The Resurrection of the “Completed and Accepted Work Doctrine”

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[author: John L. Shaw]

In the recent Court of Appeals decision, Lamb vs. Duggins Welding, (No. COA12-129, August 7, 2012) the Court relied on a 1946 case (Price vs. Johnston Cotton Co. of Wendell, Inc. 266 N.C. 758) to  support the application of the “Completed and Accepted Work Doctrine” and bar an action for personal injuries by a construction worker.

The plaintiff, Jason Lamb, was the site superintendent for Lomax Construction, the General Contractor (GC) on a multi-story building project. The GC hired defendant Duggins Welding to install steel decking which in turn hired the defendant Mabe Steel to work on the steel.  In order to comply with OSHA regulations, Duggins requested Mabe to install a perimeter safety cable on the third floor. Mabe accomplished this work by threading the cable through holes in the columns and where there were no holes, threaded the cable through nuts welded onto the columns. Mabe terminated the end of the cable by wrapping it around a column and secured it with clamps and turnbuckles.

After Mabe left the site, the column to which the cable was attached was removed.  At the direction of the plaintiff, Lomax moved the cable to an adjacent column. Instead of wrapping the cable around the column and securing it, as Mabe had done, Lomax’s employees terminated the safety cable by attachment to a nut that Mabe had previously welded to the column.

One of Jason Lamb’s daily duties was to inspect the cable and while testing its deflection, the weld to the nut broke off, the plaintiff fell three stories and received serious injuries. Lamb sued Duggins and Mabe to recover damages due to his injuries.  The trial court entered summary judgment in favor of the defendants and Lamb appealed.

The Court of Appeals affirmed the summary judgment based on the “completed and accepted work” doctrine. The court, quoting Price stated the “completed and accepted work doctrine provides ‘that an independent contractor is not liable for injuries to third parties occurring after the contractor has completed the work and it has been accepted by the owner…a fortiori, an independent contractor is not liable where the injury is not due to the condition in which he left the work”.

The court noted the doctrine is rarely applied in North Carolina and is limited to construction and repair contracts.  The court also noted that the doctrine has previously been held not applicable to service contracts. Nevertheless, the court holds the doctrine applicable to this case because it involved a construction contract.

On an issue of first impression, the court further held that the plaintiff, although employed by the General Contractor, was a “third party” within the meaning of the doctrine. In support, the court relies on Fishback and Moore, Inc. v. Foxwworth, 246 Miss. 814, 152 So.2d 714 (1963).

The court recognized an exception to the doctrine if a contactor turns over work so negligently defective as to be imminently dangerous to third persons, provided the contractor knows or should have known of the dangerous situation created by him and the other contractor does not know of the dangerous condition or defect and could not discover it by reasonable inspection. The court then held that the welded nut was not imminently dangerous as originally used to maintain the height of the cable and therefore the doctrine was applicable to this case.

The resurrection of the Completed and Accepted Work doctrine and its application to claims involving construction contracts has several ramifications that may be the reason the doctrine was seldom used. First, a construction contract is a service contact to which,  according to one case, the doctrine should not apply. Second, and perhaps the most important, is how does one determine if a contractor’s or subcontractor’s work has been “accepted”?  Apparently, a latent defect will not be sufficient to benefit from the exception to the rule unless the entity furnishing the work knows its work is “imminently dangerous” to third persons and knows or should know of the dangerous condition. Therefore, mere negligently performed work causing injury would not take it outside the doctrine and allow a claim for personal injuries. 

Although the court does not discuss the terms of the parties contracts, will the standard provision stating that “payment for work does not constitute acceptance of the work” be binding on “third parties.” Exactly when is work accepted in order for the doctrine to apply?

In the future, one would expect this case to be cited by defense counsel in connection with injuries during construction work and many arguments made as to whether the defective work was accepted and, if so, whether it was “imminently dangerous.”

There is some indication the Completed and Accepted Work Doctrine is an extension of the lack of privity defense, but even the economic loss doctrine allows claims for personal injuries. In addition, it appears that if the traditional defenses of contributory negligence or lack of proximate cause had been applied, the case would have had the same result without the application of the doctrine and its uncertainties.