With the Society

THE SOCIETY OF FIRE PROTECTION ENGINEERS Joseph E. Johnson, President

Robert A. Pedersen, First Vice President Edward F. Tabisz, Second Vice President

Richard E. Stevens, Secretary-Treasurer

LEGAL ASPECTS OF F I R E P R O T E C T I O N E N G I N E E R I N G

On January 16, 1967, Mr. Ambrose B. Kelly, General Counsel of the Fac- tory Mutual System, spoke to the New England Chapter of the SFPE. In view of its importance to fire pro- tection engineers, we are presenting Mr. Kelly's message in its entirety.

"There has been a continuing argu- ment over the age and standing of various professions, with some new contenders in an old race. With recog- nition comes responsibility, which in today's vocabulary often means legal liability. Recent decisions have con- sidered the degree to which loss pre- vention engineers, employed by insur- ance companies or rating bureaus, or their employers may be liable for negli- gence in making inspections. The precedent-setting decisions have in- volved the safety engineers working for workmen's compensation com- panies, but fire protection engineers have no special immunity.

"Let us, in typical legal fashion, consider a hypothetical case. This afternoon there was an explosion and fire in the plant of the X Manufactur- ing Company, located in Anytown, U.S.A. Three employees were killed, together with three other men who were visitors at the time of the explo- sion. Customers' goods with a value of $100,000, not insured, were destroyed. Before the fire was brought under con-

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trol, it had spread to an adjoining building causing an additional loss of $100,000. Two separate public investi- gations were launched, and an inquest was held. The following facts were established:

�9 "The initial explosion occurred in a gas dryer equipped with safety inter- locking controls. Employees testified that in order to maintain production, the relays had been bridged for more than six months, and the controls were by-passed.

�9 "After the explosion, the resulting fire was not controlled by sprinklers because of inadequate water supply. An automatic fire pump failed to op- erate. Employees testified tha t it had been inoperative for a year.

�9 "The adjoining building tha t was burned out was the middle one of three similar buildings. Neither of the others suffered severe damage because they were protected by wired glass windows and outside sprinklers.

�9 "The X Manufacturing Company has been insured for years with a group of companies which put the emphasis of their solicitation on engineering and loss prevention service. They had ap- proved the blueprints for the dryer and its controls. The last inspection was made three months before the fire. The report of the engineer made no refer- ence to the dryer controls, but did

With t he Soc ie ty

recommend that the automatic fire pump be restored to service.

�9 "The X Manufacturing Company had retained Ambrose Kelly, insurance advisor, to make a survey of the insur- ance on the property two months be- fore the loss. Mr. Kelly had hired Maurice Boulais, who held himself out as a qualified fire protection engineer, to make a detailed inspection of the property. The Boulais report, which was incorporated into the Kelly sur- vey, missed both the bridged controls and the inoperative fire pump.

�9 "The adjoining property that suf- fered loss was insured in the Factory Mutuals. Their last inspection report had recommended wired glass win- dows, bu t not outside sprinklers.

�9 "The following suits are filed. The insurance companies who covered the plant are sued, on the ground that loss was due to their failure to inspect properly, by the legal representatives of the persons killed in the explosion and fire; by the customers whose prop- erty was destroyed; and by the Factory Mutuals, who exercised their subroga- tion rights as insurers of the adjoining building. Mr. Boulais and Ambrose Kelly are sued by the X Manufacturing Company for uninsured loss, by the legal representatives of those killed, and by the Factory Mutuals for the loss at the adjoining property. The X Manufacturing Company is sued by the legal representatives of the dead visitors, and by the Factory Mutuals (again exercising their subrogation rights). The question, simply, i s - 'Who is liable for what on these facts?'

"Now that we have the problem, let us consider the general legal principles that would be applicable.

"A professional engineer, like any other recognized professional (such as a doctor or lawyer), must exercise such reasonable skill and ordinary diligence as may fairly be expected from a person

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in his situation. There are many more cases involving architects than engi- neers and, because of the similarity in training and duties, it may be helpful to consider what the courts have said about architects. In Bayshore Devel- opment Co. vs. Bonfoey et al , it was ex- pressed this way: 'The responsibility resting on an architect is essentially the same as that which rests upon the lawyer to his client, or upon the physi- cian to his patient, or which rests upon any one to another where such persons pretend to possess some skill and abil- ity in some special employment and offers his services to the public on ac- count of his fitness to act in the line of business in which he may be employed. The undertaking of an architect im- plies that he possesses skill and ability, including taste sufficient to enable him to perform the required service at least ordinarily and reasonably well, and that he will exercise and apply in a given case his skill and ability, his judgment and taste, reasonably and without neglect. But the undertaking does not imply or warrant a satis- factory result. I t will be enough that any failure should be by the fault of the architect. '~

" In the case of Paxton vs Alameda County, the court said it this way: 'By undertaking professional service to a client, an architect impliedly represents that he possesses, and it is his duty to possess, that degree of learning and skill ordinarily possessed by architects of good standing, practicing in the same locality. I t is his further duty to use the care ordinarily exercised in like cases by reputable members of his pro- fession practicing in the same locality; to use reasonable diligence and his best judgment in the exercise of his skill and the application of his learning in an effort to accomplish the purpose for which he is employed. '2

" In the Michigan case involving a

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bu i ld ing collapse, the cour t said: 'Th is cou r t has he ld t h a t the respons ib i l i ty of an a r ch i t ec t does no t differ f rom t h a t of a l awye r or phys ic ian . W h e n he possesses the requis i te skill and knowl- edge and in the exercise the reof has used his bes t j u d g m e n t , he has done all t he law requires . T h e a rch i t ec t is no t a w a r r a n t o r of his p lans and specifica- t ions. T h e resu l t m a y show a mi s t ake or defect , a l t hough he m a y have ex- ercised the reasonab le skill required. '3

" T h a t these def ini t ions are equa l ly app l i cab le to engineers m a y be gaged f rom a F l o r i d a case in which the cour t said: 'An engineer, or a n y o the r so- cal led professional , does not " w a r r a n t " his service or t he tangib le evidence of his skil l to be " m e r c h a n t a b l e " or "f i t for an i n t e n d e d use." These are t e rms un ique ly app l i cab le to goods. R a t h e r , in the p r e p a r a t i o n of design and speci- f icat ions as the basis of cons t ruc t ion , the engineer or a rch i tec t " w a r r a n t s " t h a t he will or has exercised his skil l accord ing to a cer ta in s t a n d a r d of care, t h a t he ac t ed r easonab ly and w i thou t neglect . Breach of th is " w a r r a n t y " occurs i f he was negligent . Accord ing ly , the e l emen t s of an ac t ion of negligence and for b reach of the " impl ied war- r a n t y " a re the same. '4

" T h e r e has been a t leas t one case, t h a t of Broy les vs Brown Engineer ing C o m p a n y , 5 in which i t was held t ha t , where t he p lans p repa red b y an engi-

F i r e T e c h n o l o g y

of h im than would be e x p e c t e d f rom someone who had no t m a d e t h e c la im to unusua l t r a in ing a n d exper ience in t he a rea of loss p reven t ion .

" I n one of the m a j o r cases in which an insurance c o m p a n y , which has pro- v ided loss p reven t ion service, was held respons ib le for the d e a t h s a n d in jur ies of a n u m b e r of employees , t he decis ion seemed to t u r n on the fact t h a t the in- surance c o m p a n y had , in i ts a d v e r t i s - ing, emphas ized the effect iveness of i t s sa fe ty engineer ing and in spec t ion serv- ices. Th i s u n d o u b t e d l y s w a y e d the j u r y in hold ing aga ins t t he in su rance company . I t was no t c i ted in t he de- cision of the I l l inois S u p r e m e Cour t , which held t h a t an insurance c o m p a n y which vo lun t a r i l y u n d e r t o o k services to o the r s can be held l iable for fai l ing to p r e ve n t an in ju ry . T h e c o u r t in t h a t case held t h a t the p la in t i f f s were on ly requi red to p rove t h a t t h e insur- ance c o m p a n y had u n d e r t a k e n the sa fe ty and inspec t ion services unde r c i rcumstances t h a t c rea ted a d u t y to pe r fo rm the services wi th t h e p rope r care and to show t h a t t he neg l igen t pe r fo rmance of t he sa fe ty inspec t ion and engineer ing service was t h e cause of the pla int i f fs ' in jur ies a n d dea th . 8

" I a m sure i t is recognized b y al l of you t h a t an insurance c o m p a n y under - t a k i n g to p rov ide inspec t ion service is doing so g ra tu i tous ly , since t h e r e is no ob l iga t ion to do so in the fire in su rance

neer ing f i rm for the d ra inage of a pro- posed subdiv is ion were inadequa te , r ecovery could be secured f rom the engineer on the ground t h a t there was an impl ied w a r r a n t y of a d e q u a t e re- suits .

" F r o m these cases, i t is qu i te obvi - ous t h a t the engineer will be held re- spons ib le for the exercise of care; t h a t he will be held to a high s t a n d a r d of profess ional competence; and the fac t t h a t he has held h imsel f ou t as a spe- cial is t m e a n s t h a t more will be expec ted

\ - p o l i c y . Counsel for i n su rance com- panies who have s tud ied t h e p r o b l e m re ly ve ry s t rong ly on the R e s t a t e m e n t of the L a w of Tor t s . Sec t ion 323 of t he R e s t a t e m e n t , pub l i shed in 1965, reads : '323. Negl igen t P e r f o r m a n c e of Un- d e r t a k i n g to R e n d e r Services . One who under t akes , g r a t u i t o u s l y or for cons idera t ion , to r ende r serv ices to another , which he should recognize as necessa ry for the p ro t e c t i on of the o the r ' s person or things, is s u b j e c t to l i ab i l i ty to the o the r for p h y s i c a l h a r m

W i t h t h e S o c i e t y

resul t ing f rom his failure to exercise reasonable care to per form his under - t ak ing , if (a) his fai lure to exercise such care increases the r isk of such harm, or (b) the h a r m is suffered because of the o the r ' s rel iance upon the unde r t ak ing . '

" T h e Nelson case conta ined no show- ing of re l iance or any showing t h a t the inadequac ies of the inspect ion service increased the r isk of harm. In a ve ry recent case, j u s t decided by the Penn- sy lvan i a S u p r e m e Cour t and filed N o v e m b e r 15, 1966 (DeJesus v s . Lib- e r t y M u t u a l Insurance Co.), t h a t cour t refused to pe rmi t an in jured em- p loyee to proceed aga ins t the em- p loye r ' s w o r k m e n ' s compensa t ion car- r ier because there had been no showing t h a t negl igent pe r fo rmance of inspec- t ion service would increase the r isk of h a r m or t h a t there was any rel iance b y the in ju red p la in t i f f upon the defend- a n t ' s pe r fo rming the service i t had u n d e r t a k e n to render .

" I a m sure you are all aware tha t , unde r the c o m m o n l y accepted pr in- ciples of t o r t l iabi l i ty , anyone can be held respons ib le for in jur ies or damage to p r o p e r t y which resul t f rom his fa i lure to exercise reasonable care. I t has been he ld t h a t a v io la t ion of law or o rd inance wi th respect to safe work- ing condi t ions creates a p r e s u m p t i o n of negligence on the pa r t of the p rop- e r t y owner. T h e same resul t follows if he pe rmi t s the con t inua t ion of a dan- gerous cond i t ion t h a t has been ca l led to his a t t en t i on . We have no t y e t reached in th i s coun t ry the rule fol- lowed in E u r o p e under the Code of Napoleon . I t imposes upon the prop- e r t y owner the b u r d e n of p roof to show t h a t his negligence was not respons ib le for t he sp read of the fire beyond his premises .

" W i t h these general pr inc ip les in mind , le t us r e t u r n and t ake a quick look, w i th a m i n i m u m of compl ica t ions , a t the l i t iga t ion which resu l ted f rom

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the loss a t the X M a n u f a c t u r i n g Com- pany . W e m i g h t even a t t e m p t to pre- d ic t the resu l t of the va r ious sui ts which have been filed.

" T h e legal r e p r e s e n t a t i v e s of the people kil led in t he fire will s t a n d in a lmos t exac t ly the s ame s i t ua t ion as d id the employees in the Nelson case. I f the cour t in our h y p o t h e t i c a l in- s t ance followed the reason ing of the I l l inois S u p r e m e Cour t , a n d does no t feel t h a t i t is e i the r necessa ry to show t h a t the poss ib i l i t y of h a r m was in- c reased by the negl igent inspec t ions or t h a t the re was re l iance on these inspec- t ions, i t is qu i te p robab le t h a t recovery aga ins t the insu re r could be had . In a n y t r ia l of the case, i t would, of course, be a rgued on b e h a l f of the insurance c o m p a n y t h a t n o r m a l inspec t ion pro- cedures would no t be suff icient ly de- t a i led to ca tch the fac t t h a t the sa fe ty cont ro l s on the d r y e r had been br idged. T h e i r a t t o r n e y s would also po in t to the fact t h a t t h e y had de t ec t ed the def ic iency in t he a u t o m a t i c fire p u m p and r e c o m m e n d e d to the insured t h a t i t be res tored to service. Counsel for the insurance c o m p a n y would also argue very s t r o n g l y t h a t the insurance c o m p a n y inspec to r s were only con- s u l t a n t s to the X M a n u f a c t u r i n g Com- p a n y , and t h e y could no t compe l i t to c a r r y ou t a n y r e c o m m e n d a t i o n s . They , therefore, should no t be he ld respons- ible for i ts fa i lure to fix the defect ive

/ p u m p af te r the condi t ion had been cal led to i ts a t t e n t i on .

" I n d e t e r m i n i n g w he the r or no t the insurance c o m p a n y should be held re- spons ib le for t he fa i lure of i t s inspec- tors to de tec t t he defec t ive controls , the j u d g e would be guided b y the prac- t ice of ski l led fire p ro t e c t i on engineers, as expla ined b y expe r t witnesses. I f th.e judge feels t h a t the re is sufficient ev idence to have the case considered b y the ju ry , the chance of an unfavor - ab le verd ic t is high. I f the c o m p a n y is

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held liable, it would be answerable to both the legal representatives of those who were killed and to the customers whose property was destroyed in the fire. The insurance company might well be in a much stronger position with respect to the customers, since here the question of their negligence would almost certainly hang on the inoperative fire pump, and the fact that this had been called to the atten- tion of the X Manufacturing Company might well operate to release the in- surance company from liability. I t must also be kept in mind that, in weighing evidence, juries are not indif- ferent to the plaintiffs who are asking for justice, and the wife and child of an employee killed by the explosion of the dryer are in a somewhat different position from another large corpora- tion whose property has been destroyed in the ensuing fire.

" In a case brought by the Factory Mutuals under subrogation, the de- fense of contributory negligence would almost certainly be raised on the grounds that good engineering prac- tice would have required a recom- mendation of open sprinkler protection for the adjoining building. In this case, the insurance company would also have a chance to prove that it was the failure of the fire pump rather than its inadequate inspection of the dryer that was responsible for the spread of fire to the adjoining property - - and for this the X Manufacturing Com- pany, rather than the insurance com- pany, must be held responsible.

"With respect to the suits brought against Maurice Boulais and Ambrose Kelly, it would seem that the X Manu- facturing Company has a rather sound case based upon the doctrine of im- plied warranty, which was mentioned in some of the earlier cases. There is no question that an engineer of Mr. Boulais' experience and competence

Fire T e c h n o l o g y

should have detected the major faults in the fire protection of the plant and called them to the attention of the X Manufacturing Company in his report. Since Ambrose Kelly had hired Boulais and vouched for his professional quali- fications, he would undoubtedly also be held responsible for the engineer's failure to detect and report on the dangerous conditions. A verdict against both Kelly and Boulais, there- fore, is likely.

"With respect to the suits brought on behalf of those killed in the explo- sion, there would be basically the same situation with respect to Kelly and Boulais as exists with respect to the in- surance company engineers and the in- surer who had made the last regular inspection, except that the case would be somewhat stronger by reason of the failure to detect the inoperative fire pump. The defense of contr ibutory negligence against the subrogation action of the Factory Mutual Com- panies could also be used by Boulais and Kelly.

"The suit against the X Manu- facturing Company by the legal repre- sentatives of the people killed who were not its employees is interesting in view of the fact that the most im- portant evidence that would be offered in this case is that produced by the re- ports of the loss prevention engineers. I f it can be proven that the X Manu- facturing Company had knowledge of the dangerous conditions and had had time to remedy them but had done nothing, it is entirely possible tha t they will be held liable. In their de- fense they will undoubtedly cite the fact that Mr. Boulais had not de- tected the dangerous conditions. Their at torney would argue that their action in having such a survey made showed their desire to maintain safe working conditions in their plant. The fact that the report of their own insurers

W i t h t h e Soc i e ty

showed a defective fire pump, which had not been repaired, would, of course, be held against them, and it would be necessary for them to present evidence excusing their failure to remedy this deficiency. The one thing tha t is cer- tain is t ha t a great deal of expert testi- mony would be offered in this case, and the records of the insurance com- pany would be subpoenaed, as would those of Boulais.

"All in all, as I review the various suits, it seems certain tha t the l iabili ty carriers who had agreed, for a pit tance, to cover the l iabili ty of the insurers arising out of their professional li- abil i ty, or who had similarly agreed to write a broad umbrella contract for Kel ly and Boulais, will be faced with the prospect of paying out substant ia l sums in set t lement of these cases.

"Now, we have been dealing with a hypothet ical situation, and probably you wonder whether there is any pos- sibili ty t ha t suits along these lines will be brought. Stop wondering! Such li t igation is a fact. At the moment there is a whole series of suits pending in the Florida courts as the result of the fire tha t occurred in the Hotel Roosevelt in Jacksonville, Florida, in 1963. The plaintiffs' complaints al- leged t ha t the insurance company, which insured the hotel for fire, public liability, and workmens' compensation, made 'periodic safety engineering in- spections to the hotel premises to de- tect conditions hazardous to persons occupying and using the hotel prem- ises,' bu t t ha t the company 'carelessly and negligently failed to detect and re- port the hazardous conditions tha t ap- proximately caused or contr ibuted to causing' the injuries and death. The motion by the defendant insurance company to dismiss was denied on the basis of the Nelson case.

"There is a second series of suits pending in Indiana as the result of the

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explosion of the Indianapol is Coliseum over a year ago in which a large num- ber of persons were killed and injured. In this case, suit has been brought against the Indiana Inspect ion Bureau, which rated the risk, on the theory tha t its inspectors should have dis- covered the propane tanks whose con- nections were not in accordance with the ci ty ordinance, even though those propane tanks were not in the base- ment a t the t ime of the last inspection.

"A recent case in which the Factory Mutua l Companies are involved arises out of an explosion in a dryer, very similar to the hypothet ica l case with which I s tar ted this talk. I t was al- leged tha t our engineers had approved the blueprints for the installation, and tha t even though the ac tual explosion occurred some six or seven years after the approval of the blueprints, we were still responsible for the fact t ha t it was not a completely safe installation. I t was also alleged tha t our inspections had failed to detect the fact tha t the safety controls had been j immied so tha t they were not operative. The at- torney for our l iabil i ty insurer feels t ha t the judge, in the light of evidence in support of these allegations, might hesi tate to take the case from the jury and tha t if i t ever reached the jury they might hold against us, since the injuries were serious.

"At tent ion was focused on possible l iabil i ty of safety engineers and the insurers for whom they work by the Nelson case a l ready referred to, which involved a claim made by employees against the workmen's compensation insurer. The language used in some of the decisions resulted in a good deal of soul-searching on the par t of insurance companies, since they realized tha t by providing inspection service they p u t themselves in a position where they might be sued for negligence in carry-

ing out the inspection.

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" A n u m b e r of s t a t e s have a m e n d e d the i r laws to free the insurance carr ier f rom such l iab i l i ty , and w o r k m e n ' s c o m p e n s a t i o n laws have been amended to b r ing the insurer wi th in the defini- t ion of ' emp loye r ' . T h e n u m b e r of de- cisions and the in te res t in the sub jec t resu l ted in a n u m b e r of ar t ic les in legal per iodicals . T h e l iab i l i ty of the archi- t ec t in his supe rv i so ry funct ion was d iscussed in an ar t ic le t h a t appea red in T h e F o r u m , publ i shed b y the Sect ion of I n su rance Negl igence and Compen- sa t ion L a w in J a n u a r y of 1966. A t the mee t ing o f the Amer i can Ba r Associa- t ion in M o n t r e a l las t summer , an excel- len t p a p e r on a rch i tec t s ' , engineers ' , and insurance agen t s ' profess ional li- ab i l i t y was p resen ted b y Wi l l i am M. Hoeveler . A t a lk on the sub jec t of in- surance c o m p a n y inspec t ion was pre- sen ted b y M a r c u s A b r a m s o n before the In su rance Buye r s ' Associa t ion of P i t t s - bu rgh in M a r c h 1966. T h e r e is, there- fore, a g rea t dea l of m a t e r i a l ava i lab le on the s u b j e c t for those of you who wish to s t u d y i t in more dep th .

" T h e p r o b l e m received close scru- t i ny f rom the legal d e p a r t m e n t s and top execu t ives of all insurance organi- zat ions. T h e r e were a few in the busi- ness who fel t t h a t the only logical resu l t was to cu r t a i l o r e l imina te such inspec- t ion service, since in th is w a y t h e y could e l imina t e any possible l i ab i l i ty for negl igence in ca r ry ing i t out . Upon more ref lect ion, however , i t was the cons idered feeling of all m a j o r insurers t h a t we should no t give up our engi- neer ing funct ion , b u t t h a t in ca r ry ing i t o u t we should recognize the r isk of l i t iga t ion and even the poss ib i l i ty of r ecovery aga ins t us in the even t t h a t our inspec t ions were inadequa te , in- comple te , or careless ly made . Th i s has been the pos i t ion of the F a c t o r y M u - tuals , and i t is one which we share wi th all of the m a j o r o rgan iza t ions who pro- vide sa fe ty and loss p r even t ion engi- neer ing to the i r pol icyholders . We feel

F i r e T e c h n o l o g y

t h a t we m u s t m a k e i t c lear t h a t we ac t as consu l t an t s to the po l i cyho lde r , and we canno t force h im to cor rec t dange r - ous condi t ions in his p r o p e r t y o r to in- s ta l l sa fe ty devices which, in o u r j u d g - men t , are necessary . W e can, a n d do, cancel the insurance if we feel t h a t a dange rous condi t ion exists w h i c h he is unwil l ing to r e m e d y . W e recognize t h a t our repor t s , cal l ing his a t t e n t i o n to deficiencies in his loss p r e v e n t i o n procedures , may , in some f u t u r e l i t iga- t ion, be used aga ins t t he p o l i c y h o l d e r since t h e y are ev idence t h a t he knew of the dange rous cond i t ion a n d d id no th ing to cor rec t it . W e feel s t r o n g l y t h a t the pol icy we are fo l lowing is in the publ ic in te res t and t h a t i t is a pol icy which is u n a n i m o u s l y s u p p o r t e d b y our po l icyholders .

" W e all recognize t h a t in t o d a y ' s wor ld we can be held a c c o u n t a b l e in the cour t s for our negligence, for our fa i lure to exercise r easonab le care , for ou r fai lure to ac t as r e a s o n a b l y p r u d e n t persons in t he c i r c u m s t a n c e s which conf ron t us. T h i s does no t m e a n t h a t we should hes i t a t e to ca r ry o u t a loss p r even t ion p r o g r a m a n y m o r e t h a n a surgeon would hes i t a t e to o p e r a t e be- cause he knows t h a t he m a y be sued for ma lp rac t i c e if the p a t i e n t feels, a f t e r a poor resul t , t h a t t h e surgeon was careless o r i nc ompe te n t .

"You , as profess ionals , m u s t accep t w i thou t fa l t e r ing the respons ib i l i t i e s t h a t go wi th y o u r p rofess iona l s t a tus . You mus t never hes i t a t e to a c t in ac- cordance wi th y o u r bes t p ro fess iona l j u d g m e n t - - a n d le t the ch ips fall where t hey m a y . "

C I T A T I O N S ' 78 So 507 (Florida 1918). 2 259 Pac. 2nd 934 (California 1953). 3Bayne vs. Everham, 197 Michigan

181, 163 N.W. 1002. 4 Audlane Lumber Co. vs. D. E. Brill &

Associates, Inc., 168 So 2nd 333 (Florida DC App 1964).

5 151 So 2nd 767 (Alabama 1963). S Nelson et al vs. Union Wire Rope

Corp., Archer I ron Works, American Mutual Liabil i ty Ins. Co. 199 N E 2nd 767.