January 2019 Edition
by Brian K. Carroll, Esq., Sanderford & Carroll, P.C.
Recently, the Texas Supreme Court has decided a case that has potentially wide-reaching consequences to any subcontractor that operates a carpooling program. Under the recently decided case of Painter v. Amerimex Drilling I, Ltd., subcontractors can be on the hook for any accident that occurs during a company sponsored carpooling trip to or from work. This is problematic because it creates a potential coverage gap and exposes a subcontractor to direct liability for personal injuries where no liability exposure previously existed.
The case involved an oil and gas contractor, Amerimex Drilling I, Ltd. Sandridge Energy, Inc. hired Amerimex Drilling I, Ltd. to drill wells on a ranch in west Texas. Amerimex provided bunkhouses for its employees; but, Sandridge did not allow Amerimex to put the housing on the ranch. So, Amerimex put the housing about 30 miles away from the ranch. The Sandridge/Amerimex contract mandated that Amerimex pay the crew driller $50 per day to drive Amerimex’s employees to the jobsite.
On Feb. 28, 2007, a crew driller was driving three Amerimex employees home when the driller struck another vehicle, which resulted in a rollover that killed two of the employees and injured the driver and the other passenger. The driver sought workers’ compensation benefits, and he was found to have been in the course and scope of employment. The injured passenger and the two deceased passengers did not seek workers’ compensation benefits, and when Amerimex sought to determine whether workers’ compensation covered the injuries, a court determined that Amerimex lacked standing to bring the action.
Painter, the injured passenger, brought a lawsuit against Amerimex, Sandridge, and the driver. Sandridge was dismissed from the lawsuit on the grounds that Sandridge did not have any control over the transportation arrangement. Amerimex sought summary judgment by arguing that the exclusive remedy provision of Texas workers’ compensation law applied, and this was denied. Next, Amerimex sought summary judgment on the grounds that Amerimex did not have any control over the transportation, and this summary judgment request was granted. Ultimately, on appeal to the Supreme Court, the court ruled that Amerimex did have sufficient control over the transportation arrangement to create liability.
The problems with this holding are very straightforward, and they apply to subcontractors just as easily as they apply to general contractors. First, workers’ compensation did not offer any protection to the contractor. Second, the owner—which mandated that a driver be paid to drive other employees to work—was not liable. Consequently, the only company that could be liable in this situation was the contractor. And, a contractor’s commercial general liability policy is not going to cover an accident like this. Further, the situation is something that could arise on a lot of different projects. For instance, in a high-rise development project in a crowded downtown area, an owner/developer may not want heavy traffic to a jobsite. So, that owner might mandate a carpooling arrangement in a contract. That requirement would then likely be flowed down to subcontractors. And, based on Painter, a subcontractor could be on the hook for any accidents that occur as a result of that carpooling arrangement. Adding insult to injury, there is a good chance that the subcontractor would not have coverage for the accident.
This case deviates from a longstanding rule that is applicable in many jurisdictions: the coming and going rule. Under this tort law rule, an employee is not within the course and scope of his or her employment when that employee is coming to or going from work. This is a straightforward rule that is easy to apply and understand. In fact, this rule applies under Texas law even when an employee is paid a general travel allowance. Despite this, the Supreme Court borrowed from Workers’ Compensation law and determined that, because a specific employee was contractually identified as a driver and because the $50 per day payment was a “bonus” rather than a “travel allowance,” the driver was acting within the course and scope of his employment when he was driving Amerimex’s employees home.
After the court’s decision, Amerimex filed a Motion for Rehearing and ASA filed an amicus, or “friend-of-the-court,” brief in support of this motion. In the amicus, ASA argued that the Supreme Court: improperly relied on workers’ compensation cases to support its holding; should have focused on the task the driver was completing rather than whether the driver was generally employed by Amerimex; and the holding went against public policy.
First, ASA argued that the Supreme Court improperly relied on workers’ compensation insurance caselaw to support the court’s holding. ASA noted that workers’ compensation protection is designed to provide compensation to injured employees and it is consequently interpreted very broadly. This broad interpretation is counterbalanced by the fact that workers’ compensation insurance provides an exclusive remedy to an injured employee. Conversely, the coming and going rule provides an express limitation to the otherwise expansive realm of tort liability. The two goals are in conflict, and thus the court should not have relied on workers’ compensation law to alter a common law restriction on tort liability. This is especially true because workers’ compensation was found to not apply to the accident in question.
Second, ASA argued that the court improperly focused on the driver’s role as an employee of Amerimex when the court should have instead focused on the driver’s task at the time of the injury. In so doing, ASA pointed out the multitude of cases noting that the focus of the analysis should be on what was going on at the time of the accident. If the employee was traveling to or from work, the employee’s task had nothing to do with work. ASA argued that the court’s holding—which was in essence that once a person was an employee for one purpose it was an employee for all purposes—was too broad and that it overturned decades of caselaw.
Third, ASA pointed out the public policy issues with the court’s holding. Specifically, ASA pointed out that the holding would disincentivize contractors and subcontractors from engaging in carpooling. Additionally, ASA argued that the holding creates the potential for coverage gaps in the construction industry. For instance, in this case, workers’ compensation insurance provided no protection. And, the owner was not liable. Therefore, the contractor was left directly exposed. Finally, ASA argued that the court’s ruling would turn a straightforward rule (that if an employee was going to work or leaving work, the employee’s driving did not create vicarious liability) and turn it into a convoluted analysis. For instance, under the court’s ruling, a contractor that specifically identified a type of employee that would receive the driving bonus would be potentially liable for subsequent accidents. However, if a contractor simply said that a bonus would be paid to any employee that chose to offer carpooling, there likely would not be liability. This, in essence, is a distinction without a difference, and it would make the standard the court arrived at unworkable because it would depend on arbitrary distinctions like whether an employee’s job title was specifically identified or not.
Motions for reconsideration are always a long shot. But, at present, the Supreme Court is down to only four remaining live motions for reconsideration. All other motions that were filed during the current session have been denied. Out of these four, Amerimex’s motion is still a live motion. Consequently, there is a fair chance that the Supreme Court will reconsider its decision.
Brian K. Carroll, Esq., is a managing partner with Sanderford & Carroll, P.C., Temple, Texas. Licensed since 2002, the primary focus of Carroll’s practice is upon representing contractors and subcontractors in the construction industry. In addition to earning a law degree, he holds a bachelor’s of science in architectural engineering from the University of Texas at Austin. Prior to pursuing a law degree, Carroll worked as a design engineer for two of the preeminent civil engineering firms in the nation. He uses his knowledge of TxDOT design and highway engineering to represent highway contractors and assist them in evaluating, preparing and litigating claims arising out of TxDOT projects. In addition to serving as an advocate, Carroll is also a certified mediator. His mediation practice is not limited to construction, but instead covers all manner of civil disputes. He has also taught senior and graduate level courses in contracts, liability, and engineering ethics at the University of Texas School of Engineering. Carroll was certified in the inaugural class of Board Certified Construction Lawyers. He can be reached at (254) 773–8311 or firstname.lastname@example.org.