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Energy & the Law

Your MSA is in Place – Now What?

Posted in Contract Disputes, operations

controlAre you an operator who hires contractors on location, … a contractor who hires subcontractors, … the party to be indemnified for injuries to the other party’s employees? This post is for you.

Salas v. Allen Keller Company One, LLC, is not about master service agreements, but it is instructive. Want to avoid responsibility for your sub’s employees? Don’t assert control over them.  Think Jason Garrett and his Cowboys, … John Boehner and the Freedom Caucus.

Mr. Saurez was killed while working for his employer, subcontractor C&B, on a highway construction project.  C&B and contractor AKC had a written construction subcontract in which C&B was to perform concrete work. His widow sued AKC for negligence.

The sub’s obligations – looks like an MSA

C&B represented and agreed:

  • It was capable and experienced in the construction,
  • It would supply its own materials, labor, tools and equipment,
  • It would procure its own insurance,
  • It would assume responsibility for claims arising out of death to injuries to persons or damages to property sustained in connection with C&B’s performance of the contract, and
  • It would take all reasonable safety precautions and comply with applicable laws.

C&B was to perform traffic control.  On the day of the accident Suarez was performing traffic control duties.

Did the contractor owe a duty?

Here is Texas law on a contractor’s duty to a sub’s employees:

  • Ordinarily, there is no duty to insure that an independent contractor performs its work safely.
  • A limited duty arises if the contractor retains some control over the manner in which the independent contractor performs its work. The contractor’s duty of care to the sub’s employee is commensurate with the control it retains over the independent contractor’s work.
  • There must be a nexus between the contractor’s retained control and the activity that caused the plaintiff’s injury.
  • The key is the actual exercise of control.
  • There must be more than a general right to order the work stopped or resumed to inspect progress, or make suggestions and recommendation which need not necessarily be followed, or prescribe alterations and deviations.
  • There must be such a retention of a right of supervision that the sub-contractor is not entirely free to do the work in its own way.

Factors that matter

AKC did not have a contractual right to control C&B’s performance but could have actually exercised such control in a manner that would give rise to a legal duty to C&B’s employees.

  • On-site orders or instructions on the means or methods to carry out a work order are important.
  • TxDOT’s inspections and directions was no evidence that AKC retained supervisory control over operations of the sub.
  • AKC never instructed the C&B crew on how to actually move and set out cones and signs.
  • There was no nexus between any exercise and control and Salas’ conduct which caused his injuries.

Salas Simplified

  • You can tell the sub what you want; don’t tell him how to do it.
  • Suggestions ≠ instructions.
  • Make sure your field personnel is mindful of the difference.

A musical interlude.