Beware: Independent Contractors May Not Be So Independent

April 24, 2013

By: Gary Kessler

HOA’s Maybe Liable For The Acts of an Independent Contractor

Conventional wisdom has often assumed that when an HOA hires and independent contractor that the HOA will not be liable if the contractor is negligent and harms someone. After all, the contractor is “independent” and why should the HOA be liable when the contractor, over whom it supposedly has no control, causes such harm?

In the Affan decision, the California Court of Appeal, briefly discusses this issue in an otherwise extensive decision. Yet, the brief discussion of this narrow issue is often overlooked. It is extremely important to recognize that the principle announced in the case may be the basis for triggering huge monetary liabilities on HOA’s.

The Facts
For years, Akil and Cenan Affan, owners of units at the Portofino Cove condominium complex suffered damage as a result of sewage back-ups and flooding. They bought their unit in 1986. Their permanent residence was in Arizona, but they vacationed a few weeks a year at Portofino Cove. From 1999 to 2005, every time they visited their unit, they found sewage residue in the sink in their kitchen or tub in their bathroom. They consistently reported the problems, and after each back-up, the Association manager hired a plumber to snake the drain line. However, the plumber – an independent contractor – did not clean the pipes properly. Specifically the court, summarizing the testimony of an expert, stated: “the [plumber] used the wrong equipment to clear the main lines the [plumber] should have used a ‘scour jet’ with a motorized spinning head for mechanical boring, rather then simply trying to hydro-jet the lines…”

While one can presumably understand why the plumber contractor might be liable based on the foregoing description of its work. But why should the HOA be liable? According to the Court of Appeal decision, the Association could be liable for the acts of the plumber on the basis that the pipe repair is a “non-delegable” duty. That is, even if the HOA was not negligent, if its plumber, an independent contractor, caused damage, the Association could be “vicariously liable” for the plumber’s negligence.

It is important to note that this Court’s ruling with regard to “non delegable” duty did not go so far as to hold that the HOA was, in fact, liable. Rather, the Court remanded the case to the trial court for a new trail on this issue.

Yet the ruling is clear: yes, an Association may be liable for the acts of an independent contractor. The lesson is likewise clear: (1) do not assume that hiring any independent contractor is a sure way to limit liability; (2) having competent, licensed, insured contractors is crucial; (3) if possible, make sure the HOA is an additional insured on the contractor’s general liability policy and that the Association is contractually indemnified by the contractor; and (4) exercise reasonable due diligence in investigating and hiring the contractor.

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