The Minnesota Supreme Court recently rendered a decision that has serious potential consequences for contractors working in Minnesota, and for contractors working in other States if those States follow suit.
The 2007 collapse of the I-35 bridge in Minneapolis resulted in 13 deaths. Despite a statutory $1 million limitation on its liability, the state of Minnesota voluntarily established a $37 million fund for the compensation of the families of the deceased. To offset these payments, the state sought recovery from the engineering company which had performed the design of the bridge between 1962 and 1965.
Most construction risk management professionals would be quick to note that the applicable statute of repose limited recovery against the contractor and/or design professional, which in this case disallowed claims for injury or damage occurring more than 15 years after project completion. Liability for this project was therefore extinguished in 1982, 25 years before the collapse that produced the injuries in question. However, to allow the state's action against the engineering company, the Minnesota legislature passed acts allowing the revival of liability for wrongful death claims arising out of this one specific incident. The engineering company argued, among other things, that this action by the state was unconstitutional, but the Minnesota Supreme Court deemed otherwise, allowing the state's claims for indemnity against the engineer to stand.
This decision has stunned both the construction and insurance industries. Contractors and designers in Minnesota have particular cause for worry that future losses will result in similar actions, but the bigger concern is that other states will adopt the approach when tragedies occur and compensation for victims is deemed appropriate. In that event, neither contractors nor their insurers will have confidence in the efficacy of statutes of repose in limiting contractors' liabilities.
The engineer appealed the case to the United States Supreme Court, and the Associated General Contractors of America filed an amicus brief outlining the perils of allowing the decision to stand. .