Protecting Your Project from Third Party Contractor Claims
The legal pitfalls surrounding construction projects range from proper payment of wages to
unforeseen change orders and delays to a host of potential tort and property damage liability
claims.
One construction danger zone that can be largely
avoided by the careful project manager is the thirdparty injury claim from sub-contractors or others on
the job site.
The general rule is that the employee of a contractor who is injured while performing work
for a contractor cannot sue the entity that hired the contractor. Several court cases explain
the scope of this rule, though recent cases have affected its applicability. The first section
below provides the essential background for liability at a construction site. This is followed
by a brief explanation of how the rules have changed to create some liability exposure,
followed by highlights of ways to protect your entity during a public construction project.
Evolving Doctrine in Third Party Liability
The first case to begin to scale back on third-party liability was Privette v. Superior Court. 5
Cal. 4th 689 (1993). In Privette, an employee of a roofing company was hired by the owner
of a duplex to install new roofing. Id. at 692. The roofing company employee in Privette
was injured when he fell off a ladder and the bucket of hot tar he was carrying fell on top of
him. Ibid. The employee sued the property owner, alleging that the owner’s negligent
selection of the contractor was a cause of the injuries he suffered. The Privette court
recognized that Workers Compensation’s exclusive remedy rule prevented the owner of the
duplex from recovering in indemnity against the roofer’s employer. Id. at 698. As a result,
it held that the property owner could not be liable for the injuries of the roofer’s employee.
Id. at 702.
Five years later, the Supreme Court attempted to remove any doubt about whether Privette
served as a complete bar to recovery against a property owner. Toland v. Sunland Housing
Group (1998) 18 Cal. 4th 253. In Toland, the plaintiff–an employee of a framing subcontractor–was injured when a wall fell on him. Toland at 257. The plaintiff asserted that
Privette only applied when the property owner had taken precautions in the contract to
prevent injury, but not in his case where no such contractual provisions existed. Ibid.
However, the Supreme Court echoed its previous ruling in Privette, affirming the motion for
summary judgment in favor of the property owner and limiting its liability. Id. at 267.
could not be liable for injuries to employees of licensed contractors. 52 Cal. 4th 590 (2011).
However, in the last three years California courts
have announced three rulings that impact how you
should address contractor and sub-contractor accident
claims in the workplace.
First, in US Airways v Seabright, the Supreme Court echoed its earlier positions that owners
In Seabright, the employee of an independent contractor hired to maintain an airport
conveyor belt was injured on the job. Id. at 594. US Airways owned the conveyor belt and
the injuries were caused because the belt did not have OSHA-required safety equipment.
Ibid. Holding that US Airways delegated its duty for the OSHA regulations to the
independent contractor it hired, the Supreme Court ruled US Airways was not liable for the
employee’s injuries. Id. at 604.
Then, in January of 2012, the Fourth Appellate District ruled on another case that opened the
door to additional liability claims. Tverberg v Fillner Construction, 202 Cal App. 4th 1439 .
The issue in Tverberg was whether an owner could be held directly liable for injuries to a
subcontractor hired by a licensed contractor. Id. at 1442. The contractor ordered one of its
sub-contractors to dig large holes into which Tverberg, himself an independent contractor,
fell. Ibid. The Court ultimately held that the general contractor could be liable for the injuries
for affirmatively contributing to the workplace injury by directing the work that caused the
injuries. Id. at 1449. The case was sent back to the trial court to determine if in fact the
owner’s actions affirmatively contributed to the injuries.
Shortly after Tverberg, the First Appellate District addressed the issue of whether a general
contractor could be liable for injuries to a sub-contractor as a result of the general contractor’s
negligence. Brannan v. Lathrop Construction Associates, 206 Cal. App. 4th 1170. In
Brannan, a masonry subcontractor was injured at a school construction site when he slipped
on wet scaffolding. Id. at 1172. The subcontractor contended that the general contractor
caused his injuries by negligently sequencing construction work and failing to call a “rain
day” to protect against slip hazards. Ibid. The First Appellate District court held that the act
of scheduling work on a project is not sufficient to subject the general contractor to liability
for affirmatively contributing to the harm that caused injury under the Hooker line of cases.
Id. at 1178.
Brannan followed the dominant line of authority in limiting exposure when an independent
contractor’s employees are injured. This case confirms that there are still several ways to
protect a project owner or general contractor during a construction project.
Among the best practices for contract and project
management, there are ways to minimize risk
exposure based on how courts have ruled in relevant
cases.
Three Key Ways to Protect Your Project
(1) Do not contribute to the harm. It is important to make sure you do not provide defective
equipment and a good practice is to write stern language into the contract with your General
Contractor (or sub-contractors, as applicable) regarding the equipment it brings on site. See
e.g. McKown v. Wal-mart Stores, Inc. (2002) 27 Cal.4th 219
(2) If you retain control for project safety, you must be vigilant about inspection and
protocol. Negligent retention of control for safety can lead to liability exposure. See e.g. Ray
v Silverado Constructors (2002) 98 Cal.App.4th 1120. Also, consider adding language in
your contracts delegating responsibility for safety issues over which the contractor has
control.
(3) Err on the side of disclosing any known hazard and make reasonable attempts to identify
them before the project commences. Failure to disclose a known hazard is a significant
potential concern, both for injuries and, in the case of environmental concerns, significant
delays and other project costs. See e.g. Kinsman v UNOCAL Corp (2005) 37 Cal. 4th 659
Conclusion
It is almost never possible to completely insulate your public project from any liability
exposure. The evolving treatment of contractor and subcontractor injuries also complicates
this area of law. Nevertheless, the careful project manager/contract administrator can
minimize the risks attendant any major project by knowing what risks to watch for and how
to include contract language that shifts the cost of those risks to the maximum extent
allowable.
Omar Passons is a Senior Attorney at Stutz Artiano Shinoff & Holtz, where he practices construction,
land use, and commercial litigation. He can be reached at opassons@sashlaw.com or by phone at
(619) 232-3122.