Small Construction Jobs – A Construction Agreement that Protects a Property Owner

Peter Pokorny | Real Estate Counselors

Introduction – Real estate owners frequently hire contractors for small and
less complex projects to construct, remodel or improve their property. Even
for small jobs, a construction contract is beneficial. The contract requires
both parties to reach an agreement on the scope of the project and payment
before work begins and protects the owner if a dispute arises. This article
discusses some key terms an owner may want to consider in a small job
construction contract
.

 Pre-Work Obligations – Before starting the project the contractor should
provide the owner (i) plans and specifications showing all of the work in
reasonable detail, (ii) copies of all permits required to perform the work,
and (iii) evidence of comprehensive general liability insurance, worker’s
compensation insurance and umbrella insurance.

 Inspection – The owner should have the right to inspect and be present
during the performance of the work to protect interest in the Property.
The owner should make sure that the contractor agrees that it has no
claims because of the owner’s presence or inspections.

 Completion – The contract should specify the outside date of completion
and if there are any penalties or consequences if there is a delay in
completion.

 Indemnity – The contractor should indemnify and hold the owner harmless from any claims and damages that were caused by the contractor’s breach of the agreement. In addition, the indemnity provisions should survive the expiration or termination of the agreement.

 Warranty – The Contractor should guaranty its work be free from defects for a period of not less than one year from the date of completion. Further, the contractor should assign to the owner any other applicable warranties or guaranties received by the contractor from its subcontractors or suppliers with regard to the work.

 Repair – The contractor should restore any affected area of the property damaged during the performance of the work.

 Termination – The owner may want to have the right to terminate the contract and/or take over the work if contractor is not performing the work timely and properly. For even more protection, the owner may want the right to terminate, at its sole discretion, regardless of how the contractor is performing. The contractor, however, may demand some compensation to cover lost profit for any discretionary termination right.

Conclusions – Even for a small job, a well written construction agreement provides multiple benefits. An experienced business attorney can draft an agreement to address the issues discussed above and any other issues that may pertain to the specific project.

Property Owner’s Defense Goes Up in Smoke in Careless Smoking Case

Michael Ciamaichelo | White and Williams LLP | June 11, 2019

Property owners owe a duty of reasonable care to avoid causing harm to neighboring properties. When a property owner knows or should know about a condition that poses a risk of danger to neighboring properties, the property owner must exercise reasonable care to make the condition safe. The Court of Special Appeals of Maryland recently held that, where hundreds of discarded cigarette butts had accumulated in a bed of mulch over an extended period of time prior to the fire at issue, the owner of the property with the mulch beds owed a duty of care to its neighbors to prevent a foreseeable fire.

In Steamfitters Local Union No. 602 v. Erie Insurance Exchange, 2019 Md. App. LEXIS 430 (May 30, 2019), a fire originated in a strip of mulch at property owned by the Steamfitters Local Union No. 602 (Union) and caused damage to neighboring properties. The fire occurred when an unknown person discarded a cigarette butt into the mulch. Following the fire, investigators found “hundreds, if not thousands of cigarettes” in the mulch where the fire originated. A representative for the Union acknowledged that there were more butts in the mulch “than there should have been” and that, “[i]n the right situation,” a carelessly discarded cigarette could cause a fire. The Union, however, had no rules or signs to prohibit or regulate smoking at the property, where apprentices would often gather prior to class.

The insurance companies for the damaged neighbors filed subrogation actions alleging that the Union, as the property owner, failed to use reasonable care to prevent a foreseeable fire. A jury found in favor of the subrogating insurers and against the Union.

On appeal, the court held that, under the circumstances of the case, a reasonable jury could conclude that the Union knew or should have known that cigarettes were regularly being discarded in the mulch, which created a foreseeable risk of a fire that could damage neighboring properties. Although the use of mulch, by itself, did not create the Union’s duty to protect its neighbors from a careless smoking fire, the court held that the Union owed a duty of care to its neighbors because it knew that a large number of cigarette butts were discarded in the mulch over a period of time prior to the fire. Because it was foreseeable that the dangerous condition created by the practice of throwing cigarette butts into the mulch would damage neighboring properties, the court held that the Union owed its neighboring property owners a duty of care.

In addition to discussing the duty the Union owed to neighboring property owners, the court considered, among other things, whether the subrogating insurers needed expert testimony to prove their case. The court held that, because habitually discarding cigarettes in a combustible substance is a matter of common knowledge, the plaintiffs did not need expert testimony to establish the standard of care associated with maintaining the Union’s property.

As this case establishes, a defendant can, in some situations, be held liable for a careless smoking fire even if the defendant does not have a duty to control the actions of third parties and is not vicariously liable for the third party’s actions. Thus, when subrogation professionals deal with a careless smoking case, they should consider whether the defendant, such as a landowner, can be held liable because it owed a duty of care – such as the duty owed by a landowner – to the injured plaintiff that does arise from controlling the smoker’s actions or being vicariously liable for his or her activities.

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.”

Conclusion

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.