A recurring question in the design and construction industry is, what is the liability attached to site observation visits?  Most design professionals, construction managers, and owners’ representatives include language in their contracts that they are not responsible for contractors’ means and methods or for assuring safe practices.  But do those provisions really cut off liability?  Is the end result that, regardless of what language is included in contracts, the person performing the site observation visit retains some liability for a contractor using improper means or methods, or creating an unsafe jobsite?  The Houston Court of Appeals recently answered this question.

1.     The Question (and Answer)

In Cynthia Garcia et al. v. Kellogg Brown & Root Services Inc. et al.[1], the Houston Court of Appeals was asked to decide whether an owner’s construction manager had legal responsibility for the death of an employee of a public works contractor, SJ Louis Construction (SJ Louis).  The Court answered the question “no”, the construction manager did not have that liability.

2.    The Project and Relationships

The project at issue was the installation of water transmission lines in Montgomery County, Texas.   The San Jacinto River Authority (the “River Authority”), the project owner, divided the work into 18 smaller parts and then subcontracted the parts to different public work contractors. One of those construction contractors was SJ Louis.  SJ Louis’s scope of work was to build a tunnel approximately 35 feet under Lake Creek in Magnolia.

To manage the 18 parts of the project, the River Authority separately contracted with Kellogg Brown & Root Services, Inc. (“KBR”) as “Construction Management and Inspection (CM&I) Consultant.” The River Authority paid KBR to provide general construction management, administration, and inspection services for the Project. The contract provided that KBR “shall work as an extension of [the River Authority’s] staff during the execution of its duties and responsibilities” and would “be subject to oversight, monitoring, and direction” by the River Authority.  KBR was not a party to the contract between the River Authority and SJ Louis.

3.    The Accident

Gilberto Garcia (“Gilberto”) was operating a tunnel-boring machine on behalf of SJ Louis when a conveyor belt unexpectedly “jumped,” striking Gilberto in the head and pinning him to the side wall. He was pronounced dead at the scene.  OSHA investigated the accident and found that the conveyor on the tunnel-boring machine was unstable. It determined that this was a “serious” violation of the applicable regulation, stating that “[t]he employer [did] not ensure that all conveyors in use [met] the applicable requirements for design, construction, inspection, testing, maintenance, and operation.”

4.    The Lawsuit

Gilberto’s widow, Cinthia Garcia, filed a wrongful-death suit against KBR and others alleging negligence, negligence per se, and gross negligence resulting in Gilberto’s death. Garcia asserted that KBR breached its duty to Gilberto by failing to provide adequate safety equipment, failing to warn of improper conditions, failing to comply with applicable safety standards, statutes, and regulations, failing to properly train and supervise its employees, providing negligent instructions and orders, and failing to maintain a safe premises.

KBR moved for summary judgment against Garcia, asserting that it had no contractual relationship of any kind with Gilberto or SJ Louis.  The trial court granted KBR’s motion, setting in motion to appeal to the Houston Court of Appeals.

5.   The Liability (None)

The primary factor in the Houston Court of Appeals deciding that KBR did not have legal liability for Gilberto’s death was the language in the contracts between the parties.  Even though the contract between River Authority and KBR stated that KBR would provide general construction management, administration, and coordination of policies and procedures to be implemented on the Project, the Court, interpreting the contract as whole, held such provisions “did not obligate KBR to ensure the safety of the construction work nor did it grant KBR a right of control over the work of the construction contractors.”

The Court specifically referenced the following boiler-plate provision in KBR’s contract.

[KBR] shall not control or have charge of, and shall not be responsible for Construction Contractor construction means, methods, techniques, sequences, procedures of construction, health or safety programs or precautions connected with the work and shall not manage, supervise, control or have charge of construction.

The Court also found that the River Authority’s contract with SJ Louis specifically provided that KBR did not have control over the way in which SJ Louis conducted its work, to wit.

Contractor [SJ Louis] shall be responsible for initiating, maintaining and supervising all safety precautions and programs in connection with the Work. Prior to commencement of the Work, Contractor shall submit a site security plan for approval by Owner [the River Authority]. By reviewing the plan or making recommendations or comments, Owner will not assume liability nor will Contractor be relieved of liability for damage, injury or loss…

In the Court’s opinion, KBR had no duty to keep Gilberto safe since the contractual relationship between KBR and the River Authority “precluded KBR from controlling the manner and means of Gilberto’s work.” That control was, instead, vested in Gilberto’s employer, SJ Louis.  In language reminiscent of the Texas Supreme Court’s analysis of a “web of contracts” and risk shifting provisions in LAN/STV, the Garcia Court reasoned that, “it would be unreasonably burdensome to entities in KBR’s position, and would undermine the parties’ contractually-agreed roles and risk allocation, to recognize the duty that Garcia asserts here.” The Court found that KBR’s role was one to inspect and report and not to control aspects of construction, and as such, KBR owed no duty to Gilberto.

6.    Garcia’s Impact

Design professionals, construction managers, and owner’s representatives are frequently joined to lawsuits because of alleged failures to observe and document deficiencies in the operations or means and methods employed at the jobsite.  The Garcia opinion offers both assurance and a warning.

On one hand, courts (or at very least one of two Houston Courts of Appeal) will enforce unambiguous contract language and will look to risk shifting provisions in the “web of contracts” to determine who owes duties to whom.  On the other hand, allocation of risk should be carefully and properly considered during the contract negotiation process.  An unsuspecting designer, construction manager or the like may, by signing an agreement that eliminates or materially changes some of the risk shifting language, find itself without the protection the Garcia Court has seemingly provided.

It is always advisable to consult with counsel when negotiating contracts or determining the enforceability or legal impact of contractual provisions.  The attorneys in our Austin and Dallas offices are available to answer any questions you may have.  Please don’t hesitate to contact us at info@gstexlaw.com.

 

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