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Controlling Means and Methods of Construction May Subject Project Owner to Liability of Subcontractor's Employees

Richard H. Agins on 6/18/2012

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Richard Agins is a member of Sigman & Zimolong, LLC. He holds an MBA and is licensed as a CPA.

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When an employee of a subcontractor is injured on the jobsite, the subcontractor sometimes may seek coverage of the injury under the project owner’s insurance policy. A recent Pennsylvania Supreme Court decision clarifies the circumstances under which the owner will be liable for such coverage based on its interpretation of the “retained control exception” – an exception under which the owner has retained enough control over the substantive means and methods of construction to warrant the imposition of liability.

Courts have held that “[i]t is not enough that [the property owner] has merely a general right to order the work stopped or resumed, to inspect its progress or to receive reports, to make suggestions or recommendations which need not necessarily be followed, or to prescribe alterations and deviations.

There must be such a retention of a right of supervision that the contractor is not entirely free to do the work in his own way.” Pennsylvania courts generally have declined to apply this so-called “retained control exception” to an owner who has implemented safety regulations out of concern for jobsite safety.

The retained control exception was most recently examined by the Pennsylvania Supreme Court in Beil v. Telesis Construction, Inc., et al.1, a case in which the plaintiff-employee of the roofing subcontractor was seriously injured while utilizing scaffolding erected by the masonry contractor, causing him to sue the construction manager, the masonry contractor and the owner for damages. In his personal injury action filed in the Court of Common Pleas of Philadelphia County, the plaintiff charged that all three defendants were negligent.

The owner filed a motion seeking to escape liability asserting that because it had hired the construction manager to perform the work on the premises, the owner therefore was not liable for injuries to employees of the independent contractor or its subcontractors because it did not fall within the retained control exception. The Court of Common Pleas denied the owner’s motion without opinion and following a trial, a jury awarded damages in favor of the plaintiff against all three defendants for $6.8 million, apportioning liability 50% to the construction manager, 35% to the owner, 10% to the masonry contractor, and 5% to the plaintiff.

The owner filed post-trial motions seeking judgment notwithstanding the verdict (“n.o.v.”), a new trial, a new trial on damages, or a reduction in the damages. By unpublished opinion and order, a unanimous panel of the Superior Court reversed the lower court and remanded for entry of a judgment n.o.v. in favor of the owner, concluding that, as a matter of law, it was not liable under the “retained control exception.” The Superior Court noted that a property owner has no duty to warn the contractor or its employees of conditions that are at least as obvious to the contractor and its employees as they are to the landowner. Therefore, responsibility for protection and liability for negligence generally are placed squarely on the contractor and its employees. The critical exception to this rule arises where a property owner who hires an independent contractor retains control of the “means and methods of the contractors work,” in which case the property owner then assumes liability.

In Beil, the construction manager acknowledged that it was in complete control of the project and responsible for the safety of its subcontractors, including the roofer and its employees. Accordingly, because of the construction manager’s direct control and the fact that the owner did not 1 11 A.3d 456 (PA 2011) retain control over the means and methods of the operative details of the masonry work (even though it did have a project manager onsite), the Superior Court reasoned that the record did not support the trial court’s conclusion that the owner had retained control sufficient to impose liability.

On appeal to the Supreme Court, the issues to be decided were: (1) did the Superior Court misapply case law as to the retained control exception; (2) did the Superior Court improperly fail to view the evidence in the light most favorable to the Plaintiff; and (3) did the Superior Court misapply both § 414 of the Restatement (Second) of Torts and other case precedent?

As to the first consideration, the Supreme Court held that it is preferable to leave the level of review and inspection the parties intend in any given contractual situation to be decided by the contracting parties according to the needs of each project. Therefore, at trial, the inquiry regarding what level of review and inspection the parties intended is left to the finder of fact. The Supreme Court has recently endorsed the principle that certain safety related conduct, including the employment of on-site safety representatives with the authority to stop work, does not constitute control of the work site as a matter of law. By extension in this case, the Court held that “a property owner retaining a certain degree of authority over safety issues, such as supervising and enforcing safety requirements, and even imposing its own safety requirements at a work site, does not constitute control for purposes of imposing liability.”

As to the second consideration, the Court found that Plaintiff’s assertions that safety-related conduct at the work site established requisite control to impose liability is contrary to consistent pronouncements of Pennsylvania courts rejecting such arguments as against public policy. Therefore, the Court concluded that even when viewed in the light most favorable to the Plaintiff, the owner did not control the work of its subcontractors with respect to safety-related conduct and was therefore not liable for the Plaintiff’s injuries on that basis.

Finally, as to the third consideration, the Court drew a clear line between the imposition of safety requirements and the control of means and methods of the operative details of construction as a determinant for the purpose of imposing liability. The former, it held, is well within the purview of the owner, while the latter – relating to the substantive performance of the work – is not. The Court also found that the contractual relationship between the owner and a contractor or its employees largely determines whether liability may be imposed and determined that in Beil, the appellant did not have a sufficiently direct contractual relationship with the owner to impose such liability.

Under the Pennsylvania Supreme Court’s holding in Beil v. Telesis Construction, Inc., et al., a property owner who exercises control over jobsite safety, but who is otherwise not involved in determining the substantive methods and means of construction will not be subject to liability for injury to a subcontractor’s employee under the “retained control” as adopted by Pennsylvania courts.

This determination can be made as much by observance of jobsite practice as by contract language, so the collaboration of owner, contractor and attorney is necessary to ensure that liability is apportioned in accordance with the expectations of all parties.

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