The State of Minnesota contracted with Sverdrup & Parcel and Associates, Inc. to design the original bridge in 1962. Construction of the bridge was complete in 1967. Then, through a series of post-completion name changes and mergers, the Jacobs Engineering Group, Inc. purchased Sverdrup & Parcel. From here on in I’m going to refer to Sverdrup & Parcel, the Jacobs Group, and all of the names in between together as the “original engineer”.
Before the collapse, URS Corp. (the “later engineer”) and Progressive Contractors, Inc. (the “contractor”) were both working on maintenance for the bridge. After the bridge collapsed, the State and others sued the later engineer and the contractor. They looked back to the original engineer’s design and decided part of the blame also belongs to the original engineer too. So they sued the original engineer for contribution and indemnification. Basically, the later engineer alleged that the original engineer was at least partly to blame for the bridge collapse. And because the original engineer’ was partly to blame, the original engineer should reimburse the later engineer and the contractor for what they must respectively pay-out to the State and others.
The Arguments and Decisions
original engineer asked Judge Hedlund to dismiss the current engineer’s
and the contractor’s lawsuits. Their reason? Back in 1965 the
Minnesota Legislature passed a statute of repose
that required all lawsuits for design or construction defects to be
filed within 10 years after substantial completion of the project (the “1965 Statute”).
The I-35 bridge project was completed in 1967. So the 10 year repose
period under the 1965 Statute started in 1967 and expired in 1977.
Because the current engineer and contractor didn’t file their lawsuit
until 2009, the original engineer suggested to Judge Hedlund that the
lawsuits were filed too late and she should dismiss them.
later engineer and the contractor countered. They told Judge Hedlund
that although the original engineer was off the hook under the 1965
Statute, in May 2007 (3 months before the bridge collapse) the Minnesota Legislature amended the 1965 Statute to exclude claims for contribution and indemnity from the 10 years after substantial completion deadline (the “2007 Amendment”).
Without that deadline the later engineer and the contractor had timely
filed their lawsuits and Judge Hedlund should dismiss neither.
The original engineer replied back that:
- The 2007 Amendment shouldn’t be applied to retroactively revive claims that, under the 1965 Statute, died in 1977, and
- The 2007 Amendment is unconstitutional
contractor also claimed that they qualify as an “agent” of the state
within under the indemnification terms of the 1962 contract between
the original engineer and the State. So, the contractor said, they’re
a a third-party beneficiary of that indemnification provision and
should be allowed to enforce it directly against the original
engineer. Judge Hedlund decided that because the indemnification was
ambiguous regarding whether the contractor qualified as an agent of the
State, there would have to be more evidence to make a final decision
and it was too early to dismiss the contractor’s indemnification
How Does This Affect You?
- If you’re a design professional, contractor (prime or sub), or material supplier….
- This decision is a reminder that what the legislature gives in a statute of repose, the legislature can take away too.
need to keep track of what’s going on in the legislatures of the states
here you work and want to work. Look for news and alerts from your
lawyers and trade associations – American Institute of Architects, Associated General Contractors of America – especially your state and local chapters.
contingency plans for how you and your professionals will respond if
you lose protection under a statute of repose. Your lawyers can help
you estimate just how much protection you stand to lose. And you’ll
need to talk to your accountants about how much, if anything, to add to
reserves to fund revived contingent liabilities.
- While changes in a statute of repose can hurt you, they can
help you too. It helped the latest engineer and the contractor in this
case. Maybe they’ll settle with the original engineer and that
settlement will cushion some of the blow they(and their insurers) take in paying the State and others.
you’re an owner, a change in a statute of repose could remove an
impregnable defense defense. But these changes don’t come easy and
they don’t come often. And they may not be as good as you first
think. Be careful! The changes to the statute of repose in the 2007 Amendment were very narrow. They revived only a very narrow class of
claims – contribution and indemnity.