Lochlin B. Samples – April 6, 2012<\/p>\n
A recent Tennessee Supreme Court case,\u00a0Federal Insurance Co. v. Winters,<\/em>\u00a0354 S.W. 3d 287 (Tenn. 2011), addressing two previously unresolved issues in Tennessee, concluded that a contractor has an implied duty to perform work in a careful, skillful, and workmanlike manner and that, absent the owner\u2019s consent, this duty is not delegable to subcontractors.<\/p>\n One Sentence Takeaway<\/strong><\/p>\n In Tennessee, contractors face liability for breach of contract based on an independent subcontractor\u2019s failure to perform work in a careful, skillful, diligent, and workmanlike manner.<\/p>\n Background<\/strong><\/p>\n Martin Winters, a contractor, entered into an oral contract to replace the roof of a home owned by the Emersons. Winters was incapable of replacing the entire roof, so, without informing the Emersons, he subcontracted out the work. Within a few months of the work\u2019s completion, the roof began to leak. When notified of the problem, Winters agreed to repair the roof and hired a different subcontractor, Bruce Jacobs, to remedy the problem.<\/p>\n Winters and Jacobs entered into a written subcontract providing in part that \u201cany and all work will be the responsibility of Bruce Jacobs\u201d and \u201c[a]ny and all leaks\/damages caused by work performed\u2026will be [his] responsibility to repair or replace.\u201d While performing the repairs, Jacobs used a propane torch on the roof. Shortly after Jacobs completed his work, a fire occurred, causing over $800,000 in damages to the house. Winters was not present while Jacobs was performing the repairs. A fire investigator found that Jacobs\u2019 use of the propane torch caused the fire. Nei-ther Winters nor Jacobs had liability insurance coverage when the fire occurred.<\/p>\n Procedural History<\/strong><\/p>\n The Emersons\u2019 insurance company, Federal Insurance Company, covered the damages to the house and then filed suit against Winters, asserting that Winters had an implied duty to perform the roofing work skillfully, carefully, diligently, and in a workmanlike manner. Furthermore, Federal argued that this implied duty was non-delegable, making Winters liable for Jacobs\u2019 negligence in burning down the house. The trial court granted Winters\u2019 motion for summary judgment, finding that Jacobs, not Winters, was liable, and that no implied non-delegable duty existed that would make Winters liable for Jacobs\u2019 work. The Tennessee Court of Appeals reversed, finding that Winters did have an implied duty and that the duty was not delegable, thus making Winters liable for Jacobs\u2019 work. The Tennessee Supreme Court agreed, based on the existence of a non-delegable implied duty, which Winters breached when Jacobs\u2019 actions caused the house to catch fire.<\/p>\n Tennessee Supreme Court\u2019s Decision<\/strong><\/p>\n The court based its decision on two primary factors. First, the court concluded that construction contracts are service contracts and that service contracts carry an implied duty to perform the service skillfully, carefully, diligently, and in a workmanlike manner. Thus, any construction contract contains the implied duty to perform the work in a skillful, careful, diligent, and workmanlike manner. Second, the court ruled that a contractor could not avoid this implied duty by delegating the work to a subcontractor. Therefore, contractors remain liable under the contract for work performed by subcontractors.<\/p>\n Although at first glance this decision seems to expose the contractor to inescapable liability, the decision contains two caveats. First, it has no effect on tort liability. A contractor remains protected from tort liability for a subcontractor\u2019s actions, assuming the subcontractor is an independent contractor. Second, the owner and contractor can agree to release the contractor from liability for a subcontractor\u2019s actions and negligence. Therefore, while the contractor may not delegate the duty to perform services skillfully, carefully, diligently, and in a workmanlike manner on its own, the contractor may still avoid liability for subcontractors\u2019 work by obtaining a release from the owner for work performed by independent subcontractors.<\/p>\n Practical Implications<\/strong><\/p>\n\n