Insurer Not Obligated to Cover Bridge Collapse Under Policy Exclusions, Eighth Circuit Rules

What Happened?

In October 2015, a 990-ton bridge deck collapsed at a Southern California construction site. The bridge deck collapsed when workers lowered it onto supports. The accident resulted in injuries to ten construction workers. Water trapped inside the bridge deck caused the bridge to fail.

HNTB, a transportation engineering firm, was on site when the incident happened. The role of the HNTB onsite engineer would be central to the ensuing lawsuits.

Bridge Collapse Lawsuits

The injured workers filed five separate state court cases against HNTB. The cases were consolidated for pre-trial proceedings. The injured workers maintained that the HNTB onsite engineer was supposed to inspect the bridge deck. Plaintiffs argued that such an inspection would have revealed that trapped water had weakened the bridge.

HNTB contended that its employee was present solely for "independent quality assurance." The defense added there was nothing the onsite engineer could have done

Insurance Coverage Disputes

Initially, HNTB’s professional liability insurer and Liberty agreed to split the defense costs. Later, Liberty would contest its liability, arguing that the policy’s "construction management" and "professional liability" exclusions prevented coverage. At that point, Liberty ended its participation in the proceedings. HNTB went on to settle the bridge collapse lawsuit for $2.5 million.

Summary Judgement

Liberty then requested that a federal court declare that it did not have to indemnify HNTB for the settlement. In a counterclaim, HNTB argued the opposite.

U.S. District Judge Stephen R. Bough granted an HNTB motion for summary judgment in part. Judge Bough determined that the underlying allegations created the potential for coverage under the engineering firm’s commercial general liability and umbrella policies.

Panel Remands to Lower Court

A three-judge panel reversed Judge Bough’s grant of partial summary judgment to HNTB and directed the district court to enter judgment in favor of Liberty on the umbrella policy claim. The panel remanded the case for further proceedings to resolve the remaining issues.

First, the three judges determined that Liberty is not liable under the umbrella policy. The judges point out that HNTB’s Liberty umbrella policy kicks in only if liability exceeds coverage limits from other policies the firm holds. The engineering firm has another policy that covers up to $5 million. As such, despite any exclusions, the panel finds that Liberty would not owe HNTB any payments on the $2.5 million settlement.

In its decision, the panel also discussed that Liberty's obligation to pay depends on where the workers’ lawsuit focused. The judge reasoned that if the basis of liability was an activity that the policy excludes, then Liberty had no obligation. This is a factual question for factfinders.

The three judges explained that the main point of contention was whether HNTB's work on the project included certain types of activities. For example, the policy construction management exclusion “pertains to the inspection, quality control or engineering activities done by or for the insured on a project on which it served as a construction manager.”

Further, the policy’s professional services exclusion pertains to a failure to render professional services -- providing engineering services in HNTB's capacity as an engineer.

Liberty agreed with the workers' theory, contending that the HNTB contract required it to render construction management services and independent quality insurance. In Liberty’s and the plaintiffs’ view, the HNTB engineer failed to take compliance and problem identification steps that would have revealed the bridge decks’ structural defects and the presence of water.

In its determination, the appellate court also considered the HNTB project work plan. The plan listed similar responsibilities, which included engineering solutions recommendations for actual and potential problems.

Angela M. Clark and John L. Kellogg of Wallace Saunders Chtd. represented Liberty in these proceedings. HNTB’s counsel was Mark T. Kempton of Kempton & Russell.