An engineer’s general liability insurance carrier (“Utica Insurance”) refused to defend a suit against the engineer arising out of the death of a laborer (“Lindsley”) in a trench collapse. It contented that the claim was excluded from coverage. The trial court’s declaratory judgment in favor of the engineer against the insurance carrier was reversed on appeal because the court found the policy exclusion to be clear and unambiguous, particularly with reference to what constitutes professional services.
The survivors of the deceased laborer alleged that the engineer was negligent in that the engineer allegedly (1) failed to make daily inspections of excavations, failed to be present during all excavations and failed to make inspections after every rainstorm; (2) negligently designed the system for excavation, negligently drafted the plans and negligently failed to indicate in the slope of the spoil pile adjacent to the excavation; and (3) misrepresented its qualifications to prepare the safety requirements and design the excavation system, and misrepresented that it would properly inspect and monitor the excavation.
The engineer’s general liability policy contained the following exclusion: “This insurance does not apply to ‘bodily injury,’ ‘property damage,’ ‘personal injury’ or ‘advertising injury’ arising out of the rendering or failure to render any professional services by or for you, including: (1) The planning , approving, or failing to prepare or approve maps, drawings, opinions, reports, surveys, change orders, designs or specifications; and (2) Supervisory, inspection or engineering services.”
In an apparent effort to avoid this policy exclusion, the Lindsleys amended their complaint against the engineer to allege acts and omissions against non-engineering personnel as well as engineering personnel, with the intent of characterizing the services as nonprofessional. Although the trial court was apparently persuaded by this argument, the appellate court was not. It stated that the court must look at the facts alleged in the complaint rather than the legal theories alleged. The facts in the underlying complaint, says the court, were that the engineer negligently performed services that were explicitly defined in the policy exclusion as professional services, and thus the claim was excluded from coverage under Utica’s policy. Utica Lloyd’s of Texas v. Sitech Engineering Corporation, 38 S.W.3d 260 (Tex. App. 2001).
** Risk Management Note: This case provides a good example of the value gained from carrying design professional insurance if you are providing services as either a contractor, construction manager or design professional that may be deemed “professional services.”
About the author: Article written by J. Kent Holland, Jr., a construction lawyer located in Tysons Corner, Virginia, with a national practice (formerly with Wickwire Gavin, P.C. and now with Construction Risk Counsel, PLLC) representing design professionals, contractors and project owners. He is founder and president of a consulting firm, ConstructionRisk, LLC, providing consulting services to owners, design professionals, contractors and attorneys on construction projects. He is publisher of ConstructionRisk.com Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932. This article is published in ConstructionRisk.com Report, Vol. 3, No. 5 (Aug 2001).