In a Win for Property Owners California Court Expands and Clarifies Privette Doctrine

Garret Murai | California Construction Law Blog | March 21, 2018

We’ve written before about the Privette doctrine, which generally holds that a higher-tiered party is not liable for injuries sustained by employees of a lower-tiered party under the peculiar risk doctrine, herehere,  here and here. We’ve also talked about some of the exceptions to the Privette doctrine, including the non-delegable duty doctrine and the negligent exercise of retained control doctrine, which provide that a hirer cannot rely on the Privette doctrine if it owed a non-delegable duty to an employee of an independent contractor or if it retained control over the work of an employee of an independent contractor and negligently exercised that control in a manner that affirmatively contributes to injuries to that employee.

In the next case, Delgadillo v. Television Center, Inc., Second District Court of Appeals, Case No. B270985 (February 2, 2018), the Court examined whether a property owner could be held liable under the non-delegable duty doctrine and negligent exercise of retained control doctrine for failing to provide structural anchor bolts on its buildings which led to the death of an employee of window washing company.

Delgadillo v. Television Center, Inc.

In Delgadillo, property owner Television Center, Inc. contracted with  Chamberlin Building Services, a licensed contractor, to wash the windows a of three-story building owned by Television Center in Hollywood, California. While washing the building’s windows, Salvador Franco, an employee of Chamberlin fell to his death when his descent apparatus failed. Franco’s wife and children sued Television Center on the ground that Television Center failed to equip the building with structural roof anchors to which the descent apparatus could be attached as required by law.

Television Center filed a motion for summary judgment arguing that the lawsuit was barred under Privette v. Superior Court (1993) 5 Cal.4th 689 and its progeny because Television Center did not control the manner in which the work would be performed. In opposition, decedent’s family, citing McKown v. Wal-Mart Stores, Inc.(2002) 27 Cal.4th 219, argued that because the building did not have structural roof anchors, Television Center was liable for providing defective tools or equipment to an employee of Chamberlin. The trial court granted Television Center’s motion finding that Television Center did not retain control over the Chamberlin’s washing of the windows and the structural roof anchors (or the lack thereof) were not “equipment” under the McKown case.

The plaintiffs appealed.

The Appeal

On appeal, the Second District Court of Appeals explained that under common law “a person who hired an independent contractor to perform a task generally was not liable to third parties for injuries caused by the independent contractor’s negligence.” However, the Court noted one exception to the common rule, known as the peculiar risk doctrine, wherein “a person who hires an independent contractor to perform work that is inherently dangerous can be held liable for tort damages when the contractor’s negligent performance of the work causes injuries to others.”

In 1993, the California Supreme Court decided Privette,supra, which held that while employees of independent contractor’s are “third parties,” the peculiar risk doctrine does not apply to injured employees of independent contractors. Since then, several exceptions to the Privette doctrine have been created, two of which, are the non-delegable duty doctrine and the negligent exercise of retained control doctrine.

Under the non-delegable duty doctrine, a party that owes a duty to another party cannot delegate that duty to an independent contractor and later claim that it is not liable for injuries to an employee of that independent contractor because it delegated its duty to that independent contractor. Under the negligent exercise of retained control doctrine a party that retains control over the conditions of the work and negligently exercises that control such that it affirmatively contributes to injuries to an employee of an independent contractor cannot later claim that it is not liable for those injuries.

On appeal, the plaintiffs argued that notwithstanding the Privette doctrine, Television Centers was liable because it had a non-delegable duty to ensure that its building had structural roof anchors and had failed to do so and, further, that by failing to ensure that its building had structural roof anchors Television Centers negligently exercised retained control over the work. The Court of Appeals disagreed.

As to the plaintiff’s non-delegable duty argument, the Court of Appeals explained that under Seabright Ins. Co. v. US Airways, Inc. (2011) 52 Cal.4th 590, the Supreme Court held that while safety regulations under Cal-OSHA create a duty by a hirer to protect its own employees, it does not prevent a hirer from delegating such duties to an independent contractor with respect to the independent contractor’s employees. Relying on Seabright, the Court of Appeals held that:

  1. Safety statutes and regulations, whether under Cal-OSHA or otherwise, can be implicitly delegated by a hirer to an independent contractor with respect to that independent contractor’s employees; and
  2. Delegation of that duty properly includes delegation of the duty by an independent contractor to “identify the absence of safety guards” and to “take reasonable steps to address that hazard.”

Thus, held the Court of Appeals, under Seabright “[Television Centers] implicitly delegated to [Chamberlin] its duties under Cal-OSHA and non Cal-OSHA sources to provide a safe workplace for decedent.” (emphasis added).

As to Plaintiff’s negligent exercise of retained control argument, the Court of Appeals explained that under McKownsupra, while a hirer is not liable for injuries to an employee of an independent contractor merely because the hirer retained control over safety conditions, a hirer is liable insofar as the hirer’s exercise of retained control affirmatively contributes to the injuries of an employee of an independent contractor. The Court of Appeals, however, held that McKown was inapplicable because:

  1. “[W]hile [Television Centers] arguably ‘provided’ the inadequate anchor points to [Chamberlin], it did not suggest or request that [Chamberlin] use the anchor points to wash the building’s windows. To the contrary, the undisputed evidence before the trial court was that ‘[Chamberlin] and its employees made all decisions as to how the job was to be done.’”; and
  2. “Although it is undeniable that [Television Center’s] failure to equip its building with roof anchors contributed to decedent’s death, McKown does not support plaintiff’s suggestion that a passive omission of this type is actionable.”


Delgadillo both clarifies and expands the Privette doctrine by clarifying that a hirer’s “passive omissions” will not give rise to liability for injuries to an employee of an independent contractor, in addition to expanding the protections afforded under the Privette doctrine by holding that safety regulations, whether under Cal-OSHA or otherwise, may be impliedly delegated by a hirer to an independent contractor with respect to that independent contractor’s employees.

Can Insurance Appraisers Favor and Advocate For The Party That Selected Them?

Patrick Aul | Property Insurance Law Observer | March 22, 2018

This is a question the Colorado Supreme Court is set to resolve after recently granting Owners Insurance Company’s petition for writ of certiorari in Owners Insurance Company v. Dakota Station II Condominium Association, Inc., 2018 WL 948601 (Col. Feb. 20, 2018).

The Colorado Court of Appeals answered this question “yes” in the opinion being appealed from, at least as long as the appraiser does not also act in a demonstrably unfair manner or with a provable bias, such as with a direct financial interest in the outcome of the appraisal process. 2017 WL 3184568 (Col. App. Jul. 27, 2017).

The facts of the underlying loss are straightforward.

Owners issued a property damage insurance policy to Dakota. The appraisal provision of the policy states:

If we and you disagree on the value of the property or the amount of loss, either may make written demand for an appraisal of the loss. In this event, each party will select a competent andimpartial appraiser. The two appraisers will select an umpire. If they cannot agree, either may request that the selection be made by a judge of a court having jurisdiction. The appraisers will state separately the value of the property and amount of loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will be binding.

(Emphasis added).

Wind and hail storms damaged the insured buildings. The parties combined the losses into a single insurance claim, but disagreed as to the value of the damages. The parties invoked the policy’s appraisal provision. When the parties’ appraisers submitted proposed awards of different amounts, they nominated an umpire. The umpire issued an award of $3 million, which appears to have been substantially identical to the damages estimate prepared by Dakota’s appraiser, at least with regard to amount. Owners’ appraiser, who had estimated the damages at about $2.3 million, disagreed with the umpire’s award and declined to sign it.

Litigation ensued, and Owners learned of facts it contends demonstrate Dakota’s appraiser was not sufficiently impartial. Specifically, Owners argues Dakota’s appraiser was not impartial because she: (1) met with Dakota and its public adjuster prior to being selected, (2) communicated with Dakota’s public adjuster while performing her appraisal, (3) failed to disclose certain policy terms and pre-loss roof repair estimates to Owners’ appraiser, (4) failed to disclose Dakota’s tactical decisions with regard to its claim, (5) included a claim for damage not caused by the hailstorm in her estimate, (6) was referred to by Owners’ public adjuster as his “partner,” (7) had a contract with Dakota that permitted her to be paid up to 5% of the total replacement cost value she estimated, and (8) testified that it is natural for an appraiser to act as an advocate for the party that retained her.

The Colorado Court of Appeals accepted that many (though not all) of Owners’ contentions had factual support, but nevertheless affirmed the trial court’s conclusion that Dakota’s appraiser was sufficiently impartial.

In so doing, the court addressed the impartiality standard under the policy.

The term “competent and impartial appraiser” is not defined in the policy. Owners argued that “impartial” means “not favoring one side more than another; unbiased and disinterested; unswayed by personal interest.” But the court partly disagreed. It stated:

While we agree that an impartial appraiser should be unbiased and unswayed by personal financial interest, like an expert witness at trial, we do not agree that the impartial appraiser called for in this policy may not favor one side more than the other.

2017 WL 3184568 ¶ 22. The court concluded that the context of the policy distinguishes appraisers from umpires, and “plainly contemplates that the appraisers will put forth a value on behalf of the party that selects them.” Id. ¶ 23. It also cited to an Iowa Supreme Court case that previously held “appraisers do not violate their commitment by acting as advocates for their respective selecting parties.” Id. ¶ 24 (citing Cent. Life Ins. Co. v. Aetna Cas. & Sur. Co., 466 N.W.2d 257, 261 (Iowa 1991)). Lastly, the court found that it would be understandable for an appraiser to view herself as an “advocate” for the party that selected her because appraisers often have, and in this particular case in fact had, pre-existing relationships with their retaining party, appraisers necessarily have contact with their retaining party in order to work out the details of the retention and gather information necessary for the appraisal, and appraisers know that an umpire will review their appraisals and select what the umpire finds to be accurate. Id. ¶ 67.

Accordingly, the court held that even if Dakota’s expert viewed herself as an advocate for Dakota, that does not mean in and of itself that her appraisal was biased, dishonest, or purposely inaccurate. Id. The court also held that the contingent-cap fee agreement in the appraiser’s contract with Dakota did not render her impartial on the facts before it, because 5% of the final appraisal was far in excess of the actual billed fees, the contract provision was not invoked, and there was no other evidence before it that the appraiser relied on improper assumptions, or took any other improper action, as a result of subjective bias. Id. ¶ 55.

The dissent, in an insightful opinion, noted that “the majority’s ruling permitting appraisers to be somewhat less than truly impartial may ultimately harm insureds by giving justification to insurers to hire appraisers who are not truly impartial,” particularly because insurers have the “ability to hire the same appraiser for numerous claims – an ability not shared by the insured.” Id. ¶ 72. Accordingly, the dissenting opinion would require that an appraiser not favor one side more than the other or advocate for the party that retains her in order to maintain their impartiality. Otherwise, the dissent states, the term “impartial” is completely read out of the policy, as “the word ‘impartial’ cannot be reconciled” with permitting appraisers to be advocates. Id. ¶¶ 76-80.

The certiorari order, issued on February 20, 2018, states that the Colorado Supreme Court is going to review whether the Court of Appeals’ rule permitting insurance appraisers to “favor one side more than the other” and act as “advocates” for the selecting party conflicts with its holding in a prior case that, although appraisers are not arbitration referees, their duty of impartiality is the same.  It is also going to review whether the Court of Appeals’ rule permitting insurance appraisers to utilize contingent-cap fee agreements that tie the appraiser’s own compensation to the ultimate appraisal award conflicts with its previous holding that such appraisers must be impartial in the same manner as arbitrators.

Accordingly, should the Colorado Supreme Court actually issue an opinion on these questions in the coming months, its ruling will provide guidance for future appraisal bias lawsuits not just in Colorado, but also in the many other jurisdictions for which controlling precedent on such issues remains lacking.

Jury Instruction That Fails to Utilize Concurrent Cause for Property Loss is Erroneous

Tred R. Eyerly | Insurance Law Hawaii | March 19, 2018

The Florida District Court reversed erroneous jury instructions that adopted the efficient proximate cause doctrine in determining whether the insurer was responsible for the insureds’ collapsed roof. Jones v. Federated National Ins. Co., 2018 Fla. App. LEXIS 561 (Fla. Ct. App. Jan. 17, 2018).

The insureds filed a claim for their damaged roof, contending that the damage was caused by a hailstorm. Federal National Insurance Company denied the claim based upon exclusions for “wear and tear, marring, deterioration;” “faulty, inadequate or defective design;” “neglect;” “existing damage;” or “weather conditions.”

The insureds filed suit for breach of their all-risk policy. At trial, the insureds presented evidence that the hailstorm caused damage to the roof. Federated presented evidence that the hailstorm caused no meaningful damage, and that all the damage had already existed prior to the hailstorm as wear and tear. In rebuttal, the insureds presented evidence that the leaking solar panels could not have been the only cause of damage, pointing to the presence of hundreds of divots spread across the roof.

The insureds took issue with the jury instruction that required them to prove that the hailstorm was the “most substantial or responsible cause” of damage to the roof. The instruction read:

Did [the insureds] prove by the greater weight of the evidence that they sustained a direct physical loss to their roof as a result of the hailstorm . . . which was the most substantial or responsible cause of the damage to the roof?

The insureds submitted that the trial court would be wrong to apply the efficient proximate cause doctrine as advanced by Am. Home Assurance Co. v. Sebo, 141 So. 3d 195 (Fla. 2d DCA 2013). They argued that the policy was all-risk, covering all losses except those caused by specifically excluded events. The insureds submitted that the concurrent cause doctrine applied pursuant to Wallach v. Rosenberg, 527 So. 2d 1386 (Fla. 3d DCA 1988).

The trial court did not change the jury instruction and the jury determined that the insureds could not satisfy their burden of proof as set forth in the jury instruction.

On appeal, the court noted that the efficient proximate cause provided that where there was a concurrence of different perils, the efficient cause – the one that set the other in motion – is the cause to which the loss is attributable. The concurrent cause doctrine, on the other hand, provided that coverage may exist where an insured risk constituted a concurrent cause of the loss even when it was not the prime or efficient cause.

The insureds also argued that the trial court erred by requiring them to first prove that the hailstorm was the efficient cause of damage to the roof. The Court of Appeals agreed.

The all-risk policy stated, “We insure against risk of direct loss to property described in Coverages A and B only if that loss is a physical loss to property.” Coverage A specifically covered, “the dwelling on the residence premises shown in the Declarations, including structures attached to the dwelling.” After explaining that Federated would cover all direct physical losses to the dwelling, the policy then listed the specific exclusions to the coverage.

Because the policy was all-risk, the allocation of proof in the jury instruction was erroneous. The trial court placed the initial burden of proof on the insureds to demonstrate that the hailstorm was “the most substantial or responsible cause of damage to the roof.” Under an all-risk policy, once the insured established the loss within the terms of the policy, the burden shifted to the insurer to prove that the loss arose from a cause which was excepted. This was consistent with the notion that an all risk policy guarded against all risks except those explicitly excluded by the policy.

Because the jury instruction was erroneous, the case was reversed and remanded for a new trial.

Negligence Against a Construction Manager-Agent

David Adelstein | Florida Construction Legal Updates | March 9, 2018

Can a construction manager-agent / owner’s representative hired directly by the owner be liable to the general contractor in negligence?  An argument likely posited by many general contractors on projects gone awry where there is a separate construction manager.  Well, here is an interesting case out of Louisiana that supports a negligence claim against a construction manager-agent.


In Lathan Company, Inc. v. State, Department of Education, Recovery School District, 2017 WL 6032333 (La.App. 1st Cir. 2017), a general contractor entered into a contract with a public owner to renovate a school.  The public owner hired a separate construction manager (as the owner’s agent) for the project.  The general contractor claimed that the construction manager was negligent through its: unreasonable refusal to approve payment applications; delayed responses to submittals and questions; refusal to recommend substantial completion; refusal to properly manage construction oversight; and its interference with the progress of the project.   The contractor claimed, in particular, that given the scope of the construction manager’s supervisory and management responsibilities for the project, the construction manager owed a duty to exercise its responsibilities in a professional manner (akin to a professional negligence claim).  These factual assertions are not unusual facts asserted by a general contractor on a problematic project with a separate construction manager / owner’s representative.


The trial court granted summary judgment in favor of the construction manager on the negligence claim. But, the appellate court reversed finding that the construction manager did owe a duty to the general contractor:


Accordingly, after careful review of the record herein, we find that although Jacobs [construction manager] was not in direct contractual privity with Lathan [contractor], Jacobs must be deemed and held to know that its services were not only for the protection or interests of the owner but also third parties, including, specifically, Lathan, who was acting as the general contractor on the project. As outlined above, it was foreseeable and to a degree certain that Lathan would suffer economic harm if Jacobs failed to perform, or negligently performed, many of its professional duties.  Moreover, as outlined above, there is a close connection between Jacobs’s alleged failure to act according to industry standards, and the alleged economic harm suffered by Lathan.


Thus, after carefully considering the record herein, and applying the balancing test enunciated in the jurisprudence noted above, we are unable to find any reason why the courts’ rationale in such prior jurisprudence, extending the liability of architects and engineers, should not likewise apply to a project management professional, under the facts of this case.



Lathan Company, supra, at *13-14 (internal citations omitted).


Insurer’s Motion to Dismiss Complaint for Collapse Coverage Fails

Tred R. Eyerly | Insurance Law Hawaii | March 7, 2018

The insurer’s motion for summary judgment seeking dismissal of the insured’s claim for collapse coverage was rejected by the Supreme Court of New York. Parauda v. Encompass Ins. Co. of Am., 2018 N.Y. Misc. LEXIS 269 (N.Y. Sup. Ct. Jan. 25, 2018).

The insureds submitted a claim to Encompass for damage to the brick siding, or façade, of their home, which was bulging near the front door. Encompass hired H2M Architects and Engineers to inspect the home and issue a report. H2M determined that the brick façade near the front door was separated from the house. Photos showed that the bricks had separated, the mortar joints were cracked, and there were cracks and deterioration in the mortar. H2M concluded that the brick façade was in poor condition and need repairs and/or replacement. H2M concluded that the separation of the brick façade was caused by water infiltration behind the wood trim and brick façade, occurring over a several year period. Encompass denied the claim based upon exclusions for “freezing, thawing,” “wear and tear,” and “inadequate maintenance.”

The insureds retained Diego Fernandez, a general contractor, to replace the stucco and wood trim in the house. Fernandez stated in an affidavit that the wooden vertical studs and horizontal plates that supported the house were in a severe state of decay. The vertical studs were hanging unattached to the horizontal plates and other vertical studs were crumbling, leaving the structure without support in certain areas. When Fernandez removed a section of the stucco adjoining the bricks near the front door, he found more decayed framing that was not supporting the house as it was intended. Fernandez installed temporary exterior supports, as well as temporary interior framing, to prevent further collapse of the building.

Encompass had a second inspection performed by Eagle Adjusting Services. Eagle found that water was getting behind the stucco and brick siding. The trim embedded in the stucco was rotten and missing in most areas. These issues had been going on for some time according to Eagle. Encompass again denied the claim based upon exclusions for “collapse,” “wear and tear,” “wet or dry rot,” “settling, shrinking, bulging,” and “inadequate maintenance.”

Plaintiffs sued, alleging that the loss was caused by the collapse of the building due to hidden decay. Encompass moved for summary judgment to dismiss the complaint. The policy required a structure to “abruptly fall down or cave in” to constitute a collapse. Further, the loss was excluded by the policy exclusions covering wear and tear, wet or dry rot, and settling, shrinking, bulging.

The court determined that collapse must significantly effect the structure of the building to be covered. The affidavit of Diego Fernandez established prima facie that the vertical studs supporting the second floor had collapsed from decay. Because the collapsed studs could not be seen until the bricks and stucco were removed, plaintiff had established prima facie that the collapse was caused by hidden decay. The burden shifted to defendant to show a triable issue as to whether the collapse was caused by hidden decay or whether any policy exclusion applied. Focusing primarily on the exterior façade, Encompass’ experts thought that the home had not been properly maintained. However, the experts failed to explain how more regular maintenance would have uncovered the hidden decay. Thus, the experts’ opinions were merely conclusions.

Judgment was granted to the insureds to the extent of declaring that the loss was covered by the policy.