Landowner May Be Liable to Injured Worker for Latent or Concealed Condition on Property That Landowner Knew or Should Have Known was Hazardous.

Kinsman v. Unocal Corporation (December 19, 2005) __Cal.4th__.

The California Supreme Court recently handed down its long awaited decision in the case of Kinsman v. Unocal Corporation, regarding a landowner's responsibility to workers injured as a result of pre-existing concealed hazardous conditions on the jobsite. The court reaffirmed the right of an injured worker to seek damages against owners on a premises liability theory, where the owner knew or should have known of a concealed hazardous condition, the worker and his employer could not have discovered the hazard, and the owner failed to warn the worker or his employer.

During the 1950s, Ray Kinsman worked as a carpenter at Unocal's refinery in Wilmington, California. Kinsman was employed by Burke & Reynolds, an independent contractor that Unocal hired to perform scaffolding work during periods of shut-down and repair at the refinery. Kinsman built and dismantled scaffolding used by other trades, including pipe fitters and insulators. This work exposed Kinsman to air-borne asbestos, which ultimately caused Kinsman to develop mesothelioma, an asbestos-induced malignant cancer of the lining of the lungs.

Kinsman sued various manufacturers and distributors of products containing asbestos as well as several owners of the premises where he worked. The case proceeded to a jury trial against Unocal alone. Kinsman submitted his case on two theories of liability: a premises liability theory-that Unocal was negligent in the use, maintenance, and management of the areas where Kinsman worked; and a retained control theory- that Unocal was negligent in the exercise of retained control over the means and methods of the work performed by Kinsman. Unocal denied that it was negligent, asserting that it complied with the industry standards governing asbestos and other dusts and vapors in effect at the time. The parties agreed that Kinsman's mesothelioma was caused by asbestos and that Kinsman was not at fault. The jury found for Kinsman on the premises liability theory only and awarded Kinsman over $3M in compensatory damages against Unocal.

Unocal appealed, arguing that there was no evidence that Unocal affirmatively contributed to Kinsman's exposure to asbestos. The Court of Appeal agreed and reversed the judgment, concluding that "[a] contractor's employee cannot recover under [a premises liability] theory unless the landowner had control over the dangerous condition and affirmatively contributed to an employee's injury." (italics added)

Upon review, the California Supreme Court affirmed in part and reversed in part. The court began its analysis by discussing the legal theories that Kinsman had pursued against Unocal: retained control and premises liability. The theory of retained control is more commonly known as the Privette Doctrine. Under Privette and its progeny, one who hires an independent contractor is not liable to an employee of the independent contractor for injuries caused by the independent contractor's negligence in performing the work, even where the hirer retains control over safety conditions on the jobsite, unless the hirer exercises that control in a manner that affirmatively contributes to the employee's injuries. Stated another way, a hirer-in this case, an owner-has the right to delegate to an employer the responsibility safely to perform construction work on the premises, and to be free from claims by the contractor's employees, so long as that hirer does not affirmatively and negligently participate in the means and methods of the work or how the job is accomplished, resulting in the employee's injury.

The court then addressed the California doctrine of premises liability which imposes on all owners and possessors of land the duty of reasonable care in the management of his/her property. The general rule is that if a hazard on land is open and obvious, the owner/possessor can expect that an invitee will observe it and the owner has no duty to remedy or to warn of the condition. However, if the owner/ possessor is aware of a concealed and hazardous condition, the owner/possessor has a duty to exercise reasonable care either to correct the condition or to warn invitees visiting the property.

The Kinsman case presented the question of how to reconcile these two legal doctrines when a landowner, who might normally be protected under the Privette doctrine, hires an independent contractor whose employee is injured by a concealed hazardous condition (asbestos fibers) known to exist on the property. The court determined that the usual rules concerning landowner liability must be modified under these circumstances, and that a landowner may be independently liable to the contractor's employee, even if it does not retain control over the work, where:

1. The landowner knows or reasonably should know of a concealed, pre-existing hazardous condition on its premises;

2. The contractor does not know and could not reasonably ascertain the condition; and

3. The landowner fails to warn the contractor.

At trial, Unocal acknowledged that it was aware generally of the hazards of asbestos at the time that Kinsman worked at its refinery. However, there were conflicting inferences from the evidence as to whether Kinsman's employer knew or should have known about the air-borne asbestos hazard, or whether Unocal was or should have been aware that Kinsman's employer did not know of the hazard. Because these issues had not been submitted to the jury, the case was remanded for a new trial.

The court in Kinsman fashioned a legal solution to the rather unique circumstances presented in the case. In the process, however, we think that the court has opened the door to years of future litigation over the language and implications of its decision. For example:

Common law premises liability traditionally imposed liability for negligence on "possessors" of land. The "possessor" could be an owner, a lessee or even an independent contractor given the right of "control" over the premises during construction. (SeeMorehouse v. Taubman Co.) We think that the court's holding in Kinsman will also be applied to lessees and likely to contractors in control of premises during construction. This carries particular significance for general contractors who will now owe multiple separate duties to employees of subcontractors: (1) the responsibility to follow California Construction Safety Orders; (2) the general duty to exercise reasonable care in the exercise of retained control over safety on the worksite so as not affirmatively to cause or contribute to an employee's injuries; and now, (3) the duty to warn of a concealed, pre-existing condition that the contractor knows or should know is hazardous.

The Kinsman court utilizes very specific terms in its holding: e.g., "concealed," "pre-existing," and "hazardous." As is frequently the case with new law, we expect that trial courts will now be forced to grapple with these new terms and their application to a given set of facts. For example, how willKinsman be applied to a condition that is open and obvious, but where the injured employee and his employer reasonably do not have the expertise to recognize the condition as hazardous? Does this ignorance satisfy the Kinsmanrequirement of a "concealed" hazard? Would the landowner or the general contractor have a duty to warn under these circumstances? Or what if a hazardous condition did not exist at commencement of construction, but instead the condition was created during construction but before the arrival of the injured employee and his employer on the project? Does this satisfy the Kinsman requirement of "pre-existing" condition?

We believe that, due to the Kinsman decision, premises owners will more frequently find themselves being named as defendants in cases arising out of construction site injuries, and particularly in claims concerning exposures to asbestos, silica, and other hazardous dusts and gases. The focus of these claims will now be, in part, whether the premises owner and employer knew or should have known of the concealed hazardous condition, and whether the property owner was aware of the employer's state of knowledge. Therefore, we cannot emphasize enough the need for owners and contractors to incorporate into their construction documents indemnification and insuring obligations, as well as other provisions for risk transfer.

- Ralph R. Rhoades