Iowa Supreme Court Reaffirms Limits on General Contractor Liability

The Iowa Supreme Court’s recent decision in Kono v. D.R. Horton, Inc., et al. provides important clarifications for general contractors (GCs) and construction industry stakeholders regarding exposure for injuries to the employees of subcontractors on jobsites.

Key Holding: The Court reaffirmed the longstanding rule that GCs ordinarily do not owe a duty of care to employees of subcontractors. Instead, responsibility for oversight of subcontractor’s employees rests with the subcontractor because it controls the means, methods, and day-to-day execution of the work.

Background: The Supreme Court reversed a Polk County jury decision awarding a $20.5 million verdict to an employee of a plumbing subcontractor following the collapse of a trench wall, burying the employee alive and causing substantial emotional and physical injuries. Despite the significant jury award, the Iowa Supreme Court reversed, finding no duty of care under the circumstances.

Important Exceptions:

While the baseline ruling favors general contractors, the Supreme Court contemplated two narrow exceptions raised by Mr. Kono that may, in certain circumstances, give rise to general contractor liability:

1. Retained Control — Contract or Conduct

A duty may arise if the GC retains or exercises control over the specific work that causes the injury:

• Contract: Liability arises if the contract provides the GC with control over the method and manner of the work of the subcontractor’s employees — general supervisory authority for the GC and standard safety programs/manuals/directors included within contracts should not trigger a duty of care.
• Conduct: A duty may arise where the GC goes beyond oversight and actively directs a subcontractor on how the subcontractor’s work is performed.

The Court reiterated that inclusion of general safety programs, safety manuals, or having safety directors are insufficient to establish retained control by a general contractor.

2. Peculiar Risk Exception

A GC may owe a duty of care where the subcontracted work involves a special or inherent danger requiring unusual precaution. This exception does not apply to the risks of ordinary construction and is narrowly construed. Such a risk must be inherent in the work to be done when that work is properly done, not risks associated with improper completion of ordinary work.

Practical Takeaways:

• Contract Drafting: Avoid the inclusion of provisions that could be interpreted as providing the GC with control over the means and methods of the subcontractor’s work.
• Field Practice: Even with well-drafted contracts, a duty may be interpreted by on-site conduct that seeks to direct both what work is done by a subcontractor and also how that work is completed. This does not include general safety oversight.
• Evaluate High-Risk Activities: Identify work that may involve unusually hazardous conditions and plan ahead for proper risk allocation and safety planning.

Conclusion: The Iowa Supreme Court’s decision reinforces a framework friendly to general contractors underscoring there is generally no duty of care for general contractors in relation to employees of their subs. However, the Court acknowledges there are limited, fact-specific circumstances that may arise. General contractors and subcontractors should align both their contracts and their on-site practices to this guidance to minimize risk.

Please contact BrownWinick’s Construction Practice Group to discuss how this decision may impact your contracts or risk management strategies.