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Potential Limits of Ch. 95 Premises Owner Defenses

05.23.14

Chapter 95, as a general rule, protects premises owners sued by independent contractors for personal injuries arising out of the construction, repair, renovation, or modification of an improvement to real property unless the independent contractor/plaintiff can prove that the premises owner (1) exercised "some control" over the work performed by the contractor, other than the right to order the work to start or stop or to inspect progress or receive reports; (2) possessed "actual knowledge" of the danger or condition causing the contractor's injury; and (3) failed to warn of that danger. Chapter 95 has often applied to exonerate oil and gas operators (i.e., premises owners) from liability to their independent contractors' employees when the three requirements are satisfied.

Recently, the Fourteenth Court of Appeals confirmed its dicta in Dyall v. Simpson Pasadena Paper Co., 152 S.W.3d 688 (Tex. App.—Houston [14th District] 2004, pet. denied) and explained that while Chapter 95 defeats a premises-liability claim if the requisites are satisfied, it does not, as a matter of law, defeat distinct claims for negligent activity and negligent undertaking. Thus, it is possible that a premises owner will be liable for negligent activity and negligent undertakings it performs on its properties, even if Chapter 95 applies to exempt it from liability for other claims. See Elmgren v. Ineos USA, LLC, 14-13-00044-CV, 2014 WL 1677545 (Tex. App.—Houston [14th Dist.] Mar. 20, 2014, no. pet. h.).

In Elmgren, the Court also affirmed summary judgment in favor of the property owner for all claims except those for negligent activity and negligent undertaking, and rejected Plaintiff's attempt to challenge the second element of the property owner's chapter 95 defense. Plaintiff claimed his injury did not arise from the condition or use of an improvement to real property because the task that Plaintiff was performing (the replacement of de-coke header valves) was not the specific improvement that caused his injury. Instead, Plaintiff claimed his injury was caused by the allegedly defective condition of the operation of the plant's "gas process." In rejecting Plaintiff's argument, the Court refused to find that the specific line and valves upon which the Plaintiff was working were separate from the rest of the "gas process" such that Plaintiff's injury arose from a separate improvement. In making its decision, the Court explained that accepting the Plaintiff's argument would require the Court to divide the plant's "gas process" system of furnaces and headers valve-by-valve or line-by-line into separate, discrete improvement, which is not required under Chapter 95.

There are two important messages from the Court's holding Elmgren: (1) a larger system should be considered as one improvement for purposes of Chapter 95; if one aspect of the improvement causes the Plaintiff's damages, Chapter 95 should still apply; and (2) even if Chapter 95 defeats a premises liability claim against a property owner, it does not necessarily defeat distinct claims for negligent activity and negligent undertaking.

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