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Liability of a Texas Property Owner to an Independent Contractor’s Employee

In Oiltanking Houston, LP v. Delgado, an employee of an independent contractor hired to work on a pipe by Oiltanking died in an explosion. He was welding a flange on a 24-inch pipe used to transport crude oil. Hydrocarbon fumes ignited, and an explosion occurred, killing the employee and injuring two others.

The employee’s family sued Oiltanking, the owner of the premises and the hirer of the independent contractor, for wrongful death. The victims also sued for personal injuries.

At trial, testimony was provided about the procedures used, the aspects of the process that Oiltanking controlled versus the aspects controlled by the independent contractor, and the events that led up to the explosion. Under Chapter 33 of the Civil Practice and Remedies Code, Oiltanking designated the independent contractor as the responsible third party. However, the judge struck the designation when the evidence closed. Due to this, the jury was asked whether Oiltanking’s negligence was the legal cause of the explosion.

The jury answered various liability questions in favor of the claimants. The jury answered yes as to a negligent undertaking theory against Oiltanking. It also answered yes regarding Oiltanking’s liability for a dangerous condition on the premises. It also found that Oiltanking exercised or had control over how the independent contractor performed the work. Together, these answers satisfied the requirement that a property owner has liability if it has control and actual knowledge related to claims related to death or injury to an independent contractor’s employees who repair, modify, or construct an improvement to real property. However, its answers were not unanimous, so punitive damages questions weren’t answered. The actual damages assessed by the jury totaled $21,057,710.63.

Oiltanking appealed. Among other things, it argued that the negligent activity and negligent undertaking claims lacked evidentiary support and weren’t allowed under Texas law. It also argued that the evidence didn’t support the jury’s affirmative answers regarding the elements of control and actual knowledge.

The appellate court explained that the jury charge provided three options that established Oiltanking’s liability related to the explosion that killed an independent contractor’s employee and injured other employees. These three options were negligent undertaking, premises liability, and negligent activity. The court explained that Chapter 95’s control and actual knowledge requirements had to be fulfilled for any of these theories to apply.

Chapter 95 was enacted in recognition that property owners often hire someone else with expertise to repair or make an improvement on their property. It applies to a claim against a property owner, contractor, or subcontractor when there is a wrongful death, personal injury, or property damage claim to the contractor, subcontractor, or their employees arising from the condition or use of a real property improvement if the contractor or subcontractor constructed, repaired, renovated, or otherwise modified the improvement.

The law limits liability in this situation unless the property owner exercised or maintained control over how the work was performed, other than the right to start or stop the work, inspect it, or receive reports. Additionally, liability is limited unless the property owner had actual knowledge of the danger or condition that resulted in the wrongful death, personal injury, or property damage, and failed to provide adequate warnings.

In this case, the plaintiffs argued that Oiltanking had waived arguments under Chapter 95, since it had failed to request and get jury findings related to its applicability. However, they didn’t point out evidence to show there was a factual dispute about whether their claims were against a property owner for wrongful death to a contractor’s or subcontractor’s employee.

The court explained that the plaintiffs had to prove actual knowledge (as opposed to constructive knowledge) of the danger. Actual knowledge is not found when there is knowledge that an activity is potentially dangerous.

The court explained that before the decedent and other employees started work, Oiltanking personnel closed valves to cut off the flow of hydrocarbons and pumped out the pipe. The independent contractor’s employee completed a “cold cut.” The plumber’s plug and vent pipe were owned by Oiltanking but installed by the independent contractor. The plaintiff’s expert testified that Oiltanking had improperly cleaned out explosive materials, failed to survey for explosive vapors, and used a sloppy permit procedure.

Oiltanking argued there was no evidence to show it had actual knowledge of the hydrocarbon gas leak during the welding, while the plaintiffs argued that it knew of the existence of hydocarbons within and around the improvement because crude oil had been pumped from the tank within a day of their arrival. The court explained that this was not actual knowledge. Simply knowing that there was a potential danger because elaborate safety precautions were needed with crude oil was not actual knowledge of danger. The court reversed the judgment and rendered a take-nothing judgment.

If you are injured due to a dangerous condition on property or while working, the experienced San Antonio attorneys at Carabin Shaw may be able to represent you and develop a sound strategy for handling your premises liability case. Call our office for more information at 1-800-862-1260.

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