The following is based on a compilation of actual legal claims I am defending in my practice. The names were changed.
Natoli Property Management retained Harkins Landscaping & Environment to perform snow and ice management services at the Nittany Mountain Center, a sprawling outdoor retail complex. The open-air lifestyle center includes high-end stores, restaurants and housing. This was a huge opportunity for Harkins Landscaping & Environment, but it was a much larger job footprint than it had ever agreed to service.
The standard contract used by Natoli Property Management was five pages and contained language covering the price for services, the trigger for initiation of services, responsibility for inspection and monitoring, mandatory liability insurance limits, and defense and indemnification. Harkins’ management confirmed the pricing, service trigger and inspection/monitoring responsibility before executing the contract. The company wisely forwarded the insurance requirements to its insurance agent, who made sure its policy of insurance was adequate to cover all requirements. The defense and indemnification provision essentially required Harkins Landscaping & Environment to take responsibility for any property damage or claims for personal injury arising from its negligence. Harkins discussed these requirements with its attorney, which had no objection.
Failure to communicate
Harkins intended to hire three subcontractors with whom it had longstanding business relationships. Natoli Property Management’s contract allowed the use of subs but required Harkins to provide a list of all subcontractors, their contact information and proof of adequate insurance. Harkins made the subcontractors aware of all insurance requirements.
Representatives of Natoli Property Management and Harkins conducted a preseason inspection to discuss problematic areas, including an area of the parking lot where drainage flowed toward retail stores, a location next to handicapped parking spaces where water ponded, and areas on walkways where ice formation was common. They discussed priority locations for clearing snow and ice, hours of operation of various tenants of the retail center, and the locations where snow should be piled in the event of significant accumulations.
Harkins Landscaping & Environment failed to convey the site-specific information or to conduct an onsite visit with its subcontractors to ensure everyone understood the site’s unique physical characteristics and areas of responsibility. Harkins did prepare a rough map of the Nittany Mountain Center, with areas of responsibility for snow clearing somewhat identified. A failure to clearly and unambiguously delineate the areas resulted in subsequent confusion over the subcontractor responsible for walkways in a specific area. In the first storm of the season, those walkways weren’t serviced, leaving an icy walkway and, not surprisingly, a fairly significant injury to an elderly shopper, R. Hamill.
Who’s to blame?
Hamill filed a lawsuit, and the investigation revealed that no subcontractor believed they were responsible for the subject walkway. As Harkins Landscaping & Environment was contractually responsible for the site, the company (through its insurance carrier) settled the legal claim for more than $100,000. Your company will be judged by the work performed by your subcontractors, and losing a customer - and being sued because a subcontractor did not properly perform services - is a difficult pill to swallow.
- To minimize the potential for liability, it is extremely important to meet on site with all subcontractors.
- If using multiple subcontractors at a single job location, clearly delineate areas of responsibility with great specificity.
- Use a formal written agreement for all subcontractors.
- Provide subcontractors with a written document outlining specific job requirements for all locations the subcontractor is servicing.
Darryl Beckman founded Beckman Roth Ogozalek, which has offices in New Jersey
and Pennsylvania. Contact him at email@example.com.