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A landowner that hires an independent contractor may be liable to the contractor’s employee if the landowner knew or should have known of a latent or concealed preexisting condition on its property, the contractor didn’t know and couldn’t have reasonably discovered the hazardous condition, and the landowner failed to warn the contractor about the condition. In the case of Kinsman v. Unocal Corporation, (Cal. 2005), the Supreme Court of California concluded that at the trial on the merits of a jobsite injury claim by an employee of an independent contractor against the property owner, Unocal, the jury had not been sufficiently instructed by the judge who should have explained that a landowner could be liable under the circumstances of the case only if it had failed to warn the contractor about a hidden hazardous condition at the property.

The plaintiff in this case, Ray Kinsman, had worked as a carpenter at Unocal’s refinery in Wilmington , California during the 1950’s.  He was employed by an independent contractor that had been hired by Unocal to perform scaffolding work during periods of shutdown and repair and the refinery.  He alleged that the work had exposed him to asbestos and that he later developed cancer as a result.

The suit by Kinsman against Unocal argued two theories of liability. The first was a premises liability theory, arguing that Unocal was negligent in the use, maintenance, or management of the areas where Kinsman worked.  The second theory was that Unocal was negligent in the exercise of retained control over the methods of the work or the manner of the work performed by Kinsman.  The jury found in favor of Kinsman on the first theory – premises liability.

The case went to appeal first to the Court of Appeal and then ultimately to the Supreme Court of California.  In the Court of Appeal decision, the court held that “a contractor’s employee cannot recover under a premises liability theory unless the landowner had control over the dangerous condition and affirmatively contributed to the employee’s injury.”  That court reversed the jury award because it concluded the jury instructions did not accurately reflect Unocal’s limited duty.  The California Supreme Court granted review of that decision and affirmed it insofar as it reversed the jury award, but reversed it as to the instructions to be followed by the trial court on remand.

The discussion presented by the Supreme Court analyzes the theories of liability in great detail and sets forth some considerations to be applied when determining a landowner’s responsibility in situations like this one.   The court explained the basic rule applying to a landowner when that landowner hires someone to work on the land.  The analysis begins with a review of Privette v. Superior Court (1993) as follows: “At common law, it was regarded as the norm that when a hirer [like Unocal] delegated a task to an independent contractor, it in effect delegated responsibility for performing that task safely, and assignment of liability to the contractor followed that decision…. For various policy reasons … courts have severely limited the hirer’s ability to delegate responsibility and escape liability.  But in Privette and its progeny, we have concluded that, principally because of the availability of workers’ compensation, these policy reasons for limiting delegation do not apply to the hirer’s ability to delegate to an independent contractor the duty to provide the contractor’s employees with a safe working environment.  In fact, the policy in favor of delegation of responsibility and assignment of liability is so strong in this context that we have not allowed it to be circumvented on a negligent hiring theory.  Nonetheless, when a hirer does not fully delegate the task of providing a safe working environment, but in some manner actively contributes to the employee’s injury, the hirer may be liable in tort to the employee.”

Starting from the above-explained principles, the court went on to analyze the doctrine of landowner liability as it applies to independent contractor’s employees.  The basic rule, said the court, is that a property owner must manage his property, acting as a reasonable man in view of the probability of injury to others.   Where, for example, the owner knows of a dangerous concealed condition, and knows that a person is about to come into contact with it, the owner can be liable for negligence in failing to warn or failing to repair the condition.   The question before the court is how these principles apply when the landowner hires an independent contractor whose employee is injured by hazardous conditions on the premises.

The court concludes that when there is a safety hazard on the hirer’s premises that can be addressed through reasonable safety precautions on the part of the independent contractor, the owner may delegate the safety responsibility to the contractor.  The owner would not then be liable to an employee of the contractor that is injured because the contractor failed to execute the work safely.  But, if the hazard is one that is concealed from the contractor but known to the owner, a different rule will apply.  The court concludes that “A landowner cannot effectively delegate to the contractor responsibility for the safety of its employees if it fails to disclose critical information needed to fulfill that responsibility.”  Therefore, says the court, “the landowner would be liable to the contractor’s employee if the employee’s injury is attributable to an undisclosed hazard.”

Thus, even if it does not retain control over the work, the landowner can be liable to a contractor’s employee if “(1) it knows or reasonably should know of a concealed, pre-existing hazardous condition on its premises;  (2) the contractor does not know and could not reasonable ascertain the condition; and (3) the landowner fails to warn the contractor.”

Comment: The court was careful to point out that the premises liability doctrine it adopted applies only to preexisting hazardous conditions on the property.  The court specifically reaffirms the right of hirers “to delegate to independent contractors the responsibility of ensuring the safety of their own workers.”  Landowner’s may continue to rely upon their independent contractors to take responsibility for site safety and the safe execution of work provided that the owner discloses to the contractor hazardous conditions that it knows or reasonably should have known about, and which the contractor does not know and could not reasonably ascertain.

Contractors often require by contract that the site owner disclose all hazardous site conditions known to the owner.  Some owners have resisted or deleted this clause.  They have attempted to avoid any responsibility for disclosure and to instead place on the contractor all responsibility for discovering site conditions.  Based on the decision of this court, the contract language is only requiring owners to do what will be required of them in any event in order to avoid liability to employees of those contractors.

About the author: Kent Holland is a construction lawyer  in Tysons Corner, Virginia, and is a risk management consultant for environmental and design professional liability insurance and contracts.   He is also publisher of ConstructionRisk.com Report.  He may be reached at Kent@ConstructionRisk.com.  This article is published in ConstructionRisk.com Report, Vol. 8, No. 4.