Texas Supreme Court's Second Interpretation of the Scope of Chapter 95 (Property Owner Liability)
In Ineos USA, L.L.C. v. Elmgren, __ S.W.3d __, No. 14-0507, 2016 WL 3382144 (Tex., June 17, 2016), the Texas Supreme Court issued its second opinion in as many years interpreting Chapter 95 of the Texas Civil Practice & Remedies Code, which protects property owners against liability to contractors, subcontractors, and their employees under certain circumstances. In May 2015, the Court issued Abutahoun v. Dow Chemical Co., 463 S.W.3d 42 (Tex. 2015), in which it interpreted the scope of the statute “as a case of first impression” and held that Chapter 95 applies to all independent contractor claims for damages caused by a property owner’s negligence (i.e., not just premises liability claims) when the requirements of section 95.002(2) are met. Id. at 43-44.
In Ineos, the Court addressed three questions: (1) whether the statute applies to negligence claims other than those that assert premises liability; (2) whether the statute applies to claims against a property owner’s employee; and (3) whether the plaintiffs’ summary judgment evidence created a fact issue that precluded summary judgment despite the statute’s protection. 2016 WL 3382144 at *1. Chapter 95 provides limits on a property owner’s liability as follows:
A property owner is not liable for personal injury, death, or property damage to a contractor, subcontractor, or an employee of a contractor or subcontractor who constructs, repairs, renovates, or modifies an improvement to real property, including personal injury, death, or property damage arising from the failure to provide a safe workplace unless:
(1) the property owner exercises or retains some control over the manner in which the work is performed, other than the right to order the work to start or stop or to inspect progress or receive reports; and
(2) the property owner had actual knowledge of the danger or condition resulting in the personal injury, death, or property damage and failed to adequately warn.
Tex. Civ. Prac. & Rem. Code § 95.003.
In Ineos, Elmgren suffered severe burns from a gas explosion while performing furnace repair work at the Ineos petrochemical plant in Alvin, Texas. Elmgren sued Ineos, the plant owner, and Jonathan Pavlovsky, an employee of Ineos whom Elmgren alleged was the “furnace maintenance team leader.” Ineos and Pavlovsky filed motions for summary judgment, asserting Chapter 95 protected them from liability on all of Elmgren’s claims. The trial court granted the motions, and Elmgren appealed.
On the first issue (whether the statute applies to negligence claims other than those that assert premises liability), the Court applied its previous statutory interpretation analysis from Aboutahoun. First, the statute defines the term “claim” to mean “a claim for damages caused by negligence,” without distinguishing between different categories of negligence claims. Abutahoun, 463 S.W.3d at 48. Next, the statute applies to a claim that “arises from the condition or use of an improvement to real property.” Id. The Court noted it had previously interpreted similar language (“condition or use”) as used in the Texas Tort Claims Act and concluded that “condition” refers to premises and “use” refers to activities. Id. at 50 (citing DeWitt v. Harris Cty., 904 S.W.2d 650, 653 (Tex. 1995)). Therefore, because the Legislature used the same phrase in Chapter 95 without defining it, the Court concluded in Abutahoun that Chapter 95 applies “to all negligence claims that arise from either a premises defect or the negligent activity of a property owner or its employees by virtue of the ‘condition or use’ language in section 95.002(2).” Id. at 50.
Accordingly, applying Abutahoun, the Ineos Court concluded that Chapter 95 applied to negligent activity claims as well as premises liability claims, and, thus, it applied to Elmgren’s negligence-based claims against Ineos. Ineos, 2016 WL 3382144 at *3.
On the second issue (whether the statute applies to claims against a property owner’s employee), the Court applied the plain language of the statute. Section 95.003 protects a “property owner,” which section 95.001 defines as “a person or entity that owns real property primarily used for commercial or business purposes.” Id. at *4 (quoting Tex. Civ. Prac. & Rem. Code §§ 95.001(3), 95.003). Under this definition, the Court said, the statute protects Ineos but not Pavlovsky because Ineos owns the property at issue and Pavlovsky does not. Id. at *4.
The Court rejected Pavlovsky’s argument that “entity” includes the employees of an entity. Id. The Court also rejected Pavlovsky’s argument that Chapter 95 protected him because he was acting as Ineos’s agent, given that the definition of “property owner” does not include agents of the property owner. Id. at *5. The Court disapproved of several court of appeals decisions holding to the contrary. Id. Thus, the Court held Chapter 95 applied to the claims against Ineos but not to the claims against Pavlovsky, and it reversed the summary judgment in favor of Pavlovsky.
On the third issue (whether the plaintiffs’ summary judgment evidence created a fact issue that precluded summary judgment for Ineos, even if Chapter 95 applied), the Court held that Elmgren’s summary judgment evidence did not raise fact issues on (a) whether Elmgren’s injuries arose from a dangerous condition of the same “improvement” on which he was working when the explosion occurred, see Tex. Civ. Prac. & Rem. Code § 95.002(2) (stating the statute applies to a claim “that arises from the condition or use of an improvement ... where the contractor ... constructs, repairs, renovates, or modifies the improvement”), and (2) whether Pavlovsky and other Ineos employees had “actual knowledge” of the danger or condition that resulted in Elmgren’s injury, see id. § 95.003(2).
Even though Elmgren was working on furnace 101B, and the gas leak that caused the explosion occurred near furnace 101D, the Court held that the furnaces were all part of a single processing system within a single plant on Ineos’ property. Ineos, 2016 WL 3382144 at *8. Thus, Elmgren was injured by the same “improvement” on which he was working at the time of the explosion. Id.
On the actual knowledge issue, Ineos argued its evidence established that it lacked actual knowledge of any gas leak because the employees had performed a lockout-tagout procedure and a sniff test that indicated the line had no gas in it. In response, Elmgren offered evidence about the dangers of explosive gases and hydrocarbons at the plant as a whole, in an effort to show actual knowledge. Id. But, the Court held the dangerous condition was the gas in the particular pipe on which Elmgren was working, not the plant as a whole, and, thus, Elmgren’s evidence did not raise a fact issue on Ineos’ actual knowledge of the gas in the particular pipe. Id. at *8-9. The Court affirmed the summary judgment in favor of Ineos.
 Section 95.002 provides: “This chapter applies only to a claim: (1) against a property owner, contractor, or subcontractor for personal injury, death, or property damage to an owner, a contractor, or a subcontractor or an employee of a contractor or subcontractor; and (2) that arises from the condition or use of an improvement to real property where the contractor or subcontractor constructs, repairs, renovates, or modifies the improvement.” Tex. Civ. Prac. & Rem. Code § 95.002.