Bayan Salehi

Associate Manning & Kass, Ellrod, Ramirez, Trester LLP

The California Court of Appeal's recent decision in CBRE v. Superior Court, D083130 (Cal. Ct. App. June 28, 2024) provides important clarification on the application of the Privette doctrine to property owners and managers in construction injury cases. This ruling reinforces the strong protections afforded to hirers of independent contractors while also highlighting some of the nuances courts consider when evaluating potential exceptions.

Background on the Privette Doctrine

The Privette doctrine, established by the California Supreme Court in Privette v. Superior Court, 5 Cal. 4th 689 (1993), generally shields property owners and other hirers from liability for injuries sustained by employees of independent contractors while working on the hirer's property. The doctrine is based on the principle that the independent contractor, rather than the property owner, is primarily responsible for the workplace safety of its employees.

However, two key exceptions have developed to the Privette rule:

1. The concealed hazard exception: The hirer can be liable if it failed to disclose a known, concealed hazardous condition that the contractor could not have reasonably discovered.

2. The retained control exception: The hirer can be liable if it retained control over safety conditions and negligently exercised that control in a way that affirmatively contributed to the injury.

CBRE v. Superior Court

In CBRE, an electrician - Johnson - was injured while working on a construction project in a building owned by Property Reserve, Inc. and managed by CBRE. Johnson was employed by a subcontractor hired by the general contractor, Crew Builders.

Notably, CBRE had instructed Crew Builders to proceed with the project without obtaining the required permits, which would have involved inspections and engineering drawings. Johnson was later electrocuted by an unexpectedly live wire.

The court's ruling

The Court of Appeal ruled in favor of PRI and CBRE, finding that the Privette doctrine shielded them from liability. The court's key holdings include:

1. A written contract is not required to invoke Privette protection. The doctrine applies once the hirer delegates control over the worksite to the contractor, even if done informally.

2. The decision to forgo permits did not constitute "retained control" over safety conditions. The court viewed this as a decision about the scope of work rather than control over how the work was performed.

3. The live wire was not a "concealed hazard" because the subcontractor could have discovered it through proper safety protocols like using voltage testers.

Key takeaways for property owners and managers

This ruling generally reinforces the broad protections afforded to property owners and managers under Privette. Key takeaways include:

1. Flexibility in delegation: Formal written contracts are not necessary to delegate responsibility and invoke Privette protection. This allows for more flexible work arrangements.

2. Scope of work decisions: Choices about what work to include or exclude (like permitting) are less likely to be seen as "retained control" over safety conditions.

3. Contractor responsibility: There's a high bar for what constitutes a "concealed hazard." Courts expect skilled contractors to follow proper safety protocols to identify potential dangers.

4. Permits and code compliance: While the court did not directly address this, property owners should be cautious about instructing contractors to skip legally required processes like permitting. This could potentially expose owners to other forms of liability even if protected under Privette.

Key takeaways for contractors

These takeaways underscore the importance for subcontractors to prioritize safety and take primary responsibility for identifying and mitigating potential hazards on job sites.

1. Safety Responsibility: The court's decision reinforces that subcontractors bear primary responsibility for their workers' safety. Subcontractors should not rely on property owners or general contractors to ensure safe working conditions.

2. Thorough Site Inspections: Subcontractors should conduct comprehensive site inspections and safety checks before beginning work. The court emphasized that the electrical hazard could have been discovered through proper safety protocols.

3. Use of Safety Equipment: The court noted that using tools like voltage testers or "hot sticks" could have prevented the injury. Subcontractors should ensure their workers consistently use appropriate safety equipment.

4. Awareness of Permit Status: While the lack of permits did not create liability for the property owner in this case, subcontractors should be aware of the permit status of their projects. Lack of permits could potentially impact safety and liability.

5. Contractual Obligations: Subcontractors should carefully review their contracts, including any requirements related to permits, inspections, or safety protocols. The court referenced contractual obligations in its analysis.

6. Limited Protection from Privette: Subcontractors should be aware that property owners and general contractors are generally protected from liability for worker injuries under the Privette doctrine. This emphasizes the importance of workers' compensation insurance.

7. Proactive Safety Measures: The court's ruling suggests that subcontractors are expected to take proactive measures to ensure safety, even in the absence of formal inspections or permits.

8. Documentation: Maintaining thorough documentation of safety protocols, inspections, and any communications about site conditions could be crucial in potential legal disputes.

9. Training: Ensuring all workers are properly trained in safety protocols and use of safety equipment is critical, as the court seemed to expect a high level of competence from skilled contractors.

10. Communication: Clear communication with general contractors and property owners about safety concerns or unusual site conditions is important, even if these parties are generally shielded from liability.

Key takeaways for insurance carriers

These takeaways suggest that while the Privette doctrine provides strong protections, general liability carriers should still encourage insureds to maintain robust safety practices and comply with regulatory requirements to minimize overall risk exposure.

1. Potential for Regulatory Liability: While the Privette doctrine may protect against tort liability, carriers should be aware that insureds could still face regulatory consequences for permit violations or code non-compliance.

2. Worker's Compensation as Primary Remedy: The case reinforces that worker's compensation is often the primary (or sole) remedy for injured workers in these situations.

3. Policy Wording Importance: Given the nuances in how courts apply the Privette doctrine, precise wording in insurance policies regarding coverage for construction-related injuries becomes increasingly important.

4. Risk Assessment: When assessing risks for property owners and managers involved in construction projects, the strength of the Privette doctrine should be a key consideration, potentially leading to more favorable risk profiles in many cases.

Conclusion

The CBRE decision largely reaffirms the strong protections provided to property owners by the Privette doctrine. However, the dissenting opinion highlights that some judges view decisions like skipping permits as potentially more problematic. Property owners and managers should still exercise caution in their interactions with contractors, particularly regarding safety-related decisions, to avoid potential liability under the doctrine's exceptions.