Oster, R. v. Serfass Const. Company, Inc.

J-A03017-22

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

RONALD AND JILL OSTER, H/W : IN THE SUPERIOR COURT OF

: PENNSYLVANIA

Appellants :

:

:

v. :

:

:

SERFASS CONSTRUCTION COMPANY, : No. 1052 EDA 2021

INC., AND CITY CENTER :

INVESTMENT CORPORATION :

:

RONALD AND JILL OSTER, H/W :

:

Appellants :

:

:

v. :

:

:

TOWER SIX OP, LP

Appeal from the Order Entered May 4, 2021

In the Court of Common Pleas of Lehigh County Civil Division at No(s):

2018-C-2235,

2018-C-3087

BEFORE: STABILE, J., DUBOW, J., and McCAFFERY, J.

CONCURRING/DISSENTING MEMORANDUM BY McCAFFERY, J.:

FILED AUGUST 17, 2022

Because I conclude the record contains a genuine issue of material fact

as to whether Tower had superior knowledge of the dangerous condition which

led to Mr. Oster’s injury, I would vacate the order granting Tower summary

judgment and remand the case for trial. However, I am constrained to concur

with the Majority’s decision to affirm the trial court’s grant of summary

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judgment in favor of Serfass. Although I strongly disagree with the manner

in which the statutory employer doctrine has been wielded by negligent

general contractors to shield themselves from civil liability when they have

not taken any steps to ensure the employees of their subcontractors will be

adequately compensated (or even insured) for on-the-job injuries they sustain

as a result of that negligence, I acknowledge we are bound by existing,

controlling statutory and case law to the contrary. Thus, I respectfully dissent

in part and concur in part from the Majority’s memorandum decision.

I. Summary Judgment in favor of Tower

With regard to Tower’s liability, or lack thereof, the Majority concludes

the record “supports the trial court’s determination” that Appellants failed to

identify any “evidence of record” that Tower possessed “superior knowledge”

that the condition of the Trifecta Building posed a danger to Mr. Oster, and

thus, the court’s entry of summary judgment in favor of Tower was proper.

See Majority’s Memorandum at 8. However, I find the Majority’s application

of the law to be too limited.

Generally, “a landowner who engages an independent contractor is not

responsible for the acts or omission of such independent contractor or his

employees.” Beil v. Telesis Const., Inc., 11 A.3d 456, 466 (Pa. 2011)

(citations omitted). Nevertheless, there are several exceptions to this general

rule. See id. One such exception applies when the landowner possesses

“superior knowledge” of a potentially dangerous condition. See Gutteridge

v. A.P. Green Servs., Inc., 804 A.2d 643, 657-58 (Pa. Super. 2002).

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A landowner owes a duty to warn an unknowing

independent contractor of existing dangerous conditions

on the landowner’s premises where such conditions are

known or discoverable to the owner. Such a duty to warn is

owed irrespective of whether the independent contractor

exercises full control over the work and premises entrusted to

him. However, [a]n owner of land who delivers temporary

possession of a portion of the land to an independent contractor

owes no duty to the employees of the independent contractor with

respect to an obviously dangerous condition on that portion of the

land in the possession of the contractor. It has also been said that

the employer of an independent contractor has no duty to warn

the contractor or his employees of a condition that is at least as

obvious to them as it is to him. In addition, the owner of property

is under no duty to protect the employees of an independent

contractor from risks arising from or intimately connected with

defects or hazards which the contractor has undertaken to repair

or which are created by the job contracted.

Colloi v. Philadelphia Elec. Co., 481 A.2d 616, 619–20 (Pa. Super. 1984)

(citations & quotation marks omitted; emphasis added & some emphasis

removed). Thus, a landowner owes a duty of care to protect the employee of

an independent contractor from potential dangers that are known or

“discoverable” to the landowner, and not as obvious to the employee.

In the present case, it is undisputed that the employee, Mr. Oster, had

no knowledge the Trifecta Building was struck by an excavator bucket a few

weeks before his first day at the jobsite, or that the incident may have affected

the structural integrity of the chimney located directly above the area where

he was assigned to work. The relevant question is whether the potentially

dangerous condition was “known or discoverable to” the landowner, Tower.

See Colloi, 481 A.2d at 619 (emphasis added). As this Court explained in

Gutteridge:

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The question of whether a landowner owes a duty to warn an

independent contractor of dangerous conditions on the premises

turns on whether the owner possesses “superior knowledge” or

information which places him in a better position to

appreciate the risk posed to the contractor or his

employees by the dangerous conditions.

Gutteridge, 804 A.2d at 657–58 (emphasis added).

In my view, the fact that those in charge of the jobsite retained an

engineer, less than 10 days before the accident, to conduct a structural

assessment of the building on which Mr. Oster was working when he was

injured, raises a jury question as to whether Tower had “superior knowledge”

of the potential danger or whether such knowledge was discoverable to Tower.

In granting summary judgment to Tower, the trial court first emphasized

that the engineering report was addressed to Serfass, and there was “no

indication that Tower . . . solicited the . . . Report or received a copy of the .

. . . Report.” Trial Ct. Op. (No. 2018-C-3087), 5/4/21, at 8. I find it

implausible that the landowner, who contracted with Serfass to perform the

demolition work, would not have been informed of the potentially dangerous

condition resulting from an excavator bucket striking the connecting building,

and, indeed, would not have received a copy of the engineering report.

Nevertheless, even if Tower can establish it did not request or receive the

Report, it is still liable to Appellants if a jury determines the dangerous

condition was “discoverable to” Tower, and that Tower was in a better position

to appreciate the risk than Mr. Oster. I conclude that these two critical

questions are for the jury to decide.

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Second, both the Majority and the trial court maintained that Appellants

presented no evidence Tower “had any knowledge that the excavator’s impact

with the Trifecta Building caused the chimney to pose a danger to workers at

the Tower Project site” — primarily because the engineering report “concluded

that the Trifecta Building was unaffected by the excavator impact.” Majority

Memo at 8; see also Trial Ct. Op. at 8-9. Again, I would conclude the Majority

and the trial court made a factual determination which should have been left

for the jury.

First, I emphasize that the excavator incident was alarming enough to

those in charge of the jobsite that they requested a structural assessment

by an engineer. Moreover, as Appellants pointed out in their brief, the report

provided an assessment of only the exterior wall of the Trifecta Building and

made no mention of the chimney that later collapsed. See Appellants’ Brief

at 33. Although the trial court found this argument misleading — noting that

the report spoke “directly to the area of the Trifecta Building previously struck

by the excavator bucket”1 — I cannot agree. It is unclear from the record

whether the engineer did, in fact, assess the condition of the chimney, and

the determination of whether Tower should have conducted a more thorough

assessment or taken steps to protect the subcontractors are, again, questions

for the fact finder.

____________________________________________

1 Trial Ct. Op. at 9.

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Viewing the record in the light most favorable to Appellants — the

nonmoving parties — I conclude that the record does not clearly demonstrate

Tower is entitled to judgment as a matter of law, and, in fact, there exists a

genuine issue of material fact as to whether Tower either had superior

knowledge of the potential danger to Mr. Oster, or that such knowledge was

discoverable to it, and not apparent to Mr. Oster. See Hovis v. Sunoco,

Inc., 64 A.3d 1078, 1081 (Pa. Super. 2013). Thus, I dissent from the

Majority’s decision to affirm the order granting summary judgment to Tower.

II. Summary judgment in favor of Serfass

The Majority also affirms the order of the trial court granting summary

judgment to Serfass concluding that, pursuant to the five-part test outlined in

McDonald v. Levinson Steel Co., 153 A. 424 (Pa. 1930), Serfass was Mr.

Oster’s “statutory employer” and, thus, is entitled to immunity from civil

liability under Section 302(b) of the Workers’ Compensation Act. See Majority

Memorandum at 8-12. Reluctantly, I acknowledge the five-part McDonald

test remains the standard by which the courts of this Commonwealth

determine whether a general contractor is the statutory employer of the

employee of a subcontractor, and consequently, immune from civil liability.

Moreover, I concur that upon application of the McDonald test, the trial court

properly determined Serfass was Mr. Oster’s statutory employer in the present

case, and, thus, immune from liability.

Nevertheless, I am compelled to express my opinion that statutory

employer doctrine, as applied via the McDonald test, is “an irrational relic of

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a bygone era.” Patton v. Worthington, 89 A.3d 643, 651 (Pa. 2014) (Baer,

J., concurring). “The Legislature’s purpose in imposing this status upon

general contractors was remedial, as it wished to ensure payment of

workers’ compensation benefits in the event of defaults by primarily liable

subcontractors.” Id. at 645 (emphasis added; citations omitted). See Peck

v. Delaware Cnty. Bd. of Prison Inspectors, 814 A.2d 185, 188 (Pa. 2002)

(Per Newman, J., with two Justices concurring, and one Justice concurring

with separate opinion) (“The purpose of this provision is clear: to ensure the

payment of compensation benefits by a financially responsible party in the

injured worker’s chain of employment from subcontractor to general

contractor.”) (emphasis added); Dougherty v. Conduit & Found. Corp.,

674 A.2d 262, 265 (Pa. Super. 1996) (“The intent behind the doctrine of

statutory employer is ‘to hold a general contractor secondarily liable for

injuries to the employees of a subcontractor, where the subcontractor

primarily liable has failed to secure benefits with insurance or self-

insurance.’”) (citation omitted; emphasis added).

When Section 302(b) was enacted in 1915, employers were not

required to obtain Workers’ Compensation insurance for their employees.

Thus, if an employee of a subcontractor was injured on a jobsite, that

employee was not guaranteed workers’ compensation benefits if their

employer failed to obtain the coverage. The statutory employer doctrine was

enacted to address this potential lapse, and impose “secondary liability on

statutory employers . . . to ensure that an injured worker will be afforded

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payment of benefits, even in the event of default by his primary employer.”

Doman v. Atlas America, Inc., 150 A.3d 103, 109-10 (Pa. Super. 2016).

As this Court observed in Doman,

The tort immunity associated with the imposition of secondary

liability reflects the historical quid pro quo between an employer

and employee whereby the employer assumes liability without

fault for a work-related injury . . . . However, the Act was

amended in 1974 to require that all employers provide

workers’ compensation coverage. Notwithstanding, the 1974

amendments allowed general contractors to remain

insulated from tort liability, despite never being required to

provide workers’ compensation benefits to injured employees of

subcontractors, and created a windfall immunity shield. Thus,

“the mandatory nature of workers’ compensation has

rendered the statutory employer doctrine obsolete[,] ...

[and] adversely impact[s] worker safety by eliminating the

traditional consequences (money damages) when a general

contractor’s negligence harms a subcontractor's employee.”

Id. at 110 (citations & quotation marks omitted; emphases added).

Accordingly, the Doman Court called upon the Pennsylvania Legislature to

“reconsider [this] statutory scheme.” Id. at 109.

Heretofore, judicial criticism of the statutory employer doctrine has

fallen on deaf ears. Justice Nigro authored a dissenting opinion in Fonner v.

Shandon, Inc., 724 A.2d 903 (Pa. 1999), advocating for the addition of a

sixth element to the McDonald test — proof that the general contractor

“assumed responsibility for providing workers’ compensation to the injured

employee[.]” Fonner, 724 A.2d at 908 (Nigro, J. dissenting). He explained:

[The 1974 amendments for the Workers’ Compensation Act made]

its application . . . mandatory. The impetus of this change was to

afford protection to employees. The Legislature never intended

that the amendments would allow a general contractor to escape

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civil liability if it did not pay for the injured employee’s workers’

compensation insurance. I find the clear meaning of the 1974

amendments was to place responsibility for workers’

compensation benefits upon the general contractor only

where the subcontractor or direct employer failed to do so. In

reality, application of these amendments rarely, if ever, will result

in the general contractor assuming responsibility for providing

workers’ compensation insurance because in the modern

construction workplace, general contractors will rarely, if ever,

award a contract absent the subcontractor showing proof of

workers’ compensation coverage. Common sense and logic

dictate that the general contractor should not reap the

benefits of civil liability immunity unless it undertakes

responsibility of compensation coverage. If however, a

general contractor does assume responsibility for the payment of

workers’ compensation, then it should be afforded statutory

employer immunity.

* * *

As Judge Hoffman stated more than thirty years ago,

. . . very great care . . . must be exercised before allowing

an employer to avoid its liability at common law by asserting

that he is a statutory employer. Section 203 of the

Workmen’s Compensation Act, which was designed to

extend benefits to workers, should not be casually

converted into a shield behind which negligent

employers may seek refuge.

Id. at 908-09 (some emphases added), citing Stipanovich v. Westinghouse

Elec. Corp., 231 A.2d 894, 898 (Pa. Super. 1967).

More recently, another Supreme Court Justice reiterated this same

concern in a concurring opinion in Patton. See Patton, 89 A.3d at 650-51.

Justice Baer advocated that the Pennsylvania Legislature

revise the statutory employer doctrine to mirror that of our sister

state, New Jersey. There, the doctrine only operates where a

subcontractor has violated the mandatory provisions of the

New Jersey Act and failed to obtain workers’ compensation

insurance. Under these circumstances, the general contractor

steps into the shoes of the subcontractor, paying the

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subcontractor’s employee’s workers’ compensation, and then

receiving immunity from common law tort damages, while further

having the ability to assert a right of subrogation against the

noncompliant subcontractor. Otherwise, [w]here the

subcontractor takes out compensation insurance . . . the general

contractor is treated as a third party and is not granted immunity

from a common law negligence suit by an employee of a

subcontractor. Notably, the subcontractor is then likewise given

a right of subrogation, should the general contractor be found

negligent at common law.

Id. at 652 (Baer, J. concurring) (citations & quotation marks omitted). The

Justice opined that “adopting such a paradigm would achieve” the primary

purposes of the Act: (1) ensure “prompt payment” of benefits to an injured

worker regardless of fault; and (2) “perpetuate[ ] the concomitant quid pro

quo of immunity to the paying employer[.]” Id. Justice Baer anticipated that

this approach would also “help to ensure safety in the workplace, and

hopefully lead to the prevention of tragic accidents due to someone’s

carelessness . . ., by incentivizing general contractors to adopt more rigorous

safety regimes.” Id. See also Doman, 150 A.3d at 109 (Superior Court

panel stating that it “echo[s] those calls” that the legislature “reconsider

Pennsylvania’s [workers’ compensation] statutory scheme”).

Therefore, like my honorable colleagues on the Supreme Court and the

Doman panel, I advocate for a change in the workers’ compensation law. In

my opinion, as suggested by Justice Nigro, the McDonald test should require

a sixth element — proof that the general contractor either paid the injured

worker’s benefits, or prior to the injury, obtained a policy which would have

covered the injured employee. Only when a general contractor has assumed

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responsibility for an injured worker’s benefits should it be entitled to immunity

under the Act. To do so would be in furtherance of the initial legislative intent

which is to provide a failsafe for injured workers in the event of a lapse in

workers’ compensation insurance by the primary employer. Imposing such a

requirement would also promote public policy considerations of assuring safe

worksites and providing maximum protection and compensation to injured

workers. However, because, as noted above, I concede we are bound by

controlling statutory and case law to affirm the trial court’s grant of summary

judgment in favor of Serfass, I am constrained to concur in the Majority’s

decision.2

Thus, I concur with the decision to affirm the order granting summary

judgment to Serfass, and dissent from the decision to affirm the order granting

summary judgment to Tower.

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2 I note that unlike my colleagues in the Majority, I do not find Appellants

waived this claim. See Majority Memorandum, at 12 n.5. Indeed, they

discussed the “judicial calls to the Pennsylvania legislature to reconsider [this]

statutory scheme” in their Memorandum of Law accompanying their response

to Serfass’ motion for summary judgment, and asserted that the “present

statutory scheme allows general contractors to remain insulated from tort

liability despite never being required to provide . . . benefits to injured

employees of subcontractors, thus creating a windfall immunity shield.”

Appellants’ Memorandum of Law in Opposition to [Serfass’] Motion for

Summary Judgment, 11/19/20, at 12.

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