Case of the Day – Friday, September 30, 2022

SNAP, CRACKLE AND POP

Arboriculture professionals pride themselves on being expert at what they do, which is – generally put – to manage trees. Management may include trimming, preservation, or in many cases, removal of trees. Often, how the tree is to be treated depends on the arborist’s expert opinion of the condition of the tree and the threat (if any) that the tree poses to persons or property.

A lot can depend on the arborist’s opinion. If an examination of a tree misses a defect or disease, and the tree ends up falling on a troop of Brownies who happen by on the public sidewalk at just the wrong time, the unlucky arborist will end up with a lot of ‘splainin to do.

The U.S. Court of Appeals for the Seventh Circuit handed down a decision in fall 2014 that involved not a single tree. Nevertheless, the decision should serve as a caution to arborists, landscapers and tree trimmers – not to mention those who hire them.

It seems that small-time grain handler ConAgra Foods, Inc. (January 15th market cap – $16.9 billion) had a problem with a wheat pellet storage bin. Grain can be tricky stuff, generating a lot of dust as well as carbon monoxide. Both of these like to explode with little provocation. The technical people call it “deflagration,” more of a low-level snap and crackle than a high-level detonation “pop” – but to the man or woman on the street, it’s a fairly destructive bang.

ConAgra knew just what to do when one of its grain bins in Chester, Illinois, started heating up spontaneously. It called in an expert in “hot bins,” a sort of a Red Adair of wheat silos. The company, West Side Salvage, went to work on the unstable grain bin, but only after a delay occasioned by contracting procedures and West Side’s other business commitments.

The delay proved the project’s undoing. West Side tried to salvage some of the wheat pellets in the bin, but the removal of the grain let more oxygen into the bin, and the instability increased. West Side’s supervisor called firefighters to stand by, but while he awaited their arrival, he sent several workers for one of West Side’s subcontractors into the bin through a tunnel to retrieve tools. While they were doing so, the grain dust exploded, seriously injuring them.

Everyone knows that an owner is not responsible for the negligence of an independent contractor. Everyone also knows that the owner may be liable if it does not provide the independent contractor with a safe place to work. The district court agreed that ConAgra had done just that and that West Side was negligent in sending the employees into the dangerously unstable grain bin. It smacked ConAgra and West Side jointly with $18 million in damages for negligence.

ConAgra appealed, arguing that it was not liable for any damages to the subcontractor employees, because West Side knew what it was getting into. Besides, its contract with West Side provided that West Side would indemnify ConAgra from any West Side negligence. West Side, anxious to have a company with ConAgra’s deep pockets around to share the $18 million, retorted that ConAgra failed to reveal material information to it about the unstable grain bin. Furthermore, West Side’s indemnification of ConAgra may have been written into the contract, but West Side had never signed the document.

The Seventh Circuit was baffled. The injured workers complained that ConAgra had provided them with a dangerous workplace? “Well, yeah,”  the Court said. The whole point of hiring a “hot bin” expert was that the bin was dangerous. The Court held that where an owner hires an independent contractor to remedy a dangerous situation, the owner would not be held liable if the feared disaster came to pass. Such a policy would only discourage people with serious or dangerous problems from hiring experts to get them fixed.

The Court has just as little patience with West Side’s complaint that ConAgra had failed to disclose information to it about the grain bin’s condition. West Side didn’t exactly say that ConAgra had provided false information. In fact, it admitted that ConAgra adequately answered all of the questions it had put to its client. The problem, West Side argued, was that ConAgra had other information about the dangerous grain bin – specifically, temperature readings from earlier in the month – that it failed to volunteer.

The 7th Circuit expressed incredulity at the claim. West Side was a self-professed expert in “hot bins.” ConAgra was not. An owner like ConAgra was entitled to assume that when an expert like West Side is hired, the expert will ask for all the information it deems important. In this case, ConAgra did not end up sharing liability with West Side simply because it didn’t answer questions that were never asked.

The Court seemed almost perplexed by West Side’s argument that it had never gotten around to signing the contract with ConAgra, so it wasn’t bound by the provision that it indemnify ConAgra from damages resulting from its negligence. That hardly mattered, the Court said. West Side began the work, whether it signed the contract or not. That was enough to signify that it had accepted the contract terms.

So what’s the takeaway for arboriculture professionals? First, be sure the contract is completely negotiated and signed the way you want it. If you leave it for later but begin work now, a court may conclude you had accepted terms you thought were still being negotiated. Second, you’re an expert at what you do. Be certain to gather all of the information you need for the job. When the tree falls on that Brownie troop, you can’t hide behind the owner’s failure to give you information about the condition of the tree that you never asked for.

Jentz v. ConAgra Foods, Inc., 767 F.3d 688 (7th Cir. 2014). A grain bin in Chester, Illinois, exploded in April 2010, injuring three workers. The month before, ConAgra Foods – the owner of the bin, which was part of a flour mill – discovered a burning smell coming from the storage vessel, which contained wheat pellets. ConAgra hired West Side, which claimed expertise in handling “hot bins.” When work began, West Side hired A&J Bin Cleaning to do some of the tasks. Two of the injured workers, John Jentz and Robert Schmidt, were employees of A&J. The third, Justin Becker, was employed by West Side itself.

ConAgra wanted to salvage as much of the grain as possible, but as pellets were removed from the top more oxygen reached wheat composting at the bin’s bottom. West Side decided to remove some grain via side tunnels. On April 27 West Side detected smoke coming from the bin. Its crew sprayed water on the pellets and used an air lance to try to discover the smoke’s source; the effort failed. Mel Flitsch, West Side’s foreman, told ConAgra to call the fire department. Waiting for firefighters to arrive, Flitsch sent Jentz and Becker into a tunnel, instructing them to remove tools that might impair firefighters’ access. While they were there, the explosion occurred. They were severely injured but survived. Schmidt, who was in an elevator nearby, also was injured, but less seriously.

A Federal district court jury awarded $180 million in damages against ConAgra Foods and West Side Salvage. ConAgra contended that liability rested on West Side, which it had hired to address problems in the bin. For its part, West Side did not contest liability to the workers but contended that it does not have to reimburse ConAgra for the cost of repairing the facility. The injured workers contend that both ConAgra and West Side must pay the full verdict.

Held: The Court of Appeals held that ConAgra was not liable. Normally, the appellate panel said, employees of an independent contractor cannot obtain damages from the owner of the premises at which the contractor was working. The injured workers contended that ConAgra nevertheless was liable for failing to provide West Side with a safe place to work. ConAgra responded that of course the grain bin was unsafe — that’s why West Side had been hired to begin with. ConAgra relied on the principle that someone who engages an independent contractor to redress an unsafe condition is not liable when the feared event occurs.

The Court agreed, pointing out that Illinois law held that “in a case involving negligent rendition of a service [by an independent contractor] … a factfinder does not consider any plaintiff’s conduct that created the condition the service was employed to remedy.” Here, ConAgra may have delayed in hiring West Side (it rejected other companies for lack of liability insurance), and it may not have provided all of the information about the bin it had, but that does not matter. The evidence showed that West Side was hired to deal with a hot bin, and all liability, therefore, is on its account. Having hired a self‑proclaimed expert in hot bins, ConAgra was entitled to assume that West Side would ask for whatever information it needed. The Court said that “[p]eople who hire lawyers rely on them to ask for information material to the situation, and no court would hold a client liable to his lawyer for failing to reveal spontaneously something that the lawyer never asked about; similarly people who hire specialists in controlling the risks of grain storage are entitled to rely on them to know what matters and ask for the material information.”

Finally, ConAgra signed and tendered to West Side a contract containing a promise by West Side to indemnify ConAgra for any damage caused by West Side’s negligence. The jury concluded that West Side is liable under this promise, but West Side argued that it did not return a signed copy of the contract to ConAgra. It agreed to undertake the job and set to work, but did not sign on the dotted line. The district judge thought this to be irrelevant because performance usually is as good as a signature as a way to accept a proposed written contract. The Court of Appeals agreed. Knowing the proposed terms, West Side began the work. That was as good as a signature on the dotted line.

– Tom Root