Victoria Electric Cooperative, Inc. v. Williams

100 S.W.3d 323

• Court: Court of Appeals of Texas
• Decided: January 15, 2003
• Docket: 04-00-00222-CV
• Status: Published

Opinions

Opinion on Appellees’ Motion for En Banc Reconsideration

Opinion by:

PAUL W. GREEN, Justice.

We grant the Motion for En Banc Reconsideration filed by Barbara 0. Williams, Individually and as Representative of the Estate of Elvin Ray Williams, Brian Williams, and Brandon R. Williams. We withdraw our opinion of April 3, 2002 and substitute this opinion in its place:

Victoria Electric Cooperative, Inc. appeals a judgment finding it liable for negligence in the transportation of utility poles by its independent contractor. Because we hold there is no evidence demonstrating Victoria Electric retained a right to control the activity leading to the injury and because the trial court erred in holding Victoria Electric vicariously liable for the negligence of its independent contractor, we reverse the trial court’s ruling and render judgment in favor of Victoria Electric.

Background

Victoria Electric is a rural electric cooperative operating under a statutorily authorized franchise granted by the City of Victoria “to construct, maintain, and operate [ ] electric light and power lines, with all necessary or desirable appurtenances (including underground conduits, poles, towers, wires, and transmission lines, and telegraph and telephone wires for its own use) for the purpose of supplying electricity [ ] within the City limits of the City of Victoria, Texas.” In carrying out its franchise obligations, Victoria Electric entered into a contract with Urban Electrical Services, Inc. to construct and maintain electrical distribution lines in the franchise area.

The evening before the accident, Urban employees loaded six utility poles onto a truck and trailer. The next morning, before sunrise, one of Urban’s employees, Troy Allen Baze, drove the truck and trailer onto a public highway for the trip to the installation location. The utility poles extended beyond the end of the trailer and, although the trailer was equipped with proper marker lights, some warning devices required to be affixed to extended loads were not attached. As Baze attempted to cross a highway at an intersection, a vehicle driven by Elvin Ray Williams struck one of the poles extending past the end of the trailer. Williams was killed.

Williams’s survivors (“Williams”) brought this wrongful death action against Victoria Electric, Urban, and Baze. Before trial, Williams settled her claims against Urban and Baze for $2 million. At trial, the jury found actual damages in the amount of $5.016 million and assigned responsibility fifty percent to Victoria Electric, twenty-five percent to Urban, and twenty-five percent to Baze. After applying the settlement credit, the trial court awarded judgment against Victoria Electric for the remaining balance by imputing Urban’s and Baze’s negligence to Victoria Electric. The trial court found: (1) Victoria Electric retained the right to control Urban’s activities; (2) Victoria Electric had a non-delegable duty of care under the “peculiar risk” and “inherently dangerous activity” exceptions; and (3) Victoria Electric had a non-delegable duty of care under the franchise exception.¹

Right to Control

The trial court found Victoria Electric negligently failed to exercise its right to control the activities of Urban and Baze as required by section 414 of the Restatement of Torts. On appeal, Victoria Electric claims the evidence is insufficient to support Williams’s section 414 negligence claim. We must determine whether Victoria Electric retained a right to control Urban’s activities such that a duty of care arose. If a duty of care arose, we must determine whether a breach of that duty of care led to Williams’s injuries.

A. Section 414 Duty of Care

Section 414, adopted by the supreme court in 1985, provides:

One who entrusts work to an independent contractor, but who retains the control of any part of the work, is subject to liability for physical harm to others for whose safety the employer owes a duty to exercise reasonable care, which is caused by his failure to exercise his control with reasonable care.

Restatement (Second) op ToRts § 414 (1977); Redinger v. Living, Inc., 689 S.W.2d 415, 418 (Tex.1985). This rule applies where the employer retains less control than would subject him to liability as a master. Redinger, 689 S.W.2d at 418. In 1998, the supreme court expounded on independent contractor liability, explaining that an employer’s duty of care arises under section 414 only when the retained right of control is more than general or supervisory. Hoechst-Celanese Corp. v. Mendez, 967 S.W.2d 354, 356 (Tex.1998) (per curiam). Specifically, the retained right of control must extend to the “operative detail” of the contractor’s work so that the contractor is not free to do the work in its own way. Id. The comments to section 414 further discuss the degree of control needed to create a duty:

It is not enough that [the general contractor] has merely a general right to order the work stopped or resumed, to inspect its progress or receive reports, to make suggestions or recommendations which need not necessarily be followed, or to prescribe alterations and deviations. Such a general right is usually reserved to employers, but it does not mean that the contractor is controlled as to his methods of work, or as to operative detail. 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.

Id. (quoting Restatement (Second) of Torts § 414 cmt. c (1965)); see Mendez, 967 S.W.2d at 356.

A duty arising under section 414 is commensurate with the degree of control retained by the employer. See Elliottr-Williams Co., Inc. v. Diaz, 9 S.W.3d 801, 803 (Tex.1999). The employer “must have some latitude to tell its independent contractors what to do, in general terms, and may do so without becoming subject to liability.” See Koch Ref. Co. v. Chapa, 11 , 156 (Tex.1999) (per curiam). Further, we must remember that liability results only when the right of control relates to the injury-producing activity itself. See Clayton W. Williams, Jr., Inc. v. Olivo, 952 S.W.2d 523, 528 (Tex.1997). As such, an employer is not liable for the negligence of an independent contractor unless the employer retains the right of control, or exercises actual control, over the condition or activity that causes the injury. Id.

Here, the “condition or activity” causing Williams’s death was the transportation of utility poles in the dark, without any warning lights, on a trailer that was too short in violation of both the Texas Transportation Code and provisions in Victoria Electric’s safety manual. In this case, it is not contended that Victoria Electric was exercising actual control over Urban’s employees at the time of the alleged negligent act. Therefore, we must first determine whether there is evidence demonstrating Victoria Electric retained a contractual right of control over the “means, methods, or details” used by Urban in transporting utility poles from Victoria Electric’s yard to the construction site. See Diaz, 9 S.W.3d at 804.

B. Contractual Provisions Relating to Victoria Electric’s Right to Control

The contract in question is a U.S. Department of Agriculture Rural Utilities Services printed form contract entitled “Distribution Line Extension Construction Contract (Labor Only).” It is in the form of a “proposal” from the contractor (Urban) to “the Owner” (Victoria Electric) which, upon being signed, constituted the contract between the parties. In the contract, Urban agrees to construct electrical supply line-extensions (“the Project”) in accordance with specified plans and at times when sections of the project are certified as ready for construction by Victoria Electric.

Two main parts of the contract contain language relevant to the right to control issue: Article II and Article IV. In Article II, the section regarding “Supervision and Inspection”² provides:

a. The Contractor shall cause the construction work on the Project to receive constant supervision by a competent superintendent (hereinafter called the “Superintendent”) who shall be present at all times during working hours where construction is being carried on. The Contractor shall also employ, in connection with the construction of the Project, capable, experienced, and reliable foremen and such skilled workmen as may be required for the various classes of work to be performed. Directions and instructions given to the Superintendent by the Owner shall be binding upon the Contractor.³

b. The Owner reserves the right to require the removal- from the Project of any employee of the Contractor if in the judgment of the Owner such removal shall be necessary in order to protect the interest of the Owner. The Owner shall have the right to require the Contractor to increase the number of his employees and to increase or change the amount or kind of tools and equipment if at any time the progress of the work shall be unsatisfactory to the Owner; but the failure of the Owner to give any such directions shall not relieve the Contractor of his obligations to complete the work within the time and in the manner specified in this Proposal, c. The manner of performance of the work, and all equipment used therein, shall be subject to the inspection, tests, and approval of the Owner. The Owner shall have the right to inspect all payrolls and other data and records of the Contractor relevant to the work. The Contractor will provide all reasonable facilities necessary for such inspection and tests. The Contractor shall have an authorized agent accompany the inspector when final inspection is made and, if requested by the Owner, when any other inspection is made.

Article IV’s section on “Protection to Persons and Property”⁴ provides:

The Contractor shall at all times take all reasonable precautions for the safety of employees on the work and of the public, and shall comply with all applicable provisions of Federal, State, and Municipal safety laws and building and construction codes, as well as the safety rules and regulations of the Owner. All machinery and equipment and other physical hazards shall be guarded in accordance with the “Manual of Accident Prevention in Construction” of the Associated General Contractors of America unless such instructions are incompatible with Federal, State, or Municipal laws or regulations.

The quoted provisions of the contract show Victoria Electric retained some right of control over the activities of Urban; however, we must determine whether the right to control was supervisory in nature, which does not trigger liability, or specifically controlling the details of Urban’s work, which does trigger liability.

C. Was Victoria Electric’s right to control supervisory?

Victoria Electric’s right of control extended to ensuring that Urban performed the work in accordance with the construction specifications and applicable safety laws. In reviewing the contractual language, we see the scope of authority retained does not implicate a right to control the operative details of how Urban did its work or to deny Urban the ability to do the work in its own way. In other words, the control was broadly supervisory. Although Victoria Electric did reserve the right to order corrections if the work was not being done safely, Victoria Electric’s right to require Urban to operate safely is not evidence of control over the “details of what was being done” so as to impose liability. See Mendez, 967 S.W.2d at 356 (employer who required contractor to train its employees in safety measures not liable to employee who was injured because of a violation of those safety measures).

Further, for liability to exist, there has to be a nexus between the employer’s retained control and the condition or activity that caused the injury. Id. at 357. As noted, the activity causing Williams’s death was the violation of state transportation safety laws. Although Victoria Electric may have had a narrow duty of care to others arising under Section 414 to ensure that Urban was performing its work safely, the scope of its duty was limited to the scope of its retained control. In this case, the scope of the duty was supervisory, and was limited to ensuring Urban’s overall compliance with the contract. The scope of the duty did not extend to control over the details of how utility poles are to be transported.

D. Lee Lewis Constr., Inc. v. Harrison

In Lee Lewis Construction, Inc. v. Harrison, the supreme court upheld a finding that a general contractor, LLC, was liable for the death of an independent contractor’s employee, who fell from a ten-story building when his safety support system failed. Lee Lewis Construction, Inc. v. Harrison, 70 S.W.3d 778, 782 (Tex.2001). In upholding the liability finding, the supreme court focused on the evidence showing that LLC assigned a superintendent “the responsibility to routinely inspect the ninth and tenth floor addition to the south tower to see to it that the subcontractors and their employees properly utilized fall protection equipment.” Further, the supreme court noted the evidence demonstrating the superintendent personally witnessed and approved of the specific fall-protections systems used by the independent contractor.

Relying on the following language in the contract at issue, Williams argues this case is controlled by Lee Lewis Construction:

The Owner shall have the right to require the Contractor to increase the number of his employees and to increase or change the amount or kind of tools and equipment if at anytime the progress of the work shall be unsatisfactory to the Owner.

The manner of performance of the work, and all equipment used therein, shall be subject to the inspection, tests, and approval of the Owner.

Williams argues Victoria Electric is liable because it retained the specific right to decide what equipment Urban used in transporting the utility poles.

This argument is unpersuasive for two reasons. First, when the contractual language is considered in context with the remaining text in the paragraph, it is clear that the language refers to Victoria Electric’s right to inspect and approve the work on the Project, which is a right any general contractor has to ensure the work is performed according to contract specifications. Second, the facts here are quite different from Lee Lems Construction. The supreme court’s decision was based on the fact that LLC exercised actual control over the safety of the premises.⁵ Importantly, the case before us is not an actual control case; it is a contractual right of control case.

Interestingly, the concurring justices believed the facts in Lee Lewis Construction supported a contractual right of control theory. Id. at 787, 800 (Hecht & Jefferson, JJ., concurring). The theory was that LLC contractually retained a right of control over the safety of the premises and thus owed the contractor’s employees a duty of care commensurate with the amount of control that was retained. Id.; see Exxon v. Tidwell, 867 S.W.2d 19 (Tex.1998). Because the contract imposed very detailed safety requirements on the contractor and LLC took on the burden of ensuring safety at the work site, the contractor was not free to do the work in its own way. Id. at 801 (Jefferson, J., concurring). Further, because “the general contractor also actually knew that the independent subcontractor was using an extremely dangerous device in its work and did nothing to stop it,” there was evidence supporting the liability finding. Id. at 789 (Hecht, J., concurring).

In this case, Victoria Electric did not contractually assume the burden of ensuring the safety of the traveling public. The guidelines in Victoria Electric’s safety manual, which specify how to transport utility poles, impose no additional safety requirements other than those already mandated by state law. Therefore, Victoria Electric simply required that its contractor abide by all state, local, and federal laws and its own safety rules and regulations.

Victoria Electric also retained the latitude to “inspect, test, and approve” Urban’s work to make sure it was complying with contract specifications, as well as safety requirements, without subjecting itself to liability. So long as Victoria Electric determined that Urban was abiding by the safety laws and regulations, Urban was permitted to carry out its work as it saw fit. Therefore, contrary to Williams’s argument, this contractual language does not implicate a right to control the details of the independent contractor’s work.

E. Is there evidence demonstrating Victoria Electric was aware Urban had previously violated safety provisions?

Williams also argues Victoria Electric had a duty arising out of its awareness that Urban had previously violated safety regulations and claims a duty arises from this knowledge. Williams relies on the following language of Mendez: “an employer who is aware that its contractor routinely ignores applicable federal guidelines and standard company policies related to safety may owe a duty to require corrective measures to be taken or to cancel the contract.” Mendez, 967 S.W.2d at 357. Thus, if Victoria Electric learned Urban was violating the safety requirements of the contract and failed to correct it, Victoria Electric could be hable to others injured as a result of that failure to properly supervise. Id.; Traylor Bros., Inc. v. Garcia, 49 S.W.3d 430, 435 (Tex.App.-San Antonio 2001, pet. denied) (stating that if a contractor requires a subcontractor to comply with its safety regulations, the contractor owes a narrow duty of care — that is, that its safety requirements and procedures do not unreasonably increase the probability and severity of injury).

There is no proof that this narrow duty of care was breached. The only evidence relied on by Williams that refers to Victoria Electric’s knowledge of Urban’s previous violations is a general statement made by a Victoria Electric mechanic, who said he had seen Urban haul poles before daylight without lights attached. Williams admitted no evidence demonstrating how many times the mechanic observed the violation, when the violation occurred in reference to the date of the accident, who the violation was reported to, and what resulted from the observed violations.

While it is true there was testimony that some employee of Victoria Electric had seen someone with Urban at some time hauling poles on the wrong size trailer in the dark without lights, there was no evidence that Victoria Electric approved of this conduct or failed to do anything about it if it was ever brought to the attention of someone with authority at Victoria Electric. We decline to hold that the statement is sufficient to demonstrate Victoria Electric was aware that Urban “routinely ignored” safety guidelines and, consequently, had the duty to “require corrective measures be taken.” Consequently, there is no support for a breach of the narrow duty of care Victoria Electric owed to the public under the limited control it retained in the contract. Because we hold the trial court erred in holding that Victoria Electric retained a “contractual right” to control the activities of Urban and Baze, we sustain Victoria Electric’s first four issues.

“Peculiar Risk” & “Inherently Dangerous Activity”

Exceptions

The trial court found that because the transportation of electrical poles poses a “peculiar risk” and is an “inherently dangerous activity,” Victoria Electric has a non-delegable duty of care and is vicariously liable for the negligence of Urban and Baze. Section 416 of the Restatement provides:

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.

Restatement (second) of ToRts § 416; see Scott Fetzer Co. v. Read, 945 S.W.2d 854, 862 (Tex.App.-Austin 1997), aff’d, 990 S.W.2d 732 (Tex.1998). Also, if a general contractor fails to take reasonable precautions when the independent contractor’s work involves an inherently dangerous activity, it will be held hable for the neghgence of the independent contractor. Restatement (second) of ToRts § 427. Importantly, despite the applicability of the “peculiar risk” and “inherently dangerous activity” exceptions, the general contractor will not be held vicariously ha-ble for an independent contractor’s negh-gence if: (1) the neghgence consists solely in the improper manner in which he does the work; (2) it creates a risk of such harm which is not inherent in or normal to the work; and (3) the employer had no reason to contemplate the neg-hgence when the contract was made. Restatement (second) on ToRts § 426; 427 cmt. d.

Considering relevant case law, we decline to hold that the transportation of utility poles is a “peculiarly risky” or “inherently dangerous activity.” Arlen v. The Hearst Corp., 4 S.W.3d 326, 328 (Tex.App.-Houston [1st Dist.] 1999, pet. denied) (declining to recognize the “peculiar risk” doctrine); Burton-Lingo Co. v. Armstrong, 116 S.W.2d 791, 796 (Tex.Civ.App.-Amariho 1938, writ ref d) (stating the hauling of “lumber and material with a motor-truck is not intrinsically dangerous”). Further, Victoria Electric could not have reasonably contemplated the new risk created by the actions of Urban and Baze that was not inherent had the poles been transported in the “ordinary or prescribed way.” See Restatement (second) on ToRts § 426; 427. We sustain Victoria Electric’s fifth, sixth, and eighth issues.

Franchise Exception

The trial court also held Victoria Electric vicariously liable under the franchise exception found in section 428 of the Restatement. Section 428 provides a general contractor carrying on an activity, “which can be lawfully carried on only under a franchise granted by public authority and which involves an unreasonable risk of harm to others,” is hable for the neghgence of its independent contractors. Restatement (second) of Torts § 428. The rule in section 428 does not apply to “the carrying on of activities which involve no special danger, and which could be lawfully carried on [ ] by private persons without liability for the misconduct of the contractors to whom they are entrusted.” Id. cmt. a. We decline to hold that the transportation of utility poles is an activity that can only be carried out under a franchise. See Tirres v. El Paso Sand Prods., Inc., 808 S.W.2d 672, 678 (Tex.App.-El Paso 1991, writ denied) (holding that oversize load permits are not analogous to franchise permits obtained from the Texas Railroad Commission or the Interstate Commerce Commission because “anyone, not just a common carrier, ... has a right, to obtain a special permit”). As such, the trial court erred in finding Victoria Electric vicariously liable under the franchise exception. We sustain Victoria Electric’s eighth issue.

Conclusion

We hold there is no evidence demonstrating Victoria Electric retained a right to control the activities causing Williams’s death. Further, we hold the transportation of utility poles is not a peculiarly risky activity, an inherently dangerous activity, or an activity that may only be lawfully carried out under a franchise. As such, we reverse the judgment of the trial court and render judgment in favor of Victoria Electric on all claims. We need not address Victoria Electric’s remaining issues.

Dissenting Opinion by: ALMA L. LÓPEZ, Justice, joined by PHIL HARDBERGER, Chief Justice, and CATHERINE STONE, Justice.

1 . The trial court made a separate finding that Victoria Electric admitted it had not delegated its contractual duties to Urban and Baze.

2 . Article II, which is labeled “Construction,” has six sections: (1) Time and Manner of Work; (2) Changes in Plans, Specifications and Drawings; (3) Supervision and Inspection; (4) Defective Workmanship; (5) Materials; and (6) Term of Contract.

3 . This last sentence has nothing to do with right of control. Rather, it is intended to clarify that when Victoria Electric gives directions or instructions to the Superintendent in the course of monitoring the work under the contract, that communication is equivalent to giving the instructions directly to Urban.

4 . Article IV, which is labeled “Particular Undertakings of the Contractor,” has four sections: (1) Protection to Persons and Property, (2) Insurance, (3) Bond, and (4) Delivery of Possession and Control to the Owner.

5 . Id. at 783-84 (stating “to evaluate LLC’s no-evidence challenge we must determine if the Harrisons presented more than a scintilla of evidence that LLC exercised actual control over safety’’).