United States District Court, E.D. North Carolina, Western Division
C. DEVER III Chief United States District Judge
2015, Stewart Engineering, Inc. ("Stewart" or
"plaintiff') filed an amended complaint seeking a
declaratory judgment [D.E. 8]. Stewart contends that its
insurance contract with Continental Casualty Company
("Continental" or "defendant") requires
Continental to indemnify Stewart up to the aggregate policy
limit of $5, 000, 000. On March 7, 2017, Continental moved
for summary judgment [D.E. 54]. On April 7, 2017, Stewart
moved for summary judgment [D.E. 61]. Thereafter, each party
responded and replied. As explained below, the court grants
Continental's motion for summary judgment and denies
Stewart's motion for summary judgment.
is a North Carolina professional corporation that provides
engineering, surveying, and landscape architectural services.
Am. Compl. [D.E. 8] ¶¶ 4-5. Continental is an
insurance company incorporated and with its principal place
of business in Illinois. Id. 16; see Answer [D.E.
25] 16. Continental issued a liability insurance policy to
Stewart for the policy year April 21, 2014, to April 21, 2015
(the "policy"). See [D.E. 56-3] 2 (copy of the
policy). The policy includes a $3 million per claim liability
limit for any claim "first made against [Stewart] and
reported to [Continental] during the policy year."
Id. at 2, 35. The policy also includes a $5 million
aggregate claim liability limit for "all claims first
made against [Stewart] and reported to [Continental] during
the policy year." Id. The policy also provides
that if the liability limit for any policy year is exhausted,
"[Continental's] obligation for that policy year
shall be deemed completely fulfilled and extinguished."
Id. at 35.
the terms of the policy, Continental agreed to pay:
[A]ll amounts in excess of the Deductible up to the Limit of
Liability that you become legally obligated to pay as a
result of a wrongful act, ... that results in a claim
anywhere in the world, provided that on the Knowledge Date
set forth in Item 4. on the Declarations none of your
officers, directors, principals, partners, or insurance
managers knew of any act, error, omission, or event that
could reasonably be expected to become the basis of that
Id. at 27. Wrongful act is defined as "an
error, omission, or other act that causes liability in the
performance of professional services for others by you or by
any person or entity, including joint ventures, for whom you
are liable." Id. at 33. The policy includes a
separate provision concerning related claims. Specifically,
the policy provides that "all related claims shall be
considered a single claim...." Id. at 35. The
policy defines "related claims" as all claims
arising out of (1) "a single wrongful act, " or (2)
"multiple wrongful acts that are logically or causally
connected by any common fact, situation, event, transaction,
advice, or decision[.]" Id. at 32. Thus, all
related claims are subject to the $3 million per claim
liability limit. See Id. at 32, 35.
January 23, 2013, the trustees of Wake Technical Community
College ("Wake Tech") contracted with Pearce
Brinkley Cease & Lee, P.A. ("PBCL") for
architectural design services for two pedestrian bridges on
Wake Tech's North Campus in Raleigh. See Am. Compl.
¶18; [D.E. 56- 5] 3-4. Wake Tech also contracted with
Skanska USA Building, Inc. ("Skanska") to provide
construction management services for the two pedestrian
bridges. See Am. Compl. ¶ 19. On February 11, 2013, PBCL
contracted with Stewart to provide structural engineering
design services for the two pedestrian bridges. See
id ¶ 20; p.E. 56-5] 3; Andrew S. Pordon Aff. p.E.
65-7] ¶¶ 4, 6, 9. The contract between Stewart and
PBCL included deadlines for the schematic design, design
development, and construction documents for the two
pedestrian bridges. See [D.E. 56-5] 11.
February 2013, Stewart began the design development phase for
a pedestrian bridge that crossed the Neuse River buffer and
connected the plaza between two parking decks to Building F
("Bridge 2"). See Am. Compl. ¶ 24; Pordon Aff.
¶10. The bridge was designed to have three long glue
laminated truss spans, kingposts, tension cables, and central
steel v-column platforms. See Am. Compl. ¶ 24. Stewart
presented two glulam truss schematic design options to PBCL.
See Pordon Aff. ¶11. PBCL selected the single
kingpost glulam truss design option. See
April 2013, PBCL merged with Clark Nexsen, Inc. ("Clark
Nexsen"), and Wake Tech reassigned PBCL's contract
to Clark Nexsen. See Am. Compl. ¶¶ 21-22.
Similarly, PBCL reassigned the Stewart contract to Clark
Nexsen. See id f 23. Around September 2013, Clark Nexsen
notified Stewart that Wake Tech had requested a design for
the second pedestrian bridge ("Bridge 1").
See Pordon Aff. ¶ 13. Bridge 1 was designed to
connect Building F to Building L. See id. Although
the design process for Bridge 2 occurred before the design
process for Bridge 1, both bridges had the same engineer of
record and project manager. See First Set of Interrogs. [D.E.
56-4] ¶¶ 20-21; [D.E. 65] 8; Pordon Aff. ¶ 14.
October 2014, construction for both bridges began. See Am.
Compl. ¶ 26. On November 13, 2014, Bridge 1 collapsed
while workers were pouring the concrete slab for the bridge.
See Id. ¶ 27. In the early morning on November
14, 2014, Bridge 2 also collapsed. See Id. ¶
28. Four workers were injured and one worker was killed from
the Bridge 1 collapse. See id ¶ 27. There were
no injuries from the Bridge 2 collapse. See id
February 6, 2015, Stewart sent a memorandum to the
Occupational Safety and Health Administration
("OSHA") and stated "through our own
investigation, [we concluded] that the precipitating failure
in each instance was at the notched end of a glulam truss and
that, regretfully, the failures resulted from a design
feature, namely that the notched ends of the glulam trusses
were not mechanically reinforced." [D.E. 56-10] 2. On
July 24, 2015, Stewart issued a memorandum to the North
Carolina Board of Examiners for Engineers and Surveyors in
which Stewart admitted that "[b]oth bridges collapsed
because of the absence of mechanical reinforcement of notched
glulam truss ends." [D.E. 56-8] 8. Stewart also admitted
that "[t]he lack of mechanical reinforcement resulted
from a miscommunication between Stewart Engineering's
Project Manager and its Project Engineer." Id.
at 4. OSHA investigated and concluded that "[t]he cause
of the failures of bridges Nos. 1 and 2 was the structural
design flaw in that the glulam girders were severely notched
at each end to facilitate end connections, " and that
the consultants and contractors failed in their professional
responsibility to share their knowledge with the structural
engineer concerning the presence of the notches. [D.E. 56-7]
the Bridge 1 and Bridge 2 collapses, numerous individuals and
entities brought claims against Stewart ("Bridge
Claims"). The five individuals who were working on
Bridge 1 when it collapsed asserted claims against Stewart
for bodily injury, and in the case of the deceased worker, a
claim for wrongful death. See Am. Compl. ¶¶ 40-51.
Clark Nexsen, Wake Tech, and Zurich American Insurance
Company ("Zurich") also brought claims against
Stewart. See Id. ¶¶ 52-70. Clark Nexsen
asserted direct and indemnification claims for damages
incurred in connection with the Bridge 1 and Bridge 2
collapses. See Am. Compl. ¶¶ 62-63. Wake Tech
asserted a claim against Stewart for indemnification from
claims by third parties in connection with the Bridge 1 and
Bridge 2 collapses. See Id. ¶ 67. Zurich
asserted a subrogation claim based on Skanska's claim for
property damage and clean-up costs resulting from the Bridge
1 and Bridge 2 collapses. See Id. ¶¶
moves for summary judgment and asks the court to declare that
(1) the Bridge claims constitute "related claims"
subject to the policy's $3 million claim liability limit,
and (2) Continental has no further obligations concerning the
Bridge Claims once it has paid the $3 million claim liability
limit. See Def. Mot. Summ. J. [D.E. 54]. Stewart moves for
partial summary judgment and asks the court to declare that
(1) the Bridge 1 and Bridge 2 claims are not "related
claims" for purposes of detennining whether Continental
has a duty to defend Stewart, and (2) ...