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When engineers are involved in the daily operations of a work site, such as an oil rig or a construction site, they may face liability for personal injuries resulting from any unsafe conditions or operations at this site. A typical engineering company is insured under a commercial general liability policy that excludes coverage for “professional services.” The well-prepared company is also insured under a professional liability policy that covers the “professional” risks excluded under the first policy. However, some engineers fail to purchase professional coverage, or purchase the coverage but retain a substantial part of the risk under a deductible, or self-insured retention. This can lead to a fair amount of dissension between insurer and insured when a pipeline bursts, a trench caves in, or a scaffold buckles, and injured workers blame the engineer for failing to keep the place safe. Is this safety a “professional” obligation such that safety claims must be handled by the insured and/or its professional carrier? Or is this an “ordinary” negligence claim? We can draw at least one clear answer from the conflicted cases on this issue: work site safety is not inherently a professional or non-professional matter.

Flip Through The CGL Policy: How Specific Is The “Professional” Exclusion?

The “professional services” exclusion crops up in engineer’s policies in several different forms.

We Don’t Cover “Professional” Services

The plainest exclusion encountered in these cases simply states that the policy does not cover injuries resulting from “professional services.” The task of defining “professional services” is left to the courts.

Texas courts have decided that a “professional” act must usually involve predominantly mental or intellectual labor, and require skill, education, or special knowledge. See, e.g., Duncanville Diagnostic v. Atlantic Lloyd’s, 875 S.W.2d 788 (Tex. App.–Eastland 1994, writ denied) Maryland Cas. Co. v. Crazy Water Co., 160 S.W.2d 102 (Tex. Civ. App.–Eastland 1942, no writ).

In determining what is “professional,” the focus is on the act giving rise to liability, not on the title or education of the person performing the act. The pertinent question is whether the service that the insured negligently performed (or failed to perform), is recognized as requiring specialized training or expertise. Cochran v. B.J. Serv. Co. USA, et al., 302 F.3d 499 (5th Cir. 2002); Fidelity & Cas. Co. of New York v. Environdine Engineers, Inc., 461 N.E.2d 471, (Ill. 1983)(if the insured physically constructed a dangerous scaffold, this would not be professional work, as opposed to the liability of a consulting engineer).

For example, if a school janitor performs a tracheotomy on a choking student, he is doing “professional” work. If a brain surgeon mops up a spilled coke, he is not doing “professional” work. This distinction must be kept in mind when evaluating work site safety claims, because an unsafe condition could result in the negligent performance of routine tasks at the site, but it could also arise from an engineering mistake. See, e.g., Thermo Terratech v. GDC Enviro-Solutions Inc., 265 F.3d 329 (5th Cir. 2001) (Louisiana law)(an engineer who caused a fire by disconnecting the power to a cooling unit was not performing a “professional service”-non-professionals could, and did, perform this operation as well).

The menial or clerical work of a non-professional employee may be considered to be “professional” work if it is interrelated with the professional services provided by its employer. Id.; see also, e.g., Holmes v. Employers Casualty Co., 699 S.W.2d 339 (Tex. App.–Houston [1st Dist.] 1985, writ ref’d n.r.e.) (barber shop assistant dropped hair solution into customer’s eye – this was part of “professional” services).

We Don’t Cover “Professional Engineering” Services

Some exclusions attempt to be more precise by specifically encompassing “professional engineering” services. While the inclusion of the word “engineering” is helpful, some courts have been troubled by the fact that this word is generally undefined in the policy, and have consequently given a narrow interpretation to the exclusion. See, e.g., Aetna Fire Underwriters Ins. Co. v. Southwestern Engineering Co., 626 S.W.2d 99, 101-02 (Tex. Civ. App.–Beaumont 1981, writ ref’d n.r.e.) (Beaumont court of appeals found the term “engineering services” as used in a policy exclusion ambiguous as to whether it would encompass the act of locating underground pipelines).

In Aetna Fire, the insured engineer struck a pipeline while digging a trench. The court evaluating the policy examined a number of factors in puzzling over whether this was a “professional” error. The court relied on the breadth of the insured’s contract (which did not require the insured to locate pipelines), the testimony of the insured’s engineer, who stated that it does not take somebody with an engineering background to locate underground pipelines, and the statutory definition of “engineering,” set forth in the Texas Engineering Practice Act, Tex. Rev. Civ. Stat. Ann. art. 3271(a), §2(4). The court finally stated that it could not say as a matter of law that the physical act of digging for and locating an underground pipeline requires engineering skill, and refused to rule that this work was “professional.”

We Don’t Cover “Professional Engineering” And That Means We Don’t Cover Maps, Plans, Tests, Inspections, Or Anything of That Sort

This type of exclusion has become fairly popular. It doesn’t define “engineering,” but it does give a lot of helpful hints by listing specific services that it targets. Generally, the exclusion will refer to maps, plans, designs, surveys, inspections, tests, and certain supervisory activities. This gives the courts a lot more confidence in working through an analysis of what is “professional” and what is not. For instance, in Utica Lloyds of Texas v. Sitech Engineering Corp., 38 S.W.3d 260 (Tex. App.–Texarkana 2001, no pet.), in contrast to the Aetna Fire case discussed above, the court announced that the “engineering” exclusion was unambiguous, and clearly applied to the insured engineer’s failure to operate safely at a construction site. Id.; see also State Automobile Mut. Ins. Co. v. Alpha Engineering Serv. Inc., 208 W.Va. 713, 542 S.E.2d 876 (W. Va. 2000)(engineer provided inaccurate maps and incorrectly advised that the area was “safe;” court held that this liability resulted from the negligent provision of surveys, maps and engineering services which were excluded from coverage).

In Utica Lloyds, the plaintiffs claimed that the engineer failed to prevent a trench from caving in and injuring workers. The plaintiffs alleged that the engineer was negligent in: (1) failing to be present at the worksite and make required inspections, (2) poorly planning and designing the excavation, and (3) misrepresenting its qualifications to plan safety requirements for the job. The court noted that the court in Aetna Fire did not hold that the term “engineering services” is always ambiguous, and that “there can be no ambiguity as to what services are professional services when the services performed by the insured are explicitly included in the category of professional services defined under the policy.” The court found that the insured’s errors in overseeing and inspecting the work, designing the excavation process and related matters, were clearly the type of errors contemplated under the exclusion, which specifically addressed services such as inspections, designs, and the preparation of plans.

Similarly, in Natural Gas Pipeline Company of America v. Odom Offshore Surveys Inc., 889 F.2d 633 (5th Cir. 1989), the court held that damage to a pipeline arising from the performance of work that would be “generally recognized as surveying services” was explicitly excluded from coverage. In IA Construction Corp. v. T&T Surveying, Inc., et al., 822 F. Supp. 1213 (D. Md. 1993), the insured engineer used erroneous data in laying out the foundation for a train platform, and the platform was constructed at the wrong elevation. In construing a similar exclusion, the court held that this was “the stuff of construction trade and of professional malpractice insurance” because the alleged damage resulted from a surveying error, which was specifically excluded from coverage.

Look At The Engineer’s Contract

The scope of the engineer’s services contract is given a fair amount of weight in the analysis of “engineering.” If the insured has undertaken to plan, design, or approve certain matters related to safety, then an error in this undertaking is likely to be considered “professional.” For instance, an engineer who is required by contract to examine and approve (or reject) a contractor’s operations based on safety concerns, is probably performing a “professional” obligation. See, e.g., Atlantic Mut. Ins. Co. v. Continental Nat’l American Ins. Co., 123 N.J. Super. 241, 302 A.2d 177 (N.J. 1973)(engineer was performing professional work when it approved the contractor’s unsafe use of a steel cage device to protect workers operating in a trench, allegedly “in the absence of sound engineering practice”).

On the other hand, if the engineer was hired to perform engineering operations unrelated to safety, the engineer’s failure to stop an unsafe operation is less likely to be labeled “professional.” See, e.g., Cochran v. B.J. Serv. Co. USA, et al., 302 F.3d 499 (5th Cir. 2002)(insured’s alleged failure to properly supervise an employee in a construction task of cement head removal was not “professional” as it was not the insured’s job to provide any instruction, specialized or otherwise, to contractors). See also Matter of Stone Petroleum Corporation, 961 F.2d 90 (5th Cir. 1992) (Louisiana law)(The insured surveyor’s failure to ensure that a production facility was safe for the specified work included claims going beyond the purview of professional surveying.).

If the contract addresses safety, but merely requires the engineer to perform cursory reviews of safety matters, or to report on the contractor’s compliance with safety plans or laws, that is probably not an undertaking to provide some sort of “professional” safety services. See, e.g., Reliance Ins. Co. v. National Union Fire Ins. Co., 262 A.D.2d 64, 691 N.Y.S.2d 458 (N.Y. 1999)(engineer did not create or review safety plans, but merely enforced them, which required only normal powers of supervision and observation, and the failure to ensure the contractor’s compliance was not “engineering”); see also Continental Cas. Co. v. Hartford Accident & Ind. Co., 836 F. Supp. 246 (E.D. Pa. 1993)(where a contract obligated the engineer to report safety infractions it noticed at the site, but not to conduct safety inspections or training, the work required was not “professional”).

The same analysis applies when an engineer fails to warn workers of a dangerous condition. If “engineering” skill is not required to identify the dangerous element, then the failure to warn of the danger is not an “engineering” mistake. See, e.g., CBM Engineers, Inc. v. Transcontinental Ins. Co., 460 S.2d 745, (La. App. 1984)(failure to warn of elevator malfunction); Gregoire v. AFB Construction, Inc., 478 S.2d 538 (La. App. 1985)(question of fact as to whether failure to warn of high-voltage electric wires was “professional”); see also Camp, Dresser & McKeever v. Home Ins. Co., 30 Mass. App. Ct. 318, 568 N.E.2d 631 (Mass. App. 1991) (duty to instruct and warn employees on the use and maintenance of a dangerous conveyor belt resulted from a mix of professional and non-professional activities); see also Matter of Stone Petroleum Corp., supra (surveyor’s negligent failure to ensure that a production facility was safe for the specified work was beyond the purview of “professional services”).

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