Thursday, September 6, 2018

Governmental Immunity Waived for Independent Contractor - Lopez v. City of Grand Junction


On July 12, 2018, the Colorado Court of Appeals announced its decision in Lopez v. City of Grand Junction, 2018 WL 3384674 (Colo. App. 2018). The Court considered whether immunity is waived under Colorado’s Governmental Immunity Act (“CGIA”), pursuant to section C.R.S. § 24-10-106(1)(f), in situations where the public entity hired an independent contractor to perform the work. The Court held that if the public entity would have been liable under the CGIA for the conduct that caused the injury, had it performed the work itself, then it is liable for the work performed by its independent contractor.

While the CGIA provides immunity to the government, pursuant to C.R.S. § 24-10-106(1)(f), the government waives immunity for injuries resulting from the operation and maintenance of any public sanitation or electrical facility. The City of Grand Junction contracted with Apeiron Utility Construction (“Apeiron”) to perform maintenance of a public traffic light. During such maintenance, Apeiron breached a natural gas line that leaked into a sewer main located nearby. The gas migrated to the plaintiffs’ home and entered the basement, resulting in an explosion and injuries. 

The city filed a motion to dismiss for immunity under the CGIA and the plaintiffs argued that the city waived its immunity under the CGIA because the explosion resulted from the operation and maintenance of a public sanitation facility. The trial court held a Trinity hearing and granted the city’s motion to dismiss. See Trinity Broadcasting of Denver, Inc. v. City of Westminster, 848 P.2d 916 (Colo. 1993) (holding that a court may hold a Trinity hearing where the injured plaintiffs bear the burden of proving the court’s subject matter jurisdiction under the CGIA and that immunity has been waived). Tidwell ex rel. Tidwell v. City & Cty. Of Denver, 83 P.3d 75, 85 (Colo. 2003). The Court of Appeals reversed in part, and affirmed in part, holding:

1. Reversed—the waiver of immunity applies even if the operation or maintenance was performed by an independent contractor. 
2. Affirmed—the dismissal of the negligence claim as to the city’s operation and maintenance of its sewer line as the evidence did not support an immunity waiver.

Waiver of Immunity for Work Performed by Independent Contractor

The Court of Appeals relied upon Springer v. City & County of Denver, 13 P.3d 794 (Colo. 2000). The CGIA establishes governmental immunity from suit for public entities and their employees in tort cases, but also waives immunity in certain circumstances. C.R.S. § 24-10-106; Springer at 792. The Court in Springer reviewed three aspects of section 1(c) of the CGIA and determined:

1. A public entity lacks immunity when it creates the acts, as well as its omission, in failing to reasonably discover and correct an unsafe condition. Id. at 801.
2. If the CGIA waiver were construed to exclude the acts or omission of the independent contractor, a public entity could avoid responsibility by contracting out its work to others, nullifying the purpose and effect of the waiver. Id. at 801-2.
3. The General Assembly’s intent, to hold a public entity responsible for the acts of its independent contractor, is consistent with longstanding principles of tort lability. Id. at 802 (citing Restatement (Second) of Torts § 422 (Am. Law Inst. 1965).

The Court of Appeals noted, “[A]s a logical matter, any attribution of Apeiron’s conduct to the City will only matter—for purposes of waiver—if the conduct would have waived the City’s immunity had the City itself committed this act.” If so, the city’s immunity is waived if plaintiffs can show the injuries resulted from the specific conduct. See C.R.S. § 24-10-106(1)(f); Tidwell at 86. This does not require a showing that the injuries were “caused by” the conduct. Tidwell at 86. Rather, there must be at least a “minimal causal connection’ between the injuries and the specified conduct. Id. The trial court found, by way of the undisputed facts, that the injuries resulted from the conduct of Apeiron striking and breaching the gas line. As such, this conduct would have waived the city’s immunity had the city itself committed this act.

While a person hiring an independent contractor is generally not liable for the negligence of the independent contractor, there are widely recognized exceptions to this rule, such as when a public entity retains possession of its premises during the contractor’s performance of its work on the premises. See Huddleston ex rel. Huddleston v. Union Rural Elect. Ass’n, 841 P.2d 282, 288 (Colo. 1992); Restatement (Second) of Torts § 422. Another widely recognized common law principle of liability attributed to the conduct of the independent contractor to the employer is when the maintenance is inherently dangerous. Restatement (Second) of Torts § 427.  The city did not dispute that it retained possession of the property during Apeiron’s work, or that the work was inherently dangerous.  Thus, the independent contractor exceptions applied.

The Court reversed, finding the city would have been liable for the alleged injuries under the CGIA had it performed the work itself.  Thus, immunity was waived under the CGIA in this instance.

Operation and Maintenance of the Sewer System

Plaintiffs argued that the sewer main was not in the same general state of repair as when it was installed. Plaintiffs contend that roots had grown into the sewer main creating gaps for the gas to enter. C.R.S. § 24-10-106(1)(f) waives immunity if the injury results from the public entity’s failure to keep the public facility “in the same general state of being, repair, or efficiency as initially constructed. C.R.S. § 24-10-103(2.5). 

The trial court found that at the time of the explosion, the sewer main was intact and in good condition, and functioned at or near the same efficiency in 2013 as it had been when installed in the 1940’s. The Court of Appeals deferred to the trial court’s factual finding, citing City & County of Denver v. Dennis, 418 P.3d 489 (Colo. 2018) (“On review, we defer to the district court’s factual findings unless they are clearly erroneous and unsupported by the record”). As the Court of Appeals did not find the factual findings erroneous and unsupported by the record, the Court affirmed the trial court, finding Plaintiffs did not meet their burden to prove a waiver under C.R.S. § 24-10-106(1)(f).

Conclusion

We believe Lopez to be potentially problematic for contractors hired by governments in situations where they have agreed to indemnify the governmental entity for claims arising from their work.  In those situations where the CGIA will not apply, contractors cannot rely on it to shield them from ultimately liability to the governmental entity.  With this in mind, this opinion was not released for publication as a petition for rehearing or a petition for certiorari in the Colorado Supreme Court may be pending. Thus, the Colorado Supreme Court may review this opinion.

For additional information regarding Lopez v. City of Grand Junction or about construction defect litigation in Colorado, generally, you can reach Frank Ingham by telephone at (303) 653-0046 or by e-mail at ingham@hhmrlaw.com.

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The information contained in this blog is provided for informational purposes only. It is not legal advice and should not be construed as providing legal advice on any subject matter.