In Utah, It’s Obvious What’s Open and Obvious

Mark Morris | Snell & Wilmer | July 5, 2019

There is good news for contractors in Utah who take care to appropriately mark, sign and warn of hazards. Of course it does not mean they will avoid being sued. But in Coburn v. Whitacker Construction Co., 2019 UT 24, the Utah Supreme Court recently reaffirmed Utah’s embrace of the open and obvious danger rule, affirming a summary judgment in favor of a contractor whose warning signs and orange netting were consciously ignored by a plaintiff who tripped over them and suffered injuries.

In July 2018, a woman and her husband went for a walk on a trail in a recreational area. At the trail head, a contractor had posted a sign warning that there were construction activities in the area and that portions of the trail were closed. The contractor had also placed orange netting across the trail to deter people from accessing the construction site. The woman and her husband saw both the sign and the netting strung between two orange barrels. The woman chose to try to step over the netting, tripped, fell and injured her arm and shoulder.

The woman sued the contractor for negligence. After obtaining admissions that the woman had seen the sign, the barrels and the netting, the contractor filed a motion for summary judgment, claiming that the open and obvious danger rule in Utah barred such a suit. The trial court granted the motion for summary judgment, and on appeal the Utah Court of Appeals affirmed it. On a petition of certiorari to the Utah Supreme Court, the Utah Supreme Court affirmed Utah’s adoption of Section 343 and 343A of the Restatement (Second) of Torts. In short, “[a] possessor of land is not liable to his invitees for physical harm caused to them by any activity or condition on the land whose danger is known or obvious to them, unless the possessor should anticipate the harm despite such knowledge or obviousness.” Resisting arguments that only a jury could decide what is open and obvious, and finding that the arguments to overturn precedent were unpersuasive, the Utah Supreme Court let the ruling stand. Of some import to the Court was the fact that the plaintiff and her husband were able to safely traverse the netting on the way back to their car, thus demonstrating that a “reasonable person exercising ordinary attention, perception and intelligence” could avoid the danger.

Construction can create hazards that may be unavoidable and thus need to be warned against. The irony in the Coburn case is that it was the warnings themselves, and not the dangers, that led to harm. But it is heartening that a contractor who conscientiously takes reasonable and visible steps to warn of those hazards can avoid liability, even if getting there may ultimately require three levels of judicial review.

Claims for Negligence? Duty to Defend Triggered

Michael S. Levine | Hunton Andrews Kurth | June 19, 2019

On June 17, 2019, the First Circuit held that an insurer’s duty to defend was triggered because the underlying complaint set forth claims that required a showing of intent as well as claims that sought recovery for conduct that “fits comfortably within the definition of an ‘accident.’” In Zurich American Ins. Co v. Electricity Maine, LLC, Zurich sought declaratory judgment that, under a D&O policy, it had no duty to defend the insured, Electricity Maine, an electrical utility company being sued in the underlying class action. Zurich argued it had no duty to defend because the underlying complaint failed to allege that Electricity Maine engaged in conduct that qualified as an “occurrence” or that caused “bodily injury” under the terms of the policy. The First Circuit disagreed.

The D&O policy stated that Zurich “has a duty to defend Electricity Maine against any lawsuit that seeks damages for ‘bodily injury’ caused by an ‘occurrence.’” The policy defined an “occurrence” as “an accident . . .” and under Maine law an accident is “commonly understood to mean . . . an event that takes place without one’s forethought or expectation . . . .” The Court held that, because the underlying complaint asserted claims for negligence and negligent misrepresentation, in addition to intentional torts, the conduct upon which recovery was sought fell within the definition of an “accident” and therefore qualified as an “occurrence” triggering the duty to defend. Second, the Court held that, although the underlying complaint did not allege that Electricity Maine’s conduct caused “bodily injury,” the complaint did not need to do so to fall within the risk insured and trigger a duty to defend. Instead, because the alleged conduct could result in bodily injury due to emotional distress, the allegations fell within the risk insured and Zurich has a duty to defend.

Alarm Cries Wolf in California Case Involving Privette Doctrine

Garret Murai | California Construction Law Blog | April 17, 2019

It’s one of the most quoted phrases in legal history: “Shouting fire in a [crowded] theater.”

It comes from the U.S. Supreme Court’s landmark 1919 decision in Schenck v. U.S. and has come to stand for the proposition that not all speech, in particular dangerous speech, is protected by the First Amendment.

The next case also involves a false alarm. But not of the First Amendment kind.

In Johnson v. The Raytheon Company, Inc., California Court of Appeal for the Second District, Case No. B281411 (March 8, 2019), a false alarm investigated by maintenance engineering staff led to a Privette Doctrine claim against a property owner when a ladder on which the maintenance staff was standing slipped on wet flooring.

Johnson v. Raytheon

Lawrence Johnson worked as a maintenance engineer for ABM Facilities Services, Inc. ABM was hired by Raytheon Company, Inc. to staff the control room at one of Raytheon’s facilities in Southern California. Among other things, control room staff monitored water cooling towers owned by Raytheon to ensure that the water in the cooling towers were maintained at minimum levels.

Johnson worked the graveyard shift. At 2:50 a.m. on February 20, 2013, Johnson received a low water level alarm. He called his supervisor who, as one might expect someone to do when awakened at 3:00 a.m. in the morning,  told Johnson to do whatever he thought he should do.  In other words, Johnson was alone.

At the time, Raytheon was undergoing a renovation project involving the removal and replacement of its water towers. System XT was the general contractor on the project, and two of its subcontractors, Brownco Construction Company, Inc. and Power Edge Solutions, Inc., were responsible for concrete work and the installation of electronic monitoring, respectively.

Johnson, unable to resolve the alarm, walked outside to the water tower in question where he saw an extension ladder left by Brownco leaning against the cooling tower wall. The cooling tower used to have a platform ladder for access but it had been removed during the renovations. Oh, and also, it had been raining, so the ground was wet.

I know what you’re thinking. It’s like the scene in pretty much any horror movie where the creepy music cues and you’re nearly yelling at the screen, “don’t open that door!,” or in this case, “don’t climb that ladder!” Well, we all know what happens next.

Johnson climbed the ladder even though (camera pan in) there was a sign on the ladder in all capital letters stating “CAUTION” and “THIS LADDER SECTION IS NOT DESIGNED FOR SEPARATE USE.” Because it was dark, Johnson didn’t see the warning.

Johnson made his way up the ladder. When he took a look over the 8-foot wall of the cooling tower … wait for it … there was no problem with the water level. However, as he made his way down the ladder, it slid, causing Johnson to come tumbling down on top of the ladder where he sustained serious injuries.

An investigation conducted after the accident revealed that the water level sensor installed by Power Edge had corroded and had to be replaced. That’s luck for you.

Johnson later sued Raytheon and Systems XT, alleging that Raytheon was liable because it retained control of the premises and that Systems XT ,as the general contractor, was liable for: (1) Power Edge’s failure to properly install the water level sensor to prevent it from becoming corroded; and (2) Brownco’s negligence in leaving its ladder out rather than putting it away.  Both Raytheon and Systems XT filed motions for summary judgment, which were granted by the trial court, and Johnson appealed.

The Appeal

On appeal, the 2nd District Court of Appeal noted that the Privette Doctrine, named after the case in which it was first elucidated, Privette v. Superior Court (1993) 5 Cal.4th 689, stands for the general principal that “a hirer of an independent contractor was not liable for the negligence of the independent contractor.”

However, also noted the Court, the Privette Doctrine has given way to several exceptions including the following:

  1. Negligent Exercise of Retained Control: Under the negligent exercise of retained control exception, a hirer is liable for injuries sustained by an employee of an independent contractor if: (1) the hirer retains control over any part of the work; (2) the hirer negligently exercises that control; and (3) the hirer does so in a manner that affirmatively contributes to the employee’s injury.” Hooker v. Department of Transportation (2002) 27 Cal.4th 198.
  2. Hazardous Conditions on Property: Under the hazardous conditions on property exception, a hirer is liable for injuries sustained by an employee of an independent contractor if: ” [(1)] the landowner knew, or should have known, of a latent or concealed preexisting hazardous condition on its property, [(2)] the contractor did not know and could not have reasonably discovered this hazardous condition, and [(3)] the landowner failed to warn the contractor about this condition.” Kinsman v. Unocal Corp. (2005) 37 Cal.4th 659.

Raytheon Was Not Liable Under Hooker

The Court of Appeal, focusing on the third factor of the negligent exercise of retained control exception, whether the hirer “affirmatively contribute[d]” to the employee’s injury, held that Johnson had failed to show that Raytheon affirmatively contributed to his injuries because the evidence presented to the trial court was that Raytheon provided ABM employees with access to numerous other safe ladders that Johnson did not choose to use on the night in question:

After Raytheon pointed out the availability of other ladders in its respondent’s brief, Johnson argued, in reply, that he had believed the ladder he found at the wall had been left by Raytheon, so had assumed it was safe, and that the area was not sufficiently well lit for him to have appreciated the danger posed by the partial extension ladder. While these arguments go some way to explaining why Johnson chose to use the partial extension ladder he discovered at the wall, they do not raise a triable issue of fact as to Raytheon’s affirmative contribution to his injury. Raytheon did not represent that the partial extension ladder was a safe replacement for the platform ladder, nor did Raytheon promise to provide ABM employees with light fixtures at the water cooling tower – and Johnson cannot suggest for the first time in its reply brief on appeal that it did.

Raytheon Was Not Liable Under Kinsman

The Court of Appeal, focusing on the second factor of the hazardous conditions on property exception, that the contractor did not know and could not have “reasonably discovered” the hazardous condition, held that Johnson could have reasonably discovered the hazard posed by the partial extension ladder by simply inspecting the ladder, and, once discovered, could have avoided the injury by using a different and safer ladder:

As we have discussed above in connection with the Hooker exception, it is undisputed that there were A-frame ladders available to Johnson. Thus, if the Brownco partial extension ladder were to be considered an obvious hazard, it cannot give rise to Raytheon’s liability because knowledge of the hazard is not inadequate to prevent injury. Anyone with actual knowledge of the hazardous could have avoided it by obtaining an A-frame ladder instead.

In other words, Johnson should have read the warning signs on the ladder.

Systems XT Was Not Liable For Negligence

Johnson’s claim against Systems XT was for negligence rather than an exception to the Privette Doctrine. Negligence, explained the Court of Appeals, involves the following: “(1) a legal duty to use due care; (2) a breach of that duty; and (3) the breach as the proximate or legal cause of the resulting injury.”

Johnson alleged that Systems XT breached two duties, namely, that Systems XT failed to ensure that Power Edge installed a water level sensor that would not create false alarms and  that System XT failed to ensure that Brownco safely secure its equipment including the partial extension ladder.

However, explained the Court of Appeals, while Johnson supported his allegation with contractual provisions contained in the various contracts and subcontracts between the parties, including a statement of work stating that the water cooling plant “must be a 24 x 7 ‘Fail-Safe’ operation,” general provisions providing that “contractors are responsible for keeping their work areas orderly and neat . . and free of . . . hazardous,” as well as specific provisions concerning ladders, which provided that “[w]hen not in use, store the ladder in an appropriate storage place,” Johnson had not shown that any of these contractual provisions created a duty owed by Systems XT to Johnson as a third-party beneficiary under these contractual provisions.

Conclusion

Johnson is an interesting case for reasons I think might surprise you. I believe the facts and law could have been interpreted and applied differently, fairly easily, by a different court. Instead of “Johnson should have just read the dang warning signs on the ladder,” I could see another court finding that the ladder shouldn’t have been there in the first place, and because the cooling towers were still “on line” Raytheon should have provided some means to provide safe access to them (after all, they had a platform ladder at one time, ostensibly for this very purpose). I could also see another court finding that  Systems XT did in fact breach a duty to Johnson because the safety provisions in the contracts was not intended to benefit some amorphous entity (i.e., Raytheon),  but among others, the employees of Raytheon who were working alongside an ongoing construction project.

But here’s the thing. It wasn’t another court. It was the 2nd District Court of Appeals. And in the last few years, the 2nd District Court of Appeals has come out with decisions scaling back exceptions to the Privette Doctrine, including last year’s Delgadillo v. Television Center, Inc. (2018) 20 Cal.App.5th 1078 case, and Khosh v. Staples Construction Company, Inc. (2016) 4 Cal.App.5th 712 case decided two years earlier.

Perhaps we have an appellate court split in the making?

Sox Are ‘Slippery When Wet’: Contractor May be Liable for Injury Caused by Work Installed According to Customer Specifications

Amandeep S. Kahlon | Bradley Arant Boult Cummings LLP | March 21, 2019

An Illinois appellate court recently addressed the scope of negligence liability for a slip and fall injury on a newly installed roof at the Chicago White Sox Stadium. In 2013, a maintenance employee slipped on the roof at the stadium and suffered severe muscle tears. The employee filed suit alleging negligence and strict liability against the White Sox, the roofing contractor, and the manufacturer of the roofing product. All three defendants moved for and were granted summary judgment by the trial court, and the employee appealed.

On appeal, the manufacturer argued that it owed no duty of care to the employee and, regardless, had provided sufficient warning to its immediate vendee, the contractor, so as to relieve the manufacturer of any liability. The contractor argued that it owed no duty of care to the plaintiff because it relied on the customer’s specifications and performed the work in accordance with the specifications.

After reviewing the manufacturer warnings, the appellate court agreed that the manufacturer had provided adequate warnings to the contractor regarding use of its roofing product and affirmed summary judgment in favor of the manufacturer. However, the appellate court reversed the trial court’s grant of summary judgment with respect to the White Sox and the contractor. Although the contractor cited past Illinois rulings that relieved contractors from liability to third parties when contractors followed the plans, specifications and instructions provided by an owner, the appellate court here found that the contractor still owed a duty of care to third parties. The court reasoned that, because the White Sox sought the contractor’s “expertise, advice, and direction” to make recommendations regarding roofing materials and necessary safety equipment, the contractor was not just “blindly replicat[ing]” specifications and plans.

The court was particularly persuaded by evidence that the White Sox and contractor negotiated the contract over several iterations and meetings. Unlike a traditional design-bid-build work scenario, the contractor had input on the specifications, plans and materials to be used in the construction of the roof, not unlike a design-build project.

The court’s decision places the contractor in a precarious position, where it may be held accountable for an injury to a third party, despite following its customer’s plans and specifications. Contractors, especially those involved in negotiated private work and, in particular, those performing construction manager roles with input into design and constructability decisions, should be mindful of the Illinois court’s decision and the implications the decision may have on future claims. A careful contractor can do several things to mitigate the risk of liability to third-party plaintiffs such as the White Sox employee in this case:

  1. pass on any manufacturer warnings explicitly to the owner;
  2. expressly disclaim liability for defective specifications or plans and seek indemnity from the owner for the same; and
  3. evaluate, during negotiations, the potential unintended consequences of recommending different materials, equipment or systems, especially if the recommended alternatives are to satisfy a demanding customer’s price concerns.

Minnesota Court Allows Punitive Damages Claim Against Contractor

Nicholas A. Loyal | Stinson Leonard Street | February 21, 2019

Punitive damages in construction cases are rare, but the Minnesota Court of Appeals recently allowed a driver to seek punitive damages after he was injured by debris falling from a construction company’s truck. The court’s decision provides a framework for punitive damage claims to proceed against contractors and serves as a cautionary tale for those who are involved in the construction industry.

In Carney Lien v. Casper Construction Inc., et al., a driver was hurt when a rock fell off of a dump truck hauling gravel from a pit to a construction site, broke through his windshield, and caused major injuries. After settling with the trucking company and the gravel pit, the driver went to trial against Veit & Company, which was responsible for supplying the gravel being hauled.

At trial, Veit argued that the injury was the result of a “freak accident,” while the driver argued that Veit was filling dump trucks dangerously full—so much so that rocks were falling off the top and sides of its trucks as they drove away. The injured driver produced testimony from eyewitnesses to the accident, as well as truck drivers on the project who testified that the trucks were being consistently overloaded. The jury found for the driver, and awarded $4,754,973.67 in compensatory damages.

Generally, in order to obtain punitive damages under Minnesota law, the party seeking damages must provide evidence that clearly and convincingly shows a “deliberate disregard for the rights or safety of others.” Minn. Stat. § 549.191 et seq. That standard is met if the evidence shows that the offending party “has knowledge of facts or intentionally disregards facts that create a high probability of injury to the rights or safety of others” and either deliberately proceeds to act with indifference or conscious disregard of that probability for injury. Id. at subd. 1(b). If awarded, punitive damages can greatly exceed the actual damages sought by a plaintiff in a lawsuit, as they are designed to punish an offending party to such a degree that the wrongdoing is not repeated.

In Carney Lien, the injured driver sought punitive damages after the verdict based on affidavits from five truck drivers working on the project asserting that Veit not only overloaded its dump trucks, but that it continued to do so despite complaints about the safety of this practice. While the district court denied the motion and struck the claim for punitive damages, the court of appeals reversed, finding that the district court abused its discretion by improperly weighing the evidence presented. As a result, the court of appeals remanded the case to the district court for further consideration of whether punitive damages were proper.

While it remains to be seen what the ultimate resolution of the punitive damages issue will be at the district court level, the court of appeals opened the door for claims seeking punitive damages by providing a framework for the type of damages needed to support such a claim. Specifically, if an injured party can present evidence establishing that a contractor is knowingly acting in a manner that could be detrimental to public safety, the contractor could face punitive damages for any injuries resulting from that action.

Obviously, construction companies should not knowingly act in a dangerous manner or disregard potential harm to public safety. However, in this case, the truck driver himself had a responsibility to secure his load and not allow his truck to be overfilled. To hold the excavator responsible for enormous damages resulting from such an accident creates the potential for extending punitive damages beyond their traditional limits.