(Article from Insurance Law Alert, November 2018)
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As discussed in our March 2018 Alert, a North Carolina federal district court ruled that an insurer was obligated to pay only a single claim limit under a liability policy with respect to multiple claims arising from two bridge collapses because claims arising out of the collapses were “related claims.” Stewart Engineering, Inc. v. Continental Cas. Co., 2018 WL 1403612 (E.D.N.C. Mar. 20, 2018). This month, the Fourth Circuit affirmed the ruling. Stewart Engineering, Inc. v. Continental Cas. Co., 2018 WL 5832805 (4th Cir. Nov. 7, 2018).
Stewart was the structural engineer designer for two pedestrian bridges. During construction, both bridges collapsed, killing one worker and injuring several others. When suits were filed against Stewart, it sought defense and indemnity from Continental up to the aggregate policy limit of $5 million. Continental argued that its obligation was limited to the $3 million per-claim limit. The district court agreed and granted Continental’s summary judgment motion.
Affirming the district court, the Fourth Circuit ruled that claims arising out of both bridge collapses constituted “related claims,” defined by the policy as “all claims . . . arising out of . . . a single wrongful act; [or] . . . multiple wrongful acts that are logically or causally connected by any common fact, situation, event, transaction, advice, or decision.” The Fourth Circuit explained that even though the two collapses caused different injuries, they arose out of wrongful acts that were logically and causally connected. In particular, the court emphasized that claims arising out of both bridge collapses were connected by the following common facts: a single contract for Stewart’s design services for both bridges; the same engineer and project manager supervised both bridges; and “crucially, the same design flaw caused the collapse of both bridges.”