Tag Archives: lawsuit

Engineer: Immune or not in Sewer collapse? (Part 2) (law note)

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riverside plantUPDATE 1/9/2012:  In the original version of this post, an incorrect picture was used of the new water reclamation facility for Spokane County, WA.  This photo is the facility discussed in the lawsuit.  Many thanks to David Moss, PE, for the correction. 

When last we left off, the causes of the Spokane wastewater treatment disaster were revealed to be a combination of three things: 1) a blocked overflow pipe; 2) a malfunctioning monitoring system inside the digester; and 3) a failed attempted to transfer sludge out of the digester.

Once this information came to light, the plaintiffs and their families filed a negligence action against CH2M and the city. The city of Spokane was immune from liability under the state’s Industrial Insurance Act.  The only issue at trial was whether CH2M was negligent. The lower court ruled in favor of the plaintiffs, finding CH2M negligent. CH2M appealed the ruling, contending that it too ought to enjoy immunity under the Industrial Insurance Act.

The Court was confronted with determining whether immunity should be granted to the engineering firm. One provision of the Act states that that an injured worker may not seek damages against a design professional who is a third person retained to perform professional services on a construction project. However, a different provision states that immunity does not apply to the negligent preparation of design plans.

CH2M argued that the entire plant was a construction project, thus entitling it to immunity. It further argued that it did not prepare design plans, and as such the design plans provision of the Act should not apply. The plaintiffs argued the plant was not a construction site, and that CH2M did, in fact, prepare design plans negligently.

The Court found that there was undoubtedly construction occurring on the sewage treatment campus. The question was whether the existence of construction somewhere on the campus triggered automatic immunity. The Court concluded it did not. The construction was isolated on various parts of the campus and not widespread enough to cause the entire campus to be deemed a construction site.

With regard to producing design plans, the Court said that there was no appreciable difference in recommending a change in the piping of the sludge and the locations of the skillets under an “on call” service agreement, and preparing written plans and specifications to accomplish the same thing. The Court found that it was difficult to believe the legislature intended to allow design professionals to escape liability for negligent work by simply not writing down their plans.

The Court also held that CH2M owed a duty of care, as all such professionals do, and that the duty extended to the injured employees. The Court found that the duty was breached and that the breach was the proximate cause of the employees’ injuries.

Taken as a whole, the Court stated that the legislature, when enacting the Industrial Insurance Act, intended to protect design engineers from the sort of liability imposed on general contractors for workplace safety.  The Court refused, however, to believe that the legislature intended to protect design engineers from their own negligence.

Tomorrow, 3 take-away lessons from the case.

Thoughts, comments, or questions?  Post in the comment section, below.

Is an Engineer ever immune from lawsuit? (Law note)

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Spokane city towerCan an Engineering firm be held liable in negligence despite provisions in a state law which allegedly gives design professionals immunity?  That was the issue confronted recently by the Supreme Court in the state of Washington in a case entitled Larry Michaels vs. CH2M Hill.

The Washington court analyzed its state Industrial Insurance Act, which is similar to North Carolina’s Workers’ Compensation Act.  These acts are often described as “grand compromises” between workers and their employers.  Injured workers are given a fast, no-fault compensation system for injuries in the workplace. Employers, in turn, are given immunity from civil suits.  The workers get speed and certainty, while the employers are required to pay less than they would be in a lawsuit.

Washington state’s Act, unlike North Carolina’s Act, provides some immunity for design professionals performing design services, and the court had to wrestle with the applicability in a particularly gruesome case involving a catastrophic failure at the Spokane wastewater treatment plant.

One man was killed and another two other seriously injured in May 2004 when a digester dome (a huge, sports stadium-like contraption) collapsed at the wastewater treatment plant. The collapse caused Mr. Cmos to fall into heated sewage sludge, where he drowned. The lower court judge described the incident as arguably one of the most disgusting and terrible deaths imaginable. Mr. Evans was thrown from the dome and drenched with the sewage, while Mr. Michaels was knocked down by a cascade of sludge. The survivors, and the family of Cmos, sued CH2M for negligence.

CH2M was an engineering firm hired by Spokane as a consultant on a 10-year capital improvement project to upgrade the plant. One of the tasks the engineering firm oversaw was replacement and re-engineering of several transfer tubes between various digester domes at the plan. Ultimately a buildup of sewage occurred, shattering the dome on digester #3 and fatally injuring Cmos.

A series of unfortunate events took place on that day in early May of 2004 that all conspired to lead to the sewage buildup. After failed attempts to transfer the sludge to another digester, foam began leaking out of a pressure relief valve at the top of dome #3. The effluent ran down the outside of the dome and a concerned plant superintendent worried that the discharge might enter the Spoken River. The supervisor gathered Cmos, Evans and Michaels and asked if the three could assist him in diverting the sludge. Cmos and Evans climbed the dome with a fire hose to siphon foam while the superintendent and Michaels attached the other end of the house to a drain.

The dome continued filling with sludge until it finally cracked and collapsed. Cmos, alive and conscious, dropped into 100 degree sewage sludge and died in excruciating physical pain, darkness and utter helplessness. Evans and Michaels suffered varying severe injuries including broken limbs and lung damage from aspirating the sewage.

The city hired an engineering firm to investigate the disaster. The firm concluded there were three main causes: 1) a blocked overflow pipe; 2) a malfunctioning monitoring system inside the digester; and 3) a failed attempted to transfer sludge out of the digester.

Tomorrow, we’ll discuss the Court’s analysis and ruling concerning whether or not CH2M had immunity from being sued, and Friday we’ll discuss a few take-away lessons from the case.  Stay tuned……

Have you signed up for the blog to be delivered directly to your in-box? If not, do so now, so you’ll be sure to catch parts 2 and 3 of this article, and never miss any other posts here, either.

Photo: (c) spokanephotos.com via Creative Commons license.

Drop the Dead Weight: Fire your Worst Clients! (Tue Tip)

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Today’s Tip:  Listen to your gut.  Ever get that feeling that a potential client may be high maintenance or want everything done yesterday?   Listen to your instincts and turn them away as fast as you can.  Send them to a directory.  Send them to a rival.  Send them away from you.  Bonus if you can refer them to your worst enemy (kidding!).

The Pareto Principal is true in more ways than one:  not only do 80% of your profits come from 20% of your customers, but 80% of your complaints come from 20% of your customers.  If you can weed out that complaining/crazy/high-maintenance 20% up front, think of the aggravation you will save.

Architects (and engineers) sometimes tell me that they knew they might have issues with a particular client based on how the initial meetings & negotiations proceeded; needing the work, they took the job anyhow, only to find themselves facing the prospect of a long-drawn out lawsuit.  Don’t let this be you.

What to do if you already have the crazy client on board?  Document everything, including verbal agreements.  And cut them loose when you can safely do so.  This can be tricky-if not impossible-to do during an active project.  So in the interim, prepare as if you will be sued, because there is a good chance of it.  Remember that in a lawsuit, everything will be evidence, so your documentation during the project will be vital.

And next time- listen to your gut!

Do you have an experience working with a “crazy” client?  Did you ever not listen to your gut, only to rue the day you didn’t later on?  Share below, or send me an email.  Remember to remove identifying details, to avoid being stalked by your crazy ex-client!

 Photo: (c) jimwhimpey via Creative Commons.

Developers Rejoice Over Impact Fees Decision (news note)

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Today I’m unveiling a new column here at Construction Law in North Carolina called “News Notes”.  News notes will be postings of current news items relating to the design (and construction) community.  [This means that sometimes I must be a tad drier than my usual festive self.  Consider yourself warned.]  If you have an idea for a News Note, drop me a line.

Much to the delight of developers and realtors across the state, the North Carolina Supreme Court recently affirmed a decision which struck down local school impact fees. The fees had been assessed to fund construction of new schools in the Cary portion of the Wake County schools to help with the Town ofCary’s  rapid growth.

Impact fees are usually enacted by local boards and town councils as Adequate Public Facilities Ordinances (APFO).  In 1999, the Town of Cary began assessing school impact fees on developers in certain portions of the town which faced overcrowding.  The revenue brought in by the fees was earmarked to pay for expansion of existing school facilities.  Notably, the Town of Cary has no separate school system from the rest of Wake County, and did not have the legal authority to control the provision of school facilities within the district. 

Last month, the state Supreme Court, in a tight 3-3 tie decision (with one abstention) left the Court of Appeals decision in place, rejecting the Town’s attempt to collect school facilities fees and declaring the fees illegal.  [As an aside, my firm represented another developer who intervened in the lawsuit; however, the facts were somewhat different and we were not involved in this appeal.]

The Cary case is not the first time the issue has arisen in the state.  Currituck County once proposed a similar APFO to fund school construction during the real estate boom as out-of-state residents from Virginia crossed into North Carolina in an attempt to flee the taxes and dismal school system in Chesapeake,Virginia.

The Currituck proposal was widely criticized by both local and state homebuilder’s associations. Across North Carolina, homebuilders and realtor groups worked together to stop attempts at passing such impact fees. These organizations have run into problems as cash-strapped local governments see impact fees as one method of paying for increasingly expensive public school construction.

The theory is that developers of new homes pass the impact fees along to new home buyers by raising the price of homes or lots. Existing residents are spared the tax increases caused by a rapid influx of new residents with school-aged children. Thus, the people responsible for the increased strain on the school system – the new residents – bear the burden of the tax increase.

school

Over the past decade, Durham, Union County, and Cabarrus County have instituted similar impact fees. All three such attempts were disallowed by various courts. Thus far, virtually all attempts at imposing such fees have been struck down, although there appears to be wiggle room in the case law. For example, impact fees collected for improvements that directly run to the property (such as water or sewer lines) are typically allowed. Additionally, other municipal governments impose fees related to schools that have not (yet) been decided in the state court system, and those may be broad enough to pass judicial scrutiny.

In this case, Cary’s ordinance assessed residential developments a mitigation fee if they did not first obtain a certificate from Wake County certifying classroom availability. Over $4 million was ultimately collected since the ordinance was first passed in 1999. Cary is now faced with the prospect of returning these fees, plus over $300,000 in attorney fees awarded to the developers who filed suit.  Ouch!!!

Comments or questions?  Post in the comment section, below.

Photo (c) Ivy Dawned via Creative Commons license.

Insurance Issues for Construction Projects: the Court of Appeals takes a stab at CGL policies

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Update 3/9/2017:  George’s blog is no longer active on the web.  Therefore, I have edited this post to include my full article below.

Recently, I had the honor and privilege of guest posting on George Simpson’s blog, entitled North Carolina Insurance Law.  George’s blog is a gold mine of information for those concerned with insurance issues, and it is a staple of my blogroll.

My post is entitled:  “Court of Appeals Finds Applicable Coverage Under CGL Policies Despite Exclusionary Language”

insurance

The Court of Appeals has been busy this summer deciding two somewhat similar CGL policy cases, both of which the insurance professional should keep an eye on.

1.         Damage to Property Other than Work Product
First out of the gate, Builders Mutual Ins. Co. v. Mitchell, a case involving a declaratory judgment action between two CGL carriers for the same insured.  In that case, Umstead Construction Company was insured, at various times, by both Builders Mutual and by Maryland Casualty Co.  Umstead performed some renovation and repair work on a house on Figure Eight Island, and poor workmanship caused the home to experience water drainage issues and rot, damaging the home’s interior, marble terraces, and decks.
Builders Mutual settled the underlying claim at mediation, and sought contribution from Maryland Casualty.  In the declaratory judgment action, Maryland Casualty claimed that there was no coverage because there was no “occurrence” as defined in the policy.  However, the Court noted that “an occurrence” under the policy could include accidents resulting from faulty workmanship that caused damage to any property other than the work product.
Here, because there was damage to previously undamaged portions of the house that were not being worked on, an occurrence had arisen.  The Court also noted that the fact that the accident may have arisen from Umstead’s negligence did not prohibit coverage.

The Court held that Maryland Casualty’s definition of “your work”, to include all damage, even that of property other than the work product itself, was too broad to be upheld.

2.        Coverage of Consequential Damages and Lost Profit

Even more recently, the Court addressed CGL policies in Alliance Mutual Insurance Co. v. Glen Dove. In that case, a grain elevator ignited moments after some repair welding was conducted.  The mill owner sued for, among other things, cost to repair the elevator, cost to repair the grain bucket, and for lost business and revenue.

Alliance argued that since coverage for damage to the elevator itself was excluded under the “your work” exception, the portion of lost revenue and other consequential damages attributable to the loss of use of the elevator should also be excluded.  The Court, however, held that the “your work” exclusion does not cover lost revenue and other consequential damages.  The Court noted:

to adopt the plaintiff’s very broad reading of the exclusion clause would result in the exclusion clause swallowing up the whole of the commercial liability policy, and render any coverage contained therein illusory.

The Court therefore held that there was coverage for the loss of use and consequential damages flowing from damage to the specific property the insured was working on.

Insurance coverage issues are important to all design professionals, because if the general contractor doesn’t have applicable coverage, the A/E may be left holding the bag.

What are your thoughts as to what CGL insurance policies should and should not cover? Obviously, CGL policies are not meant to be performance bonds, but where does the line between coverage and non-coverage get drawn?  Share your thoughts in the comments.

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Photo:  “insurance” by Alan Cleaver via Creative Commons license.