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Actual Danger and Independent Contractors: Fourteenth Court of Appeals Overturns a $21 Million Verdict

Money Court.jpgThe Case

Oiltanking Houston, L.P. v. Delgado, 2016 Tex. App. LEXIS 886, *13 (Tex. App. Houston [14th Dist.] Jan. 28, 2016).

Background

Javier Delgado, an employee of independent contractor L-Con, Inc. ("L-Con"), was killed when hydrocarbon fumes ignited while he welded a flange onto a 24-inch pipe. Several other L-Con employees suffered injuries as a result of the explosion. Delgado's family and the injured L-Con employees filed suit against Oiltanking Houston, L.P. ("Oiltanking"), the owner of the oil storage facility where the explosion occurred.

The trial evidence established that Oiltanking was at least partially responsible for cleaning the oil pipe before L-Con employees began welding. Additionally, the evidence indicated that Oiltanking's employees gave a signed safety document to L-Con's employees representing that certain safety actions had been performed when, in actuality, such precautions were never taken.

At trial, the jury found that Oiltanking was at fault under three separate negligence theories: (1) negligent undertaking, (2) premises liability (unsafe property condition), and (3) negligent activity (ordinary negligence). Importantly, the jury found that Oiltanking had control of the property in question and had actual knowledge of the danger that resulted in the death and injuries to the Plaintiffs. Taken together, the jury's findings of control and knowledge meant that Oiltaking was liable as a property owner for the injuries suffered by employees of the independent contractor, L-Con, under Chapter 95 of the Texas Civil Practice and Remedies Code.

The jury assessed actual damages of $21,057,710.63, and the trial court entered judgment for this amount. However, the Fourteenth Court of Appeals reversed the decision and rendered a take-nothing judgment in favor of the Defendant, Oiltanking.

The Court's Analysis

The Fourteenth Court of Appeals' entire analysis turned on Chapter 95 of the Texas Civil Practice and Remedies Code and the definitions contained therein.

Citing case law from the Texas Supreme Court and the Fourteenth Court of Appeals, the court held (1) Chapter 95 applies to this case because no one disputes that Oiltanking qualifies as a "property owner" as defined in the chapter (owner of real property primarily used for business purposes); (2) when Chapter 95 applies, the Plaintiffs must show Defendants had control of the property being modified or fixed and actual knowledge of the danger; (3) the Plaintiffs failed to show that Oiltanking had actual knowledge of the specific danger; and (4) because the Plaintiff's failed to show Oiltanking had actual knowledge, the court did not need to address whether Oiltanking had control of the property being modified or fixed.

Takeaways

There are two main takeaways for this case. First, when a contractor, subcontractor, or employee of a contractor or subcontractor sues a property owner for negligence, the Plaintiff must show that the Defendant satisfies the requirements under Chapter 95 with respect to control and actual knowledge. This is true regardless of which theory of negligence the plaintiff pursues. Second, the Chapter 95 "actual knowledge" requirement is a higher bar than "constructive notice," and is a very high bar that can be difficult for Plaintiffs to prove. To show actual notice in this case, the Plaintiffs would have needed to show that Oiltanking knew of a specific danger present in the property (e.g., knowing that explosive fumes had built-up in the pipe).

Tips and Practical Advice

1. When hiring independent contractors to modify or fix commercial property, make sure your agreements delineate work responsibilities and assign work place safety to the contractor.

2. Inform contractors, in writing, of any dangerous areas on your property and have the contractor sign an acknowledgment.

3. Allow contractors to control their own workspace and work procedures.

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