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Slattery Skanska Inc. v. American Home Assurance Co.

September 1, 2009

SLATTERY SKANSKA INC., ET AL., PLAINTIFFS,
BOMBARDIER TRANSIT CORPORATION, PLAINTIFF-RESPONDENT,
v.
AMERICAN HOME ASSURANCE COMPANY, DEFENDANT-APPELLANT,
AON RISK SERVICES COMPANIES, INC., ET AL., DEFENDANTS.



Defendant American Home Assurance Company appeals from an order of the Supreme Court, New York County (Charles E. Ramos, J.), entered January 3, 2008, which, to the extent appealed from as limited by the briefs, denied its motion for summary judgment dismissing the complaint, granted plaintiffs' motions for partial summary judgment as to coverage and ordered an inquest as to damages.

The opinion of the court was delivered by: Catterson, J.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and subject to revision before publication in the Official Reports.

Luis A. Gonzalez, P.J. Peter Tom John W. Sweeny, Jr. John T. Buckley James M. Catterson, JJ.

117297/04

This action arises out of an accident that occurred on September 27, 2002, in which an AirTrain light rail transit test train derailed in a curve on the aerial guideway that runs between the Howard Beach station and the Federal Circle station near JFK International Airport in Jamaica, Queens*fn1. At the time of the accident, the test train, with three cars and no occupants except the train operator, was participating in an acceleration test. When the test train derailed, large concrete slabs that had been placed in the lead car for added weight followed Newton's first law of motion, shifted, and then crushed the train operator against the operator's console. As a result of the accident, the train operator was killed. Furthermore, there was some $16 million in property damage.

In 1997, plaintiffs Slattery Skanska Inc., Perini Corporation, Koch Skanka, Inc., and Skanka (USA), Inc. (hereinafter referred to as "Slattery") and plaintiff Bombardier Transit Corporation (hereinafter referred to as "Bombardier"), formed a consortium known as the Air Rail Transit Consortium (hereinafter referred to as "ARTC"). In April 1998, the Port Authority of New York and New Jersey (hereinafter referred to as the "Port Authority") entered into a Design and Build Contract (hereinafter referred to as the "contract") with ARTC for the construction of the AirTrain.

The contract provided for the design, fabrication, installation, testing and demonstration of the track system, guideway superstructure and rail cars of the AirTrain. Slattery was responsible for the construction of the AirTrain infrastructure, including the train stations, power substations and elevated track or guideway. Bombardier was responsible for manufacturing and supplying the train cars, control systems and communication systems, and testing and commissioning of the AirTrain.

The contract contained a comprehensive insurance scheme that required the Port Authority to secure the following insurance policies covering the ARTC members and their suppliers and subcontractors (1) first-party builder's risk insurance "covering the improvements or other [w]ork to be effectuated by the [c]ontractor and the [s]ubcontractors" (2) third-party commercial general liability insurance (3) worker's compensation and employer's liability insurance and (4) excess liability insurance.

The Port Authority initially obtained builder's risk insurance from Reliance Insurance Company. When Reliance became insolvent, the Port Authority placed the policy with defendant American Home Assurance Company (hereinafter referred to as "AHA"), with a policy period of August 15, 2000 to December 31, 2003 (hereinafter referred to as the "AHA Policy").

Bombardier's AirTrain Test and Commissioning Rule Book (hereinafter referred to as the "T & C Rule Book") sets out "operational rules to ensure that the [AirTrain] system is operated safely and efficiently." It describes the relevant testing and commissioning process as follows: "The Testing and Commissioning [...] process begins when the first section of the Jamaica -- JFK with Howard Beach Light Rail System (AirTrain) is handed over to the Test & Commissioning Organization [...] for the start of test and commissioning. It is complete when the entire Light Rail System is ready for revenue operation [...]"Typically, Test & Commissioning for each test section begins with the first traction power application in the test section and the subsequent start of vehicle/ATC dynamic testing. Once the section is handed over from construction, any access to that section is under the control of the Test & Commissioning Organization."

Section 12.0 of the T & C Rule Book described the protocol for waiving operating constraints. It states: "Waiving of Operating Constraints -- If the test involves the waiving of any normal operating constraints (as given in this manual), the Test & Commissioning supervisor or delegate must identify the specific operating constraints to be waived and the safety precautions to be taken to ensure the safe conduct of such a test."

An attachment to the T & C Rule Book, entitled "Instruction Number: 6 -- Waiver of Constraints For Testing" states that the "purpose of this instruction is to ensure the safety of personnel during Test and Commissioning where, due to testing requirements, T & C rules and/or Safety systems are required to be temporarily suspended." It then describes the procedure to follow in the event that a "safety system" is required to be temporarily suspended.

The procedure provides, in pertinent part: "5.1 Activity covered by the Work Authorization can only take place provided approval of the Site Safety Engineer, T & C Supervisor and Site Engineering Manager."5.2 -- Rules and Safety systems temporarily suspended/disabled must be clearly identified."5.3 -- Alternate Safety measures must be clearly identified and must be in place before the activity can take place."5.4 -- The waiver can only cover the activity identified under the Permit Number. For each activity a new waiver must be approved and no waiver can cover any similar activity."

The "Waiver of Constraints For Testing" form, which was also attached to the T & C Rule Book, specifically lists the supervisory and management personnel authorized to waive safety constraints. The only three individuals authorized to waive safety constraints were Safety Engineer Jeremy Jordon, T & C Supervisor Baha Guliter and Engineering Manager Brian Heeney.

It is undisputed that as part of the project's testing and commissioning process, a Power Distribution System Integration Test (hereinafter referred to as the "acceleration test") was required to ensure the safety of future passengers of the AirTrain. The test was designed to calibrate the trip limits of certain transit power substation circuit breakers. It involved the simultaneous starting and accelerating of two trains at maximum throttle, one at the Howard Beach inbound platform and the other at the Lefferts Boulevard inbound platform. The record reflects that it was necessary that the trains accelerate simultaneously, at maximum throttle, in order to achieve a high enough current draw so that the circuit breakers could be calibrated to a level that would be reflective of starting and/or stopping several trains in actual service. The written parameters for the acceleration test, contained within Bombardier's "Power Distribution System Integration Test Procedures," specified that each of the trains involved in the test would have four cars. It also specified that the two trains would accelerate in the same direction in "Automatic Train Control" (hereinafter referred to as "ATC mode").

The record reflects that ATC mode is the mechanism that physically controls and operates the train in the place of a human operator. The ATC directs the train's starting and stopping and intervals between other trains. The ATC mode also controls the train's rate of acceleration, known as "jerk limiting," so that "the passengers are not thrown around inside the vehicle."

Shortly before the acceleration test, however, a Bombardier systems engineer working offsite at its Canada headquarters advised, in an e-mail, that the test be performed in manual mode. In other words, he advised that a driver control the train with direction from an operations center instead of using the prescribed driverless ATC mode of operation. The e-mail was sent to the three individuals at Bombardier that possessed authority to waive safety constraints.

It is undisputed that Bombardier conducted the test in manual mode. It is also undisputed that Bombardier disengaged the speed governor that limited train speed to 15 mph in manual mode during the acceleration test.*fn2

Furthermore, the record is clear that Bombardier ran the trains with two instead of four cars, and, to compensate for the loss, loaded tons of concrete blocks onto the first cars. The slabs were placed unsecured on sheets of plywood in the passenger compartments of each of the loaded vehicles.

Since the transit system was not yet in operation and was designed to be a driverless, fully automated system, neither of the two operators assigned for the test had experience operating on the main line. The operators were normally responsible solely for moving and positioning cars and trains within yards where they operated in manual mode and where the speed governor limited train speed to 15 mph. Although operators were trained to retrieve disabled trains from the main line, such retrievals were performed in ...


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