The opinion of the court was delivered by: GASCH
Plaintiff American Home Assurance Co. filed this suit to obtain a declaratory judgment holding that the claim submitted to it by defendant J. F. Shea Company is not covered by the insurance policy at issue here. Alternatively, if the Court should hold that there is liability under the policy, American seeks a declaration that the amount of liability be reduced by $100,000 pursuant to the deductible provision of the policy. The matter is now before the Court on cross-motions for summary judgment. The parties have submitted a joint stipulation of undisputed facts, the most pertinent of which follow.
Defendant Washington Metropolitan Area Transit Authority (WMATA) obtained an insurance policy from plaintiff to cover construction of its subway system. WMATA as well as all its contractors and subcontractors are named insureds under the policy. The insurance protects against "ALL RISKS OF PHYSICAL LOSS OR DAMAGE."
Specifically excluded, however, are losses due to "inherent vice," "defective design and specifications," or "faulty workmanship."
Also in the insurance contract is a "SUE & LABOR CLAUSE," providing that the insured, when necessary, must sue or labor to safeguard the covered property from actual or imminent loss or to minimize loss once it has occurred and also providing that the insurer will contribute to the expenses incurred by the insured under this clause.
The events precipitating Shea's claim at issue here concerned the construction of a "transition cut"
for the subway along its route through Montgomery County, Maryland. An essential part of this work was the construction of a support-of-excavation system to support the terrain along the transition cut during construction of it. Defendant WMATA contracted with defendant Shea to perform this work.
Under the terms of the WMATA-Shea contract, WMATA established the design criteria including the determination of the lateral pressures expected to be imposed on the support-of-excavation system. Pursuant to these criteria, Shea designed and installed the system. There is no contention that Shea's design or workmanship during installation of the system was defective.
The trouble began in late May or early June of 1976 after a major portion of the excavation had been completed and the cut was down to a depth of about fifty feet below the main thoroughfare of Rockville Pike. At that point, inward or lateral movement of the east wall of the support-of-excavation system was detected. Informed of this, Shea investigated and confirmed the movement.
Several letters were then exchanged among the parties, each generally acknowledging the urgency of the matter and the applicability of the sue and labor provision. Shea also periodically submitted cost reports to American. Then, in October, 1976, American wrote Shea advising it that its claim for the repair work was being denied because of faulty workmanship,
but also reserving all other defenses available to American.
As earlier noted, American no longer contends faulty workmanship by Shea was involved; rather, it now relies on the exclusions covering inherent vice and defective design. American's theory is that WMATA's design criteria anticipated a certain range of lateral pressures to be exerted on the east wall of the support-of-excavation system. The pressures that in fact occurred were greater than those anticipated, thereby causing excessive deflection in the wall. Accordingly, American submits that WMATA's design criteria were defective. This theory is attractive in its simplicity; yet, its simplicity is also its fallacy.
It is undisputed in this case that WMATA did everything it reasonably could be expected to have done in the preparation of its design criteria. American's own expert, Mr. Nathan Hale, stated that WMATA's estimates of the anticipated lateral pressure were proper and in fact were conservative.
Nobody appears to know what caused the wall to bend excessively, and the only theory offered, and the one generally accepted by all, is that of Mr. Hale. In his expert opinion, he could see no reason for the excessive deflection except a possible faulty slippage plane in the earth some distance away from the construction site. Apparently, the earth moved along that plane, forcing the east wall of the support system outward. According to Mr. Hale, it would take a genius to be able to look at the soil borings and determine from them that a slippage plane was present. Expressing it in terms a layman could understand, he stated that if the slippage were in a rock formation, the chances of finding it were one in a hundred, and if the slippage were in the soil, the chances would become a miniscule one in a million.
American has tried to support its argument that the design was defective by invoking the dictionary definition of "defective," which states that something is defective when it is
1. wanting in something, incomplete, lacking a part; deficient, imperfect; faulty
2. in error, at fault . . . .
Webster's New International Dictionary 584 (1971). In the Court's view, however, such definition equally supports the defendants' position. This definition suggests the involvement of negligence or other improper conduct on the part of the actor. Yet, as noted above, American's ...