Indiana Supreme Court Re-Affirms Rule That A Principal Is Not Liable For The Negligence Of An Independent Contractor Absent A Claim Of Negligent Hiring

It is well-established under Indiana law that a principal is not liable for the negligence of an independent contractor.  Bagley v. Insight Conn. Co., 658 N.E.2d 584, 586 (Ind. 1995).  However, Indiana courts have recognized five exceptions to this general rule.  Id.  These exceptions are: (1) where the contract required the performance of intrinsically dangerous work; (2) where the principal is by law or contract charged with performing the specific duty; (3) where the act will create a nuisance; (4) where the act to be performed will probably cause injury to others unless due precaution is taken; and (5) where the act to be performed is illegal.  Id.  Under the Indiana Supreme Court’s recent decision in Helms v. Carmel High School Vocational Building Trades Corp., 844 N.E.2d 562 (Ind. Ct. App. 2006), a plaintiff seeking to have one or more of these exceptions apply must also arguably make a claim of negligent hiring against the principal/premises owner. 

The general rule and the exceptions to it have been the focus of two cases in Indiana over the last few years.  In PSI Energy, Inc. v. Roberts, 829 N.E.2d 943 (Ind. 2005), the Supreme Court of Indiana examined an asbestos action brought by an employee of an independent contractor.  The plaintiff sued PSI Energy for personal injuries arising from contracting mesothelioma arising from his work with asbestos containing materials and argued that his claim fell under the exception to the general rule that a principal is not vicariously liable for the acts of an independent contractor, as the work was “intrinsically dangerous” and the work to be performed would probably cause injury unless “due precaution” was taken.

The Roberts court found that the principal, PSI Energy, was not liable because the plaintiff’s injuries arose from a situation he was employed to address; asbestos is not “inherently dangerous as that term is used in the exception to non-liability;” and the injuries the plaintiff sustained are common among workers in his industry and the necessary precautions he identified were the responsibility of the plaintiff’s employer, not PSI Energy.

A key finding of Roberts was that to the extent an independent contractor is employed to redress or correct a problem for the principal, even if the contractor’s activity may be viewed as either intrinsically dangerous or may require precautions, employees of the contractor have no claim against the principal based solely on either acts of the contractor or the condition to be remedied.  The Court noted that it is the contractor that is best equipped to evaluate the necessary precautions and determine the standard of care and that employees of the contractor have no claim against a principal for their own or the contractor’s failure to use ordinary care in carrying out the contractor’s assignment.  The Court also found that a principal is not liable to the employees of a contractor simply by reason of employing the contractor to engage in inherently dangerous activity.  The Court held that “in the absence of negligent selection of the contractor, an employee of the contractor has no claim against the principal based solely on the five exceptions to the general rule of non-liability for acts of the contractor.”

This issue was re-examined recently by the Indiana Court of Appeals in Helms v. Carmel High School Vocational Building Trades Corp., 844 N.E.2d 562 (Ind. Ct. App. 2006).  The Helms plaintiff, an employee of a sub-contractor, was installing flashing on a PVC pipe at a work site when he fell twenty feet to the ground and sustained injuries.  The project’s general contractor had obtained a building permit from the Department of Community Services for the City of Carmel/Clay Township to construct a single family home at the site.  The application for the building permit provided that any construction, reconstruction, enlargement, relocation, or alteration of a structure requested by the application would comply with all applicable laws of the State of Indiana. Plaintiff’s complaint filed against the general contractor alleged that, based on the application for a building permit, it had a non-delegable duty to provide him with a safe work site. 

The Court of Appeals noted the general proposition that a principal is not liable for the negligence of an independent contractor and the five exceptions to this general rule.  Although the plaintiff in Helms identified the second exception, that the principal was by law a contractor charged with performing a specific duty, as the basis for his action, the court found that the building permit application in question did not affirmatively show an intent by the general contractor to assume the alleged duty of care and concluded that the plaintiff could not show that any of the exceptions to the general rule regarding a principal’s non-liability for the negligence of an independent contractor applied.

The appellate court discussed the facts and holding in PSI Energy v. Roberts and specifically quoted the holding that “in the absence of negligent selection of the contractor, an employee of the contractor has no claim against the principal based solely on the five exceptions to the general rule of non-liability for acts of the contractor.”

The appellate court determined that this language indicated that the Supreme Court intended a broad interpretation precluding all claims made under the exceptions, unless the plaintiff also alleged a negligent selection of the contractor by the principal.  The court used this interpretation of Roberts as a secondary basis for its affirmation of summary judgment.   In other words, the Court of Appeals found that the five exceptions were only available to a plaintiff who alleged negligent hiring.  This holding served to limit the exceptions for imposing liability on a principle for the negligence of an independent contractor.

The Helms plaintiff appealed to the Indiana Supreme Court.  The Court agreed with the Court of Appeals that the “law or contract” exception did not apply to the case.  The Indiana Supreme Court also found that the five exceptions to the general rule of non-liability are only available when a plaintiff (employee of a subcontractor) alleges negligent hiring on the part of the principal.

Indiana’s current general rule is that a principal is not liable for the negligence of an independent contractor.  Additionally, the five exceptions to the general rule identified in Bagley are also applicable.  However, pursuant to the decisions in Roberts and Helms, an action cannot be maintained against the principal by an employee of  an independent contractor absent an allegation of negligent selection of the contractor.

Therefore, independent contractors who are not negligently hired by a principal to perform intrinsically dangerous work, or work that is likely to cause injury to others unless due precaution is taken, are assumed to be the experts in the type of work for which they are hired.  It will be their responsibility, not that of the principal, to ensure that proper precautions are taken to ensure the safety of their employees and that the proper standard of care is met.