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Practical Litigator: Consider third-party premises liability when analyzing comp claims

By MARK McGRATH, Special to Lawyers Weekly

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Somewhere in the dark recesses of our memories, most of us can recall a measure of what we learned during our first year of law school.

Ah, how fondly I recall those salad days spent in torts class. Remember learning about the duties owed by property owners? Invitees, licensees, trespassers? Attractive nuisances, duties to warn, hidden and concealed dangers?

I have wistful memories of the late Robert Byrd pacing in front of our torts class, playfully taunting us with his mastery of the subject and our stubborn inability to grasp it. Thank goodness for those Gilbert’s study guides!

For those of us whose practices involve a steady diet of injury cases, this subject has considerable currency and relevance. Most frequently, we handle cases in which an individual has been injured while on the property of another. For example, a child falls down an unguarded well at a chemical plant. A party guest falls through an opening in a deck. A child is electrocuted when he contacts a low-hanging power line at a shopping center.

Most of us would immediately identify merit in such cases when they involve individuals who are going about their daily business at the time of the injury. Interestingly, however, many workers’ compensation attorneys do not recognize the potential for recoveries when a person is injured on the property of another while working in the course and scope of his employment.

The most common scenario involves workers who are the employees of independent contractors. The owners of a factory or other facility owe to their contractors a number of duties, including the duty to act with reasonable care, to warn of unknown or hidden dangers and to act in conformity with generally accepted standards of their particular industry.

What does all this mean? The principle is best illustrated by providing some typical factual scenarios.

(1) A piece of high-voltage electrical equipment inside a factory is in need of repair. The owners of the factory contacts ABC Electrical Contractors to fix the equipment. Three electricians arrive to perform the job. Inside the factory, workers perform finishing, grinding and polishing tasks on molded titanium products. Unknown to the electricians, these activities generate large amounts of titanium dust, which is highly explosive when exposed to fire or an electrical arc. Also unknown to the electricians, the factory worker has not implemented any dust collection or containment measures, in direct violation of the standards promulgated by the National Fire Protection Association. As a result, the air inside the facility is thick with titanium dust. As the workers prepare to work on the equipment, a switch is thrown to deactivate the equipment. When the switch is opened, the energized portions of the equipment create an arc, which ignites the airborne titanium dust in a massive fireball. Two of the electricians receive third-degree burns over most of their bodies. The owner is liable for the injuries suffered by the electricians.

(2) Painting subcontractors are preparing to work on an apartment building located within a large residential complex. Two painters are in the process of erecting a scaffold when a metal brace contacts an overhead power line. One of the workers is killed. The second suffers severe electrical burns. The evidence reveals that the owner of the apartment complex relocated the line without informing the utility providing service. A survey of the accident scene reveals that the power line is hanging too low and does not comply with the clearance requirements of the National Electrical Safety Code. As a consequence, the owner of the complex is responsible for the accident.

(3) A public utility is constructing a new substation. The substation is nearly completed, but minor details still need to be ironed out. The utility retains a contractor to install some final equipment inside the substation enclosure. He has been assured that the substation is still under construction and will not come online until after he has performed his work. When the contractor arrives on-site, he observes that the gang switches outside the substation are open, meaning that there is no power coming into the substation. He enters the enclosure and prepares to perform his work. Unknown to the worker, the utility has energized the substation by tapping distribution lines at the rear of the substation to run air conditioners inside the metal control room. As a consequence, the entire substation is energized. As the worker begins his work he contacts a piece of energized equipment and is severely injured.

(4) A drywall contractor is hired by the owner of a hotel. Unknown to the contractor, the hotel has been the scene of multiple violent crimes in the preceding two years, including a murder, three armed robberies and 15 armed assaults. The owner of the hotel has not responded in any way to the crime occurring on the property and, in particular, has refused to install security cameras, electric locks, hire guards or implement other security measures. While working at the hotel, two armed assailants enter and demand money from the front-desk attendant. When the contractor hears a commotion, he goes to the lobby. When he sees that a robbery is in progress he turns to run. One of the armed men fires his weapon at the contractor, killing him instantly. The owner of the hotel has failed to take reasonable measures to protect people from the foreseeable criminal acts of others. As a consequence, the owner of the hotel is liable for the worker’s death.

When analyzing third-party premises liability cases, remember that the proper party may not always be the owner of the property when the incident occurs. Generally, owners are legally responsible for acts occurring on their property only when they are in actual control and possession of the property. Accordingly, if the property is leased to a tenant who is conducting an enterprise on the premises, the tenant will likely be the target defendant.

In the owner/tenant or franchisor/franchisee setting, it is critical to request in discovery all documents relating to the ownership of the property and the operation of the business at issue. An owner who has leased property to a tenant may have retained dominion, control and responsibility for certain portions of the property, such as common areas. If the injury occurs in a common area, the owner will need to be named as a defendant.

Other kinds of agreements can shift responsibility for an injury. For example, in the case of the fleeing drywall contractor, assume that the owner of the hotel had entered into a management agreement with a company called Hospitality Resources. Under the agreement, Hospitality Resources assumed full responsibility for all aspects of hotel operations, including the provision of “such security measures and personnel as may be necessary to promote the health and safety of hotel guests and others on the premises.” In this case, the contractor, not the owner, is likely the most culpable party.

When reviewing workers’ compensation cases for potential third-party liability, do not forget to consider the premises liability angle. This is especially true when the incident involves something catastrophic, like a fire, explosion or arc flash. Fires and explosions rarely occur in the absence of negligence.

If you have a case where a worker is injured while he is working at a facility or on property not owned by his employer, the potential for a third-party premises liability case has to be considered and explored.

Somewhere, Professor Byrd is smiling.

Editor’s note: McGrath is a partner with the firm of McGrath Podgorny in Research Triangle Park, where he focuses his practice on representing plaintiffs in catastrophic injury cases, including cases arising from nursing home neglect and abuse, electrical injuries, inadequate security, medical malpractice and third-party workplace injuries.

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