Contractor and Cable Company Held Responsible for Sub’s Negligence

By: Benjamin D. Kerr, Esquire bdk@muslaw.com

The August 4, 2006 decision, Rateau v. Comcast of Pa. II, Inc., from the Court of Common Pleas of Allegheny County, Pennsylvania, illuminates the previously undecided issue of whether the Commonwealth recognizes a cause of action against a contractor that negligently hires a sub-contractor who is a financially irresponsible. A financially irresponsible contractor is loosely defined as one who does not have adequate liability insurance or assets to compensate victims injured by its negligence.

In this case, the Rateau family ordered high-speed internet access from their cable provider, Comcast. To facilitate installation of the service, underground utility lines had to be laid on their property. Comcast contracted with a company named Conn-X to perform this work. Conn-X subcontracted the excavation portion of the work to a company named Wellhead. As Wellhead was performing the work, it struck a gas line and caused a leak.

At approximately this time, the Rateau children had arrived home from school. Though there was ample time to warn the children to get out of the house, proper steps were not taken to ensure that the children were evacuated. Tragically, the gas leak caused an explosion, which severely injured both children.

Wellhead was undercapitalized and did not carry liability insurance. As such, the plaintiffs brought suit against Conn-X and Comcast, both of whom had liability insurance. Conn-X and Comcast denied liability. Hence the main issue was whether the plaintiffs were permitted to proceed under the theory that Conn-X and Comcast negligently hired a subcontractor who was financially irresponsible.

The plaintiffs noted that under Section 411 of the Restatement (Second) of Torts “an employer is subject to liability for physical harm to third persons caused by his failure to exercise reasonable care to employ a competent and careful contractor.” The defendants argued that under Section 411, financial irresponsibility of a contractor is not a basis for finding negligent hiring.

The Court looked to a Third Circuit Court of Appeals opinion which addressed this same issue in Becker v. Interstate Properties. In Becker, the Third Circuit predicted that the New Jersey courts would hold that a contractor can be negligent for hiring a financially irresponsible subcontractor. As such, the Court held that employers can be responsible in certain instances for acts or omissions of independent contractors and that employers have an affirmative duty to ensure the financial fitness of their subcontractors. As such, the action was permitted to proceed against Conn-X and Comcast.

In light of this ruling, contractors should exercise care in selecting their subcontractors to ensure that the subcontractors are financially responsible.

For more information about a contractor’s potential liability for the subcontractors they hire, contact Benjamin D. Kerr at 412-456-2589 or e-mail him at bdk@muslaw.com.