Workers Compensation Carriers have long known that subrogation in a construction site accident can be both costly and problematic. Not only are there the usual contractual problems caused by indemnity agreements which allow the General Contractors to demand a defense and indemnification from your insured’s General Liability Carrier, but Cal OSHA regulations are admissible at trial to establish your employer’s fault for not preventing the employee’s injury (Labor Code § 6304.5). Add to that the problems caused on a “multi-employer” work site where it may be difficult, if not impossible, to identify the culpable subcontractor who created the hazard which caused injury to your insured’s employee.

The First District Court of Appeals in the case of Miguel Suarez v. Pacific Northstar Mechanical Inc. (2009) has now created a new basis for liability on those “multi-employer” work sites that may require a second look at construction accident cases as a potential subrogation opportunity for Workers Compensation carriers.

In that case the plaintiff, Miguel Suarez, worked for the general contractor, All Bay Construction. Neither Mr. Suarez nor All Bay knew that before they entered the job site an unknown person had installed an ungrounded light fixture. When Suarez climbed a ladder to make measurements on the ceiling, he grabbed an I-bolt to steady himself. Unfortunately for Suarez, and his helper holding the ladder, the ungrounded fixture was attached to that I-bolt. Suarez suffered an electrical shock and fell onto his helper causing injury to both.

Initially, Suarez and the helper filed suit against the owner of the premise where the ungrounded fixture was located. Later they joined a new defendant, Pacific Northstar Mechanical Inc.(PNM). The theory against PNM was that prior to the Suarez accident a PNM employee suffered a less severe shock from the same fixture. Suarez went on to allege that PNM failed to advise the general contractor or its employees of the hazard that existed on the work site.

PNM moved the Court for an order dismissing them on the grounds that 1) their scope of work did not include the ungrounded fixture, 2) they were only contracted to work on the heating and air conditioning system and 3) they neither owned, occupied, leased or maintained the property where the accident occurred. Further, they were not hired to inspect or repair the ungrounded light fixture.

PNM was dismissed by the Court on a Motion for Summary Judgment based on the above. However the First District Court of Appeals overruled the trial court and ruled that PNM should remain in the case and go to trial because three weeks before the Suarez injury a PNM employee was shocked and PNM failed to notify All Bay Construction of the dangerous condition on the work site.

In overruling the trial court the Court of Appeals relied on California Code of Regulations, Title 8, section 336.11 as well as Labor Code section 6400(b)(1). The Court stated in its ruling:

For all of the foregoing reasons, we agree with appellants’ interpretation of section 6400 and  regulation 336.11. Read together, and in light of the legislative history of the amendments to sections 6304.5 and 6400, these two Cal-OSHA provisions impose a duty on each employer, at a multi-employer worksite, to report all nonobvious hazards about which the employer learns  because its employees were exposed to them during the course of their work, even if the  employer in question did not create the hazard. Moreover, a breach of that duty is actionable in tort  by any worker at the site who is subsequently injured by the hazard that was not reported.

This holding not only expands the potential liability of general contractors and sub contractors on construction sites but also expands the number of potentially culpable parties an injured worker and a Workers Compensation carrier can sue for injuries caused by not reporting the dangerous condition.

A copy of the case can be viewed here.