September 09, 2010

Court Dismisses Engineer's Claims Against 35W Bridge Designer, Allows State's Claim to Proceed

On August 1, 2007, the 35W bridge spanning the Mississippi River in Minneapolis collapsed. Lawsuits soon followed against the State of Minnesota, as well as companies hired by the Minnesota Department of Transportation (MnDOT) to inspect and make repairs on the bridge.

In addition to the state, defendants included URS Corporation, which was hired by MnDOT in 2003 to inspect the bridge and make repairs, and Progressive Contractors Inc. (PCI), which was hired by MnDOT in 2007 to make repairs to the bridge surface.

URS, PCI, and the state brought third-party claims asserting contribution and indemnity against Jacobs Engineering Group, Inc.—the successor in interest to Sverdrup & Parcel and Associates, the party that originally designed the bridge pursuant to a 1962 contract. The state ultimately settled with some of the plaintiffs and made payments of approximately $37 million.

Amendments in 2007 to Minn. Stat. §541.051 removed the 10-year statute of repose period for contribution and indemnity claims arising out of improvements to real property, but retained a two-year statute of limitations for such claims. On August 24, 2010, the Minnesota Court of Appeals issued two decisions and held that Jacobs could not be liable for contribution or indemnity to URS (PCI did not participate in the appeal), but that Jacobs could still be liable to the state. These cases provide important clarity regarding the court's interpretation of the current version of §541.051.

URS Not Entitled to Contribution or Indemnity From Jacobs

The doctrine of contribution applies when two or more parties share a common liability to an injured person, and one of the parties satisfies the obligation of another. URS claimed that it was entitled to contribution from Jacobs for any damages that URS paid to the 35W bridge plaintiffs. The court disagreed with URS, finding that Jacobs did not share common liability with URS because Minnesota's 10-year statute of repose extinguished Jacobs's liability. URS argued that that the statute of repose was a technical defense that did not go to the merits of the case and, therefore, did not eliminate common liability. But the court held that the statute of repose was a complete defense of immunity, and that Jacobs was already immune from liability under the statute of repose at the time the plaintiffs suffered their injuries.

URS further argued that its contribution claim is expressly permitted under Minn. Stat. §541.051, subd. 1(b), which allows a cause of action for contribution to be brought within two years after a lawsuit is commenced. But the court held that URS's compliance with this two-year statute of limitations did not eliminate the requirement of common liability. Because URS could not establish common liability with Jacobs, URS was not entitled to contribution from Jacobs.

The court also dismissed URS's indemnity claim against Jacobs. Under Minnesota law, one party is entitled to indemnity from another party if the party seeking indemnity has incurred liability only as a result of derivative or vicarious liability for damage caused by the other party. Under that standard, the court held that URS needed to allege that it had some relationship with Jacobs that would make URS liable for the injuries suffered by the 35W bridge plaintiffs that were caused by Jacobs, even if URS was entirely free from fault. Because URS failed to allege or explain "how URS could have only a derivative or vicarious liability for damages to the plaintiffs caused by Jacobs," the court dismissed the indemnity claim.

State Can Pursue Claims Against Jacobs

The state brought claims against Jacobs for indemnity, contribution, and reimbursement under the 35W bridge compensation statute (Minn. Stat. § 3.7394, subd. 5(a) provides that the state is entitled to recover from any responsible third party any payments made to the victims of the 35W bridge collapse, "[n]otwithstanding any statutory or common law to the contrary"). In an effort to defeat those claims, Jacobs advanced four arguments: (1) that Minn. Stat. § 541.051 time-bars the state's claims; (2) that retroactive application of § 541.051 violates Jacobs's due process rights; (3) that the compensation statute unconstitutionally impaired Sverdrup's contract with the state; and (4) that reimbursement is barred because the state's settlements with the 35W bridge plaintiffs "preclude a settling defendant from asserting indemnity claims against a non-settling defendant" or, alternatively, because the state's payments were voluntary. The court rejected each of these arguments.

As to Jacobs' first argument, the court noted the plain language of the 2007 version of Minn. Stat. § 541.051, i.e., "that no period of repose applies to actions for contribution and indemnity" and the plain language of the statute that made application of the revised statute "retroactive"— and concluded that the statute of repose did not bar the state's claims against Jacobs.

Regarding the second argument raised by Jacobs, the court held that the retroactivity of the 2007 version of Minn. Stat. § 541.051 did not violate Jacob's constitutional due process rights. Although the Fourteenth Amendment prohibits any legislature from enacting a retroactive statute that "divests a private vested interest," the court concluded that Jacobs' expectation that the statute of repose would protect it indefinitely was not a "vested right" because no final judgment had been entered on behalf of Jacobs.

The court also rejected Jacobs' third argument, that the reimbursement provisions under the 35W bridge compensation statue unconstitutionally impair Sverdrup's 1962 contract with the state. Specifically, Jacobs argued that the compensation statute impaired the State's tort immunity which implicitly formed a part of the contract. But the court held that "Sverdrup reasonably should have expected that the legislature might authorize tort claims against the state related to the design of the bridge" in light of the fact that the legislature had in the past "repeatedly allowed individuals to assert, in district court, claims against the state arising out of the construction, repair, improvement, and maintenance of the trunk highway system—including claims for negligently caused death, personal injury, and injury to real and personal property." Rather than impairing the 1962 contract, the court concluded that the compensation statute actually re-enforced Sverdrup's contractual obligation to indemnify the state.

Finally, the court refused to consider Jacobs' fourth argument "because the legislature has clearly stated its intent to supersede all statutes and the common law in allowing the state to pursue reimbursement of payments made under the compensation statutes." Having rejected all of Jacobs's arguments, the state's claims against Jacobs for indemnity and contribution survived.

The Faegre Baker Daniels website uses cookies to make your browsing experience as useful as possible. In order to have the full site experience, keep cookies enabled on your web browser. By browsing our site with cookies enabled, you are agreeing to their use. Review Faegre Baker Daniels' cookies information for more details.