future defense costs in the Alabama litigation, in contrast
with the interest of IPSCO to preserve as much of the policy as needed
for the coverage action settlement in Pennsylvania.
The court concluded: “Thus, it was in IPSCO’s interests to
reach a settlement with Liberty Mutual sooner rather than later.
Even though such a settlement was adverse to Kvaerner’s
interests, Kvaerner was required, as protector of IPSCO’s interests,
to resolve any such conflicts in IPSCO’s favor.
IPSCO Steel, Inc. v. Blaine
Construction Corporation, (No. 03-2929,
U.S.
Court of Appeals, 3rd Cir., June 10, 2004).
Note:
Several other
interesting issues are discussed in this case, including whether the
excess liability carrier, Lexington Insurance Company, had standing to
intervene in litigation to assert that its own interests were adversely
impacted.
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ABOUT
THIS NEWSLETTER & A DISCLAIMER
This newsletter Report is published and edited by J. Kent Holland,
Jr., J.D., is a construction lawyer and a risk management consultant for Environmental and
Design Professional Liability. The
Report is independent of any insurance company, law firm, or other
entity, and is distributed with the understanding that
ConstructionRisk.com, LLC, and the editor and writers, are not hereby
engaged in rendering legal services or the practice of law. Further,
the content and comments in this newsletter are provided for educational
purposes and for general distribution only, and cannot apply to any
single set of specific circumstances. If you have a legal issue to which
you believe this newsletter relates, we urge you to consult your own
legal counsel. ConstructionRisk.com, LLC, and its writers and editors,
expressly disclaim any responsibility for damages arising from the use,
application, or reliance upon the information contained herein.
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Copyright 2005, ConstructionRisk.com, LLC
Publisher & Editor: J. Kent Holland, Jr., Esq.
8596 Coral
Gables Lane
Vienna, VA
22182
703-623-1932
Kent@ConstructionRisk.com
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