Catastrophic Claims Litigation

Key Points:

• The Supreme Court of Pennsylvania held that a contractor can be liable for a hazardous condition it created, even if the work is accepted, known by the property owner, and is obvious in nature.
• This opens the door to remote claims brought by third parties against construction contractors.
• It may serve to undercut the open and obvious defense to claims brought by the public against out-of-possession contractors.
• This does not serve to relieve premises owners/possessors of potential joint liability with contractors.

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In Brown v. City of Oil City, 294 A.3d 413 (Pa. May 16, 2023), the City of Oil City, Pennsylvania, retained two contractors to design and oversee reconstruction of the deteriorated concrete stairs leading to the entrance of the City’s library. The work was performed by another contractor, also through a contract with the City. Installation of the new stairs was completed by the end of 2011. However, in early 2012, the City received reports about imperfections in the concrete surface. The City notified the contractors that it considered the steps to be dangerous and defective. Between 2012 and 2015, the condition became worse, but no remedial work was performed. In 2015, the plaintiff exited the library, tripped on one of the deteriorated steps, and sustained a fatal head trauma. A wrongful death suit was filed against the City and the contractors.

After discovery, the contractors were granted summary judgment, having argued they owed no duty to third persons as they were not in possession of the premises at the time of injury. The trial court cited to Section 385 of the Restatement (Second) of Torts as limiting a contractor’s third-party liability to only those situations where a possessor was unlikely to discover the defect. The court relied on Gresik v. PA Partners, L.P., 989 A.2d 344 (Pa. Super. 2009) (Gresik I), which involved a negligence suit against the prior owner of a steel plant where modifications had been made. The prior owner removed a drawbridge designed as a safety feature for steelworkers. After the plant was sold, a steelworker died when he had no means of escaping a molten steel breach. Suit was brought against the prior owner. The Superior Court held that a precondition for liability under Section 385 is showing that the danger was unlikely to be discovered by the possessor. Since the plant’s current owner was aware of the hazard, summary judgment was entered for the prior owner. Citing to Gresik I, the trial court in Brown held that the contractors could not be liable because the City was aware of the hazardous condition of the steps. 

The Commonwealth Court reversed, citing two Pennsylvania cases that imposed liability on contractors to the public, Prost v. Caldwell Stores, 187 A.2d 273 (Pa. 1963) and Gilbert v. Conrail, 623 A.2d 873 (Pa. Cmwlth. 1963). In Prost, the court held that a contractor could be liable to third parties for faulty tile installation, despite the possessor’s acceptance of the work. In Gilbert, Conrail built a defectively designed track crossing and then turned the property over to SEPTA. Despite the obvious nature of the track crossing, the court in Gilbert held that Conrail could still be liable for a passenger’s death resulting from the hazard and that the the condition did not have to be hidden, or latent, for the contractor to be liable. SEPTA’s awareness of the condition did not negate Conrail’s exposure. 

The contractors in Brown argued on appeal to the Supreme Court that the court should adopt the Superior Court’s approach in Gresik I to limit liability for an out-of-possession contractor to latent defects only. They argued that since the condition of the steps was known by the City, that entity was solely responsible for remediation. In fact, the contractors argued that they could not take action without instructions from the City. The City would be in the best position to remedy defects, instead of a contractor who no longer had contact with the property. They also cited to the Restatement under which possessors are required to inspect for latent defects to protect invitees. Further, they cited to a comment of Section 385, which imposed liability on contractors only to the same extent as manufacturers of a product, that is, for defects which the end user is not able to discover. Brown, to the contrary, argued that Section 385 does not pre-condition a contractor’s liability to third parties on the knowledge of the possessor. Brown further argued that the contractor’s interpretation creates an incentive for possessors to ignore defects and that the possessor’s knowledge should not insulate the contractor. 

The Supreme Court in Brown affirmed the Commonwealth Court’s reversal of summary judgment. The court sided with the reasoning of Gilbert, which permitted liability, even for open and obvious conditions known by the possessor. The court held that under Section 385 of the Restatement, a contractor could face liability whether the condition was latent or apparent. 

The Supreme Court interpreted Section 385 as imposing liability on contractors for injuries to third parties arising from all defects, whether latent or obvious. The court noted that comment c to Section 385, which refers to work “unlikely to be discovered by the possessor,” is not applicable to third parties, but only relates to claims brought by possessors. As such, under Brown, a contractor can be found liable to third parties as a result of a dangerous condition it created, regardless of whether the condition is latent, open and obvious, or known by the possessor. If the condition is latent, a possessor may have a viable claim as well. This decision only bars a claim by a possessor against a contractor for an open and obvious condition. The court also notes that a possessor also retains a duty to keep its premises reasonably safe for third parties and could be jointly liable with a contractor. 

This case is problematic as it opens the door to injury claims brought against contractors by third parties long after their work is accepted, even if the condition is open and obvious to the plaintiff and the possessor. Also, the court does not address the established defenses that no duty is owed to warn of open and obvious conditions, or that the plaintiff may be at fault for assuming a risk. Last, it is presumed that this decision does not impact a statute of repose defense, assuming a defendant fits within the protected class. 

*David is an Of Counsel and works in our Philadelphia, Pennsylvania, office. He can be reached at 215.575.3577 or dswolf@mdwcg.com. 

 

_{Defense Digest, Vol. 29, No. 3, September 2023, is prepared by Marshall Dennehey to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. ATTORNEY ADVERTISING pursuant to New York RPC 7.1. © 2023 Marshall Dennehey. All Rights Reserved. This article may not be reprinted without the express written permission of our firm. For reprints, contact tamontemuro@mdwcg.com.}