Imagine someone walking down the street next to a newly constructed building. Suddenly, a defective cornice falls off the building, striking and killing the passerby. Tragedies are often quickly followed by finger-pointing.
If the incident had occurred a century ago and the victim’s next of kin had gone to court, the judge would have likely ruled that the death, happening after the work was done and approved, was caused by the building owner failing to inspect the condition of the cornice. For the contractor, it’s a different story. If it had performed shoddy work, it might have faced the owner’s wrath but not legal responsibility to third parties.
Over the years, this precept – known as the Completed and Accepted Doctrine – has lost favor. Although most jurisdictions were still clinging to the rule as late as the 1950s, courts thereafter began to repudiate it due to its harsh effects on innocent parties. Today, the doctrine holds sway in only about 20 states. Even there, some courts have recognized exceptions holding contractors liable to third parties where the accepted work had a defect that was inherently dangerous, that the owner could not discover even after a reasonably careful inspection, or that the contractor knew about but failed to notify the owner.
A majority of states now embrace the Foreseeability Doctrine, which saddles a contractor with liability for injury or damage to a third party as a result of defective work – even after completion of the job and acceptance by the owner – where such consequences were fairly predictable due to either the contractor’s negligence or its failure to disclose a dangerous condition.
Based on venerable tort law concepts of duty and causation, California courts adhere to the minority view with this justification: Having an obligation to inspect the work and ascertain its sufficiency and safety before accepting it, the owner effectively represents it to be free from hazard or other threat. An owner’s failure to remedy a discoverable defect becomes an intervening cause for which the contractor is not liable.
Daniel Hogan was injured when he fell into a hole while working at a landfill operated by Humboldt Waste Management Authority near Eureka, California. In 2016, he filed a lawsuit in Humboldt County Superior Court seeking damages. His complaint stated that he was employed by a contractor performing work at the landfill when he walked “around a piece of equipment being operated by a co-employee” and “fell approximately twelve feet into an unmarked test well known as ‘Old GP-4.' ” The test well was purportedly “to have been filled in sometime in 2006, but instead remained unfilled and unmarked and hidden” from view “by tall grass.”
Hogan alleged that Humboldt, Griffin Dewatering Corporation, and others negligently caused his injuries by failing to warn of the existence of Old GP-4 and by failing to “properly mark or fill in [the] test well.” He further contended that Humboldt wrongfully failed to maintain the landfill free of unmarked hazards.
Humboldt filed a cross-complaint (also known as a cross-claim) for indemnification, contribution, and other relief against Griffin. (Cross-complaints seek a ruling that a co-party is responsible for any damages assessed against the cross-claimant. If A sues B and C, defendant B can file an action against defendant C based on the circumstances of the original lawsuit, and this claim will be consolidated and heard with the main case.)
Humboldt denied liability for Hogan's accident and alleged that if it was “in some manner responsible” to Hogan, it was entitled to “complete indemnity” from Griffin. It further alleged that Griffin was wholly or partially responsible for any injuries or damages that Hogan incurred and if Humboldt were held liable to Hogan, Griffin should be required to pay a share of the judgment “in proportion to” Griffin's “comparative negligence, fault or legal liability” in causing the damages, and to reimburse Humboldt for any payment it makes to Hogan “in excess of [its] proportional share of negligence.” In short, Humboldt’s objective was to avoid responsibility for any damages that Hogan might win by recouping from Griffin whatever it had to pay or by shifting some of the blame, if not all of it, to Griffin.
In February 2019, Griffin filed a motion for summary judgment against Hogan, arguing that Hogan's claim against Griffin for negligence was legally insufficient for two reasons. First, Griffin's liability and duty of care to Hogan terminated in 2006, when Griffin completed its drilling work at the landfill and Humboldt accepted Griffin's work. Second, Hogan had no evidence to establish that the hole he fell into in 2015 was a hole Griffin had drilled at the landfill.
To support its motion, Griffin recited the following undisputed facts: On July 25, 2006, Griffin signed a contract with Humboldt to “abandon” the Old GP-4 well on Humboldt's landfill based on the engineering plans of Winzler & Kelly (W&K). As part of its obligations, Griffin was required to drill down into the well, remove casing, and then fill the well with grout and bentonite to the top of the grade. W&K supervised Griffin’s work, and approved it as “completed and accepted.” After finishing its work in August 2006, Griffin had no obligation to return to the landfill, and it was subsequently paid in full.
Griffin also alleged there was uncontested evidence that, sometime after it had completed its work, Humboldt discovered erosion at the site of the abandoned well and, in October or November 2006, Humboldt performed additional work at the site to address the problem, which included filling “sinkholes.” Thereafter and prior to Hogan’s injuries, other activity at the landfill affected soil in or near the well, including a road installation, an excavation project, and formation of a trench.
In addition, Griffin asserted that landfill manager Mark Springman had inspected the area where Hogan was injured and had concluded that the dimensions of the hole Hogan fell into
were different from the dimensions of Old GP-4. Moreover, Springman could not determine whether the hole was in the same location as Old GP-4.
Not surprisingly, Hogan opposed Griffin's motion, arguing that key factual matters were far from certain and needed to be sorted out at a trial. Was the hole he fell into drilled by Griffin? Did Griffin's work created a hidden defect that caused Hogan's injury? If so, the completed and accepted doctrine would not apply.
Humboldt buttressed its argument with a sworn statement by Jill Duffy, Humboldt's Executive Director since November 2012. After Hogan's accident, she personally inspected the hole where Hogan claimed to have fallen. Based on her review of available records, which included a map prepared by W&K, she identified the hole as Old GP-4. In addition, she noted that Humboldt staff referred to the location as Old GP-4.
In October 2019, the trial judge granted judgment in favor of Griffin vis-à-vis Humboldt on the ground that the completed and accepted doctrine relieved Griffin of any obligations. The court’s five-page order contained a recitation of unchallenged facts: In July and August 2006, Griffin completed its work on a project to decommission the Old GP-4 test well at the Humboldt landfill; Humboldt accepted Griffin's work no later than August 2006; In October or November 2007, Humboldt noticed erosion and sinkholes in the area where Griffin had performed its work and addressed these issues by conducting additional filling.
The trial judge specifically rejected Hogan's contention that Griffin created a latent defect, that is, a condition undetectable by the owner prior to Hogan's accident, even after a careful inspection. The judge noted that the hole Hogan fell into was “substantial,” but the injury occurred nine years after Griffin's work was completed and accepted. Meantime, he continued, Humboldt had performed additional work at the Old GP-4 site to address erosion and sinkholes. What’s more, three years preceding Hogan’s injury, Humboldt began the process of closing its landfill, involving considerable effects on the soil at the site.
Following the ruling Griffin filed a motion for a comprehensive judgment in its favor on all claims against it by all parties, including a complaint that had been filed against Griffin in Hogan's personal injury action. In November, 2019, the trial court ruled in favor of Griffin, dismissing Hogan's complaint, Humboldt's cross-complaint, and all other claims that were filed against Griffin. Humboldt appealed the part of the judgment dismissing its cross-complaint, contending it had a well-founded claim for indemnification against Griffin and thus should be allowed to present it. The appeals court agreed.
“[T]he judicial determination that Griffin owed no tort duty of care to Hogan does not preclude Humboldt from establishing that Griffin assumed a contractual duty to indemnify Humboldt, and the part of the judgment purporting to bar a future claim for . . . indemnity cannot be sustained,” the opinion stated. “Griffin expressly confirmed the existence of an indemnity agreement with Humboldt during the lower court proceedings. * * * [T]he extent of that duty must be determined from the contract.”
The appeals court remanded the case to the trial court and ordered it to reinstate Humboldt’s cross-complaint and allow Humboldt to add a claim based on what it believes Griffin had expressly agreed to do. The matter, however, remains far from settled as the parties disagree on how to interpret the indemnity provisions.
“Humboldt argues that the provision creates a broad right to contractual indemnity, which covers Hogan's accident even if Humboldt was actively negligent in causing it,” the appellate panel noted. “This debate is premature; the question at this juncture is only whether Humboldt can allege a claim for express indemnity, not whether the claim can be proven.”
Humboldt Waste Management Authority v. Griffin Dewatering Corp., No. A159199, Cal. Ct. App., First Dist., Feb. 24, 2021.