Because the 10 year state statute of repose made Jacobs Engineers immune from liability for the collapse of the I-35W bridge across the Mississippi River, it was not subject to suit by URS (the subsequent bridge inspection engineer) since there was no common liability for damages owed to the plaintiffs who were killed or injured during the collapse.  Jacobs was therefore entitled to dismissal of the third-party claim by URS for contribution.  Further, since URS didn’t plead facts demonstrating URS would have vicarious liability making it liable for damages caused by Jacobs, Jacobs was also entitled to dismissal of the URS claim for indemnity.

This case arose out the collapse of the I35W bridge in Minnesota on August 1, 2007.  This bridge had been designed in 1962 by Sverdrup & Parcel and Associates which was later acquired by Jacobs Engineering Group.  In 2003 the state department of transportation contracted with URS Corporation to inspect the bride and recommend repairs.  In 2007 the department awarded a contract to a construction firm to repair the bridge.  Repairs began in June 2007 with the intent to be completed in September 2007.  While the repair work was still in progress, however, the bridge collapsed and thirteen people were killed and more than 100 were injured.  Over 100 lawsuits were filed against URS and the construction contractor – alleging negligence and breach of contract.  URS and the contractor brought third party actions against Jacobs, claiming that Sverdrup negligently designed the bridge.

Jacobs moved the trial court to dismiss the third-party action for failure to state a claim upon which relief could be granted – arguing that the 10 year statute of repose had long since passed, making it immune from suit by the plaintiffs and, therefore, immune from suit by URS on the contribution and indemnity theories.  The trial court denied the motion, and this appeal followed with the appellate court reversing the trial court and holding that dismissal was required to be granted as to contribution and indemnity for the reasons explained below.

The first point that Jacobs argued was that an essential element of any contribution claim  is that the defendants must share in a  common liability to the plaintiffs, otherwise there is no legal basis for assessing contribution damages against an entity that had no such liability directly to the plaintiffs.  The appellate court agreed that such a common liability was “the very essence of the action of contribution.”   It quoted the state supreme court as holding “the doctrine of contribution applies when several persons are under a common liability to another, and equity distributes the burden among the several obligors in proportion to their respective shares. When one of the several obligors satisfies the obligation that would otherwise fall on all of them, the rest are required to contribute to reimburse the one to the extent that he has discharged the obligation in excess of what could justly be claimed from him.”

In this case, a state statute made it impossible for an engineer to be sued by the plaintiffs any later than 10 years following substantial completion of the construction.   The statute that governs actions for damages arising out of the defective and unsafe condition of an improvement to real property states:

“(a) Except where fraud is involved, no action by any person in contract, tort, or otherwise to recover damages for any injury to property, real or personal, or for bodily injury or wrongful death, arising out of the defective and unsafe condition of an improvement to real property, shall be brought against any person performing or furnishing the design, planning, supervision, materials, or observation of construction or construction of the improvement to real property or against the owner of the real property more than two years after discovery of the injury, nor in any event shall such a cause of action accrue more than ten years after substantial completion of the construction. Date of substantial completion shall be determined by the date when construction is sufficiently completed so that the owner or the owner’s representative can occupy or use the improvement for the intended purpose.

(b) Notwithstanding paragraph (a), an action for contribution or indemnity arising out of the defective and unsafe condition of an improvement to real property may be brought no later than two years after the cause of action for contribution or indemnity has accrued, regardless of whether it accrued before or after the ten-year period referenced in paragraph (a).

(c) For purposes of paragraph (a), a cause of action accrues upon discovery of the injury; provided, however, that in the case of an action for contribution or indemnity under paragraph (b), a cause of action accrues upon the earlier of commencement of the action against the party seeking contribution or indemnity, or payment of a final judgment, arbitration award, or settlement arising out of the defective and unsafe condition.”

Minn.Stat. § 541.051, subd. 1 (Supp.2007) (emphasis added).

This is a statute of repose whose purpose, as quoted by the court here,  has been described by the Minnesota Supreme Court as follows:

“[A] statute [of repose] is intended to terminate the possibility of liability after a defined period of time, regardless of the potential plaintiff’s lack of knowledge of his or her cause of action. Such statutes reflect the legislative conclusion that a point in time arrives beyond which a potential defendant should be immune from liability for past conduct.”

URS acknowledge that the ten-year repose period barred direct action by the plaintiffs against Jacobs, but it argued that the URS claim for contribution was allowable under subparagraph (c) of the statute quoted above.  But the appellate court disagreed with that argument, and held being able to bring a contribution action pursuant to the limitations described in the statute does not mean that a contribution action has actually accrued that would trigger the new time frame for filing a contribution action. Since the plaintiffs could not themselves bring an action against Jacobs, the court held that there was no common liability owed by Jacobs and URS – and that without such common liability there was no accrual of a contribution action.   In reaching this decision, the court acknowledged that it might seem harsh. It stated:

“We recognize that, because improvements to real property routinely last for many years after the ten-year repose period has passed, applying the statute of repose to defeat a contribution claim may produce harsh results. We also recognize that contribution is a flexible equitable remedy. But equity does not permit a court to change Jacobs’ substantive right to be free from liability after the ten-year repose period has passed.”

As to the indemnity count of the URS third-party claim, Jacobs argued that it was entitled to indemnity because its liability to the plaintiffs was derivative or vicarious liability for damages caused by Jacobs.   The indemnity that was at issue here was a common law indemnity rather than indemnity arising out of a contractual liability clause.  The court explained this indemnity as follows:

“One joint tortfeasor may obtain indemnity from another joint tortfeasor when the one seeking indemnity (1) “has only a derivative or vicarious liability for damage caused by the one sought to be charged”; (2) “has incurred liability by action at the direction, in the interest of, and in reliance upon the one sought to be charged”; (3) “has incurred liability because of a breach of duty owed to him by the one sought to be charged”; or (4) an express contract exists between the parties that contains an explicit undertaking to reimburse for liability of the character involved.”

The court further explained the concept of “vicarious liability” as follows:

“Vicarious liability is based on a relationship between the parties, irrespective of participation, either by act or omission, of the one vicariously liable, under which it has been determined as a matter of policy that one person should be liable for the act of the other. Its true basis is largely one of public or social policy under which it has been determined that, irrespective of fault, a party should be held to respond for the acts of another.”

According to the appellate court, although URS pleaded that Sverdrup (Jacobs predecessor) was negligent in its bridge design and that URS was free from any fault or negligence that might have contributed to the plaintiff’s injuries, the court said it missed a critical element in its pleadings by not pleading any facts regarding a relationship between Jacbos and URS that would make URS vicariously liable or otherwise impose liability for the plaintiff’s damages on URS, even if it were ultimately determined that URS was free from fault.   In the absence of an explanation for how  URS could have only a derivative or vicarious liability for damages to the plaintiffs caused by Jacobs, the court concluded that the indemnity action had to be dismissed.  For these reasons, the court reversed the trial court decision and directed that Jacobs was entitled to dismissal of the third party claim against it.   Individual 35W Bridge Litigation, 786 N.W. 2d 890 (2010).