Who Should Get Burned By Bruce’s Torch?

On Sept. 1, 2011, the Tennessee Supreme Court is set to hear oral arguments in a very significant case. At issue: whether vicarious liability will be imposed on an employer for the negligence of an independent contractor.

We all know the general rules in a post-McIntyre world. Ordinarily, each party to a tort case is responsible only for his, her or its conduct. The principle exception to this rule is the concept of vicarious liability, which wisely recognizes that those who employ others to carry on their business are responsible for the negligent acts and omissions of those employees. In this way, the cost of negligence is passed on to those who profit from the activity being engaged in at the time of the negligent act. Thus, employers have a financial incentive to carefully hire, train and supervise their employees.

Independent contractors are not considered employees. The general rule is that one who employs an independent contractor is not liable for the negligence of the contractor. This rule “is so riddled with exceptions that it is only applied when the courts cannot find a good reason to ignore it,”[1] and a case on the court’s Sept. 1 oral argument docket provides another opportunity for common sense and sound public policy to trump the general rule.

In Federal Insurance Company v. Winters,[2] the plaintiff’s insureds hired defendant roofing contractor to replace the roof on their home. Defendant advertised that he had liability insurance. Without the homeowner’s knowledge, defendant employed a sub-contractor (Bruce) to do the work because he (the defendant) was not capable of doing a project of that size. A propane torch used by Bruce on the project caused a fire that destroyed the home. The employer denied responsibility for Bruce’s work, citing the general rule and pointing out that he did not supervise Bruce’s work or otherwise control the his activities (thus carefully side-stepping other potential exceptions to the general rule).

You see the problem. If the Tennessee Supreme Court determines that the general rule applies and does not impose liability on the defendant, plaintiff will be forced to look to the sub-contractor for compensation. Presumably, Bruce has no money, and thus the homeowners and their insurance company will bear the $800,000 loss caused by the fire.

The Tennessee Supreme Court should adopt the position of the American Law Institute on this issue, and hold the defendant vicariously liable for the negligence of the sub-contractor. The court should be guided by Section 65 of the Restatement of the Law Third, Torts: Liability for Physical and Emotional Harm, which provides as follows:

An actor who hires an independent contractor to perform services is subject to vicarious liability for physical harm if: (a) the services are accepted in the reasonable belief that the actor or the actor’s employees are rendering the services, and (b) the independent contractor’s negligence is a factual cause of harm to one who receives the services and such harm is within the scope of liability.[3]

This comment provides more guidance for application of the rule:

The rule in this Section, then, can be viewed as an application of the principle of apparent authority in contexts involving physical harm by an independent contractor. Apparent agency can be established by any set of circumstances under which it is reasonable for a third party to believe that the person has authority to act for another, so long as that belief is traceable to manifestations by the other.[4]

Federal Insurance Company v. Winters has perfect facts for the application of Section 65. Defendant accepted the work knowing he did not have the expertise to do it. He hired an independent contractor to fulfill his obligation to the homeowners, but did not tell them he was doing so. Likewise, the homeowners were unaware that Bruce was not an employee of the defendant.

Common sense and sound public policy mandate that the court hold the defendant vicariously liable for the negligence of the independent contractor. First, on this type of project, homeowners hire contractors, not sub-contractors. To be sure, super-sophisticated corporations with large projects have the leverage to demand certain sub-contractors. But most homeowners lack that kind of economic power, and thus hire contractors with the expectation that they will do the work themselves.

Second, contractors like the defendant in this case have the opportunity to greatly minimize, if not eliminate, their risk of economic loss because of the acts or omissions of sub-contractors. At the outset, employers can use appropriate care in selecting sub-contractors. Employers can supervise sub-contractors, not just to keep the project on track but also insist upon safe, responsible practices. Employers can insist that their sub-contractors have an appropriate level of liability insurance. Employers can purchase liability insurance to protect themselves in the event a negligent sub-contractor is under-insured.

And, last but not least, the employer in this type of case can refuse to take on work he lacks the expertise to do, thus permitting the homeowner to make a judgment about the workmanship and responsibility of the person hired to actually perform the work.

If anyone other than Bruce should be burned by his torch, it should be the person who put him on the job without the knowledge or consent of the homeowner. A primary goal of the civil justice system is to impose liability and financial responsibility in proportion to fault, and in this case there is no reason to force the burden of Bruce’s conduct on the homeowners or their insurer. Section 65 of the Restatement Third provides the vehicle to impose liability where it should be imposed.

Notes

  1. Waggoner Motors v. Waverly Church of Christ, 159 S.W.3d 42, 53 (Tenn. Ct. App. 2004), citing Restatement (Second) of Torts, § 409 cmt. b.
  2. No. E2009-02065-COA-R3-CV (Tenn. Ct. App. Oct. 18, 2011).
  3. This section is in publication as Tentative Draft No. 7 (April 22, 2011). However, on May 16, 2011 the draft received the approval of the membership of the American Law Institute at its annual meeting in San Francisco, California. Section 65 is very similar to Section 429 of the Restatement (Second) of Torts, cited with approval in Boren ex rel. Boren v. Weeks, 251 S.W.3d, 426, 436 (Tenn. 2008).
  4. Restatement of the Law Third, Torts: Liability for Physical and Emotional Harm, Section 65 cmt (b) (citation omitted).

John A. Day JOHN A. DAY, is a trial lawyer in Brentwood, Tennessee. He wishes he could find a way to avoid responsibility for his acts, but has neither a lobbyist nor a political action committee.