In the early hours of March 26, 2024, a cargo ship struck the Francis Scott Key Bridge in Baltimore, Maryland. The bridge’s collapse was immediate; within seconds, the span crumpled and fell into the water below. Six construction workers were killed in the accident. The workers were on-site for road repairs when the ship struck, and the collision occurred too quickly for them to clear the area.
In the aftermath, questions are bubbling up. As of this writing, the FBI has just opened a federal criminal investigation of the collapse. Construction Business Owner (CBO) spoke with attorneys Judah Lifschitz and Laura Fraher of Barclay Damon LLP for more insight. Read on for their examination of the legalities surrounding the event.
Can you break down the potential legal liabilities for project owners following the Francis Scott Key Bridge collapse?
The Francis Scott Key Bridge collapse was a tragic event resulting in injuries and loss of life as well as significant nonphysical injuries, including the loss of the bridge itself and the interruption of access to the Port of Baltimore which will impact countless sectors of the economy. There will be significant costs associated with these injuries, including those suffered by the victims injured or killed in the incident as well as the cost of investigation, the cost of rebuilding the bridge, temporary measures to restore port access and the economic losses suffered by those impacted by the absence of the bridge, including the City of Baltimore and businesses that rely on it.
What parties will have potential legal liability for these myriad costs hinges on the cause of the bridge collapse itself. Unlike other bridge collapse incidents where legal liability rested with the stakeholders associated with the bridge, this collapse occurred after a collision event. Thus, the owners and operators of the cargo ship that caused the collision are the primary focus of legal liability. These issues will involve maritime laws. Only if it could be established that some material latent defect in the design or construction of the bridge, or a failure in the inspection or maintenance of the bridge, and not solely the collision itself, caused the collapse, could potential legal liability arise for the owner of the bridge, the company that designed the bridge or the contractor that built the bridge.
Could you provide insight into how liquidated damages are calculated in construction disputes, particularly in cases like this one?
A liquidated damage provision is an advance agreement of the damages that a party will be entitled to recover in the event of a future breach by the other party to a contract. Liquidated damages provisions are only enforceable where the damages likely to result from a given breach are difficult to anticipate or calculate and the agreement reached by the parties is a reasonable forecast for the anticipated damages.
Liquidated damages would not be applicable in a case like this. However, given the need to reconstruct the bridge as quickly as possible it is likely that there will be a liquidated damages provision in a future contract to build the new replacement bridge.
How do engineering, procurement and construction (EPC) contracts play a role in determining liability in construction-related incidents?
If drafted properly, the contracts governing the relationship between the parties in a construction project will clearly define the scope and limits of liability for each party in the event of a construction-related incident. A well drafted contract will allocate the risk of loss between the parties and clearly define the rights and obligations of the parties.
How do you approach the investigation process to determine liability in cases of construction accidents or failures?
With an incident like the Key Bridge collapse, there will be investigations conducted by regulators, including the National Transportation Safety Board (NTSB). The results of these investigations will be critical evidence in any legal proceedings.
There is no reason that interested parties cannot also begin their own investigations. It is imperative to understand the cause of the collapse and whether negligence occurred in order to assess potential exposure. Steps to take to investigate the incident may include a review of the structural plans, including the formwork and shoring plans, a review of safety plans, a review of records relating to recently performed safety inspections and interviews of potential witnesses. Given the highly technical nature of this type of analysis, it will be important to retain appropriately skilled consultants to assist in the investigation.
Any party that has any reason to suspect that it may have potential legal exposure must take necessary steps to ensure that protection by attorney-client privilege and the work-product doctrine before beginning any investigation. By retaining counsel early and working collaboratively to retain necessary consultants and conduct necessary interviews, a party can lay the foundation necessary to take full advantage of privilege and work product in the event of future litigation.
In your experience, what are some common types of disputes that arise in power and energy construction matters?
The most common disputes in construction matters involve alleged defects in design documents, alleged defects in construction and/or equipment, problems with the performance of equipment and technology and the impact of construction schedule delays.
What steps can project owners, developers, contractors and design professionals take to mitigate their legal risks in large-scale construction projects?
Legal risk should be negotiated and determined at the contracting stage. Before entering into any large-scale construction project, any participant must consider the legal risks and negotiate accordingly. Commonly used provisions that can be included in a contract to mitigate risk include liquidated damages provisions, limitation of liability provisions and warranty provisions with exclusive remedies. And because not all risk can be avoided, it is imperative that all project participants ensure that they have appropriate insurance in place to protect themselves against loss.
In your opinion, what are the key factors that contribute to successful resolution of construction-related disputes, particularly in cases involving significant damages?
The most important step is one that comes before a dispute ever arises — drafting and negotiating the contract. A clear contract that specifically and unambiguously defines each party’s rights and obligations greatly reduces the risk of disputes.
Developing a full understanding of the facts and legal issues as early as possible increases the odds of a successful resolution of disputes. This includes gathering and documenting relevant facts and engaging appropriate subject matter experts early to provide an objective evaluation of the facts and technical issues involved in the dispute.
The goal should always be to work out a resolution with your business partner — before they become your adversary — by objectively evaluating the facts and keeping lines of communication open. If your company wants to find a resolution without a lawsuit, never shut down negotiations altogether, even when they seem to stall or be unsuccessful.
Photo Credit: Andrew Leyden, Shutterstock 2446521065
