Opinion
No. 05-19-01171-CV
01-24-2020
IN RE EAGLERIDGE OPERATING, LLC, Relator
Jason Brand Stephens, Seth Marshall Anderson, Stephens, Anderson & Cummings, LLP, Fort Worth, for Real party in interest, Earmon Lovern, Peggy Lovern, and Stormy Lovern. Douglas D. Fletcher, Keith Andrew Robb, Fletcher, Farley, Shipman & Salinas, L.L.P., Dallas, for Real party in interest, USG Properties Barnett II, LLC. J.J. Knauff, The Miller Law Firm, Dallas, for Relator.
Jason Brand Stephens, Seth Marshall Anderson, Stephens, Anderson & Cummings, LLP, Fort Worth, for Real party in interest, Earmon Lovern, Peggy Lovern, and Stormy Lovern.
Douglas D. Fletcher, Keith Andrew Robb, Fletcher, Farley, Shipman & Salinas, L.L.P., Dallas, for Real party in interest, USG Properties Barnett II, LLC.
J.J. Knauff, The Miller Law Firm, Dallas, for Relator.
Before Justices Whitehill, Partida-Kipness, and Pedersen, III
MEMORANDUM OPINION
Opinion by Justice Pedersen, III Relator Eagleridge Operating, LLC filed a petition for writ of mandamus in which it asks this Court to command respondent, the 192nd Judicial District Court of Dallas County, to vacate its order striking Eagleridge's designation of Aruba Petroleum, Inc. as a responsible third party. Based on the Texas Supreme Court's decision in Occidental Chemical Corp. v. Jenkins , we hold that respondent did not abuse its discretion in striking Eagleridge's designation. See 478 S.W.3d 640 (Tex. 2016). We therefore deny relator's petition.
BACKGROUND
The underlying lawsuit arose out of a gas line rupture on August 24, 2017, at the Donnell 2H well facility near Bridgeport, Texas. Previously, USG Properties Barnett II, LLC was a majority interest owner in the facility, and Aruba owned a minority interest. USG also retained Aruba to serve as the facility's contract operator. However, effective May 1, 2017, Aruba sold its ownership interest to USG, and Eagleridge took over as USG's contract operator at the site. Thus, Aruba was neither an owner nor a contract operator of the facility on the date of the subject incident.
The gas line rupture injured Earmon Lovern, who at the time was working at the Donnell facility. Lovern and three members of his family sued Eagleridge and USG. The Loverns alleged claims for negligence and gross negligence, among others. Their negligence claim included allegations that the defendants: (i) "creat[ed] an unsafe work environment for individuals on the premises"; (ii) "fail[ed] to provide suitable protection for individuals on the premises controlled by Defendants"; and (iii) "fail[ed] to provide suitable safe equipment and pipelines on the premises." See Occidental , 478 S.W.3d at 644 ("Although premises liability is itself a branch of negligence law, it is a special form with different elements that define a property owner or occupant's duty with respect to those who enter the property." (citation and internal quotation marks omitted)).
Eagleridge designated Aruba as a responsible third party. The Loverns then filed a motion to strike and summary judgment (referred to hereinafter as the "motion to strike") as to Eagleridge's designation of Aruba. Following a hearing, the district court granted the Loverns’ motion to strike. Eagleridge then filed this petition for writ of mandamus.
ANALYSIS
Mandamus will issue if the relator establishes a clear abuse of discretion for which there is no adequate remedy by appeal. In re Deere & Co. , 299 S.W.3d 819, 820 (Tex. 2009) (orig. proceeding) (per curiam). Under this standard, we defer to the trial court's factual determinations if they are supported by evidence, but we review its legal determinations de novo. In re Labatt Food Serv., L.P. , 279 S.W.3d 640, 643 (Tex. 2009) (orig. proceeding) ; In re Molina , 575 S.W.3d 76, 80 (Tex. App.—Dallas 2019, orig. proceeding).
The Loverns based their motion to strike on the supreme court's decision in Occidental. The property owner in that case, Occidental Chemical Corporation, added an acid-addition system to its plant in 1992. Occidental , 478 S.W.3d at 642. In 1998, Occidental sold the plant to Equistar Chemicals, L.P. Id. at 643. In 2006, Jason Jenkins, an employee of Equistar, was injured when one of the system's valves expelled acid into his face, injuring his eyes. Id. Jenkins sued Occidental, among others, alleging that its negligent design of the acid-addition system caused his injuries. Id. Following a jury trial, the trial court rendered judgment that Jenkins take nothing, concluding that the verdict supported at least one of Occidental's statute-of-repose defenses. Id.
Our sister court of appeals disagreed, reasoning that the verdict did not support either of Occidental's repose defenses. Id. Apart from repose, the court analyzed Occidental's duty as two-pronged: (i) its duty as the owner of the property on which the dangerous condition existed, and (ii) its duty as the creator or designer of the dangerous condition on the property. Id. at 644. Although Occidental was no longer responsible for the property's dangerous condition as owner, under the court's dual-role analysis, Occidental remained responsible as a creator or designer. Id. at 644–45. Accordingly, the court of appeals reversed and remanded for the trial court to render judgment for Jenkins on the jury's liability and damages findings. Id. at 644.
The supreme court reversed the court of appeals’ judgment and rendered judgment that Jenkins take nothing. Id. at 642. The supreme court noted that, depending on the circumstances, a person injured on another's property may have either a negligence claim or a premises-liability claim against the property owner. Id. at 644. When the injury is the result of the property's condition rather than an activity, premises-liability principles apply. Id. Under these principles, a property owner's duty to make the premises safe for invitees or to warn of dangerous conditions generally runs with the ownership or control of the property. Id. In other words, upon a sale of the property, this duty passes to the new owner, and the seller is not ordinarily liable for injuries to the buyer or to third persons caused by a pre-existing dangerous condition after the buyer takes possession. Id. (citing, inter alia, RESTATEMENT ( SECOND ) OF TORTS §§ 351 – 54 (1965) ).
Notwithstanding the foregoing principles, Jenkins cited prior supreme court precedent, which held that an independent contractor could be liable in negligence for creating a dangerous condition on property even after relinquishing control of the property. Id. at 645 (discussing Strakos v. Gehring , 360 S.W.2d 787, 790 (Tex. 1962) ); see also RESTATEMENT ( SECOND ) OF TORTS § 385 (1965) (providing that "[o]ne who on behalf of the possessor of land" creates a dangerous condition while making improvements to such land is subject to liability, after its work has been accepted by the possessor, "under the same rules as those determining the liability of one who as manufacturer or independent contractor makes a chattel for the use of others"). Based on this precedent, Jenkins urged that the court of appeals’ dual-role analysis merely applied the supreme court's decision in Strakos . Id. at 645.
The Occidental court was not persuaded that the foregoing authorities supported Jenkins's position. Specifically, " Strakos speaks only to the actions of third parties," and " section 385 concerns only the liability of independent contractors and other third parties who create dangerous conditions while making improvements ‘on behalf of’ property owners." Id. at 646. The supreme court observed that no Texas case supported the court of appeals’ dual-role analysis and that "the weight of authority elsewhere rejects the notion that a property owner acts in multiple capacities when making an improvement to its property." Id. at 647–48. The court "similarly reject[ed] the notion that a property owner acts as both owner and independent contractor when improving its own property, subjecting itself to either premises-liability or ordinary-negligence principles depending on the injured party's pleadings." Id. at 648. It instead held that (i) "premises-liability principles apply to a property owner who creates a dangerous condition on its property," and (ii) "the claim of a person injured by the condition remains a premises-liability claim as to the owner-creator, regardless of how the injured party chooses to plead it." Id. at 648.
In this case, the dissent attempts to distinguish Occidental on the basis that Aruba performed the work at issue in its capacity as an independent contractor for USG, not in its capacity as an owner. In our view, this purported distinction flies in the face of the supreme court's holding in Occidental. In light of the Occidental court's rejection of a "dual-role analysis," we conclude that Aruba, a co-owner of the Donnell facility at the time it made the subject improvements, acted solely in its capacity as an owner of the property. See id. at 647–48. In short, the Loverns’ claim against Aruba was a premises-liability claim. Aruba's duty under premises-liability principles passed to the new owner of Aruba's interest in the Donnell facility, USG, upon Aruba's sale of its interest prior to the subject incident. See id. at 644. Accordingly, the district court did not abuse its discretion by striking Eagleridge's designation of Aruba as a responsible third party.
CONCLUSION
We deny Eagleridge's petition for writ of mandamus.
Whitehill, J., dissenting
DISSENTING OPINION
Dissenting Opinion by Justice Whitehill
An independent contractor that creates an unreasonably dangerous property condition continues to have ordinary negligence liability for injuries that condition causes after the contractor finishes its work and leaves the premises. While working under a third party contract, Aruba (allegedly) created an unreasonably dangerous property condition that caused or contributed to Lovern's injuries after Aruba finished its work and left the property. Does Aruba have continuing ordinary negligence liability to plaintiffs?
The majority opinion says "no," because Aruba also owned a fractional portion of the working interest and therefore the case is governed exclusively by premises liability rules, which in the usual case provide that the owner's liability ends when it sells its interest and exits control of the property. The majority opinion's logic is flawed because it ignores the fact a person can simultaneously act in two different legal capacities that produce distinct legal rights and responsibilities.
I would agree with the majority opinion that Occidental Chemical Corp. v. Jenkins , 478 S.W.3d 640 (Tex. 2016) controls the case if the evidence conclusively established that Aruba built and maintained this equipment in its capacity as co-owner. Occidental holds that an owner's potential liability for creating a dangerous property condition is governed by premises liability principles when in fact the owner does the work itself, that is, without hiring an actual independent contractor to do the work for the owner. Id. at 648. But the majority opinion does not acknowledge that the facts here are different from the Occidental facts. Here, there is more than a scintilla of evidence that USG hired and paid Aruba as an actual independent contractor to do the work at issue in this case. That is, there is more than a scintilla of evidence that Aruba performed the work at issue in its factual and legal capacity as an independent contractor with a third party. If the jury were to find that to be so, then under Strakos v. Gehring , 360 S.W.2d 787 (Tex. 1962) Aruba's potential liability for mal-performing that work would exist under ordinary negligence principles. Id. at 790–91. Specifically, under Strakos , (i) Aruba's ordinary negligence liability for shoddy work that causes or contributes to an injury would continue even after Aruba finished its work and left the property and (ii) Eagleridge properly designated Aruba as a responsible third party. See id.
Because there is more than a scintilla of evidence in the mandamus record that Aruba created the injury causing unreasonably dangerous condition in its legal capacity as an actual independent contractor for USG (instead of deciding on its own to do the work itself), the trial court was legally required to honor Eagleridge's responsible third party designation and deny plaintiffs’ motion to strike that designation. But the trial court didn't do that. Accordingly, the trial court abused its discretion; Eagleridge lacks an adequate legal remedy; and Eagleridge is entitled to its requested mandamus relief. See In re Molina , 575 S.W.3d 76, 79 (Tex. App.—Dallas 2019, orig. proceeding) (abuse of discretion to strike responsible third party designation where there was more than a scintilla of evidence supporting that designation).
I. FACTS
For present purposes, the mandamus record contains more than a scintilla of evidence supporting these controlling facts:
1. This is a personal injury case related to a natural gas pipeline explosion at a well-site.
2. At all relevant times, USG was the sole or majority working interest owner for the well at issue.
3. During all but a few months at the end of that time, Aruba was also a fractional working interest owner in the property.
4. Aruba was at all relevant times before April 2017 responsible for installing and maintaining the equipment at issue.
5. There is some evidence that USG hired and paid Aruba as an independent contractor to do installation and maintenance work that in some way caused or contributed to causing the harm for which plaintiffs seek damages.
6. Aruba sold its fractional working interest before August 2017.
7. The injury causing event happened in August 2017.
8. Plaintiffs’ live pleading alleges that in its capacity as a contract operator Aruba was a major actor responsible for causing plaintiffs’ injuries.
II. ANALYSIS
A. Standard of Review and Designated Responsible Third Parties
To obtain mandamus relief, a relator must show that the trial court clearly abused its discretion and that relator has no adequate appellate remedy. In re Prudential Ins. Co. of Am. , 148 S.W.3d 124, 135–36 (Tex. 2004) (orig. proceeding) ; In re Molina , 575 S.W.3d at 79.
In that regard, it is established that trial courts have no discretion in determining what the law is or in applying the law to the facts, even if the law is somewhat unsettled. In re Jorden , 249 S.W.3d 416, 424 (Tex. 2008) (orig. proceeding) ; In re Prudential Ins. Co. of Am. , 148 S.W.3d at 135 ; Huie v. DeShazo , 922 S.W.2d 920, 927–28 (Tex. 1996) (orig. proceeding).
Because the erroneous denial of a motion for leave to designate a responsible third party skews the proceedings, potentially affects the litigation's outcome, and compromises the defense in ways unlikely to be apparent in the appellate record, such an error ordinarily renders the appellate remedy inadequate. In re Coppola , 535 S.W.3d 506, 509–10 (Tex. 2017) (orig. proceeding) (per curiam). The same problems arise when a trial court erroneously grants a motion to strike a responsible third party designation. Thus, the appellate remedy is also ordinarily inadequate when a trial court commits such an error.
Texas law allows a tort defendant to designate a person as a "responsible third party." TEX. CIV. PRAC. & REM. CODE § 33.004(a). The designation's purpose is to have the responsible third party submitted to the trier of fact as a possible cause of the claimant's harm. See id. § 33.003. This may reduce the percentage of responsibility attributed to the defendant, thus ultimately reducing its liability to the claimant. See id. § 33.013; Flack v. Hanke , 334 S.W.3d 251, 262 (Tex. App.—San Antonio 2010, pet. denied) ("[T]he defendant typically would be the party seeking to retain the RTP in the jury charge to diminish his potential liability and perhaps eliminate any joint and several liability.").
Once a responsible third party has been designated, and after an adequate time for discovery has passed, a party may move to strike the designation "on the ground that there is no evidence that the designated person is responsible for any portion of the claimant's alleged injury or damage." CIV. PRAC. & REM. CODE § 33.004(l ). "The court shall grant the motion to strike unless a defendant produces sufficient evidence to raise a genuine issue of fact regarding the designated person's responsibility for the claimant's injury or damage." Id. Thus, the question for the trial court is whether the defendant produced sufficient evidence, more than a scintilla, for a reasonable jury to find the responsible third party responsible for a portion of the claimant's injury or damages. In re Transit Mix Concrete & Materials Co. , No. 12-13-00364-CV, 2014 WL 1922724, at *3 (Tex. App.—Tyler May 14, 2014, orig. proceeding) (mem. op.).
The trial court's ruling on a motion to strike presents a legal question. Ham v. Equity Residential Prop. Mgmt. Servs., Corp. , 315 S.W.3d 627, 631 (Tex. App.—Dallas 2010, pet. denied). Thus, our review, even under the abuse of discretion mandamus standard, is de novo. See In re Labatt Food Serv., L.P. , 279 S.W.3d 640, 643 (Tex. 2009) (orig. proceeding) ("Under an abuse of discretion standard, we defer to the trial court's factual determinations if they are supported by evidence, but we review the trial court's legal determinations de novo.").
B. Discussion
1. Strakos and Occidental
The trial court misapplied the law to the facts because it ignored the fact that Aruba's potential liability for the dangerous property condition, and thus its role as a designated responsible third party, arises from Aruba's activity in its capacity as an actual independent contractor—not from its capacity as a partial property owner who performs self-help work on the property. That result occurs because (i) the nature of the duties that a person owes depends on the capacity in which that person acted when he created the dangerous condition; (ii) a person can have two distinct capacities when he creates an unreasonably dangerous property condition; and (iii) those distinct capacities are not mutually exclusive.
If the person was an (actual) independent contractor, under Strakos he owes independent contractor duties and has independent contractor general negligence exposure to third parties for injuries caused by his negligence in creating the unreasonably dangerous property condition—even after his legal relationship to the property ends.
But, if he acted for himself in his capacity as a property owner when he created the unreasonably dangerous condition, under Occidental his premises liability exposure ends when he sells his interest in the property. Under Occidental , that result applies even if the owner's work was something that the owner might have hired an independent contractor to do. See Occidental , 478 S.W.3d at 647–49.
Significantly, Strakos holds that there can be concurrent negligence cases involving an injury caused by a dangerous property condition when two different people are responsible for that dangerous condition. 360 S.W.2d at 794. Although that holding concerned two separate contractors performing separate tasks involving the dangerous condition, property owners and contractors can also be concurrently liable. That being so, a person can have concurrent negligence liability for a dangerous property condition when that person acts as both (i) a partial owner with premises liability duties and (ii) an actual independent contractor under contract with the a third party.
Occidental did not address the fact scenario this case presents. Instead, Occidental's conduct at issue in that case was solely as the property owner—not as an actual independent contractor.
The facts before us show that Aruba occupied both roles. First, it was a fractional working interest owner, and Occidental ’s property owner based premises liability rules apply to it in that capacity. Thus, Aruba post-sale has no continuing owner-based premises liability exposure for the equipment that caused the explosion. That result follows because as a non-owner Aruba had no ability to fix or warn against the problem. See Occidental , 478 S.W.3d at 648–49.
But, second, Strakos ’s independent contractor rules apply to Aruba's capacity as USG's actual independent contractor. Occidental does not address an independent contractor's continuing liability exposure, but Strakos does. Thus, Aruba post-sale has continuing general negligence liability exposure.
To the extent the supreme court rejected Jenkins's "dual capacity" argument, it did so because Occidental acted in only one capacity, not because the same result would have applied had Occidental performed its liability causing activity in a different capacity as an independent contractor for someone else. See id. at 647–48.
In so doing, the supreme court analyzed Strakos at length. It then held that independent contractors’ liability for creating unreasonably dangerous property conditions differs from property owners’ liability for the same conduct because an independent contractor's duties exist due not only to its control of the premises but also to its work quality, which can be judged under ordinary negligence principles after the contractor no longer controls the premises:
[A]s Strakos recognizes, the duty of [independent contractors] is not necessarily co-extensive with that of the property owner because "the modern approach is to place contractors on the same footing as manufacturers of goods and apply the same general principles of negligence even after the acceptance of the work."
Strakos , 360 S.W.2d at 792. The contractor's duties are thus tied not only to its control of the premises but also to the quality of its contracted work. This latter duty may be judged under ordinary-negligence principles even after the contractor no longer controls the premises. Id.
Id. at 647.
Applying Occidental , Strakos , and their reasoning to the present case compels the conclusion that the critical fact distinguishing the present case from Occidental is that Aruba's tort duties and corresponding post-sale liabilities arise from the quality of its work on the premises as a legally distinct, actual independent contractor.
2. Arredondo
Our San Antonio sister court in a case similar to Strakos recently discussed the different causes of action that can arise when a person creates an unreasonably dangerous condition on real property. See Arredondo v. Techserv Consulting & Training, Ltd. , 567 S.W.3d 383 (Tex. App.—San Antonio 2018, pet. pending). In that case, a utility's two contractors were involved in removing a utility pole on the owner's property. One was the removal contractor who did the removal work. The other was the technical, supervising contractor that did not do the actual removal.
The owner stepped in the hole and suffered personal injuries. She then sued the utility and the two contractors.
An issue concerned whether the plaintiffs’ claims against the removal contractor were ordinary negligence or premises liability claims. The San Antonio court discussed Strakos , Occidental , and the Restatement (Second) of Torts § 385 at length. The court then held that the claims against the removal contractor were ordinary negligence claims, instead of premises liability claims. In so doing, the court further held that: (i) "liability for a premises condition may arise not only from ownership or control of the property, but also from one's role in creating the dangerous condition in the first instance" and (ii) "an actor such as an independent contractor or servant acting on behalf of a property owner or possessor may be held liable under ordinary negligence for creating a dangerous premises condition even after he is no longer in control of the property." Id. (citing Occidental , 478 S.W.3d at 645, 646–47 ).
3. Application
At this stage, Eagleridge was not required to prevail in its case that Aruba acted negligently or what percentage of responsibility should be assigned to Aruba. Rather, to sustain its responsible party designation for Aruba, Eagleridge needed to adduce only more than a scintilla of evidence that Aruba engaged in ordinary negligence that caused or contributed to Lovern's injury.
Based on the mandamus record before us, Eagleridge adduced more than a scintilla of evidence establishing grounds for ordinary negligence claims against Aruba based on Aruba's independent contractor activities that caused the plaintiffs’ injuries in suit. Indeed, plaintiffs’ fourth amended petition and Eagleridge's expert report assert facts that do just that. Furthermore, there is evidence that Aruba did installation and maintenance work that the plaintiffs allege was a cause of the explosion that caused their injuries. Additionally, there is deposition testimony stating that USG hired Aruba under contract to do that work.
Plaintiffs (and the majority opinion) never contend otherwise. They instead rely on their misreading of Occidental. Thus, there is more than a scintilla of evidence that Aruba acted negligently and that such ordinary negligence was a proximate cause of Lovern's injuries. That's enough to defeat plaintiffs’ motion to strike. See CIV. PRAC. & REM. CODE § 33.004(l ).
Because Texas law provides that a party like Aruba acting in its legal capacity as an actual independent contractor can be liable in ordinary negligence for creating an unreasonably dangerous condition while in control of the subject property, even after it loses control over the property, the trial court erred as a matter of law in concluding otherwise. It matters not that Aruba also had a separate legal capacity as a fractional working interest owner in the project. Texas law generally respects separate legal capacities.
Furthermore, improperly striking a responsible party designation is grounds for mandamus relief. In re Molina , 575 S.W.3d at 79. Accordingly, we should conditionally grant Eagleridge's mandamus petition.