TOLAND v. SUNLAND HOUSING GROUP INC

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Court of Appeal, Third District, California.

Timothy TOLAND, Plaintiff and Appellant, v. SUNLAND HOUSING GROUP, INC., Defendant and Respondent.

No. C019163.

Decided: December 04, 1995

Hefner, Stark & Marois, Robert P. Biegler, and Stephen S. Talt, Sacramento, for Plaintiff and Appellant. Shepard & Haven, Sacramento, Karen E. Halbo, San Jose, and Kenneth B. Shepard, Sacramento, for Defendant and Respondent.

A landowner who employs a contractor to do work on the property generally is not liable for the contractor's negligence.   Two exceptions to this rule arise when (1) the work involves a peculiar risk, a recognizable danger arising out of the work, that results in injuries (Rest.2d Torts, §§ 413, 416) or (2) the landowner retains control over the work (Rest.2d Torts, § 414).

Peculiar risk liability has been characterized as either (1) direct, because the landowner failed to take special precautions against the risk (Rest.2d Torts, § 413), or (2) vicarious, because the landowner's duty to take special precautions is nondelegable (Rest.2d Torts, § 416).   Application of the peculiar risk doctrine insures that the enterprise that created the risk will, as a cost of doing business, pay for any injuries the enterprise causes to innocent bystanders and neighboring landowners.  (See Privette v. Superior Court (1993) 5 Cal.4th 689, 694–696, 21 Cal.Rptr.2d 72, 854 P.2d 721.)   In 1962, the California Supreme Court extended recovery under the peculiar risk doctrine to contractors' employees injured on the job.  (Woolen v. Aerojet General Corp. (1962) 57 Cal.2d 407, 410–411, 20 Cal.Rptr. 12, 369 P.2d 708.)

In Privette, supra, the Supreme Court retreated from its earlier expansion of the peculiar risk doctrine.   It announced that a landowner cannot be held liable for injuries to a contractor's employee under the peculiar risk doctrine because “the workers' compensation system of recovery regardless of fault achieves the identical purposes that underlie recovery under the doctrine of peculiar risk.”  (Id. at p. 701, 21 Cal.Rptr.2d 72, 854 P.2d 721.)   Privette reconciled the peculiar risk doctrine with the workers' compensation system (an undertaking Dean Prosser deemed necessary on a state-by-state basis) and overruled more than 30 years of Supreme Court precedent.   (Id. at pp. 699, 701–702, fn. 4, 21 Cal.Rptr.2d 72, 854 P.2d 721;  39 A.L.I.Proceedings 256 (1963), quoted in Peone v. Regulus Stud Mills, Inc. (1987) 113 Idaho 374, 377, 744 P.2d 102.)

Before Privette's first birthday, the Court of Appeal, Fifth Appellate District, purporting to explain the intent of Privette, held that a contractor's employee could recover from the landowner for injuries resulting from a peculiar risk if the landowner's liability could be characterized as “direct” (Rest.2d Torts, § 413) because the landowner failed to provide for special precautions against the peculiar risk.  (Owens v. Giannetta–Heinrich Construction Co. (1994) 23 Cal.App.4th 1662, 1667–1668, 29 Cal.Rptr.2d 11.)   Since then, the Ninth Circuit of the United States Court of Appeals has relied on Owens as declaring California law.  (Yanez v. U.S. (1995) 63 F.3d 870, 873.)

We disagree with Owens 's conclusion.   Both the express language of Privette and a complete reconciliation of the peculiar risk doctrine with the workers' compensation system preclude a landowner's liability for injuries to the employee of a contractor hired by the landowner resulting from work involving a peculiar risk, whether the liability is characterized as direct or vicarious.

In addition, we conclude Privette abrogates liability under section 414 of the Restatement Second of Torts for work-related injuries to the contractor's employee, even though the landowner retains control over the work.   The same reason that precludes peculiar risk liability, namely, its conflict with the workers' compensation system, precludes liability under section 414.

FACTS AND PROCEDURE

The plaintiff, Timothy Toland, was injured when a wall frame fell on him while he was working for CLP Construction, Inc. (CLP), the framing subcontractor in a housing subdivision owned by the defendant, Sunland Housing Group, Inc. (Sunland).  Toland, a journeyman carpenter, was assisting several other CLP employees in raising a framed wall into place at one of the homes in the Sunland subdivision.   Under the direct supervision of the CLP foreman, Paul Holiday, they were raising the wall manually by placing the bottom of the wall in place with the frame lying on the ground and lifting the wall by walking under it until it was perpendicular to the ground.   Due to the wall's weight, the CLP employees were unable to get it into place, and it fell back on Toland, seriously injuring him.

At the time of the accident, conditions were muddy and wet, with rain threatening.   The wood in the frame was wet and, therefore, heavier than normal.   Holiday speculated a gust of wind may have pushed the wall down, causing the accident.

The contract between Sunland and CLP provided, in part:  “Builder [Sunland] shall have complete control of the Project and shall have the right to decide the time and order in which the various portions of the Project shall be done and priority of the work of other contractors and subcontractors and all matters concerning the timely and orderly conduct of the Work of the Subcontractor [CLP].”

In addition, the contract provided 96 specific details on how things were to be.   For example, one of the requirements was stated as follows:  “When erecting, hoist trusses into position with cables or spreader bars secured at designated lift points exercising care to keep out-of-place bending to a minimum.”   Nothing in the contract governed the way wall frames were to be erected.

Also, Sunland employed supervisors at the subdivision site to schedule the subcontractors' work, handle any problems, check the quality of the work, and meet weekly with the subcontractors to oversee the work and its scheduling.   The Sunland supervisors discussed safety with the subcontractors during the weekly meetings.

The notes taken at these weekly meetings reveal Sunland sometimes pushed the subcontractors to get their work done, especially to beat bad weather, although none of the notes indicates Sunland pushed CLP to get work done.   In the notes of a meeting held four months before the accident, the following notation was made:  “I will give everyone plenty of time to do their work.   If, for some reason, you stop my production schedule or continue to ignore my requests, I will hold your money on the 25th.   It can be done for 2 hours, 2 days for [sic ] 2 weeks!”

CLP's foreman, Paul Holiday, testified in a deposition he was the one who determined whether to cease work due to rain, although the Sunland supervisor, Randy Stout, could order CLP off the job due to rain.   In addition, Holiday considered Randy Stout his “boss” in the sense Stout could ask that things be done and Holiday would be required to have them done.

Toland sued Sunland, alleging two theories of liability.   First, the raising of the wall created a peculiar risk for which Sunland failed to take special precautions.   And second, Sunland exercised control over the details of the work and therefore owed a duty to assure the wall was raised safely.   The trial court granted summary judgment in favor of Sunland.   On Toland's appeal, we conclude Toland cannot recover under either theory because such recovery conflicts with the workers' compensation system.

DISCUSSION

IReconciliation of the Peculiar Risk Doctrine and the Workers' Compensation System

The peculiar risk doctrine 1 is described in two sections of the Restatement Second of Torts.2  Section 413, which imposes what Owens referred to as “direct liability” (23 Cal.App.4th at p. 1667, 29 Cal.Rptr.2d 11), states liability arises when the landowner fails to exercise reasonable care in providing for special precautions.3  Section 416, which imposes what Owens referred to as “vicarious liability” (ibid.), makes the landowner liable for injuries resulting from a peculiar risk regardless of whether the landowner provided for special precautions.4

 The peculiar risk doctrine allows innocent bystanders and neighboring landowners to recover from a landowner who hires a contractor to perform work involving a peculiar risk and that risk results in injury to the innocent bystander or neighboring landowner.  (Privette, supra, 5 Cal.4th at p. 696, 21 Cal.Rptr.2d 72, 854 P.2d 721.)   As chronicled in Privette, the Supreme Court expanded the peculiar risk doctrine to include the landowner's liability for injuries to a contractor's employee:  “Gradually, the peculiar risk doctrine was expanded to allow the hired contractor's employees to seek recovery from the nonnegligent property owner for injuries caused by the negligent contractor.   California is among the minority of jurisdictions that has adopted this view.   We applied this expansion of the doctrine for the first time in Woolen [, supra,] 57 Cal.2d [at pp.] 410–411, [20 Cal.Rptr. 12, 369 P.2d 708], seeing ‘no reason to hold otherwise.’ ”  (Privette, supra, 5 Cal.4th at p. 696, 854 P.2d 721.)

Directly confronting the issue for the first time (Privette, supra, 5 Cal.4th at p. 691, 21 Cal.Rptr.2d 72, 854 P.2d 721), the Privette court overruled Woolen and its progeny, holding those cases conflicted with the workers' compensation system.  “When ․ the injuries resulting from an independent contractor's performance of inherently dangerous work are to an employee of the contractor, and thus subject to workers' compensation coverage, the doctrine of peculiar risk affords no basis for the employee to seek recovery of tort damages from the person who hired the contractor but did not cause the injuries.”  (Id. at p. 702, 21 Cal.Rptr.2d 72, 854 P.2d 721.)

Faced with a section 413 “direct” liability case in which a contractor's employee was injured, the Court of Appeal, Fifth Appellate District, labeled Privette as a case of section 416 “vicarious” liability and distinguished it, thereby allowing peculiar risk liability because the landowner did not provide for special precautions against the peculiar risk.   (Owens, supra, 23 Cal.App.4th at pp. 1667–1668, 29 Cal.Rptr.2d 11.)   Other than quoting a footnote,5 Owens made no attempt to justify its label for Privette or the different treatment between section 413 cases and section 416 cases, except by saying:  “It is plain from the discussion in Privette that the Supreme Court intended its holding to apply only in those situations where the third party liability is vicarious rather than direct.”  (Id. at p. 1668, 29 Cal.Rptr.2d 11.)

Faced with the challenge of applying California's peculiar risk doctrine, the Ninth Circuit of the United States Court of Appeals recognized Owens as a “narrow exception to Privette․” 6  (Yanez, supra, 63 F.3d at p. 873.)   Dissenting, Judge Noonan disagreed section 413 liability for injuries to contractors' employees survived Privette and called Owens a “maverick misreading of the Supreme Court of California.”  (Id. at p. 877 (Noonan, J., dissenting).)

We cannot join in Owens 's interpretation of Privette for three reasons.

First, Privette expressly overruled Woolen, and Woolen involved only section 413 liability.   The identification of Woolen as the seminal case in the expansion of peculiar risk recovery from a “nonnegligent property owner” is instructive in our effort to discern the Supreme Court's intent.   (Privette, supra, 5 Cal.4th at p. 696, 21 Cal.Rptr.2d 72, 854 P.2d 721.)   Woolen was not a vicarious liability case in the section 416 sense.   Woolen cited and relied on section 413, the direct peculiar risk liability provision:  “The applicable rule is set forth in section 413 of the Restatement of Torts․”  (Woolen, supra, 57 Cal.2d at p. 410, 20 Cal.Rptr. 12, 369 P.2d 708.)   Thus, when the Privette court referred to Woolen as the seminal case in adoption of peculiar risk liability against “nonnegligent property owner[s],” it did not mean that it was referring only to section 416 liability.   The only interpretation that makes sense is that the Privette court was referring to the peculiar risk doctrine generally, which includes liability under both section 413 and section 416.

Privette stated:  “[W]hen considered in light of the various goals that the workers' compensation statutes seek to achieve, our conclusion in Woolen v. Aerojet General Corp., supra, 57 Cal.2d 407, 20 Cal.Rptr. 12, 369 P.2d 708, that peculiar risk liability should extend to the employees of the independent contractor, does not withstand scrutiny.”  (Privette, supra, 5 Cal.4th at pp. 701–702 and fn. 4, 21 Cal.Rptr.2d 72, 854 P.2d 721.)

Second, the Privette court announced its intent to “join the majority of jurisdictions in precluding [recovery by contractors' employees] under the doctrine of peculiar risk.”  (Privette, supra, 5 Cal.4th at p. 692, 21 Cal.Rptr.2d 72, 854 P.2d 721.)   None of the cases from other jurisdictions cited in Privette makes a distinction between section 413 and section 416 when precluding recovery by contractors' employees under the peculiar risk doctrine.  (See, e.g., Welker v. Kennecott Copper Co. (1965) 1 Ariz.App. 395, 400–404, 403 P.2d 330 [expressly rejecting liability for injuries to contractor's employee under sections 413 and 416].)

We have found no case other than Owens that imposes liability on the landowner for injuries to a contractor's employee under section 413 while sparing the landowner when liability is based on section 416.   Instead, that distinction has been expressly rejected.  (Matteuzzi v. Columbus Partnership, L.P. (Mo.1993) 866 S.W.2d 128, 131–132;  see also Stockwell v. Parker Drilling Co. (Wyo.1987) 733 P.2d 1029, 1030–1032.)

Third and finally, the facts recounted in Privette do not reveal whether the landowner took any special precautions against the peculiar risk;  therefore, we do not know whether the facts gave rise to liability under section 413 or section 416.   The Supreme Court apparently did not believe it was significant to identify, factually, the type of peculiar risk liability involved.

Owens appears to rely on Privette's use of the terms “vicarious liability” and “nonnegligent property owner” to distinguish Privette.   The Privette court stated:  “Gradually, the peculiar risk doctrine was expanded to allow the hired contractor's employees to seek recovery from the nonnegligent property owner for injuries caused by the negligent contractor.”   (5 Cal.4th at p. 696, 21 Cal.Rptr.2d 72, 854 P.2d 721, italics added.)   And later:  “[T]o impose vicarious liability for tort damages on a person who hires an independent contractor for specialized work would penalize those individuals who hire experts to perform dangerous work rather than assigning such activity to their own inexperienced employees.”  (Id. at p. 700, 21 Cal.Rptr.2d 72, 854 P.2d 721, italics added.)  Owens concluded:  “It is plain from the discussion in Privette that the Supreme Court intended its holding to apply only in those situations where third party liability is vicarious rather than direct.”  (23 Cal.App.4th at p. 1668, 29 Cal.Rptr.2d 11.)

 We do not draw the same conclusion from Privette's use of these terms.   It is common and correct to refer to peculiar risk liability, even under section 413, as vicarious liability.  (See, e.g., Wagner v. Continental Cas. Co. (1988) 143 Wis.2d 379, 391, 421 N.W.2d 835 [“Sections 413 and 416 ․ impose vicarious liability on a principal employer for the negligence of the independent contractor.”].)   When the injury occurs, the work has been turned over to the contractor and the injury would not have occurred had the contractor fulfilled its own duty of care to take special precautions.

Privette, itself, explains why peculiar risk liability under either section 413 or section 416 is vicarious liability:  “The conclusion that peculiar risk is a form of vicarious liability is unaffected by the characterization of the doctrine as ‘direct’ liability in situations when the person hiring an independent contractor ‘fails to provide in the contract that the contractor shall take [special] precautions.’  (Rest.2d Torts, § 413;  see Aceves v. Regal Pale Brewing Co. [ (1979) 24 Cal.3d 502,] 509, [156 Cal.Rptr. 41, 595 P.2d 619];  Griesel v. Dart Industries, Inc. (1979) 23 Cal.3d 578, 585–586, [153 Cal.Rptr. 213, 591 P.2d 503].)   Irrespective of whether a contract of hire provides that special precautions be taken, a person who employs an independent contractor to perform dangerous work is subject to liability under the doctrine of peculiar risk.  (Rest.2d Torts, § 416.)   Thus, peculiar risk liability is normally premised on the broader rule of vicarious liability for the contractor's negligence.   [Citations.]”  (Privette, supra, 5 Cal.4th at p. 695, fn. 2, 21 Cal.Rptr.2d 72, 854 P.2d 721.)

For these reasons, we conclude Privette made no distinction between section 413 liability and section 416 liability.   It precluded liability for injuries to contractors' employees resulting from a peculiar risk, without regard to whether liability would arise under section 413 or section 416.   Because Privette expressly overruled Woolen, we conclude the Supreme Court fully retreated from application of the peculiar risk doctrine when the injured party is a contractor's employee, regardless of whether liability arises under section 413 or 416.   Consequently, we are bound to apply Privette in that manner.  (Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 455, 20 Cal.Rptr. 321, 369 P.2d 937.) 7

II

Section 414 Liability and The Workers' Compensation System

 Toland also alleges Sunland is liable because it retained control over the work.   This allegation is based on section 414, which states:  “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.”   (See also Austin v. Riverside Portland Cement Co. (1955) 44 Cal.2d 225, 232–233, 282 P.2d 69;  Holman v. State of California (1975) 53 Cal.App.3d 317, 331–332, 124 Cal.Rptr. 773.)   As we shall explain, Toland's contention fails for two independent reasons.

 First, for the purpose of common law liability under section 414, sufficient control of the specific operation taking place at the time of the accident was absent in this case.  “The existence of a duty of care by an employer of an independent contractor towards his contractor's employees and others on the job requires an additional element:  the retention of a certain degree of control by the employer over that part of the work which caused the injury.”  (Holman v. State of California, supra, 53 Cal.App.3d at p. 333, 124 Cal.Rptr. 773, italics added.)   Sunland did not tell CLP how or when to raise the wall.   It only required CLP, generally, to meet its schedule.   There is no indication Sunland directed CLP to lift the wall into place manually instead of using machinery or that CLP lifted the wall manually because Sunland was pressing to get the work done.   While Toland shows Sunland generally controlled the work and schedule as the general contractor and specifically mandated other tasks to be done in a certain manner, Toland does not have evidence Sunland directed CLP to raise the wall at a specific time and without machinery.   Sunland supervisors were present at the subdivision when the accident took place, but only CLP employees were on the lot.   Indeed, there is no indication any Sunland employee knew how and when CLP was lifting the wall into place.   Thus, Sunland's control was insufficient to give rise to a duty of care owed to Toland under section 414.

 Second, and more importantly, reconciling section 414 with the workers' compensation scheme precludes a landowner's liability for a work-related injury to the employee of a contractor hired by the landowner.   In Privette, the Supreme Court dealt for the first time with this type of reconciliation:  “Until today, we have had no occasion to attempt to reconcile our decision in Woolen with the provision of the workers' compensation scheme limiting employer liability for an employee's work-related injury to providing workers' compensation coverage.”  (Privette, supra, 5 Cal.4th at p. 700, 21 Cal.Rptr.2d 72, 854 P.2d 721.)

While the Supreme Court expressly held, in Woolen, that the word “others” in section 413 included contractors' employees, it has never directly dealt with the issue of whether section 414 should apply when the injured party is a contractor's employee.   Although it relied on section 414 in Austin v. Riverside Portland Cement Company, supra, 44 Cal.2d at pages 232–233, 282 P.2d 69, a case involving a contractor's employee, it gave no reason for doing so.   The court apparently assumed section 414 applied under the circumstances.

Later, the Supreme Court, citing Austin, stated:  “This court has held that employees of an independent contractor come within the word ‘others' as used in sections 413, 414, and 428 of the Restatement of Torts․”  (Van Arsdale v. Hollinger (1968) 68 Cal.2d 245, 254, 66 Cal.Rptr. 20, 437 P.2d 508.)  Van Arsdale, however, dealt only with liability under section 416 and was overruled in Privette.  (Privette, supra, 5 Cal.4th at pp. 696 & 702, fn. 4, 21 Cal.Rptr.2d 72, 854 P.2d 721.)   Thus, there exists no definitive reasoning by the Supreme Court that “others,” as used in section 414, includes contractors' employees.

More specifically, the Supreme Court has never determined whether including contractors' employees in the common law definition of the word “others” in section 414 conflicts with the workers' compensation scheme.   According to Privette, however, the courts must address this potential conflict between the common law and legislation.  (Privette, supra, 5 Cal.4th at p. 691, 21 Cal.Rptr.2d 72, 854 P.2d 721.)   We conclude there is a conflict and, like sections 413 and 416, section 414 must yield to the statutory workers' compensation scheme.

Privette taught:  “When an independent contractor causes injury to the contractor's own employee, the Act's ‘exclusive remedy’ provision shields the contractor from further liability for the injury.   Yet, under the expansive view of the peculiar risk doctrine that has been adopted in California and a minority of other jurisdictions, the person who hired the independent contractor can, for the same injury-causing conduct of the contractor, be held liable in a tort action for the injuries to the contractor's employee.   Because this expansive view produces the anomalous result that a nonnegligent person's liability for an injury is greater than that of the person whose negligence actually caused the injury, it has been widely criticized.”   (Privette, supra, 5 Cal.4th at p. 700, 21 Cal.Rptr.2d 72, 854 P.2d 721.)   Holding the landowner liable in tort under section 414 produces the same “anomalous result.”  (Yanez, supra, 63 F.3d at p. 876 (Noonan, J., dissenting).)   The landowner's liability “is greater than that of the employer whose negligence also caused the employee's injury.”  (Ibid.)

In the past, the Supreme Court has not interpreted differently the word “others” as found in sections 413, 414, and 416.  (Van Arsdale v. Hollinger (1968) 68 Cal.2d 245, 66 Cal.Rptr. 20, 437 P.2d 508.)   Before Privette, “others” included contractors' employees;  now it does not.

Privette cited with approval a special note in a tentative draft of the Restatement Second of Torts.   The note stated:  “The other class of plaintiffs not included in this Chapter [which includes section 414] 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.  [¶]  Again, when the Sections in this Chapter speak of liability to ‘another’ or ‘others,’ or to ‘third persons,’ it is to be understood that the employees of the contractor, as well as those of the defendant himself, are not included.”  (Rest.2d Torts, Special Note to ch. 15, (Tent.Draft. No. 7, 1962), pp. 17–18, quoted in King v. Shelby Rural Elec. Co-op. Corp. (Ky.1973) 502 S.W.2d 659, 662.)

Although Privette mentioned other justifications for retreating from peculiar risk liability when the injured party is a contractor's employee (5 Cal.4th at pp. 698–699, 21 Cal.Rptr.2d 72, 854 P.2d 721), it relied mainly on the fact that the peculiar risk doctrine and the workers' compensation system serve the same purpose and, therefore, recovery under the peculiar risk doctrine advances no societal purpose.  (Id. at p. 692, 21 Cal.Rptr.2d 72, 854 P.2d 721.)   Consistent with Privette, we focus on the relationship between the purpose of section 414 liability and the purpose of the workers' compensation system.

Comment a to section 414 provides:  “If the employer of an independent contractor retains control over the operative detail of doing any part of the work, he is subject to liability for the negligence of the employees of the contractor engaged therein, under the rules of that part of the law of Agency which deals with the relation of master and servant.   The employer may, however, retain a control less than that which is necessary to subject him to liability as master.   He may retain only the power to direct the order in which the work shall be done, or to forbid its being done in a manner likely to be dangerous to himself or others.   Such a supervisory control may not subject him to liability under the principles of Agency, but he may be liable under the rule stated in this Section unless he exercises his supervisory control with reasonable care so as to prevent the work which he has ordered to be done from causing injury to others.”

From this comment, we learn two things about section 414.   First, it is another vicarious liability provision, a variation of respondeat superior.   If the landowner retains control, the master-servant rules apply, making the landowner liable for the negligence of contractors' employees.   And second, the landowner is not treated as an employer of the contractors' employees for purposes of liability to “others” for injury if only supervisory control is retained.

When this rule is applied to make the landowner liable for work-related injuries to the employee of a contractor hired by the landowner, it is the very antithesis of the workers' compensation scheme.   The landowner who retains control is liable because retaining control makes the relationship between the landowner and the contractor's negligent employee more like an employment or master-servant relationship.   Therefore, while the workers' compensation scheme provides compensation to an injured employee and shields the employer from tort liability, section 414 imposes liability on the landowner for retaining control over the employee's work, that is, for acting like an employer.   While the cost of workers' compensation insurance is included in the contract price paid by the landowner, the protection from tort liability is not if contractors' employees are included in the word “others” in section 414.

The workers' compensation system serves the same purpose as section 414 liability when an employee of a contractor is injured.   It imposes statutory liability for injuries caused by the work of the enterprise regardless of fault.   It represents a public policy determination that fault is abandoned in favor of liability of the enterprise for injuries resulting from its work.   Compensation for work injuries, therefore, is a cost of doing business.   Through mandatory compensation for work-related injuries, the enterprise, including the landowner who pays for the workers' compensation indirectly by an increased contract price, takes financial responsibility for any injuries occurring to employees of the contractor doing the work of the enterprise.

“Where the reason is the same, the rule should be the same.”  (Civ.Code, § 3511.)   Since the workers' compensation system and section 414 liability serve the same purpose when the employee of a contractor is injured, they must be reconciled.   The Restatement Second of Torts did not attempt this reconciliation because each state has a different workers' compensation scheme, adopted by statute.   Dean Prosser, the reporter of the Restatement, advised, with respect to peculiar risk liability, “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), quoted in Peone v. Regulus Stud Mills, supra, 113 Idaho at p. 377, 744 P.2d 102.)

“We have to search for the mechanism of our law in life as it actually is, rather than fit the life we live to a priori rules of rigid legal system.”   (Laski, The Basis of Vicarious Liability (1916) 26 Yale L.J. 105, 113, fn. omitted, quoted in Comment, Liability to Employees of Independent Contractors Engaged in Inherently Dangerous Work:  A Workable Workers' Compensation Proposal (1980) 48 Fordham L.Rev. 1165, 1169, fn. 15.) 8  The statutory workers' compensation system, by which the courts are bound, provides the means for an enterprise to compensate a worker injured in that enterprise.   The common law, including section 414 liability, must adapt to complement rather than subvert legislative enactments.  (See Civ.Code, § 4.)   Since the purpose of the Workers' Compensation Act and section 414 liability are the same, section 414 must yield to the statutory workers' compensation scheme.

This trend, including Privette, is not an expansion of the workers' compensation system.   Instead, it is a retrenchment from a common law theory of liability that is no longer needed because the Legislature has provided the employee a remedy under the circumstances.

The practical ramifications of allowing common law liability to continue to invade the legal space allocated to workers' compensation were the foundation of the holding in Privette and compel the result we reach here.   Contractors' employees cannot recover in tort from landowners under the peculiar risk doctrine (§§ 413, 416) and section 414 for work-related injuries because imposition of such liability is both unfair and unwise—unfair because the landowner pays for workers' compensation insurance as part of the contract price and unwise because the prospect of tort liability discourages the landowner from hiring contractors with expertise in completing the work safely.  (Privette, supra, 5 Cal.4th at pp. 699–701, 21 Cal.Rptr.2d 72, 854 P.2d 721.)   Following the reasoning of Privette, we conclude section 414 liability does not apply to a landowner for work-related injuries sustained by the employee of a contractor hired by the landowner.

DISPOSITION

The judgment is affirmed.

I concur in the judgment.   I fully concur in part I of the majority opinion;  as to part II, I agree Toland has not shown sufficient control to bring this case within the provisions of section 414 of the Restatement Second of Torts.   On that basis alone, I would affirm the judgment.   I would not reach the issue of whether the reasoning of Privette v. Superior Court (1993) 5 Cal.4th 689, 21 Cal.Rptr.2d 72, 854 P.2d 721, applies to shield an employer of an independent contractor from liability for injury to the independent contractor's employees under section 414.   This extension of Privette is unnecessary to the resolution of this case.   I would defer the question of whether Privette should be so extended until the issue is squarely presented by a case.

The majority offers three primary reasons for applying the rationale of Privette, supra, 5 Cal.4th 689, 21 Cal.Rptr.2d 72, 854 P.2d 721, to section 414 cases.   First, case law has construed the term “others” consistently in sections 413, 414, and 416 of the Restatement Second of Torts;  case law provides no reason for distinguishing one section from another.   After Privette, “others” no longer includes employees of independent contractors in sections 413 and 416, so “others” should not include such employees in section 414.   Second, the workers' compensation system serves the same purpose as section 414 liability, to impose “statutory liability for injuries caused by the work of the enterprise regardless of fault.”  (Maj. opn. p. 381.)   Since the landowner pays for workers' compensation indirectly through the contract price, it is fair that the landowner also receive the shield of its exclusive remedy provisions for workplace accidents.   Finally, it is wise to extend Privette because it will encourage landowners to hire contractors with expertise rather than using their own employees.

While there are similarities between situations of peculiar risk and those where the landowner retains control, the two situations are not identical.   The differences may present different policy considerations.   Since I believe these differences do not make the extension of Privette automatic, I would defer the issue.

In the peculiar risk situation, the injury is due to the contractor's failure to take the necessary special precautions.   At most, the landowner is negligent in failing to require these precautions in the contract.   Where the landowner retains supervisory control, however, the landowner's negligence may be a more direct cause of the injury.   To the extent the landowner is directly responsible for the workplace injury, the rationale of Privette, supra, 5 Cal.4th 689, 21 Cal.Rptr.2d 72, 854 P.2d 721 becomes less compelling.

For example, in Austin v. Riverside Portland Cement Co. (1955) 44 Cal.2d 225, 282 P.2d 69, the court relied in part on section 414 in holding the landowner liable for the injury to the contractor's employee.   The injury in Austin was caused, in large part, by the landowner's refusal to turn off the electric current in overhead power lines while the contractor was working with large booms in the area.  (Id. at p. 230, 282 P.2d 69.)   This direct negligence is a far cry from the facts of Privette where a school teacher employs a roofing contractor and an employee is injured carrying buckets of hot tar up a ladder.  (Privette v. Superior Court, supra, 5 Cal.4th at p. 692, 21 Cal.Rptr.2d 72, 854 P.2d 721.)   A landowner's duty under section 414 is closely related to the landowner's duty as a possessor of land (see Johnson v. Tosco Corp. (1991) 1 Cal.App.4th 123, 139, 1 Cal.Rptr.2d 747), and is not limited to the “work of the enterprise.”

One of the purposes of the workers' compensation system is to encourage industrial safety.  (Privette, supra, 5 Cal.4th at p. 697, 21 Cal.Rptr.2d 72, 854 P.2d 721.)   The employer's workers' compensation premiums reflect the employer's safety record, thus encouraging the employer to implement safety programs and practices to keep the premiums low.   Where the liability of the landowner who employs an independent contractor is largely vicarious—that is, based on the negligence of the contractor or its employees—it is fair to allow the landowner to share in the exclusive remedy protection of workers' compensation.   Where the landowner retains a degree of control, however, and is negligent in exercising that control, competing concerns enter the picture in deciding whether the landowner should have the benefit of the exclusive remedy provisions of workers' compensation.   The contract price paid by the landowner will reflect the safety record of the independent contractor, but not that of the landowner.   The landowner who retains control and negligently exercises such control pays the same contract price as the nonnegligent landowner who leaves the work entirely to the expert independent contractor.   Extending Privette to all section 414 situations, therefore, would remove one financial incentive to encourage industrial safety by landowners.

Because the contract price does not reflect the landowner's safety record, but the landowner's liability or workers' compensation insurance premiums would, one of the rationales for applying Privette, supra, 5 Cal.4th 689, 21 Cal.Rptr.2d 72, 854 P.2d 721 to section 414 situations is weakened.   If a nonnegligent landowner faces vicarious liability for the independent contractor's negligence, the landowner may be encouraged to use its own employees to do risky work, and benefit from the shield of the exclusive remedy provisions of workers' compensation, rather than hiring an expert.   By eliminating this vicarious liability, Privette encourages the hiring of experts.   Applying Privette to section 414, however, would not encourage a landowner to leave the work to the experts, but would permit the landowner to exercise control without regard to whether due care is employed in the exercise of that control.

Because section 414 situations may involve more direct negligence on the part of the landowner than a peculiar risk situation, different policy considerations come into play in determining the extent to which the landowner should be held liable.   I would reserve deciding the full scope of Privette, supra, 5 Cal.4th 689, 21 Cal.Rptr.2d 72, 854 P.2d 721, until a case squarely presents the issue.

FOOTNOTES

1.   While the California courts have used the vague term, “peculiar risk,” to denote the activities subject to sections 413 and 416 of the Restatement Second of Torts, “American courts on the whole have preferred to adopt the language of Judge Dillon as to work which is ‘inherently dangerous.’ ”  (Prosser & Keeton, Torts (5th ed. 1984) § 71, p. 512, fns. omitted, citing Dillon, Municipal Corporations, 1st Ed.1872, § 792.)   In any event, we need not identify exactly what is a peculiar risk here because we conclude the doctrine does not apply.

FN2. Hereafter, we will simply cite to section numbers with the understanding that they are from the Restatement Second of Torts..  FN2. Hereafter, we will simply cite to section numbers with the understanding that they are from the Restatement Second of Torts.

3.   “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.”  (§ 413.)

4.   “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.”  (§ 416.)

5.   Ironically, we view that footnote (infra at pp. 377–378;  Privette, supra, 5 Cal.4th at p. 695, fn. 2, 21 Cal.Rptr.2d 72, 854 P.2d 721) differently;  that is, it compels Privette 's application to assertions of liability arising from both section 413 and section 416.

6.   If it were true Owens is a “narrow exception to Privette ․,” it would only further complicate this area of tort law which Privette sought to clarify.   The rule would go something like this:  Owens is an exception to the rule in Privette, which exception applies when the owner's liability can be characterized as “direct” rather than “vicarious.”   The rule in Privette is an exception to the rule that owners can be held liable to others under the peculiar risk doctrine, which exception applies when the injured party is a contractor's employee.   The peculiar risk doctrine is an exception to the rule that owners are not liable to third parties for harm caused by negligent contractors, which exception applies when the work presents a peculiar risk.   Consequently, Owens presents an exception to an exception to an exception to a rule.

7.   We commonly cite this case for the principle that “all tribunals exercising inferior jurisdiction are required to follow decisions of courts exercising superior jurisdiction.”  (Auto Equity Sales, supra, 57 Cal.2d at p. 455, 20 Cal.Rptr. 321, 369 P.2d 937.)   While it may be circular to reason we are bound by Supreme Court precedent because a Supreme Court precedent says so, we also accept this common law tradition as a matter of orderly administration of laws.

8.   The unanimous opinion in Privette quotes this student comment from the Fordham Law Review six times.   While some criticize the utility of student comments, those comments can often be helpful to judges and practitioners, as shown in Privette.  “Do not worry that judges do not read law reviews․  The vast majority of articles in scholarly journals are destined to go directly from the subscriber to the library shelf, there to be available for future reference as the need arises․  Law reviews are indispensable resources for judges and their clerks, whether or not the judge's opinion actually cites the article or student note that proved helpful in the preparation of the opinion.”  (Posner, The Future of the Student–Edited Law Review (1995) 47 Stan.L.Rev. 1131, 1137–1138.)

NICHOLSON, Associate Justice.

SCOTLAND, Acting P.J., concurs.

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