Architectural firm NBBJ L.L.C. may be financially responsible for Miami Valley Hospital's litigation costs arising from the 2011 deadly Legionnaire's disease outbreak, an appeals court ruled.

The Second District Court of Appeals last week upheld a summary judgment granted to Miami Valley Hospital (MVH) and its corporate arm, Premier Health Partners, after a Montgomery County Common Pleas Court found Columbus-based NBBJ breached its contract with the hospital.

In May 2007, MVH contracted with NBBJ to lead the construction of its new 12-story Heart Patient Tower. Under the contract, NBBJ was to oversee all the construction and to guard MVH from any defect and deficiencies. A clause in the contract required NBBJ to obtain commercial general liability insurance and to add MVH as an additional insured. The contract also obligated NBBJ to hold MVH and its staff harmless "from and against all damages, losses, and judgments" that arise from NBBJ's negligent acts or omissions.

In early 2011, Legionella disease broke out in the tower and multiple lawsuits were filed against the hospital. The Ohio Department of Health confirmed one patient death from the outbreak and noted 10 others contracted the disease. The cause was traced to the plumbing system in the new tower. MVH and its insurance company, Zurich American Insurance Company, demanded NBBJ provide a defense to the litigation pursuant to the terms of the contract.

When NBBJ refused, the hospital sued saying NBBJ failed to secure an insurance policy that protected the hospital for bodily injury claims that could arise from a disease outbreak, and that the firm was in breach of contract for failing to provide a defense. MVH further argued that it signed similar agreements with construction firms hired to complete the work, Skanska-Shook and TP Mechanical, and indicated that the two firms along with MVH and Zurich were currently sharing all the costs for the hospital's defense including settlements reached in the case.

NBBJ countered that it did obtain a general liability insurance policy and named MVH as an insured in a policy obtained from Chubb & Son. The policy contained a clause excluding coverage for bodily injury caused by a biological agent or bacteria. NBBJ argued that since Legionella is bacteria, it was not obligated to cover the damages from the outbreak. Therefore, the negligence of the construction companies caused the outbreak and it is those companies that are responsible for covering MVH’s costs.

Both parties filed for summary judgment in common pleas court in March 2014. NBBJ justified its denial by maintaining biological agents fell within the pollution exclusion of the contract. The provision stated: “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.”

The trial court contended the contract did not define “hazardous materials” or “toxic waste” and included the dictionary definitions of the terms in its ruling. The trial court said biological agents did not fit in the definition of those two terms and that NBBJ could not exclude it from coverage. It also ruled that it could not determine the extent of the damages because the litigation against the hospital continues. NBBJ appealed the decision.

Writing for the appeals court, Judge Mary E. Donovan wrote that Article 9.8 of the contract had the provision allowing NBBJ to buy an insurance policy that excluded bodily injury resulting from hazardous materials or toxic substances. Since the trial court defined “toxic waste” rather than “toxic substance,” the appeals court needed to decide if biological agents are a toxic substance that can be excluded.

The appeals court noted that the Chubb policy NBBJ bought had separate “pollution” and “biological agents” exclusions. And while the contract allowed for NBBJ to exclude pollution, it was silent on biological agents.

“In our view, the ‘hazardous materials and toxic substances’ in Article 9.8 constitute materials and substances of a non-biological nature,” Judge Donovan wrote. She added the contract did not allow NBBJ to procure an insurance policy that would exclude injuries from biological agents, and the effects of biological agents are within the scope of liability the architectural firm assumed.

“We further conclude that NBBJ is in breach of contract for procuring a policy with the “Biological Agents” exclusion,” the court ruled.

Judges Mike Fain and Jeffrey M. Welbaum concurred in the decision.

Premier Health Partners v. NBBJ, L.L.C. 2015-Ohio-128
Opinion: http://sc.ohio.gov/rod/docs/pdf/2/2015/2015-ohio-128.pdf
Civil Appeal From: Montgomery County Court of Common Pleas
Judgment Appealed From Is: Affirmed
Date of Judgment Entry on Appeal: Jan. 16, 2015

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