Peone v. Regulus Stud Mills, Inc.

744 P.2d 102, 113 Idaho 374, 1987 Ida. LEXIS 346

• Court: Idaho Supreme Court
• Decided: October 2, 1987
• Docket: 16409
• Status: Published

Opinions

DONALDSON, Justice.

Today, we must answer the question of whether a party to a contract owes a duty of care to the employees of the other contracting party who under the contract is engaged to perform logging activities, in light of Restatement (Second) of Torts § 413 or § 416. This question is certified by the United States Court of Appeals for the Ninth Circuit pursuant to I.A.R. 12.1.

The facts as contained in this certification are brief. Regulus Stud Mills, Inc., a sawmill operator, held timber rights to land in north Idaho. Regulus awarded Haynes Logging a contract to remove timber from the land and to deliver it to the Regulus mill. Roy Peone, an employee of Haynes working on the Regulus contract, was injured by a falling dead tree, or snag. As a result of the accident, Peone is now a paraplegic.

Peone filed suit against Regulus in Federal District Court, with jurisdiction based upon diversity of citizenship. Peone alleges that Regulus is liable for his injuries because it negligently employed an incompetent contractor, Haynes Logging, which had acted negligently in removing the timber.

The United States District Court entered summary judgment for Regulus. The court concluded that even though logging is an inherently dangerous activity,¹ as a matter of law Regulus owed no duty to Peone to select a safety-conscious independent contractor, nor did vicarious liability attach for Haynes’ failure to use due care. The District Court acknowledged that no controlling Idaho precedent existed, but, nevertheless, it had to make a decision to proceed with the case. Appeal was taken to the Ninth Circuit Court of Appeals. In turn, that court pursuant to I.A.R. 12.1 certified the following question to this Court:

“Whether, under Idaho law, an employer of an independent contractor is liable to an employee of the independent contractor under either or both of the exceptions to the general rule of nonliability provided in the Restatement of Torts:

“(1) the negligence of the employer in selecting an independent contractor or in failing to insure that adequate safety precautions were taken, as contemplated by section 413; or

“(2) the vicarious liability to the employee of the independent contractor for the independent contractor’s failure to take precautions, as provided by section 416.

“If Restatement sections 413 or 416 are applicable under Idaho law, it would appear to be important in resolving these questions of law to determine whether employees of the independent contractor are deemed to be others within the purview of those Restatement sections.”

The question presented is a narrow one. We are asked to determine whether §§ 413 or 416 of the Restatement is consistent with Idaho law and creates a duty. We are not asked to decide whether any other facet of the law creates a duty. The dissent suggests the Idaho Minimum Safety Standards & Practices for Logging creates such a duty. This contention may or may not be correct, but it is not for us to decide. Peone, as plaintiff, chose the federal forum as the arena to vindicate his rights. Our role is limited to answering the certified question. Peone, can argue the applicability of the regulations before the 9th Circuit Court of Appeals. For us to now decide the matter would result in an advisory opinion on a question not certified. The regulations adopted by the Industrial Commission do not have any effect on whether the Restatement sections at issue should be the law in Idaho.

The two exceptions at issue today are §§ 413 and 416 of the Restatement (Second). These sections read as follows:

“§ 413. Duty to Provide for Taking of Precautions Against Dangers Involved in Work Entrusted to Contractor—

“One who employs an independent contractor to do work which the employer should recognize as likely to create, during its progress, a peculiar unreasonable risk of physical harm to others unless special precautions are taken, is subject to liability for physical harm caused to them by the absence of such precautions if the employer

“(a) fails to provide in the contract that the contractor shall take such precautions, or

“(b) fails to exercise reasonable care to provide in some other manner for the taking of such precautions.”

Ҥ 416. Work Dangerous in Absence of Special Precautions

“One who employs an independent contractor to do work which the employer should recognize as likely to create during its progress a peculiar risk of physical harm to others unless special precautions are taken, is subject to liability for physical harm caused to them by the failure of the contractor to exercise reasonable care to take such precautions, even though the employer has provided for such precautions in the contract or otherwise.”

Courts have not hesitated to adopt §§ 413 and 416 with regard to a duty owed to injured members of the general public. See Comment, Liability to Employees of Independent Contractors Engaged in Inherently Dangerous Work: A Workable Workers’ Compensation Proposal, 48 Fordham Law Rev. 1165, 1167 (1980). Section 413 imposes liability on the third party employer for injuries caused by peculiar or unreasonable risks of physical harm to others. As stated in the comment to § 413:

“This Section is concerned with the special risk, peculiar to the work to be done, and arising out of its character, or out of the place where it is to be done, against which a reasonable man would recognize the necessity of taking special precautions. The situation is one in which a risk is created which is not a normal, routine matter of customary human activity, such as driving an automobile, but is rather a special danger to those in the vicinity arising out of the particular situation created, and calling for special precautions. ‘Peculiar’ does not mean that the risk must be one which is abnormal to the type of work done, or that it must be an abnormally great risk. It has reference only to a special, recognizable nature arising out of the work itself.”

Section 416 applies specifically to work considered inherently dangerous. It imposes vicarious liability on the third party owner for the contractor’s negligence on the theory that the third party owner’s duty to use reasonable care is nondelegable presumably due to the hazardous nature of the work.

The United States Court of Appeals, District of Columbia Circuit, has explained the rationale underlying § 416 as follows:

“This exception is premised upon the rationale that, because of the inherently dangerous nature of the work, the contractee is obligated to contemplate and guard against such dangers and thus, should not be allowed to ‘escape’ liability to persons or property negligently damaged in the performance of such work by its contractor. Although unequivocally applicable to third persons who are not employees of a contractor, the exception has been the subject of debate in diverse judicial interpretation when implied to employees of a contractor.” Lindler v. District of Columbia, 502 F.2d 495, 498 (D.C.Cir.1974). (Emphasis in original.)

The issue we address today, is whether employees of independent contractors are included within the class of “others” within the meaning of the Restatement provisions §§ 413 and 416. This issue has seen much debate among the various jurisdictions throughout the United, States. See generally, Employer Liability — Contractors’ Employees, 34 A.L.R. 4th 914 (1984).

Included among the jurisdictions that have adopted §§ 413 or 416 and impose liability are the following: Aceves v. Regal Pale Brewing Co., 24 Cal.3d 502, 156 Cal.Rptr. 41, 595 P.2d 619 (1979); Clausen v. R.W. Gilbert Const. Co. Inc., 309 N.W.2d 462 (Iowa 1981); Thon v. Saginaw Paint & Manufacturing Co., 120 Mich.App. 745, 327 N.W.2d 551 (1982); Peterson v. City of Golden Valley, N.D., 308 N.W.3d 550 (N.D. 1981); and Lindler v. District of Columbia, 502 F.2d 495 (D.C.Cir.1974) (applying the law of the District of Columbia). The rationale offered by these courts for imposing liability vary. For example, the Aceves court stated:

“A number of considerations have led courts to depart from the rule of nonliability of an employer for the torts of an independent contractor. Some of the principal ones are that the employer is the one who primarily benefits from the contractor’s work, the employer selects the contractor and is free to insist on a competent and financially responsible one, the employer is in a position to demand indemnity from the contractor, the insurance necessary to distribute the risk is properly a cost of the employer’s business, and the performance of the duty of care is one of great public importance.” Id. 595 P.2d at 622.

Some courts have rejected the rationale contained in the Restatement (Second) of Torts, Special Note to ch. 15, (Tent. Draft. No. 7, 1962), pp. 17-18,² which, if adopted, would have limited liability for injured employees to workmen’s compensation benefits. The District of Columbia Court noted that this tentative draft was not included in the final draft of the Restatement, and, therefore, should not be used for support. Lindler, supra, at 499. “The question is not who may ultimately bear the costs [of worker’s compensation], but rather who does the law require to bear the costs.” Id. at 499. Dean Prosser explained why the language of the tentative draft was not included in the final version of the Restatement. He stated that workmen’s compensation statutes vary widely among the jurisdictions and concluded “that it appears undesirable, if not impossible, to state anything at all about what the liability is to the employees of an independent contractor.” 39 A.L.I. Proceedings 256 (1963). Thus, it is likely that the drafters were unable to agree and purposely left the issue unclear. Sloan v. Atlantic Richfield Co., 552 P.2d 157, 160 (Alaska 1976).

Other jurisdictions have held that employees of independent contractors cannot recover from the third party employer. See King v. Shelby Rural Electric Co-op Corp., 502 S.W.2d 659 (Ky.1973) cert. denied, 417 U.S. 932, 94 S.Ct. 2644, 41 L.Ed.2d 235 (1973); Tauscher v. Puget Sound Power & Light Company, 96 Wash.2d 274, 635 P.2d 426 (1981); Johns v. New York Blower Company, 442 N.E.2d 382 (Ind.App.1982); Vertentes v. Barletta Co., Inc., 392 Mass. 165, 466 N.E.2d 500 (1984); Sierra Pacific Power Company v. Rinehart, 99 Nev. 557, 665 P.2d 270 (1983); and Conover v. Northern States Power Company, 313 N.W.2d 397 (Minn.1981). There are various rationales advanced by these courts as to why these sections do not apply to employees of independent contractors. First, there is nothing in the discussions of §§ 413 or 416 of the Restatement (Second) of Torts to indicate an employee of an independent contractor is within the class of “others” protected by these sections. All of the illustrations set out in the Restatement confer liability upon the third party owner when someone other than an employee of the independent contractor is injured. Thus, some courts have held the Restatement was not intended to apply to injured employees of independent contractors. See King, supra. Other courts have examined the reasons why exceptions to the common law rule were created.

“First, the principal reason for the development of the liability doctrine where independent contractors were involved was to prevent the employer-owner from escaping liability on inherently dangerous work or shifting the liability to his potentially less solvent contractor. Under modern law the employees of the contractor in the vast majority of instances are covered by Workmen’s Compensation laws, and the owner does not escape liability since, in effect, he pays the premium for the Workmen’s Compensation coverage as part of his contract price.” Johns, supra, 442 N.E.2d at 388.

An argument advanced by courts which impose liability is that the third party employer should not be able to escape liability by simply contracting with an independent entity. However, the reverse should apply too. The employer should not be exposed to greater liability by contracting with an independent entity. If an employee of the owner was injured, the employee would be limited to worker’s compensation benefits. See Johns, supra at 388, Vagle v. Pickands Mather & Company, 611 F.2d 1212 (8th Cir.1979) (applying Minnesota law) cert. denied, 444 U.S. 1033, 100 S.Ct. 704, 62 L.Ed.2d 669 (1980). Thus, to allow the employee to recover tort damages places the third party owner at greater risk than if his own servants performed the task.

Other courts have noted that the independent contractor already owes an absolute, nondelegable duty to its employees to provide a safe work place which is free from defects and hazards. Conover, supra, 313 N.W.2d at 404. Section 416 also places a nondelegable duty on the third party owner. “Conceptually at least, to adopt here the Restatement rule results in one nondelegable duty too many.” Id.

In sum, the question of whether employees of independent contractors are included within the class of “others” as defined in the Restatement (Second) of Torts §§ 413 and 416 is a close call. Because of the jurisdictions that have the addressed the question there are many excellent arguments for and against imposing a duty. However, upon closer examination we hold that this is not the case to impose a duty upon the third party owner and hold it liable for injuries suffered by the employee of an independent contractor.

Generally, workmen’s compensation laws have been enacted to abrogate the common law right to sue the employer in tort but in return, the employee has been given the right to swift and sure, though limited compensation. See generally A. Larson, The Law of Workmen’s Compensation, 1986 ed. To the extent that workmen’s compensation is the preferred remedy for occupational injuries, it does appear anomalous and fortuitious to allow an employee to recover in tort from a third party owner when the accident arises out of and in the course of employment. In other words, a third party owner should not be exposed to greater liability by employing an independent contractor.

As pointed out in the Restatement, there are exceptions to this policy. The exceptions in both §§ 413 and 416 involve “the peculiar risk” doctrine. The Ninth Circuit in Nelson v. United States, 639 F.2d 469 (9th Cir.1980) has explored the 413 exception:

“In some cases, however, the job the owner contracts out is ‘likely to create ... a peculiar unreasonable risk of physical harm.’ Restatement (Second) of Torts § 413 (1965). In these cases there is a special reason to place initial responsibility on the employer if he is ‘more likely to consider the risk’ and better able to assess ways to mitigate the risk. Calabresi, Optimal Deterrence and Accidents, 84 Yale L.J. 656 (1975). [Other citations omitted] He can be relieved of liability, according to this approach, if he makes what the law considers appropriate and reasonable provision by contractual or other precautions.” Nelson, supra, 639 F.2d at 476.

Here, Regulus is a sawmill operator. Haynes Logging is a logging contractor. The risk involved in this case is the danger of a falling snag, which is not “a special risk, peculiar to the work to be done____” Restatement (Second) of Torts § 413, comment b. The logging contractor is in a better position than the sawmill operator to assess this risk. The logging contractor, when removing timber will most always be faced with problems of dead and diseased trees which create a danger to anyone working in the area. The contractor is able to consider these risks and the necessary costs to insure against them when negotiating a contract price. A sawmill operator, simply by having timber rights on someone else’s land, does not have special knowledge about the risks of falling snags on that land.

The Nevada Supreme Court, in reaching the conclusion that no duty is owed by the third party owner to the employee of the independent contractor stated:

“To begin with, the rationale of the independent contractor exception, as well as criticisms of it, are most soundly based on issues of knowledge and secondary or indirect costs of avoiding accidents. The decision to place liability on one group of potential defendants stems from the recognition that, because of greater knowledge about or ability to reduce safety risks, the placement of liability on this group will keep the number and costs of accidents, both in economic and human terms at a minimum.” [Citations omitted.] Sierra Pacific Power Co. v. Rinehart, supra, 665 P.2d at 274

We conclude that Haynes Logging is in a better position to reduce the risks of injury from falling snags. A logging contractor has more knowledge and expertise than a sawmill operator with respect to the dangers that normally arise during the course of the contractor’s normal work routine. A logging operation, by its nature, involves the risk of falling snags to the employees of the logging operation. The peculiar risk doctrine does not encompass taking precautions against ordinary dangers which arise in the course of work. Therefore, neither § 413 nor § 416 of Restatement (Second) of Torts is applicable to this case.

SHEPARD, C.J., and BAKES, J., concur.

1 . For purposes of this appeal, we do not need to decide whether logging is an inherently dangerous activity. Assuming that it is, the appellants’ contention is without merit because as this opinion will indicate, the risk involved (a falling snag) is inherent in a logging operation, and not a peculiar risk within the meaning of §§ 413 and 416. The question of whether logging is an inherently dangerous activity is saved for a later day.

2 . "The other class of plaintiffs not included in this Chapter consists of the employees of the independent contractor. As the common law developed, the defendant who hired the contractor was under no obligation to the servants of the contractor, and it was the contractor who was responsible for their safety. The one exception which developed was that the servants of the contractor doing work upon the defendant’s land were treated as invitees of the defendant, to whom he owed a duty of reasonable care to see that the premises were safe. This is still true. See § 343. In other respects, however, it is still largely true that the defendant has no responsibility to the contractor’s servants. One reason why such responsibility has not developed has been that the workman’s recovery is now, with relatively few exceptions, regulated by workmen’s compensation acts, the theory of which is that the insurance out of which the compensation is to be paid is to be carried by the workman’s own employer, and of course premiums are to be calculated on that basis. While workmen’s compensation acts not infrequently provide for third-party liability, it has not been regarded as necessary to impose such liability upon one who hires the contractor, since it is to be expected that the cost of the workmen’s compensation insurance will be included by the contractor in his contract price for the work, and so will in any case ultimately be borne by the defendant who hires him.” Id., quoted in King v. Shelby Rural Electric Cooperative Corp., 502 S.W.2d 659, 662 (1973).