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(A version of this article appeared in the California Construction Law Reporter, published by the West Group.)
By James E. Acret
Owners of construction projects have prevailed in two cases arising from workplace injuries to construction workers.
The first case involved a freeway construction project. A crane was located on an overpass that was sometimes used for construction traffic. The crane operator would retract the outriggers to allow traffic to pass. The operator retracted the outriggers, left and, upon returning, started to swing the boom without extending the outriggers. The crane tipped. The operator was killed. The widow, having collected worker's compensation, sued Caltrans alleging negligent exercise of retained control.
The trial court granted summary judgment to Caltrans. The Court of Appeal reversed. The California Supreme Court reversed and sustained the trial court. Hooker v. Department of Transportation, 27 Cal.4th 198, 115 Cal.Rptr.2d 853 (2002)
The owner should not have to pay for injuries caused by the contractor's negligent performance when worker's compensation statutes already cover those injuries. It would be unfair to impose liability on the hirer when the liability of the contractor, the one primarily responsible for the injury, is limited to providing worker's compensation. The imposition of tort liability on a hirer should depend on whether the hirer exercised control that was retained in a manner that affirmatively contributed to the injury.
Here, Caltrans knew that the operator had a practice of retracting outriggers to allow traffic to pass, including vehicles driven by Caltrans employees. However, Caltrans' negligence did not actively contribute to the injury.
In the second case, a worker employed by a maintenance contractor, carrying a pump motor weighing about 40 pounds, stepped from a 24-inch platform onto a 12-inch wooden step, which collapsed, causing injury. The step was owned and maintained by ARCO, which was an additional insured under a liability policy supplied by named insured Crider Construction, Inc., which was under contract to perform maintenance work for ARCO. An endorsement to Crider's policy entitled "Additional Insured - Owners, Lessee or Contractors (Form B) CG 20 10 11 85" provided coverage for "those sums that the insured becomes legally obligated to pay as damages because of bodily injury to which this insurance applies but only with respect to liability arising out of YOUR WORK for that insured by or for you."
Fireman's accepted ARCO's defense under a reservation of rights, settled for $400,000 and sued ARCO for reimbursement. Fireman's argued: 1) coverage was provided only if ARCO's liability arose out of the contractor's work (as opposed to arising out of ARCO's own negligence); 2) there was no causal connection between the contractor's work and ARCO's liability because the sole cause of the injury was ARCO's own negligence; 3) additional insured endorsements provide limited coverage as intended by the insurance industry. The trial count granted ARCO's motion for summary judgment. The Court of Appeals affirmed. Fireman's Fund Insurance Companies v. Atlantic Richfield Company, 94 Cal.App.4th 842, 115 Cal.Rptr.2d 26 (2001)
The Court of Appeals held: 1) California courts interpret the phrase "arising out of" broadly to require only a minimal causal connection between the injury and work performed by the named insured. Here, causal connection exists because the accident occurred at the contractor's work site while the worker was performing work for the contractor. 2) No extrinsic evidence supports Fireman's position that the parties mutually intended to limit coverage to ARCO's vicarious liability. 3) California follows the majority view, and citations to cases from other jurisdictions that follow the minority view are unpersuasive. 4) There is no demonstrable public policy favoring a narrow interpretation of additional insured clauses. Rather, the majority view implies a public policy that favors freedom of contract and allows parties, if they so choose, to obtain coverage for the additional insured that goes beyond vicarious liability arising out of the negligence of the named insured.
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