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The Practical Litigator: Is Copeland a major shift, or a one-off?

On Jan. 7, the Court of Appeals issued a decision that could have far-reaching implications for imposing liability against real estate developers and other parties in premises liability and construction accident cases. The opinion in Copeland v. Crescent Communities, LLC et al. and it should be required reading for attorneys who represent parties on either side of such cases.

The case arose from an incident in the upscale Forest Ridge neighborhood in Orange County, where five-year-old Everett Copeland was playing in his driveway with other children as workers were doing grading and excavation work on an adjacent home site that was still under construction. Alejandro Suarez was operating a dump truck that was being loaded with dirt using heavy excavation equipment. Suarez had to use the restroom and exited the vehicle, leaving it unoccupied with the engine running and without placing chocks under its wheels, as his co-workers kept loading it with construction debris. 

The truck began to roll downhill, gaining speed as it careened onto the Copelands’ property, striking Everett and narrowly missing several of his playmates before slamming into their home. Everett was rushed to the hospital, where he died later that day.

An investigation revealed that Suarez had been working for Kala Contracting, a grading and site preparation contractor that had been hired by the builder-owner of the lot, Amward Homes, to perform work at the site. Crescent Communities, a Charlotte-based real development company, was the developer for Forest Ridge.

The family filed suit in Orange County Superior Court. In a sparse but bitterly poignant complaint, they asserted negligence claims against Suarez, Amward, Kala, Kala’s owners, and Crescent. They alleged that Crescent’s liability arose from its knowledge of terrain and the work being performed, including prior incidents where workers operated construction equipment in a careless and reckless manner, and its ability to take appropriate action to ensure that equipment was being operated safely and responsibly.

Crescent denied any legal responsibility for the accident, claiming that at the time of the incident it lacked the authority, ability, or legal duty to ensure safe performance of construction activities at home sites within the subdivision. At the close of discovery, it moved for summary judgment as to all claims against it, and Judge W. Osmond Smith, III granted the motion.

On appeal, the Copelands presented a well-developed tableau of evidence to support their contention that, as the developer, Crescent had a continuing legal duty to ensure that work being done by builders and contractors was happening in a safe and responsible manner. In particular, they offered evidence showing the extent of Crescent’s responsibility for the work and control over how it was performed, and expert testimony finding that it had acted negligently.

But in contrast to this well-developed factual record, the citation of relevant case law authority was surprisingly spare. Boiled to its essence, the family argued that Crescent, like any actor that engages in affirmative conduct, had to conform its actions to a standard of reasonable care. They rested upon the logic that, because Crescent exercised a high degree of control over the development of the subdivision, it owed a duty of “due care to those foreseeably affected by [the] development.”

Crescent contested the factual allegations, arguing that although its architectural control committee involved itself with the enforcement of architectural details within the subdivision, it didn’t exercise general control over construction activities performed there. It argued that summary judgment had been proper for several reasons, including contentions that developers aren’t liable for the negligence of general or independent contractors, that North Carolina law doesn’t impose a duty to anticipate the negligence of others, and that any control Crescent exercised over the work being performed related solely to aesthetic issues and not the manner in which it was done.

Both sides advanced compelling legal and factual arguments to support their positions. On one hand, North Carolina courts have been historically loath to extend the tort duties of general contractors and property owners who hire independent contractors to perform work on their behalf, and there is abundant authority to support this position. On the other hand, there is case law to support the contention that persons engaging in activity of any kind are required to conform their activities to a general standard of reasonable care.

These competing theories were placed squarely at the feet of the Court of Appeals, which held that summary judgment had been improperly granted and reversed and remanded the case to the trial court. 

Judge Richard Dietz began by analyzing whether North Carolina law imposed a duty on Crescent to monitor and inspect the construction activities being conducted within the subdivision, finding that the family’s argument was contrary to established precedent. Dietz concluded that Amward, the builder at issue, was at most an independent contractor performing its work within the subdivision. As such, “the legal responsibility for the safe performance of that work rests entirely on the independent contractor.” 

Dietz noted that the only exception to this rule was for liability arising out of the performance of “inherently dangerous” work by an independent contractor, and North Carolina courts have consistently held that residential home construction isn’t “inherently dangerous” work.

“Were we to hold that owners of property on which homes are being constructed have a legal duty to monitor the builder’s grading work, it would be an unprecedented expansion of tort liability at odds with our Supreme Court’s longstanding application of these negligence principles in the home construction context,” Dietz wrote.

The Court then considered whether Crescent retained sufficient control over the project to render it liable for negligent conduct by Amward or its subcontractors, including Kala. It reasoned that the degree of control required to establish the liability of a developer is confined to situations where the “developer retains control over how the work is performed,” and concluded that the record contained no evidence that Crescent “retained any construction responsibilities or had any control over the builder’s decisions concerning grading work.”

Rather, the control exercised by Crescent extended only to “aesthetic” and architectural details to be observed by builders who were constructing homes in the subdivision. The court found that there was “no evidence that Crescent retained any control over the actual construction work performed by the builders.” For this reason, there was no basis for arguing that Crescent “had a legal duty to monitor or inspect the grading work of a subcontractor [Kala] of the builder [Amward].”

Next, the court rejected the contention that, in developing the subdivision, Crescent embarked on an affirmative course of conduct that included a concomitant duty to exercise reasonable care to protect persons from harm that might arise from the performance of work on the project, finding that this too was foreclosed by applicable precedent. The argument failed because, among other things, parties aren’t under a legal duty to anticipate the negligence of others. 

“The law could impose a duty on Crescent, as the developer of a large planned community, to anticipate potential negligence on construction sites within the community and to take precautionary steps to prevent harm should that occur,” Dietz wrote. “But the tort law of our State, as it exists today, does not impose that duty.”

A duty might arise, Dietz wrote, where a defendant is aware of facts which give or should give notice that negligence is taking place during the project. But this exception didn’t apply because the record contained no evidence to indicate that “Crescent was aware of the negligent activities of the dump truck operator.”

But the family found more success with the argument that “there was a risk that the dump truck could have broken loose and rolled downhill event without negligence at the construction site.” Put another way, they contended that “developers of large projects on hilly terrain have a duty to sequence and manage construction to limit the risk that bystanders downhill might be harmed by foreseeable roll-away accidents.” 

Here, the court held that the family had “forecast evidence creating a genuine issue of material fact on this theory of duty.” Among other things, it cited expert witnesses’ views that there is a risk of roll-away incidents on hilly project sites, the risk of such incidents is well known in the real estate development industry, and “a reasonably prudent developer would undertake a ‘safety analysis’ or ‘hazard analysis’ and take steps such as sequencing development or conducting mass grading to eliminate the risk of injury from these roll-away accidents.”

If these facts were true, Dietz wrote, “it would be sufficient to impose a duty of care” because the plaintiffs would have “established that a prudent planned community developer would foresee that the construction creates a risk of roll-away accidents and that sequencing the construction in various, reasonable ways will reduce the risk  of injury resulting from those accidents.”

At first blush, this reasoning would appear to be contrary to the well-established principle that the existence, or not, of a legal duty is typically a question of law to be decided by the court. Citing Mozingo by Thomas v. Pitt County Memorial Hospital (1991), the court held that “when the facts are in dispute or when more than a single inference can be drawn from the evidence, the issue of whether a duty exists is a mixed question of law and fact. The issues of fact must first be resolved by the fact finder, and then whether such facts as found by the fact finder give rise to any legal duty must be resolved by the court.” It concluded that “because there are disputed issues of material fact on the question of duty, this matter cannot be resolved at summary judgment.” 

So what’s to be made of the court’s decision? From an initial reading, it appears to stretch traditional notions of duty in construction accident and premises liability cases. Not so, said David Kirby, one of the attorneys representing the family.

“Judge Dietz was applying well-settled law,” Kirby wrote, “and it was clear from his opinion that he did not want to expand the law, which he noted was the province of the Supreme Court and the legislature.”

Still, given the paucity of decisions in our case law imposing liability against owners, developers, and general contractors for the negligent conduct of independent contractors, Copeland does place an arrow in the quiver of counsel representing injured parties in premises liability and construction accident cases.

It remains to be seen how appellate and trial courts will apply the decision. Without question, the facts in Copeland are somewhat idiosyncratic, particularly the existence of hilly terrain on the project site, a fact that the court mentioned repeatedly. Will the reasoning of Copeland be extended to other factually distinct scenarios, or cases involving construction sites that aren’t marked by potentially hazardous terrain? Or will Copeland become an outlier, like Woodson v. Rowland (1991), the product of unique facts and unspeakable tragedy?

Copeland raises as many questions as it appears to answer. In the coming years, attorneys across the state will be watching closely.

Mark McGrath is an attorney with Brent Adams & Associates in Raleigh, where he focuses his practice on medical malpractice, nursing home negligence, third-party workplace injury, wrongful death and catastrophic personal injury litigation. He welcomes comments and may be reached at [email protected]

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