Oh…By the Way….Don’t Forget To Wash Your Hands!

By John Swansinger, Esq.

We can’t preach enough that, when it comes to construction contracts, words mean everything. I am writing about a tragic case involving the spread of Legionnaires disease being cause by shoddy workmanship in a new construction project.    In 2007, Miami Valley Hospital and its corporate arm, Premier Health Partners (collectively, “MVH”) contracted with architectural firm NBBJ, LLC (“NBBJ”) to lead the construction of  MVH’s new Heart Patient Tower.

In 2011, Legionella disease broke out in the new tower. Tragically, one person died and ten others contracted the disease.  Numerous lawsuits were filed against MVH. It was determined that the cause of the outbreak originated in newly installed plumbing system.

NBBJ agreed, in pertinent part, to (i) guard MVH from any defects and deficiencies, (ii) obtain commercial general liability insurance, (iii) add MVH as additional insured and (iv) hold MVH “harmless from and against all damages, losses, and judgments” that arise from NBBJ’s negligent acts or omissions.

MVH and its insurer demanded a defense from NBBJ.  NBBJ refused.  MVA then sued, stating that NBBJ breached the contract when it failed to secure an insurance policy that covered claims arising from disease outbreak and when it didn’t provide a defense.  NBBJ responded by stating that it did obtain a general liability insurance policy and named MVH as an insured as per the contract.

The policy however, excluded coverage for bodily injury caused by biological agents.  NBBJ asserted that Legionella is a bacteria and therefore, it was not required to cover MVH’s costs (although the other companies might).

The contract, on the other hand included exclusion which DID NOT mention biological agents as follows: Unless otherwise provided in this Agreement, the Architect and Architect’s consultants shall have no responsibility for the discovery, presence, handling, removal or disposal of or exposure of persons to hazardous materials or toxic substances in any form at the Project site.” (emphasis supplied). NBBJ therefore justified its denial by claiming that biological agents fell within the pollution exclusion of the contract

The trial court examined whether “biological agents” were covered by the policy exclusion under the definition of toxic “waste”.   The court of appeals corrected the trial court and determined that the question should be whether biological agents fell under the term toxic “substances”.   The issue has now become ….do the terms “hazardous waste” or “toxic waste” include the term biological agents or diseases?

The trial court and the Second District Court of Appeals agreed with us that words mean everything by finding that the terms “hazardous waste” and “toxic waste” were not specifically defined in the agreement and that the dictionary definition of those terms did not include “biological agents”. However, the issue remained as to whether the term “toxic substances” in the contract includes biological agents.  If so, the NBBJ produced a policy as was required by the agreement and have no responsibility under the agreement.

We will be watching this case unfold and find out if the trial court will take the leap and include “biological agents” in the term “toxic substances” or if it will require it to be specifically mentioned to be part of a policy or contract for construction.