Illinois Supreme Court Weighs in on General Contractor Liability for Construction Negligence Claims

December 2016

The Illinois Supreme Court recently weighed in on three separate theories of liability frequently invoked in construction-related personal injury cases. In Carney v. Union Pacific Railroad Company, 2016 IL 118984, Happ's, a scrap contractor, entered into a contract with Union Pacific to purchase and remove three abandoned railroad bridges. The plaintiff was severely injured when a steel girder fell during the dismantling of one of the bridges. The plaintiff, an employee of Chicago Explosive Services, filed suit against Union Pacific alleging Union Pacific: 1) retained control over the work of Happ's and failed to properly supervise the work; 2) was negligent in hiring Happ's; and 3) failed to warn plaintiff of a dangerous condition on its land.

The opinion includes an important discussion of liability under Restatement (Second) of Torts §414, under which a hiring entity - such as a general contractor - may be subject to liability for work entrusted to an independent contractor where it retains control over the independent contractor's work. Illinois courts analyzing §414 have described both "direct liability" and "vicarious liability." Direct liability relates to the retention of general supervisory control and the failure to exercise that control with reasonable care to prevent work from causing injury to others. The hiring entity could also be subject to vicarious liability for the negligence of the independent contractor if it controlled the operative details of the work.

The Supreme Court described "confusion" as to the scope of §414 citing the many appellate court decisions which have imposed both direct liability and vicarious liability under §414. The Court found the source of the confusion to be the first sentence of "comment a" to §414 which states:

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 Supreme Court clarified that "comment a" does not explain when §414 applies, but when it does not apply. The court affirmatively stated §414 "articulates only a basis for imposition of direct liability." Because an entity which hires an independent contractor is typically not liable for the contractor's negligence, the hiring entity's liability must be based on the entity's own negligence. The court explained that, if control over the independent contractor is such that it gives rise to a master-servant relationship - negating independent contractor status - the hiring entity may be vicariously liable for the negligence of the contractor's employees under the law of agency. Whether sufficient control is retained to give rise to direct liability under §414 is based on the written contract between the parties and/or the conduct of the parties at the jobsite.

The Supreme Court affirmed summary judgment for Union Pacific finding the contract placed responsibility for supervision of the work on Happ's and Union Pacific's mere presence on the jobsite, without more, was insufficient evidence of retained control. The Supreme Court's analysis is helpful to general contractors by clarifying §414 does not provide any basis to hold a general contractor vicariously liable for the negligence of its independent contractors. Rather, the liability under a §414 analysis following Carney will focus on the general contractor's own conduct and whether retained supervisory control over the work of the independent contractor was exercised with reasonable care.

The Supreme Court next analyzed plaintiff's action against Union Pacific for negligence in hiring an incompetent contractor under Restatement (Second) of Torts §411. The court found evidence regarding Happ's lack of competence sufficient to defeat Union Pacific's motion for summary judgment. However, the Supreme Court ruled that since the plaintiff was an employee of Chicago Explosive Services, he was not a "third person" to whom Union Pacific owed a duty under §411. Consequently, the duty to hire competent contractors does not extend to jobsite employees based on the Supreme Court's analysis to §411.

Finally, the Supreme Court affirmed summary judgment as to the plaintiff's premises liability claim under Restatement (Second) of Torts §343. The court held there was no evidence that Union Pacific built the bridge or ever used the bridge and, therefore, had no knowledge of its alleged dangerous condition.

The Carney decision, and its thorough review of the evolution of Restatement (Second) of Torts §414 liability in Illinois, provides general contractors very favorable authority from Illinois' highest court. The Carney decision will no doubt be the cornerstone for summary judgment motions by general contractors. The Illinois Supreme Court is very selective with respect to the types of cases it accepts for hearing. This is good news for general contractors since it is unlikely the Supreme Court will address §414 liability anytime in the near future.