Indiana Supreme Court Finds Project Safety Risks Can Be Minimized by Contract

By: Sean T. Devenney

On March 22, 2012, the Indiana Supreme Court issued its long awaited decision relating to Project safety in the Hunt Construction Group v. Garrett matter. DSV has been closely following this case through the courts because it had the potential to impact so many construction industry participants.  Additionally, it had the potential to help provide significant direction for drafting contracts that allow project participants to respect the importance of safety, but limit liability for tangential parties working on the site.  In this regard, the Indiana Supreme Court decision provides relatively clear guidance on how to accomplish—through contract provisions—a safe working environment while minimizing the liability risk associated with job site safety accidents.

The relevant facts of the Hunt case are these:  (1) Hunt was the CM agency on the Lucas Oil Stadium Project ; (2) Garrett was allegedly injured while working for a subcontractor when a piece of wood struck Garrett in the head and left hand; (3) Hunt’s CM contract specifically stated that Hunt’s duties in relation to the Project ran solely to the Owner and not to any contractors or employees working on the Project;  but (4) Hunt’s contract did contain several very significant and detailed safety related obligations that Hunt agreed to perform relating to the work on the Project.

In essence, the issue before the Supreme Court was as follows: By agreeing to perform safety obligations for the Owner did Hunt assume a duty of safety to all Project participants?  The answer to that question, according to the Indiana Supreme Court, turns on two questions:  (1) Was the contract clear that Hunt did not assume a duty to all Project participants relating to safety?; and (2) In performing the safety related work, did Hunt perform work beyond what it agreed to perform for the Owner such that it assumed a duty to Project participants by its on-site actions?

In analyzing the question before it, the Court started with the contract.  The contract between Hunt and the Owner had some very clear provisions that specifically stated that the work Hunt agreed to perform was for the benefit of the Owner only—including the safety related obligations.  The Court found as a matter of law that Hunt had not contractually assumed a duty to employees of subcontractor’s on the Project for safety.

The Court’s analysis then focused on what safety related activities Hunt actually performed on the construction site to determine whether Hunt, through its actions on site, had assumed a duty of safety to individual employees of subcontractors.  Garrett cited several examples of specific safety activities that Hunt performed on the Project including (1) daily safety inspections; (2) daily safety reports; (3) conducting weekly safety meetings with representatives of contractors and subcontractors;  (4) obligations to notify contractors if Hunt felt the contractor was operating in violation of the agreed upon safety program or the law and order the contractor to remedy the situation; and (5) disciplining contractors that failed to comply with the safety program.  In analyzing how Hunt’s activities impacted its decision, the Court reverted back to the contract between the Owner and Hunt and stated as follows:

We have reviewed with some care each of the specific actions that Garrett identifies as demonstrating Hunt’s assumption of a legal duty of care for her safety and have found each to fall within a contractual obligation established by Hunt’s contract with the Stadium Authority.  We have already established that the contract itself did not impose upon Hunt any legal duty of care for jobsite-employee safety.  Because Hunt did not undertake any jobsite-safety actions beyond those required by contract, it did not assume by its actions any legal duty of care for jobsite-employee safety.

What this means for construction industry participants should not be a surprise – contracts matter.  In this case, Hunt’s contract was crafted in such a way to eliminate liability arising from an injury to an employee of a subcontractor, so long as Hunt followed the contract and did not independently assume a duty of safety beyond what it agreed to perform for the Owner.  Now that we have clear direction from the Indiana Supreme Court on this important issue, it is time for you to review your own contract forms to determine how your contracts address jobsite safety issues.