Construction Manager Liable for Injury in Common Work Area

Posted by: Hilger Hammond On: 6th March 2014 | one response.

wood constructionBy Aileen Leipprandt

Titles don’t really matter.

The Michigan Court of Appeals ruled as much when it held that a construction manager was liable for injury to a worker that occurred in a common work area. In Latham v Barton Malow Co. (February 2014), a subcontractor’s carpenter was injured in a fall at a construction site. The worker was not using any fall protection gear. The injured worker sued Barton Malow claiming that Baron Malow was liable under the “common work area doctrine” because Barton Malow failed to take reasonable steps within its authority to guard against readily observable and avoidable dangers (working without fall protection) that created a high degree of risk to a significant number of workers in a common work area. Barton Malow disputed the claim, arguing that it was merely a “construction manager,” not a general contractor and therefore not liable because it lacked sufficient control over the subcontractor. Relying upon the language in its contract with the Owner, Barton Malow claimed that it was only responsible for coordination, not control of the subcontractors, as the subcontractors had responsibility for their own means and methods and the safety of their workers. Barton Malow asserted that its responsibility for coordination of safety programs did not extend to direct control over the acts or omissions of the subcontractors.

The court disagreed with Barton Malow and sided with the plaintiff ruling that while “there can be differences between a construction manager and a general contractor, that does not translate to mean that a construction manager is never liable under the common work area doctrine.” The Court concluded that Barton Malow’s title as a construction manager was “irrelevant for purposes of the common work area doctrine” particularly where there was evidence that Barton Malow’s role on site was consistent with having supervisory control and where other language in the owner/construction manager contract conferred general supervisory authority upon Barton Malow. Lesson learned – even a carefully crafted contract will not shield a Construction Manager from liability under the “common work area doctrine” where the construction manager actually exercises authority over safety on a job site.

Lower Tier Subcontractor Loses Payment Claims Against General Contractor & Owner

Posted by: Hilger Hammond On: 28th February 2014 | no responses.

gavel

By Aileen Leipprandt

The Court of Appeals dealt a heavy blow to a sub-subcontractor when it dismissed each of sub-subcontractor’s “creative” claims for payment against a general contractor and owner. In Remington Construction Co. v Dependable Concrete, Inc. (December 2013), The LaSalle Group, the general contractor on a large Wal-Mart store project, hired Dependable Concrete to provide cement work. Dependable, in turn, hired the plaintiff, Remington, to provide labor and materials. According to plaintiff, LaSalle and Wal-Mart revised the job specifications to require a significant increase in work and promised to pay for the work. Plaintiff claimed that LaSalle and Wal-Mart later refused to sign a change order for the additional work and refused to pay for the work.

Plaintiff sued its upstream contractor, Dependable, for payment of its outstanding invoices of about $80,000. Plaintiff defaulted Dependable. Presumably, Dependable was uncollectible as plaintiff also sued LaSalle and Wal-Mart. Even though it had no contract with Wal-Mart or LaSalle, plaintiff sued those parties on various theories including: Open Account, Fraud, Violation of Michigan Builder’s Trust Fund Act, Unjust Enrichment, Conversion, Negligence and Breach of Implied Warranty of Suitability. The trial court dismissed every claim ruling that plaintiff failed to present sufficient evidence as to some of the claims and failed to state a legally valid cause of action as to the other claims. The trial court concluded that plaintiff should pursue collection efforts against Dependable, the party with whom it contracted. Remington appealed. The Court of Appeals affirmed the trial court’s ruling, affirming dismissal of each of plaintiff’s claims.

The appellate court first ruled that plaintiff’s claim based upon an “Open Account” required plaintiff to establish it sold LaSalle and Wal-Mart goods/services on an open account (a series of “open” transactions) on defendants’ promise to pay. Plaintiff, however, failed to provide any evidence of direct communications with LaSalle or Wal-Mart to substantiate its claim of an oral promise to pay, nor did plaintiff present sufficient evidence of an ongoing relationship between plaintiff, a sub-subcontractor and LaSalle or Wal-Mart. Second, as to plaintiff’s claim for violation of the Michigan Builder’s Trust Fund Act (BTFA), the appellate court ruled that the plain language of the BTFA did not impose liability on LaSalle or Wal-Mart where those defendants did not hire Remington and therefore did not wrongfully withhold funds. Third, the court agreed that dismissal of plaintiff’s Fraud claim was proper where plaintiff provided no evidence that LaSalle and Wal-Mart actually promised payment. Fourth, as to plaintiff’s claim of Unjust Enrichment, dismissal of that claim was also proper where, generally speaking, LaSalle and Wal-Mart presented evidence that they paid Dependable in full; therefore, plaintiff’s claim for payment should be against Dependable, alone. Fifth, as to plaintiff’s Conversion claim, such claim could not be sustained where LaSalle and Wal-Mart never held any money in trust for plaintiff. Finally, as to plaintiff’s claim of Breach of Implied Warranty of Suitability, plaintiff argued that the project plans and specifications carried an implied warranty of suitability that the plans and specs accurately reflected the needs of the project. The Court of Appeals concluded this claim was “legally unsound” ruling that on “any given construction project, especially a large project like this one, there will be numerous changes to the original plans…[t]he need to issue change orders does not mean that the original plans were defective or breached a potential warranty.”

Lesson learned – at the end of the day, working without a signed change order or other sufficiently strong evidence of a promise to pay for extra work is a precarious practice.

General Contractor Not Entitled to Indemnity From Subcontractors Where General Contractor Liable Under Common Work Doctrine

Posted by: Hilger Hammond On: 2nd January 2014 | no responses.

bluepaintBy Aileen Leipprandt

In the recent case, National Fire, et al. v Kosters & DeVries, Inc., (Nov. 2013), the Court of Appeals rejected a general contractor’s request for indemnity from its subcontractor for a construction injury accident that occurred in a common work area. In National Fire, Pioneer (the general contractor), subcontracted with Kosters & DeVries (K&D) for K&D to provide painting services on a condominium project called Union Square. One of K&D’s employees was injured during the work. The employee sued Pioneer and others claiming that Pioneer was negligent for failing to guard against a “readily observable” and “avoidable” danger in a common work area, often called the “Common Work Area Doctrine.”

While that personal injury suit was pending, Pioneer’s general liability carrier, National Fire, separately sued K&D in a “declaratory judgment action” seeking a court order that K&D must indemnify Pioneer under the indemnity provision in the parties’ subcontract. The trial court agreed with National Fire and entered an Order, stipulated to by National Fire, requiring K&D to indemnify Pioneer for any liability imposed on Pioneer arising from acts or omissions of K&D or its employees.

Meanwhile, in the personal injury lawsuit, the jury entered a verdict in favor of the injured worker, assigning 70% of the fault for the injuries to the injured employee and 30% of the fault to Pioneer. Thus, the injured worker’s total recovery was reduced by 70%. National Fire paid the plaintiff that portion of the jury verdict (30%) related to Pioneer’s assessed liability. National Fire then sought to garnish K&D for this payment claiming that K&D was required to indemnify Pioneer pursuant to the Declaratory Judgment Order. The trial court agreed. The Court of Appeals, however, reversed, finding that Pioneer’s liability arose because of Pioneer’s own negligence in failing to maintain a safe common work area. The appellate court reasoned that to the extent that K&D’s employee was negligent, the jury had already reduced the verdict by 70% to reflect that employee’s negligence. Therefore, the remainder of the jury verdict, 30%, related only to Pioneer’s negligence for which Pioneer was not entitled to indemnity from K&D per the language of the Declaratory Judgment Order.

Consider, however, if Pioneer’s subcontract (and the ensuing Declaratory Order) had required K&D to indemnify Pioneer, even for Pioneer’s own fault (except where Pioneer was solely negligent), Pioneer (and therefore National Fire) could have sustained the indemnity claim. Instead, K&D’s indemnity obligation was limited to those circumstances as described in the Declaratory Order. Lesson learned – the language of any indemnity provision (and Court Order based on such provision) must be carefully drafted.