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General Contractor Liability for Subcontractor Negligence

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Scott A. Storey
Foster Swift Construction Law News
February 2008

Once upon a time, property owners and general contractors could not be held liable for the negligence of independent subcontractors or their employees. However, as the use of subcontractors increased and subcontractors retained their own subcontractors, those suffering damage due to subcontractor negligence found it harder and harder to find someone to sue who was both solvent and responsible. Thus, the courts developed theories under which owners or general contractors could be held liable for the negligence of subcontractors. These theories usually were grounded on the amount of control retained by the owner or general contractor over the work being done. In 2004, the Michigan Supreme Court announced its decision in Ornsby v Capital Welding, which went a long way toward clarifying the circumstances under which an owner or general contractor may be held liable for the negligence of subcontractors or their employees.

The Ornsby case arose out of a construction accident that occurred during the construction of a Rite Aid store in Troy, Michigan. The owner of the project, Rite Aid, hired general contractor, Monarch Building Services. Monarch subcontracted the steel fabrication and erection to Capital Welding. Capital Welding then subcontracted the steel erection work to Abray Steel Erectors. Ralph Ornsby, an employee of Abray, was injured when part of the structure collapsed due to overloading unsecured joists with bundles of steel decking. Mr. Ornsby was limited to workmen’s compensation benefits from his employer, Abray. Therefore, he sued Monarch and Capital Welding, arguing that these contractors had "retained control" over, and had negligently supervised the construction project.

The Supreme Court rejected application of the "retained control" rule to general contractors. Rather, the Court applied a three part "common work area" rule to determine general contractor liability. Under this rule, a general contractor, like Monarch may be found liable if (1) the contractor failed to take reasonable steps within its supervisory and coordinating authority, (2) to guard against observable and avoidable dangers, (3) that create a high degree of risk to a significant number of workers in a common work area. The determination of what constitutes "reasonable steps", "observable and avoidable dangers", "high degree of risk", and "significant number of people" are likely to be subjective assessments made on a case by case basis.

Owners, such as Rite Aid, will still be subject to the "retained control" rule. Where the owner retains sufficient control over the work to have an actual effect on the method or conditions under which work is performed, it will assume the duties and liabilities of a general contractor. Thus, where the owner has "retained control", it will be subject to the three part "common work area" rule.

Under these rules, there may be circumstances where there is both a general contractor and an owner with retained control, and both may be found liable. In such a case, the jury will apportion liability according to the relative fault it assigns to each.

A surprise "winner" in the Ornsby case appears to be the subcontractor. The Supreme Court ruling (and a subsequent unpublished ruling by the Michigan Court of Appeals) suggests that a subcontractor, even a subcontractor like Capital Welding, that hires its own subcontractors, will not be subject to "common work area" liability for the negligence of its subcontractors.