Inside this Issue

A1 - Prime Contractor Liable for Injuries to Subcontractor Employee (No Indemnification Recovered)
A2 - Engineer Had no Duty to Warn a Contractor’s Employee of Dangerous Condition of Roof
A3 - Defective Work by Flooring Subcontractor that Causes Damage to Work of other Subcontractors on the Flooring Subsystem Covered by CGL Policy
A4 - Accepting Late Performance of Work Does Not Bar Recovery for Delay Damages

Article 1

Prime Contractor Liable for Injuries to Subcontractor Employee (No Indemnification Recovered)

See similar articles: duty to defend | Indemnification clause | Jobsite Safety | Site Safety

Subcontractor’s employee was injured by falling into an expansion joint in a concrete floor that the prime contractor failed to adequately cover with plywood. This employee sued the prime contractor for his injuries. An indemnification clause in the subcontract required the Sub to indemnify the Prime for all injuries to employees of the Sub. In this case, however, because the Prime controlled the site, was responsible for the safety problem, and affirmatively created the hazard, the court held the indemnification clause could not be enforced. Strousse v. Webcor Construction, 34 Cal. App. 5^th 703 (2019).

The prime’s contract was with the University of California. Under that contract, the prime was “solely responsible for initiating, maintaining, and supervising all safety precautions and programs in connection with performance of the contract.” The contract also required the prime to “designate a responsible member of its organization at the Project site whose duty shall be the prevention of accidents.” In addition, the prime was obligated by contract to “continuously require and follow up with Subcontractors about their job site maintenance and their conformance in providing a safe work place” and to “enforce all safety-related requirements in the Contract Documents,” and to “review, monitor and coordinate the implementation of individual Subcontractor’s Safety Programs.”

The subcontractor’s employee suffered injury when his leg fell into a 12-inch deep expansion joint after the plywood safety cover that was designed, constructed and installed by the prime contractor gave way. Evidence demonstrated that the prime was the sole entity that maintained the safety covers, and its carpenters were the only ones allowed to repair them. Prior to the accident, the evidence showed that the prime knew that safety covers had been damaged or had become unsecured due to various subcontractors removing them without securing them back into place.

There was also testimony from the subcontractor’s general foreman that he had advised the prime contractor about the condition of the safety covers during weekly foreman meetings, and that he was not satisfied with the responses or actions taken the prime.

After reviewing numerous significant court decisions (including Privette v. Superior Court) that established the general principle that site safety responsibilities can be delegated to a subcontractor, the appellate court found this didn’t protect the prime contractor in this case. That is because the prime affirmatively acted to prohibit subs from maintaining or repairing the safety covers, and the prime retained control over safety in the general access areas and reasonably induced the subcontractors and their employees to rely on the presumed adequacy of the safety covers. When the matter went before a jury, the jury apportioned 100 percent of fault to the prime contractor –meaning the prime was found directly and entirely at cause, and not merely vicariously liable or derivatively liable from an act or omission of a hired subcontractor.

About the author: Article written by J. Kent Holland, Jr., a construction lawyer located in Tysons Corner, Virginia, with a national practice (formerly with Wickwire Gavin, P.C. and now with ConstructionRisk Counsel, PLLC) representing design professionals, contractors and project owners. He is founder and president of a consulting firm, ConstructionRisk, LLC, providing consulting services to owners, design professionals, contractors and attorneys on construction projects. He is publisher of ConstructionRisk.com Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932. This article is published in ConstructionRisk.com Report, Vol. 21, No. 7 (Aug 2019).

Article 2

Engineer Had no Duty to Warn a Contractor’s Employee of Dangerous Condition of Roof

See similar articles: Duty to Warn | Jobsite Safety | Site Safety

Engineer that was hired by school district prepared plans for certain roof repairs, and also prepared contract documents and bidding documents for use of the school in bidding out the roofing project to contractors. After award to the low bidder, an employee of the contractor went onto the roof to begin removing debris and immediately fell through a deteriorated area and suffered injury. The laborer sued the engineer, claiming it knew of the dangerous condition and should have warned him. Summary judgment was granted for the engineer, and affirmed on appeal, on the basis that the engineer had no contractual or common law duty to warn. Waltman, v. Engineering Plus, Inc., 264 So. 3d 758 (Miss. 2019)in preparation of doing the repairs.

According to the appellate court, the engineer’s contract indicates that the parties didn’t intend for the engineer to be responsible for the safety of construction contractor employees. Moreover, the construction contract specified that the contractor “shall satisfy itself of the existing size and conditions of the project area.” Other provisions of the contract reinforced the proposition that the contractor was the only party responsible for safety at the site. For example, a provision stated that the contractor was,

“responsible for all loss or damage arising out of the nature of the work aforesaid, or from the action of the elements, and unforeseen obstruction or difficulties which may be encountered in the prosecution of the same and for all risks of every description connected with the work for faithfully completing the whole work[.]”

Although the construction contract stated that the work “shall be done under the direct supervision of” the engineer, this did not result in the engineer legally assuming those duties. The court stated that to determine whether the engineer has a supervisory duty outside the provisions of its own contract, a seven-factor test is to be applied.

“Those factors are: (1) actual supervision and control of the work; (2) retention of the right to supervise and control; (3) constant participation in ongoing activities at the construction site; (4) supervision and coordination of subcontractors; (5) assumption of responsibilities for safety practices; (6) authority to issue change orders; and (7) the right to stop the work.”

The court notes that the contractor argued only that the engineer had knowledge of the dangerous condition. It didn’t argue any of the above factors. Mere knowledge of a dangerous condition “by itself does not satisfy the [ ] factors.” In this case, no evidence was offered to show that the engineer had responsibility for any supervision or control of the work, had assumed responsibility for safety practices, or had authority to issue change orders or stop the work.

Comment:

For managing the risk of liability arising out of jobsite safety, it is important for firms such as design professionals and construction managers have clear and unambiguous contract language delineating the scope of service and stating who is responsible for site safety. It is equally important to be conscious of how their actions and services will be judged with regard to the seven factors listed above. The protections of good contract language can be lost through actions during construction administration.

Article 3

Defective Work by Flooring Subcontractor that Causes Damage to Work of other Subcontractors on the Flooring Subsystem Covered by CGL Policy

See similar articles: CGL | Insurance Dispute | Your Work Exclusion

A commercial general liability (CGL) policy insurance carrier sought declaratory judgment that it owed no duty to defend or indemnify a subcontractor that was insured under the policy for damages allegedly caused by the subcontractor’s concrete slab work for a hospital floor. The trial court granted summary judgment on the basis of the “your work” exclusion of the policy. This was reversed on appeal because the exclusion only exempts from coverage an insured contractor’s faulty workmanship with respect to “that particular part of the property subject to the faulty workmanship, and in this case the court concluded it was work of other subcontractors (i.e. vapor barrier subcontractor and tiling subcontractor) that was damaged as a result of the alleged defects in the insured’s work on the concrete slab. All American Insurance Co. v. Lampasona Concrete Corp., 120 N.E. 3d. 1258 (Mass 2019).

The court explained that while the subcontractor installed the concrete slab, different subcontractors installed two other layers of what it called the flooring subsystem – i.e., the vapor barrier below the slab, and the tile above the slab. The alleged (a) errors included puncturing the vapor barrier, which allowed moisture to pass through into the concrete slab, and (b) improperly mixing fiber reinforcement into the concrete, which contributed to moisture wicking to the surface. “The resulting moisture problems caused damage to the tiles and carpet, such as causing the tiles to buckle.”

In granting the insurance company’s summary judgment motion, the trial judge assumed that the entire flooring system, including the vapor barrier and everything above it had to be replaced and that the slab work was inseparable from the work that the other subcontractor’s performed on the flooring system. For that reason, it deemed the j (6) “your work” exclusion to be applicable to the damages for all layers of the flooring system that resulted from puncturing the vapor barrier.

In reversing this, the appellate court found that even if the various layers became part of an integrated flooring system, it was legally significant that the subcontractor didn’t install the vapor barrier under the slab or the floor tiles and carpeting above the slab. Because of that, the court concluded that damages to the various layers must be considered separately, and that the j(6) exclusion was inapplicable to the damages claimed.

Article 4

Accepting Late Performance of Work Does Not Bar Recovery for Delay Damages

See similar articles: Delay Damages | Mechanic's Lien | Release | time of essence | Waiver

Where project owner chose not to terminate contractor for failing to substantially complete project by contractually established deadline, but permitted late completion, this did not waive entitlement to recover delay damages. McPherson Builders, Inc. v. Performance Premises, LLC, 171 A.D.3d 1270 (NY 2019).

The contract in question contained a time of the essence clause for completing work on what was to be a performing arts and events building. When the contractor failed to complete by the date required by contract, the owner didn’t terminate the contract but instead permitted the contractor to continue with its work, which was completed about five months late. The owner did not, however, pay for any of the contractor’s work that was performed after the contractually specified substantial completion date.

The contractor filed a notice of mechanic’s lien and then a suit to foreclose on the lien. Owner asserted an affirmative defense, (i.e., breach of contract by the contractor based on the delay), and also asserted a counterclaim for consequential damages caused by the delay (e.g. lost profits and rents). The contractor filed a motion for summary judgment that was denied by the trial judge and this was affirmed on appeal. Allowing late completion did not constitute a waiver of a claim to damages caused by the delay.

“In this regard,” said the court, “once substantial completion of the work by plaintiff was not completed by December 30, 2016, nothing plaintiff could possibly do would wipe out the damage suffered by defendant.” But the contractor is entitled to recover for its work performed after December 2016 with any recovery to be offset by any damages sustained by the owner due to the contractor’s failure to meet the required deadline.

Termination of the contract was not the sole remedy available for the delay. The contract stated that if contractor was “guilty of substantial breach of a provision of the contract documents,” the defendant “may terminate the contract.” The court concluded that this was permissive language and “defendant had the option to terminate the contract, but was not required to do so.” Termination of the contract was not the sole remedy available for the delay.

The appellate court held that the lower court also correctly denied that part of the contractor’s motion that sought dismissal of the owner’s counterclaim for lost profits. It will be for a jury to determine whether damages for lost profits were within the contemplation of the parties (i.e., foreseeable) at the time the contract was entered into and are capable of measurement with reasonable certainty.

Search

Get the Newsletter

Contract Guide for Design Professionals

Recent Newsletters

All Newsletters

Risk Management Workshops

Life Skills Workshop Slides

Contract Clauses – Papers and Articles

Construction Risk Management

ConstructionRisk Report (Aug 2019)