Litigation Defenders

Let’s set the stage! A new hospital is being constructed with public funds in Gotham. Your Insured, BW Painting, is hired by the general contractor to paint all the rooms in the new hospital.

The general contractor accepted BW Painting’s bid and forwarded to them an American Institute of Architects (AIA) Subcontractor Agreement for signature. BW Painting signs the agreement and sends it back. Like many smaller companies in the building trades, BW Painting’s owner, Bruce, doesn’t read the agreement in totality. Instead, he only ensures the scope of work and payment terms are correct.

As BW Painting’s work is near the end of the project, most of the construction will be complete before its work begins. In preparation, over a few weeks before beginning work, Bruce and his employees begin moving materials and equipment into the hospital. However, as often happens with large projects, a series of delays and equipment failures result in Bruce and his crew starting work without heat.

Not a big deal, Bruce sets up a few portable heaters and starts working. A few days after starting, Bruce gets a call from the site superintendent, Gordan, who tells him that the building is on fire and his crew should not report to the site that day.

Several months go by and BW Painting is served with a lawsuit by the property owner and GC for negligence and breach of contract. The complaint alleges that not only did BW Painting negligently cause the fire, but it also breached the AIA subcontractor agreement. Surprisingly to Bruce, the AIA agreement had detailed fire precaution and protection requirements, which were not complied with.

Setting aside the coverage issues and the duty to defend versus indemnify, most insureds and adjusters have never heard of such contractual requirements. However, most AIA contracts contain provisions obligating subcontractors to take certain fire protection and fire precautions steps.

Most boilerplate language requires subcontractors to do one or more of the following;

All oil-soaked rags, papers, and other similar combustible material shall be removed from the building at the close of each workday, or more often if necessary, and placed in metal containers with self-closing lids.

All heating devices in connection with temporary heating facilities shall be at the least hazardous type, shall have proper safety provisions, and shall be installed at such locations and in such manner as to minimize the hazard.

The temporary heating devices shall be inspected regularly to ensure that they are always in safe and proper operating condition. The contractor shall provide continuously during operation properly trained personnel for said inspections.

The subcontractor shall provide the necessary personnel and firefighting equipment to effectively control fires resulting from any operation involving the use of flame sparks or sparking devices. During such operations, all highly combustible or flammable material shall be removed immediately from the working area. If such removal is impossible that area should be protected with fire blankets or other suitable non-combustible shields.

Not more than one day's supply of flammable liquids, gases, or propane shall be brought into any building at one time. All flammable liquids having a flashpoint of 110 degrees or below must be brought into any building and shall be confined to a labeled safety can. Bulk supplies of any flammable liquid shall be stored at a sufficiently safe distance from any building and from yard storage of building supplies. 

Only a reasonable working supply of flammable building materials shall be located inside of or on the roof of the building.

The subcontractor shall during the entire construction, and until work is completed provide and maintain all materials equipment, and services necessary for an adequate Fire Protection system which shall meet the approval of the general contractor or architect.

The subcontractor shall maintain during construction an appropriate number of fire extinguishers which shall be in good working order conveniently located clearly visible and readily accessible.

 Armed with this knowledge we have a lot of questions for Bruce, such as:

• How much paint was being stored in the building for staging?
• What kind of heater was being used?
• By whom and when were they last inspected?
• Did you bring fire extinguishers to the site?
• What was BW Painting Fire Protection System?
• How did Bruce and his crew clean up at the end of a workday?

Seems trivial, but Bruce had contractual obligations he likely was completely unaware of. Contractual obligations which, if he breached, are unlikely covered by his general liability insurance. Again, seems trivial, but it is not unheard of for an insurer to seek reimbursement from the insured for the cost of having to defend portions of lawsuits not covered by the policy. These issues mean Bruce is potentially liable for tens of thousands of dollars in damages.

So, what is the takeaway for you, dear reader? Well, that’s simple.

Don’t sign a contract without reading it and consulting legal counsel! Also, please don’t use Cousin Vinny as your lawyer.

Nice enough guy, but does he know what the NFPA requirements are for fire prevention during hot work? Or the NFPA standards are for the type, location and size of fire extinguishers on construction sites? Or whether the container you are placing combustible-soaked material in, meets the minimum standards under the NFPA.

These and many other important details underscore the importance of understanding and complying with contractual fire protection provisions. Otherwise, your business and its insurance provider could get burned.